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Here is a detailed view of the process of drop shipping. While different vendors and retailers will have different ways of doing things, this process is a good general procession. Just remember that it will differ slightly here and there.
BEFORE THE SALE
We are going to assume that you already have an online store set up and ready to take orders. Store set up is a whole different issue that applies regardless if you drop ship or not. So we are going to skip that for now. We are also going to assume that you already have a vendor picked out. Finding drop ship vendors is a whole other issue, read more about that here.
The first step is to contact the vendor and set up an account. The vendor will most likely need some basic information including your SSN or EIN. If they don’t need one of these things, it should be a red flag as to why. Most will have a form for you to fill out or an email with all of the information they need. You’ll also need to set up payment terms. You may be able to get terms if your business has a credit history, and you provide it, or you may just pay by credit card.
The vendor should set you up with an account and then send you all the information to buy from them. This should include, but not limited to: rules, fees, price lists, directions to obtain product images, and a listing of their items that are available for drop ship.
From there it is your responsibility to get the items up on your site. Depending on the items and the information you are given, this could be a quick process, or a long time-consuming one. Be sure the time involved is worth the expected payout. Make sure everything is set in order to be ready to take orders.
THE SALE
A customer finds your site, likes your items and places an order. You will receive your order through your store’s back end system and collect payment. Be sure you are collecting your full “retail” price as well as shipping and tax if necessary. At what point you should actually collect is discussed here.
You then in turn place the same order with your drop ship vendor. Providing the customer’s shipping address and information.
AFTER THE SALE
The drop ship vendor will prepare your order and ship directly to your customer. Be sure to have clear expectations with your vendor as to how long this should take.
At the time of shipment, the vendor should charge you the wholesale price, plus shipping and drop ship fee, if any. The difference between this bill and the amount you collected from your customer is your gross profit. The supplier should provide you with a shipping confirmation number of the package.
The ball is now back in your court as you will notify the customer that the order has shipped in turn provide them the tracking number, so they can track the order themselves.
Finally, you pay the wholesale bill from your vendor.
CONCLUSION
Again, let me stress that this is a VERY simplified version of the drop ship process. There are lots of variables here as well as tons of things that can happen to throw things off. In a perfect world, the process would work like this every time, and it will often. Just always be ready for the unexpected. That’s what makes e-commerce fun!
This blog is unique. There is nothing for you to buy, no sign up fees, and no hidden pages. Just good honest information about starting and running a drop ship business. I'm a veteran drop shipper and blogger here to share my thoughts. Let me know if there is a topic you'd like covered.
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October 28th, 2007 at 1:40 am
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February 13th, 2008 at 8:57 pm
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March 27th, 2008 at 4:09 am
I wish the drop shipping could be that easy.