Today, I want to help you do things as they ought to be done, by helping you avoid drop shipping scams. They happen all too often and ruin so many dreams of starting an online business. So how can you tell the difference between a scam and a great opportunity?

I hate to sound cliche, but gut does have something to do with it. Does it sound too good to be true? Does the reward outweigh the risk involved?  If something is inexpensive, I always ask myself, “Now what does this business stand to gain by offering this so cheap?” If you can’t think of a good answer, be suspicious.

Get as much information as you can about the offer before diving in. Also, perform your proper due diligence beforehand. It’s amazing how much information you can find on the internet just by doing a few quick searches. My Dad always jokes that if you type in a product name and then “sucks,” you can find out any problems people have with a product. Of course there will always be at least one or two sour grapes that are angry. But if you find lists of complaints, don’t do business with that company period.

If you want to check if the company has a history of problems with the public, you can check them out with these three sources:
1.http://www.bbb.org/
2.http://www.complaintsboard.com
3.http://www.ripoffreport.com.

These sites are a quick way to avoid a scam.

As far as drop shipping is concerned,drop ship directories will charge a fee because you’re paying for their directory and customer service, freeing you of the stress and hassle of finding a supplier.

If a drop ship directory offers you its directory for free, I would be suspicious. Putting together a directory and customer service to back it up is a time consuming and an expensive process. Most legitimate companies don’t just give away such valuable information. So check out the costs. Are they unbelievably cheap or outrageously expensive? If so, be careful.

If the business is from overseas, you also have a higher risk of being scammed, especially if you’re a new seller. Consider keeping your first transactions within the united states. If you do decide to do business overseas, Matt Siltala recommends that you ” . . . call your merchant account company, or bank and ask them what are the proper steps to take in order to confirm an overseas payment.”

I hope that fear of being scammed won’t make you opt out on a great opportunity to sell online. Selling online can be so rewarding and quite profitable with a little hard work. Just remember to put your common sense to work and invest in what will help you succeed; not something that will waste your money. Let’s not let the scammers rob us of what could be a great opportunity.

For more information on recognizing scams check out these websites:

http://www.allbusiness.com/specialty-businesses/home-based-businesses/3875805-1.html
http://www.smallbusinessbrief.com/articles/products/004603.html
http://ezinearticles.com/?Drop-Shipping-Scams&id=530537
http://www.ripoffreport.com/Search/GoGo-Dropship.aspx (Customer protection Site)

For all you history buffs, drop shipping developed in the days of the Sear’s catalog and has been around for more than 50 years. Back then, customers looked up products and then ordered them through a Sear’s representative (a.k.a middle man) or from a brick and mortar store (a.k.a middle man). But let’s be honest, that sounds as long ago as when the dinosaurs roamed the earth.  Since then, the Internet was born and with it came a wave of drop shippers and opportunities for web based businesses and entrepreneurs to make money online from the comfort of their home.  So what are the advantages of using a drop shipper?

There are many advantages behind working directly with a drop shipper rather than working through a middle man who tends to mark up the product to pad his/her wallet. Here are some of the advantages:  get true wholesale pricing, limit start up risks by not being forced to buy the product before you sell it, avoid overhead costs such as packaging materials and space to warehouse the products (being that the drop shipper carries that burden), save yourself time from having to go to the post office each time a product needs to be mailed off, build/establish a business relationship directly with the supplier and remain more in control,

Wrong. A manufacturer typically does not want to have anything to do with any company that is not capable of purchasing from them in massive quantities. The reason for this is they are selling the product at a mark up over manufacturing cost, which is typically very far beneath its eventual retail cost. To make it worth their effort, they need to sell in large quantities… sometimes numbering in the hundreds of thousands of units at once! Most up and coming stores, be it brick and mortar or online, simply cannot do that. What are they to do?

The solution that was reached is that another company will come forward and purchase the inventory from the manufacturer, and resell it to us in smaller quantities. This company, the distributor, typically has capital, but is not interested in marketing or advertising. They are more than happy to resell the item in a smaller quantity, allowing us a foothold in the industry. It is through these distributors that the concept of dropshipping came into being.

