Drop Ship or not ship?

I got so many great comments and emails on last weeks post on how to maximize 4th Q and questions galore about drop shipping and what it means and how it works…….so you ask, and I answer!

So what is Drop Shipping?

This is usually when a website displays your product for sale, but does not buy and stock it in advance.  They sell it "like" they have it in stock, but in reality, they send you the order and have you ship it.   What is so great about drop shipping? I like that other people are marketing and promoting your brand while you are doing other things that require your attention. Be sure you have done your due diligence in reference to the merchant – be sure you like their website, feel it is the right place for your product line to be sold, and I'd be sure to check out their marketing techniques and be sure you are satisfied with their business practices before you sign on the dotted line.

This relationship can work out nicely if you up the charges a bit. What I am saying,is that instead of offering them the items at wholesale plus shipping (follow your shipping standards) you add on 25% of the wholesale price as a handling fee to cover your costs of shipping out one item at wholesale. 

For example: Let's say your item's wholesale price is $10 x 2.5 = $25 retail.   You would require them to pay $12.50 wholesale ($10+25% of wholesale + shipping) as the “fee” for doing drop shipping.  The website retailer will usually email you an invoice to put in the box.

I advise you to have the merchants credit card on file (see sample of drop shipping guidelines from my company) and charge their credit card for the item + shipping, before you ship directly to the customer.  If you use a fulfillment house this 25% extra usually covers the fees involved so it doesn’t eat into your margins.  If you are shipping yourself then you just made extra money!  Go out and celebrate!

Download Drop shipping guidelines from my company Simply Sarah

Download sample credit card authorization form from Simply Sarah

There are tons of websites that do drop ship programs……even Saks.com does a HUGE drop ship program!

Written by Sarah Shaw

There are 10 comments

Linda Edwards says:

November 17, 2010 at 10:28 am

Thank You for this article! While setting up my E-boutique I have found this option very useful. Drop Shipping has allowed me to bring a wider selection to my customers, that may not have been possible if I had to carry a full inventory.

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jenny present says:

November 17, 2010 at 10:35 am

You always have great information! Thank you!

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Jeanne Koesters says:

November 17, 2010 at 10:46 am

Excellent article Sarah. Short, to the point, and absolutely demystifies the whole process. Thank you!

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the Down to Earth doctor says:

November 17, 2010 at 11:01 am

Great article! You simplified it very well. I drop ship with that small mark-up for those who market my book on their site and it works well for everybody. And I’m always looking for more affiliates by the way!

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dash says:

November 17, 2010 at 11:04 am

Great info on the mark-up math, many thanks

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Kris Wittenberg says:

November 17, 2010 at 11:15 am

Thank you for giving us “Drop Shipping for Dummies” Sarah! We have been approached by several drop ship web sites and I honestly have not “gotten” it. This helps explain the process and some pros and cons. Appreciate the info and may look at this for 2011.
You rock!!!

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Heather says:

November 17, 2010 at 1:05 pm

Wonderful information! Thanks for putting it out there and for making it easy to understand!

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Trish Cooper says:

November 18, 2010 at 10:05 am

Another great article & thanks for providing the sample forms, Sarah

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alissa says:

November 18, 2010 at 12:32 pm

This is great advice! It does take time to fill the order and since most of the time it is only 1 item being shipped, this formula makes total sense. We have to keep in mind that the internet retailer does not need to stock the item, therefore costing him “nothing”, as well as not having to actually pay to stock the item the way a brick and mortar store does.

My question is, should we tell our drop-ship-only customers that this will be a new policy effective on such and such a date, or just institute the policy?

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Eve Leitch says:

December 11, 2010 at 5:47 am

That is exactly what I was looking for! I have got an offer from one nice web site asking for my terms and conditions for drop shipping, and was totally puzzled… Will try it definitely! Thank you!

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