Dropship Daemon

Dropshipping & Wholesaling tips , tricks and lessons

Browsing Posts published in April, 2010

Not all dropshippers require a tax ID and business license, but some do.  Many companies require nothing more than a name, address, and credit card on file to do business with them.   However, if you want to deal with the best companies and get the best prices, you should get a tax ID and business license.

Having a tax ID number will allow you to purchase goods from a much broader range of wholesalers and perhaps even get you lower prices than you’re paying now with the dropshipper.

I am always amazed when people tell me they would do anything to have their own business then freak out when I tell them they should get a tax ID and business license.  The process for getting a tax ID and business license is very simple: you fill out a form and you pay a fee.  You do not have to turn over your first-born and it doesn’t cost an arm and a leg, nor does it invite the IRS to monitor your every move.

It’s up to you whether you want to do this as a hobby or as a business.  If it’s going to be a hobby, then you’re probably not going to make much money and you will lose interest quickly.

If you want this to be a real business, then treat it like one and do the things required to do business in a formal manner.

You build a business. You dabble with a hobby. Getting a tax ID is not a difficult task. To get a federal tax ID just go to the IRS website at http://www.irs.gov, click on “Forms and Publications” to download Form SS-4. Fill it out and either mail or fax it to the IRS office indicated in the form’s instructions. There is no fee.

Once the IRS issues you a number, you will have to get a tax ID number from each state in which you have a business address. Again, this is a simple process that just requires a few minutes of your time. You fill out a form and pay a small filing fee. That’s it.

For a list of state tax offices and their websites, from which you can obtain the appropriate form, go to http://www.taxsites.com and click on “State and Local Tax” link.

It typically takes two to three weeks for the IRS to mail your tax ID, but if you’re in a rush you can call the IRS and get a tax ID number assigned to you over the phone.

The toll-free number is (866) 816-2065. It helps to have a completed Form SS-4 in front of you since the agent will ask you many of the same questions.

If you do business with wholesalers you may experience minimum purchase requirements, but you should not run into minimum purchase requirements from reputable dropshippers.

Your goal should be to find a dropshipper that will ship items one at a time instead of requiring that you purchase a fixed minimum number of items each time (single-unit purchases vs. minimum-order purchases).

With this arrangement, you don’t have to invest your limited cash reserves in inventory that might not sell (and that sits in your garage for months).

In a word: NO! The wholesale and dropship industries are ripe with disreputable companies that concentrate more on stealing your money than supplying you with product.

You should always ask for references and check out the company with the Better Business Bureau before signing on as a reseller.

Ask for the names of some of their current customers and references. If they refuse to provide such references, find another company to do business with. Thanks to the Internet, you can also search Google for information on the company.

There are many forums and bulletin boards now that concentrate on the dropship industry. Do a search for these forums and read any reviews on the company you can find. Beware companies with numerous negative reviews.

Ultimately the only way to ensure that a dropshipper is reputable is by doing your homework. If you don’t , you can find them all at dropshipdaemon.com dropshipping wholesalers

You would be surprised at how many people don’t take the time to do this and end up regretting it later.

If you don’t invest the time it takes to ensure that a dropshipper is reputable, then don’t be surprised when bad things happen.

Some companies that claim to be dropshippers are really what’s called “middleman” companies. A middleman is someone who positions themselves
between a true dropshipper or distributor and you the seller of the product.

Middlemen pretend to be dropshippers but are not. Most often they get their products from a dropshipper that you could deal with directly. Middlemen will eat into your profits and usually don’t offer much in the way of customer support and service. Middlemen often come in the guise of buyer’s clubs or wholesale distributors.

Before doing business with a dropshipper make sure that they get their products directly from the manufacturer and not from another dropshipper.

and of course , dropshippers in Dropship Daemon are not middlemen

You are.

Remember, your customer doesn’t know that the product they purchased from you really comes from a dropshipper.

You are their point of contact, so if there is a problem, your customer will come back to you for resolution.

That’s why it is important to make sure that the dropshipper you use has a policy for resolving problems quickly.

Most dropshippers have websites where you can view the number of items they have in stock at any given time. Those that don’t have telephone hotlines you can call to check inventory. If a company does not have a mechanism in place that allows you to check inventory, don’t do business with that company.

