10 Tips to Improve Your Drop Shipping Business

by WorkFromHome on April 8, 2011

Starting a drop shipping venture often proves lucrative for many business owners who understand and maintain a solid relationship with their suppliers. This work at home business depends greatly on establishing a good relationship with reliable distribution and shipping centres. Because profits result from the difference between the wholesale and retail price, it becomes imperative to select wholesalers that offer a low and consistent price. Following these 10 tips will improve your drop shipping business and lead to increased sales.

  1. Check all wholesale sources carefully before using them for your business. If a “middleman” is involved, the profit margins may be low to negative and result in an actual financial loss. Always verify the source before working with them and perform a trial run before submitting a new customer order.
  2. Be prepared to work with several suppliers. It’s a good idea to research and approve various wholesalers ahead of time so that all of your customer orders can be met right away. Make a comparison list that describes the specific products available from each supplier and keep it readily available for quick access when orders are received.
  3. Check all the facts first. Not all wholesale suppliers offer the same terms so be aware of any conditions such as fees or minimum orders.
  4. Be explicit about your company policies. Always state the terms and conditions of the sale, shipping dates, exact pricing and taxes for each transaction. Developing a good customer relationship will lead to future sales.
  5. Establish valid shipping timetables that allow a reasonable completion date. Every customer needs to have an accurate idea of when to expect their merchandise. Review any suppliers that do not follow consistent shipping dates or are unable to release standard items within a two-day time period.
  6. Stay aware of inventory levels and be cautious about back orders from a wholesaler. Customers want factual answers about the shipping date and need to be informed if the wait is longer than expected. Be sure to communicate any expected delays immediately. There may be opportunities to find the merchandise elsewhere unless the goods are non-standard items.
  7. Consider adding custom items to the list of available products. By supplying a custom order, the small business owner gains an advantage in being the sole provider for a particular product. This practice works well within the drop shipping industry.
  8. Keep track of pricing for individual items. It is normal for prices to fluctuate periodically and some items may become less available and more expensive. Being aware of economic trends and how they relate to your products for sale will help ensure consistent financial planning.
  9. Act quickly to resolve any issues over damaged goods or incorrect shipments. A valid business goal for any organization is to try and attract repeat customers. A drop shipping business that does not follow up on customer issues could lose potential orders in the future.
  10. Establish a business growth plan. A good approach is to start with a few orders and gradually build your wholesale suppliers and customer base. Moving too quickly sometimes leads to errors and misunderstandings.

Dozens of business owners have advanced their drop shipping sales and earned significant income. They key to success relies on maintaining a stable and reliable relationship with both wholesalers and customers.

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