How you can avoid the three M's of drop shipping

Copyright 2006 Brad Beiermann Ph.D.

When you are learning to do something new, it's common to make mistakes. Often our mistakes are the real lessons in life. We make mistakes because we simply do not have the past experience to know right from wrong. We can carry this same wisdom over to the world of drop shipping.

There are many Website owners trying to find authentic drop shipping companies for their online retail business. An authentic drop shipper is a supplier of wholesale products who will drop ship single item orders direct to your customers. Our business (www.hienotedirectory.com) is focused on researching and publishing information about authentic drop shippers for Internet based retailers. Our experience has taught us the do's and don't of identifying authentic drop shippers. Let's now cut to the chase. In finding an authentic drop shipper, it is important to avoid the three M's. What are the three M's of drop shipping?

(M)inimum orders (M)iddlemen (M)embership fees

We are going to examine each one of these to get a better understanding of their meanings, and how they impact you as an Internet retailer.

Quick Lessons For Success

Okay, let's see:

- You have your website running.

- You can accept payment from customers.

- You have good drop shippers to supply product…or, a least you are thinking you do. How do we know for certain?

As a quick check, we are going to validate the last bullet by seeing if we avoided the three M's of drop shipping.

1. Minimum Orders. An authentic drop shipper does not require you to buy minimum amounts of product to do business with them. An authentic drop shipper will drop ship in single item quantities to your customers. Sometimes, companies require minimum orders because they cannot absorb the cost structure of single item drop shipping. Drop shipping is generally more expensive to do for the supplier. To offset their costs and unload the products, they will require you to order product you do not need. As an online retailer, you will want to avoid this situation.

2. Middlemen. This is the classic, unnecessary, middle layer of distribution. Middlemen, as the name implies, are the people in between you and a drop shipper. When you place an order with them, they order product from the actual drop shipper. Take their slice of the profit and have the real drop shipper send the products to your customers. They can also steal your customers as they are getting all of the shipping and contact information from you. At that juncture, they can send whatever they want to your customers such as advertising with lower prices. These folks should be avoided whenever possible. They are taking your additional profits by giving you pricing often close to retail. In some situations, they can also lengthen the delivery time to your customers. Again, you do not want this to happen. You need to ask the correct questions in order to avoid these folks. Questions such as, 'Are you the manufacturer of the product?" Or, 'Do you stock inventory of the products you sell?" are good questions to ask. We even ask folks to arrange a time for us to come visit their warehouse.

3. Membership Fees. An authentic single item drop shipper will not require you to pay membership or processing fees. Should you be paying someone to sell their products? No! Beware, they could be a middleman. Avoid any membership fees or dues. An authentic drop shipper does not require membership fees to sell their merchandise. In some cases, we have found that these so-called drop shippers charge membership fees for products that might not be doing well in the market place. The supplier wants to make sure they make money by charging 'monthly fees" as they know you will probably be struggling to make money selling their products.

How you spot an authentic drop shipper.

Now that we have an awareness of the three M's to avoid, we can summarize some of the rules and validations for our drop shipper search. Our checklist of rules can begin to look something like the following:

They will drop ship single item orders without minimum requirements. They will not require you to pay any member fees or monthly fees. They will offer you true wholesale pricing so you can make a profit. They will not put any of their own promotional materials in with your customer's order.

Once a drop shipper can meet the above criteria there are other logistical items to consider such as the following:

They will put your company name on the shipping label. They will ship in a plain box without any of their company logos or information on the box.

They will include a plain invoice in with your order without any pricing.

There are other items to consider for an authentic drop shipper validation, but the above lists can get you going in the right direction. Remembering to avoid the three M's can prevent those costly mistakes in your online retail business.

Remember the last time you were learning to do something new and you made a mistake? It seems everyone has at least one of those memories. Some of us have many of them! So, wisdom has taught us the following:

Brad Beiermann Ph.D., is President of Hienote Inc. Dr. Beiermann is one of the leading experts in business technology and e-commerce. Hienote Inc. specializes in product sourcing, exhibition marketing, and assisting small businesses locate wholesale drop shipping companies. You can visit their site at http://www.hienotedirectory.com .

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