Drop shipping is one of the most effective ways for a business to start up. Drop shipping allows you to advertise and sell products without having to purchase products ahead of time or keep stock on hand. With drop shipping, you take orders first, then place the orders with your drop shipper and have those products delivered to your customers with your company's name and address, as if the products come directly from your company. If you want to start an Internet business on a shoestring budget, drop shipping can be a most effective method.
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Register your business with the Internal Revenue Service to get a tax ID number (see Resources). You'll need this to set up a business arrangement with most legitimate drop shippers. These companies are typically wholesalers as well, allowing you to purchase product at wholesale prices and have them drop shipped to your customers as needed.
Locate drop shippers that carry your products. Numerous resources that list drop-ship companies by product are available (see Resources). Many drop-ship companies import goods from around the world and carry a variety of products. Take advantage of more than one drop-ship company to acquire the products you need. There is usually no cost to use a drop-ship company except for the wholesale cost of the product and the cost of shipping to your customers. Your profit comes from the retail price of the products you sell, less wholesale cost and shipping, so figure shipping costs into your sales.
Design your website to make it look as if the products you sell come directly from your warehouse. There is no need to let customers know you drop ship. Drop-ship companies specialise in sending products out with your company's name and address on the packages. The drop-ship company is simply your warehousing option.
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