by Lucy May

Created on: April 29, 2009

Dropshipping has existed between retailers and wholesalers for many years; now with the internet it has become the ideal opportunity for private sellers to operate an online business from their home.

In principle the drop ship method is a perfect solution to online selling. The only requirement is the use of a computer, no stock to store, no packaging materials, no time and effort needed in mailing out bulky items. By using websites or auction sites, the seller takes an order and payment from the customer. The seller then contacts his dropshipping associate who in turn ships the ordered merchandise to the buyer and charges the seller the wholesale price.

Financially for the seller this is a very low risk way of creating an income, the buyer pays the seller upfront and the dropshipping company bills the seller's credit card direct. Offer a competitive price for the merchandise and the profits gained can produce quite a lucrative business.

There are many online sellers who have chosen not to run their own websites and sell through the auction sites like eBay. The items are listed but there are no rules with eBay that states the sellers must declare they do not hold the stock. Very often the dropshipper will agree to ship out the merchandise "blind" that is when the order is sent with no return address or details inside the package. The buyer usually has no idea a dropshipper has been involved.

There are however one or two problems that can arise when using dropshippers. If you take an order and a payment from your buyer and then discover that the goods are in fact sold out, it can harm your reputation as an online seller. But when you are listing on eBay and fail to deliver, this can hurt your feedback rating and feedback is the life and blood of every eBay seller.

Returns from buyers can also prove to be a further problem; most dropshipping companies do not accept returns. Good business practice suggests you offer your buyer a refund and hopefully you can re-list the goods on eBay.

There are thousands of successful online sellers operating with respectable dropshipping companies, unfortunately in this time of internet scams there are some fraudsters out there waiting to take your money. If you are just starting in this line of business it is advisable to check out the companies you are interested in. Find out how long the dropshippers have been in business and if they offer any testimonials, check them out by contacting the writers. You can always check a company's reputation with the Better Business Bureau.

To sum up, if you join one of the top dropshipping companies, keep in close contact with them; try to discover which items may be low on stock. Ensure they always ship out promptly and work hard at pleasing your buyers; this is an online business that can produce excellent results for minimal work.

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