Before you place an item for sale you should make sure that the dropshipper has a good supply on hand. If they have several hundred of an item you shouldn’t have to worry, but if they only show a dozen or so, you should either pick another product to sell or wait until their stock is replenished.

A back order occurs when you mistakenly sell an item that is out of stock. The dropshipper must order more inventory from the manufacturer before it will be able to fill the order for the item you have sold. This rarely makes for a happy customer. The best way to handle back orders is to avoid them. Make sure an item is in good supply before you ever place a sale on eBay to sell the item.

If you do run into a back order situation, handle the problem quickly and professionally.

Contact your customer and tell him that the item has proved to be so popular that it sold out faster than you expected. Offer to back order the item, replace it with a similar item, or refund their money immediately.

Do not try to wiggle your way out of a refund if the customer asks for one. You are the seller and it is up to you to make things right. Do so quickly, politely and professionally.

Keep in mind that your eBay feedback rating might be negatively affected if you don’t take care of the situation as quickly as possible.

Inevitably you will have a customer who wants to return a product for one reason or another. This is why it’s so important that you know the return policy of the dropshipper before attempting to sell an item.

Most dropshippers have a return policy that allows the customer to return an undamaged item within a certain amount of time. There is usually a restocking fee involved, but the customer does get back most of the purchase price. Also remember that your customer will come back to you for the return, not the dropshipper. As with back orders you should be proactive and respond immediately to your customer’s request.

It may be that the dropshipper will not accept the return. It then becomes your decision as to how to handle it. If the customer has a valid reason to return the item, work out the return with them on your own. If the product is in good condition you can just sell it again.

If the customer has used the product and wants to return it in an un-sellable condition, you should refuse the return or negotiate a reduced refund amount.

That depends on a number of factors, including your budget, the amount of space you have to store inventory, and the amount of time you want to devote to your business.

The advantages of buying merchandise from a wholesaler are:

  • You will find a wider range of products and get lower prices. Most dropshippers get their goods from the same wholesalers you can do business with.
  • It is easier to develop a relationship with a wholesale company since most will assign a sales rep to your account.

The disadvantages of buying merchandise from a wholesaler are:

  • Most require a business license and tax ID.
  • Most will not dropship for you. All purchases are shipped to you.
  • Most will not sell you one item at a time. You will be required to purchase by the case, the pallet, or even the truckload.
  • Most have minimum purchase requirements, i.e. a minimum order of $200 or 12 cases, etc.
  • If you buy in bulk you will need a place to store your inventory
  • You must handle shipping yourself.

While it appears that there are more disadvantages than advantages to doing business directly with a wholesaler, the opposite is actually true.

The fact that you can get a better selection and lower prices far outweighs the disadvantages, but again, this decision should be based on your particular situation.

Many sellers are building good, profitable businesses without ever signing on directly with a wholesaler. You can, too.

Dropshipping is a method of selling and distributing goods wherein the distributor or supplier of the product (the dropshipper) sends the product directly to the end user (your customer) on the retailer’s behalf (that’s you).

The process of dropshipping is relatively simple. It involves three parties who take a product from manufacturing to market.

Let’s use a blue widget as a sample product to demonstrate the process:

  • The blue widget manufacturer: This is the company that manufactures the blue widgets.  This widget manufacturer does not sell directly to the public or supply the retailers who ultimately sell the blue widgets to the end user.  They prefer to use distributors to handle the task of taking their blue widgets to market.  The manufacturer sells blue widgets by the truckload to distributors and charges $5 per blue widget.
  • The blue widget distributor (dropshipper): This is the company that purchases blue widgets in bulk from the manufacturer and supplies them to resellers and retailers at a cost of $7 each. The distributor does not ship blue widgets to the retailer, but fills orders on the retailer’s behalf as the retailer sells the widgets to its customers.
  • The blue widget retailer: This is the company that sells blue widgets to the public.  In this example YOU are the blue widget retailer.  The retailer orders the blue widgets from the distributor as they are sold (usually one at a time) and has the distributor ship the blue widget directly to its customer.  The retailer sells blue widgets to the public for $10 each, which means that for every blue widget sold the retailer nets $3.

Note: It is not unusual for the manufacturer and distributor to be one and the same.

also read , advantages of dropshipping

For a comprehensive list of dropshippers with more than 100,000 products  ,  visit the dropshippers list

Tons of Wholesale Dropshippers ,Just verified Dropshipping Wholesalers just @ DropshipDaemon.com