However, how does this all relate to our initial question of the necessity of these identification numbers? The answer is simple; there is a barrier of entry necessary for these distributors to ensure that they are dealing with actual members of the trade. Most manufacturers do not want their product hitting the market at just above-cost. They don’t want individuals purchasing their items at next to nothing, as many manufacturers have lucrative arrangements with departments stores and the like to sell their product. If everyone was going to be able to sell for a fraction of the store cost online, why would anyone ever go to the store?

This is a very bad scenario for the manufacturer, regardless of how nice it might be for us as consumers, and to combat this many manufacturers require any distributor that they work with to verify that anyone whom they resell their product to is a licensed member of the trade… hence the necessity for us as prospective resellers to have this documentation.

With this hard restriction on most suppliers, it is very important that we do go through the tasks of establishing our identification numbers, federal or state, so that when we do get to the point where we have a supplier we want to work with, we’re not stuck in a rut, entirely unable to move forward because our supplier is requiring legal documentation that we just don’t have. We may try to fight this step, but in the end, if we want to move forward with our business, we’re going to have to get legal, or get out.

Christmas and Black Friday are the poster children of this phenomenon, but they are not the only holiday offenders out there. Even ignoring the big ones, like Halloween, or Easter, we’ll still need to become very aware of what times are of significance to our specific demographic. If we’re selling paintball guns, is there a paintball super event that we need to be aware of? Is there a season when demand for our products is going to be off the charts? These may seem like very simple questions to ask, but many forget about them until it’s too late.

The significance to these questions is because they will have a very real and very potent effect on our suppliers’ ability to meet our orders. If we know that there is going to be a massive movement in our industry during a certain time of year, we want to plan ahead well in advance. Let our customers know there may be delays in processing their orders, make sure our suppliers’ inventory levels are high. The last thing we want to do is have a major event roll in, and have us caught entirely unawares.

Holidays or special events are always an excuse for a buyer to be a little spend-happy, and that’s a great force for us to work with to our advantage. However, we need to keep on top of our suppliers, and make sure they have the inventory and the ability to keep pace with the demand, because in the holiday frenzy, if anything goes wrong, its going to become a giant headache for everyone involved, but by keeping the lines of communication open, and the remaining inventory watched diligently, we can avoid a lot of the normal holiday frustration, and make it a happy one instead!

For more information, please visit GoGo Dropship.

However, if we are set on using that supplier and trying to secure that product, there are a few things that we can do to try and protect ourselves. The first main contender we have with effectively working with a Chinese supplier is getting past the logistic issue of shipping. There is the very real problem that we have to get a product halfway around the world. Our customers are going to be very impatient, and many will balk at having to pay more to wait longer. Our best recourse is to try and communicate with the supplier as to what their average shipping time and shipping costs are. They will typically be upfront about it, and it will serve a dual purpose in allowing us to see whether or not we can even speak with the supplier easily or not.

The second resource we can utilize in the great “authenticity wars” is a website called http://whatsitworthtoyou.com. This website is intended to allow us to research products and find out whether or not they are going to be legitimate or not. This is not a free resource, but for a price they will be able to help determine the authenticity of a product, which will allow you to know whether or not you can confidently and ethically sell the item on your site. Without handling the item itself, they cannot definitively and empirically make a statement on its authenticity, but we can very quickly and efficiently determine using this service if our source is legitimate. However, with a form from this site to verify that the site or product is, indeed, something that is not entirely questionable, it will allow us to list on eBay and our own site with much more confidence. It is not a bullet-proof vest to protect from any problem at all, but it is a great way to list without fear that your item is a clear counterfeit.

