http://www.asktheauctionguy.com/ – One frequently asked question I get about selling on eBay is about dropshipping. Here are my eBay dropshipping tips and how to use it to build a real eBay business.

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By David Kamau

Picture this. You sell a product that you don’t ever have to store. You set your retail price and every time you sell, your wholesaler ships the product for you to your customer’s door in your name and you keep the profit. How is that possible?

It’s called drop shipping. Simply put, a drop shipper is a distributor that will ship products in single units directly to your customer in your name. The purpose of this article is not to convince you to start a drop shipping business but to give you pointers on how to start right and avoid common pitfalls.

The Beauty of Drop Shipping

One of the greatest challenges for people interested in starting a home business is where to find products to sell. If you don’t have thousands of dollars to invest in products and storage and want to avoid the hyper-competitive business of information products, or the dreaded multi-level business, drop shipping might be the answer.

The most obvious advantages of drop shipping include: you never have to deal with the headaches of warehousing, packaging and shipping, and you don’t tie down your limited financial resources in inventory.

Other advantages are: no leftovers, you can change or add products easily and instantly, and no limitations as to what you can sell. Plus, you get to use your customers’ money to run your business and “carry” brand-name products and look big. Is this cool or what?

The Dark Side of Drop Shipping

Beware. While drop shipping business may be simple, finding a true, reliable drop shipper is not. Scam companies lurk, ready to relieve you of your hard-earned money, or profit from your hard work.

For starters, some “drop shippers” are just middle-men who contact the real drop shipper when you place an order. They use you as their salesperson, so you use your money and time to find customers, and cut into your profit.

Others are fly-by-night operations. They will take your money and disappear. In short, scam.

Once I responded to an impressive full-page ad in a business magazine. The advertiser claimed to be drop shippers, and even promising help through support and business advice. To cut a long story short, the “drop shipper” rarely delivered my orders as promised and in many instances I had to re-order elsewhere and absorb the losses to avoid disappointing my customers.

Later I found out that the company was not the real drop shipper, when I discovered their source.

A few years ago, an eBay(TM) Powerseller (someone who sells a lot on eBay(TM)) was in the news. Having sold a number of high-ticket items at an online auction, he then paid a drop shipper to deliver them. Imagine his agony when the company suddenly closed down without delivering his orders, or refunding his money!

I once paid a $100 “dealer fee” to another “drop shipper”. I received a pretty catalogue, but which probably cost pennies a copy to mass-print. When I went back to order, the website had disappeared without trace. At least all I lost was the dealer fee. Others might not have been as “lucky”.

Back-ordering is another big concern in this type of business, especially with hot items. If you are selling a product quickly and easily chances are, someone also else is. Since it’s a hot item, you and others are ordering several at the same time. Soon the product runs out of stock and you have to wait for the next shipment. Meanwhile your customers are screaming for their orders.

Okay, But Can You Make Money with Drop Shipping?

Can you make money with drop shipping? Yes and no. What do I mean? Well, as with any business, drop shipping will only work if you work and apply age-old principles of service, common sense, knowledge and a dose of wisdom. It is not a magic pill to make your money problems disappear. Sorry if I just busted your bubble.

Some eBay(TM) Powersellers, Internet marketers, and top mail order companies operate on drop shipping and are selling like crazy and making six-figure incomes, even multi-millions. Drop shipping works, big-time.

It is simple (and I don’t mean easy). Find the right drop shipper(s). Decide what products to sell, find a way to let people know what you have to offer (examples; through eBay(TM), running ads, building a website etc.) and you could be on your way to an enviable lifestyle.

It does take some homework, and that word that gives most people the creeps: testing. But you must have right product supplier(s) to start with.

Finding a Good Drop Shipper

There’s a hard way and an easy way to find a good, reliable drop shipper.

The hard way is, do your own research. Attend trade exhibitions and/or call or write manufacturers and distributors, and negotiate drop shipping terms. Used to large-scale buyers, most will just not be interested.

You could also use search engines and/or trade publications. In both cases you may have to weed through the dozens or hundreds of companies one at a time. Fine, if you have the time (and patience).

The easy (and quicker way) has two options. First option: talk to a friend who does it and who is willing to tell you his/her secrets and possibly become a competitor.

The second option and one most favored is to find the research done and ready for you to use, for a nominal fee. Where to find this?

The answer is, a reputable drop shipper’s directory. Why?

