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Welcome to the wonderful world of online selling. You may have heard that fortunes are being made by people who are working out of their basements with only a computer, a fax, and a telephone. This is sometimes true. There are, however, also very large companies who are conducting complex business operations and who are also making a reasonable profit. Both ends of that spectrum often use the services of a dropshipper.

Wholesaler Dropshippers who work with internet vendors often carry impressive product lines that can contain almost any product you can think of. One online dropshipping company advertises a product line of over 50,000 items separated into virtual warehouses based on type, cost, etc. In order to gain access to these warehouses, a vendor must pay a very small monthly or annual fee to this wholesaler. The wholesaler, however, will sell his products to the vendor at wholesale rates.

It’s a simple fact that inventory in any sales venture can be a huge investment. Not only does the vendor have to deal with tying up his capital to purchase the inventory, he also must pay for warehouse space and insurance for whatever he is storing. By using the services of a wholesale dropshipping company, the vendor can avoid all of those costs. At the same time, the vendor can enjoy the advantages of having an entire inventory, packing, and shipping mechanism at the other end of a fax.

The dropship process is fairly simple. It has been around for a long time and has been used for decades by major retailers. You may have even purchased an item from a catalog. When the item was sent to you, it may or may not have come directly from the retailer whose name was on the box. Unlike a regular shipment from a wholesale warehouse, a dropshipment is a shipment of specific goods shipped directly to a single customer who ordered and paid for them in advance. Dropshipping is a huge benefit to the vendor who never actually purchases the items until he has already been paid for them.

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

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