Our biggest concerns with Chinese suppliers will always be present; we can never be 100% sure that an item is not a counterfeit, that the shipping cost and time will not grow unreasonable, or that we’ll even be able to reach the supplier if there is a problem, but if we are very careful, it is not an impossible hope to be able to utilize Chinese suppliers. However, to quote an old food adage, “When in doubt, throw it out”: if we have good reason to think that our supplier is not legit, we are almost always going to be safer abandoning the product idea, and moving somewhere else.

To learn more about dropshipping and how it works, please visit GoGo Dropship.

When sourcing from Chinese suppliers, there are a few things that we need to be aware of. First and foremost, the copyright laws that we’re accustomed to in the United States do not apply to Chinese suppliers. They can market an in-house product as a name brand if they so desire, and there is nothing by their laws that has them at fault. This is what is called the “Grey Market”. It is not necessarily illegal in China, for instance, to market a non-name brand as a name brand, or to replicate an item exactly. However, we are still bound by the laws of our land, so if we’re unknowingly marketing the Chinese iPad as an iPod, it is we who will be in trouble for it. We will be flooded with returns almost immediately from our dropship website, but if we’re trying to source these counterfeit items on eBay, then we’re going to quickly find our accounts banned for it.

A second issue we run into is that the product that we’re purchasing may be coming from black market sources. Black market sales are strictly speaking illegal, and as such it will exist as an ephemeral thing. Since we are not receiving from our supplier a consistent source, when their stock is gone, it is gone, and even if we’ve placed the order, we have no assurance we’ll ever receive the order, or see the money again once its been sent.

Now, taking a huge leap of faith, if we find that the items we are receiving from our Chinese-based supplier are the real deal, we now have the logistic problem of getting it halfway across the world in a reasonable amount of time… and while still being able to maintain a profit. In recent years, tracking technology has made leaps and bounds when it comes to international orders, and we’re going to need to take full advantage of that. We will want to know where our item is exactly… because its going to be spending a fair span of time getting from the supplier to the customer. The shipping cost to allow for a more reasonable amount of time will typically be much higher than a buyer is willing to pay, and the increased cost of having to go overseas is going to eat into our profit.

The biggest thing to remember when sourcing from Chinese suppliers is that these problems lie directly on our shoulders; any instances that come up are our responsibility. eBay does not accept “I thought it was legitimate” as an acceptable excuse if we try and source counterfeit products from a Chinese supplier, and our buyers on our website also tend to be less than forgiving when their $300 iPad arrives at their door. It is our responsibility to ensure that our supplier is legitimate, but how will we do this?

One of the most important things that we have to realize about life on the internet is that if you don’t diligently keep track of things, you’ll never be able to know how well you’re truly doing, and what you can do to improve your dropship website.

On a typical day, we are going to get people coming to our site.  Maybe we put out ads, and they responded and came thusly. 
Perhaps they just looked up a keyword in Google, and lo and behold our little dropship site appeared.  Many people think that so long as people are coming to our site, it doesn’t quite matter where; that would be wrong!

It is very important for us to know where our traffic is coming from, as well as what they are doing when they get here.  Are the ones come from ads staying to shop, or do they just arrive and leave in a matter of moments?  On the contrary, do the ones who arrive from the search engines typically stay longer, and go forward with purchases?  This is extremely important information, because it should be our goal to make our dropship site as efficient as possible, and we cannot do that if we do not know what our visitors are actually doing!

One of the most powerful tools to utilize in this regard is called Google Analytics.  It is a program designed to track all of that information; where are our visitors coming from?  How long are they staying?  Are they leaving and then coming back?  What pages do they go to before leaving?

All of this information is worth its weight in gold!  If, for instance, everyone is leaving when they get to our product pages, perhaps our dropship site is a bit on the expensive side.  It would be worth it, then to see if we can change things up a little bit to become more competitive.  Are they making it to the homepage, and then leaving?  Perhaps we can put more enticing offers for the visitor to stay and look around, be it with a sale, or changing the images that we have.

As you can imagine, there are tons of little instances just like those that we need to be aware of, because as the old adage says, “He who is resistant to change is destined to perish,” and never has this been more true than with our dropship site!