Because, with a reputable drop shipper’s directory, you get a large database of verified, updated and tested drop shippers, all ready for you to use. Also, you get a wide selection of products to choose from, so you can pick a line of products to specialize in and avoid hyper-competitive ones.

What to Look For in a Drop Shipper

When shopping for a drop shipper, look for one who will ship small orders, especially if you’re just starting out as you will likely not have many orders.

Also important is the experience of the drop shipping company. One more reason for going with a reputable drop ship directory as they likely will have some history and user feedback about their listings.

Of course, you don’t want customers to know that you use drop shippers, or find out your source. Therefore the drop shipper must use your name and address on package labels as well as invoices.

Instant updates on inventory would be additional advantage as this helps avoid or lessen problems of back-ordering. Top-rated drop shippers will almost certainly have this benefit.

What to Avoid

Avoid drop shippers that require you to pay a monthly fee, unless they are a known franchise. Why should you pay a monthly fee to help sell their products unless they know that you’re unlikely to make sales?

Also, don’t accept offers for free websites or “turnkey business”. There are exceptions, but most free websites are nothing but electronic catalogues. Your website will look exactly like hundreds of others, and you can only sell products from that company.

And oh, steer clear of those cheap drop ship directories you’ll find all over the internet, in business opportunities magazines and online auctions. You will simply get a bunch of non-working phone numbers, broken or dead internet links and scam companies.

The company’s physical address should be clearly displayed (check the “contact us” or similar page) on their website. If it’s a PO Box, tread carefully. If no address, run!

Look for a working phone number. If they are as big as they claim to be they should be able to afford a business phone and someone to answer it. Call and insist on talking to a real person. Ask questions: they should be happy to answer questions from a prospect and if not, be very suspicious.

Avoid companies with an exclusivity clause in their terms as you can only sell that company’s products unless, of course, the company is a known franchise.

All costs must be disclosed before you commit. Watch out for companies that appear to have very low prices but sneak in exorbitant shipping and handling costs or “drop shipping charges”.

Setting Up Drop Shipping Accounts

Some distributors will require that you have a tax ID number in order to set up an account. Others (not all) may require that you pay a dealer fee or place cash deposit. These, mainly, are measures to ensure that you’re serious and not just another curiosity seeker or bargain hunter.

With stiffer competition, rules for setting up accounts are getting more relaxed.

Some distributors will mail you a wholesale catalogue and price a list. One company sends three price lists: one with lower than wholesale prices, so you can sell in wholesale, another with wholesale prices and a third with suggested retail prices. Others will send you a CD or let you access pictures and prices through their website once you sign up.

Conclusion: Drop shipping is a high-profit, low-cost business with unlimited potential, that can be run successfully from home. Drop shipping is one of greatest business innovations ever. With reliable drop shippers, your little home business is ready to sell brand-name products worldwide just like the big guys.

David Kamau offers work from home on the internet tips at his site.

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Hands-on look of the BlackBerry Torch 9800 recorded at the AT&T / BlackBerry launch event in NYC on August 3rd, 2010. The BlackBerry Torch 9800 features a vertical sliding form factor and debuts with BlackBerry 6, the newly updated operating system by RIM.

By Amanda O’Brien

Many individuals that would love to make a living online are put off because they do not know how to find a hot niche on eBay. Fortunately there are many methods that you can use to discover niches that other eBay users may not have considered. Do not ever assume that there is not room for you to make money on eBay, because in exploring some of the options detailed below you will soon find a new corner of the market in which to sell.

The power of eBay Pulse

eBay provides a free tool for sellers known as eBay Pulse. eBay Pulse shows the most searched for terms within every category on the auction website, helping you to know if prospective buyers are searching for what you have to offer. While this is a great resource, it is well known amongst the selling community so you may need to dig deeply to discover a niche in a hidden category.

The Yahoo Answer to the question

If you type a direct question into a search engine, do not be surprised if you receive a Yahoo Answer as one of the results. Yahoo Answers provides an opportunity for users to answer the pressing questions that other users have. Keeping an eye out to see the sort of questions that people are asking can help you to discover undiscovered niches, particularly when it comes to information products.

Amazons market domination

Amazon sells almost everything. And with the Amazon marketplace allowing people to post their own items, many buyers flock to its online shelves to discover their items. Why not take advantage of this and look at Amazons bestsellers within the category in which you are starting to sell. If an item will sell well on Amazon, it will sell well on eBay, making this an excellent way of learning how to find a hot niche on eBay.

