Drop Shipping is a business technique that is central to the business model of many successful eBay businesses. If you were to use a drop shipper then you would have an arrangement where you would act as a salesperson for a broker or preferably a wholesaler. You would be able to get “XYZ” product at a certain price. The idea would be to then turn around and sell “XYZ” on eBay or anywhere else at a price equal to your costs + a mark up for yourself.

Here is the great thing about drop shipping. You don’t need to have any inventory on hand. The theory is that the wholesaler / factory that you work with has an abundant supply that you could not exhaust, so you do not have to worry about running out. This is great because you don’t have to invest in or store any merchandise.

I know a lot of people who have tried to start businesses and been wiped out after they bough their initial inventory, and then were unable to move it. That is one of the great things about drop shippers; they allow you to test the waters of a particular niche without having to commit a large sum of money. The other great thing about drop shipping is that you don’t have do any SHIPPING! The wholesaler usually does it for you. You take in the payment from the customer and you take down his address, then you pay the wholesaler and give them the customers address and they ship it for you!!!

Here is one of the cons of drop shipping, usually factories want as many sales reps as possible so many times you will have competition. As we talked about in our last post perfect competition is bad for your business. This is where marketing comes in.

If you have your own customers and / or leads who you regularly communicate with then you can send them directly to your auctions. If your customers and leads trust you then chances are much higher that they will buy from you even if you are priced higher than your competition. This happens not only because they trust you but also because you can direct them strait to your auctions! This is much better for you than if they had searched eBay because had they done so there would be a much better chance of them seeing your competition in the search results page.

This is post just begins to touch on how marketing can help slay the perfect competition dragon. We will be continuing to analyze this topic in future posts.

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This entry was posted on Friday, March 9th, 2007 at 7:50 pm by Phil Weslow and is filed under eBay, E-Commerce, Online Business. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.