It is a fair question; if big department stores can carry almost any conceivable product, why is it that anyone bothers to work online in the first place?  If we want to dropship, are we just doomed right from the start?

The answer, fortunately, is a resounding “NO!”.  What many people fail to realize is that the size of a department store is a great strength, but it is also a great weakness.  Your friendly neighborhood stores have to purchase each and every last individual item that they wish to sell to their customers.  Every decision is made off of painstaking research into what items have the broadest appeal, and bulk purchases are made accordingly.  As part of this model, there is not a lot of room for experimentation or error.  This isn’t the case with a dropshipping site.

With the freedom that the internet has afforded us as consumers, that model is becoming more and more antiquated.  Where it was once acceptable to simply purchase whatever was available at the store, as you had no real choice but a lengthy mail order process, if even that, we can now go online and look for our product, and see if anyone is selling anything a bit more tailored to our own preferences, not wherever the average consumer interest lies!

This affords us a great opportunity as dropship websites to hit these markets, at very little cost to ourselves.  We are not carrying any inventory, so any item that we place in our store from a supplier is simply an option on the table for our customers.  If the item sells poorly, we are not out any initial investment, or anything like that, we simply know that it is not popular, and we can replace it if we’d like to, but we’re under no obligation to do so. 

We are not losing any inventory space by having that item available, and in fact we are making ourselves more appealing to customers, who see the variety of items that we have to offer, rather then being shoehorned into purchasing whatever is most generically desirable.

We have to remember that working at the dropship level, we have the freedom to have a much more varied and interesting product line, and this freedom is something that the big stores cannot emulate.  Our inventory can be as vast and varied as we’d like, and at no cost to us, it is they who are unable to compete, not us!

The reason for this is that the wholesale price is generally based off of the amount of product you are willing to purchase at one time.  At the dropship level, for instance, you are receiving a wholesale price, but your price point is going to be lower, because you are ordering a single item at a time.  If one of your competitors approaches the supplier, and asks if they can get a better price if they purchase ten items at once, for instance, most suppliers are willing to do so.

The strength of having a dropship site is that we are not having to carry any inventory, or do any of the shipping ourselves, but that of course comes with downsides.  Our profit margins can be solid, but if we are trying to compete price per price against a competitor, it is he who orders the most at once who will be able to negotiate the lower price.  Purchasing at wholesale is the natural evolution of our business, which is why it is important to realize that there is not any singular wholesale price, but it is instead a fluid concept, that we can use to our advantage as our business grows!
 

Why Drop ship?

Drop shipping is a great idea for the small businessman who just wants to make a buck on the side. However, unless you have an incredible niche, I wouldn’t suggest quiting your day job to become a drop shipping tycoon. I would suggest drop shipping for anyone who would like to earn a little more spending money.

Drop shipping is also a great idea for the individual who doesn’t want to deal with the hassle of storing inventory on hand at their home or paying to have it stored in a warehouse. With drop shipping, you don’t have to store anything; the supplier will simply send the product to your customer. You could even request blind drop shipping if they do it. Blind drop shipping is when they send out the product but they put your information down as the return address.

There is very low liability with drop shipping. Really, the main thing you need to worry about is following up using good customer service. For example, let’s say you have a contract with a supplier who drop ships banana chairs. This drop shipper sends the banana chair but the customer doesn’t ever receive it. It’s your responsibility, as a reputable company, to make sure that the customer gets their product. Follow up with them. Following up will hopefully increase customer retention.

Why Use a Drop Ship Directory?

Many believe that finding a drop shipper is a piece of cake. Well, they probably haven’t ever had to find a drop shipper. Sometimes it’s a nice idea to recruit some help when starting up your drop shipping business. Having someone find a drop shipper for you can actually speed up the amount of time it takes to get your business running by quite a bit. In fact, some of them even offer instruction on how to continue with your business and what steps to take to have a chance at being successful.

All in all, if you’re looking for a way to get a little extra money, and you like the idea of earning it from the comfort of your own home while you do other things, then drop shipping is right for you.