43 Things to revolutionise your business

The 43 Things website provides the opportunity for users to express their dreams and desires, as well as discovering how many other people share that desire. You may discover many surprise niches by searching for popular topics on this website, as you start to think about how best you could provide the answer to the dreams of the masses.

From hobby to business

You might not think that others are interested in your own obscure hobbies and interests, but you might be surprised. What is more, if you choose to build your business around an interest you are more likely to be motivated to continue to pursue it when the going gets tough. People could be searching for those specialty items that you know the inside and outside of, so start putting that knowledge to good use!

Whatever method you choose to discover how to find a hot niche on eBay, you can be assured that there are many niches out there to discover. Take your time in discovering what works for you, and before long you will find yourself making major profits.

Amanda O’Brien is a successful eBay Powerseller and author of two eBay home study courses – ‘The #2,500 Per Week eBay Powersellers Secrets’ and ‘The Ultimate eBay Success System’. Want to learn more about starting an eBay business or simply want to improve your eBay sales? Claim your free eBay Selling Secrets Report at Powerseller Pod.

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By Carl Ringwall

Have you ever wanted to tap into the eCommerce revolution? Do you feel that you are too ‘small time’ to be successful? There are thousands of people making nice incomes by running their own web store or eCommerce site. They got started with very little upfront costs by using a drop ship program.

These programs are offered by any one of the thousands of large manufacturers and distributors that sell their products to small online retailers through a drop ship program. How do these programs work? It is very simple – you buy the product from the vendor at wholesale, and resell it to your customer at retail; but you don’t have to actually buy or stock the product in advance. Your vendor ships the product for you, with your name on the package. So you only have to buy an item when you actually sell it.

This is a great way for small retailers to get started – or for larger ones to test products before they commit to stocking them. A good drop ship program is your business partner- you will deal with them many times a week, so choose companies with good customer service. You can find a good dropshipper using one of the many drop ship listing services available online.

If you are looking to get started with an eCommerce site, check into drop shipping. You can have all the advantages of a larger retailer without all the expense and risk of keeping large inventories. You will also have the benefit of being able to respond to market trends quickly.

We reviewed 12 drop ship program directories, and found 3 we can recommend. Read more about our our review process.

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Thinking of creating an online store or ecommerce site? Watch this video to discover a few helpful tips.

If you have an ecommerce business utilising the drop shipping business model, then you must be aware of the benefits associated with it. They include not having to stock merchandise, having a low overhead and the ability to exit a business quickly to mention but a few.

Still, like any good business consultant or student will tell you, every business has its strengths and weaknesses. We sometimes tend to focus so much on the strengths and opportunities a business presents without paying attention to the weaknesses and threats related to it.

Failure to do this can lead to building your e-commerce business on a very shaky foundation.

As you plan to start your or grow your online retail store, consider the 5 points highlighted below. They should flash a warning signal in your mind to either walk away or arm yourself with more tools to master and conquer that particular niche.

5 Warning Signals to Consider before Starting Your E-commerce Business

1. Low Profit Margins

Unless you’re a Wal-Mart or TESCO (who can make a 5 cent profit on most items they sell and still announce multi-billion dollar profits at the end of the year), make sure that you’ll be getting a decent profit on every product you sell in your drop shipping business. If the margins are too low, then walk away.

2. Over-Saturated Market

Always do your research before jumping into any market. I have to be honest and tell you that some markets are way too saturated and competitive for a newbie with limited marketing funds to attack and dominate.

3. Few Suppliers

I always advise my clients to have at least 2 suppliers before starting their business or quickly look for another if they’ve already started. Life happens and you don’t want to be in a position where your sole supplier goes out of business.

4. No Passion for Your Products

Business can be a hard and lonely place. Your love for your products or customers you serve will keep you going on those lonely days. If you feel like you don’t have any interest or love for a business, walk away as it’ll show in your interaction with customers and suppliers.

5. Negative Market Research Statistics

Some people overlook their research findings. You do this at your detriment. You might have all the love and passion for a particular business but if your research tells you that the market is over-saturated, too competitive, requires a big marketing budget etc, then move to another market niche.

I have had successful businesses but I have to also admit that I have had some losers. Looking back, one of the reasons for some of my ‘loser ventures,’ was not properly analyzing the weaknesses in that business or niche.

Drop shipping is a wonderful business model but there is a lot you have to learn to be profitable and I’d like to know what other warning signals readers of this blog should look out for when starting their e-commerce business.

Thank you.

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