A Guide to Drop Shipping In E-Commerce Market Place

Narendra Kumar

18 Dec, 2020

With the ongoing frenzy in e-commerce^[1] marketplace, Dropshipping is an ultimate guide to merchants, traders & retailers who are willing to sell the goods worldwide & establish a brand for them. Read the full story on Drop Shipping In E-Commerce Market Place

Due to its low cost & simplistic approach to setting up a business model in the worldwide arena, it is highly being used by many budding merchants. It has revolutionized the traditional retails & wholesaler concept.

Meaning:

It means you need to list items for e-commerce from a wholesale distributor based on the products they have in their warehouse. So in this case, if an order is placed with you, instead of getting that product from warehouse to your shelf, the wholesaler ships the shipment directly with your details on the package to the ultimate consumer.

Here, the wholesaler acts like your own warehouse. You have to partner or execute a Supplier’s Agreement with a Wholesaler & list the merchandise for sale. The customer is not aware of the fact that is being supplied from the wholesaler’s source.

E.g.: If you have purchased any product from e-commerce sites like Amazon, you don’t know but that particular product can be drop shipped as well. Many more drop-ship items can be even sold on shopping cart platforms for websites like Shopify, Big e-commerce, 3D Cart, Volusion, etc.

Many online merchants use a combination of both marketplaces sales & sales from their own e-commerce websites.

What Needs to be Done?

If you are setting up a Dropshipping business in the US then following things need to be kept in mind:

• Get an Employer Identification Number from the Internal Revenue Service or request a Sales Tax ID & Resellers Certificate.
• Look for a trusted & certified Wholesale dropship supplier & initiation of reseller account with them (Inventory Source helps you find a supplier who is approved)
• Documentation & Execution of agreements to be provided to the supplier for KYC & other authenticity requirements^[2].
• Creation of a Seller Account on Amazon, eBay or else inception of your own website for listing the items

Order Submission:

Order submission of any particular e-commerce sites can be done via any method suitable for the retailer i.e. Phone, Email, and Fax but needless to say, a proper record should be generated and sent forthwith with the same. XML Feeds or CSV File process can also be executed for bulk orders.

After you put forth the order, the order has been registered. Now the Supplier will ship the product before the cutoff date. The order is confirmed along with a delivery slip which shows Tracking Code for that particular consignment.

How to Charge: 

The customers have to be charged shipping from e-commerce which will bear the cost of Suppliers. The payment can be arranged through Credit/Debit VISA or MasterCard.

However, shipping drop ship consignments internationally can get expensive & complex due to a multiplicity of documentation, factoring, customs & duties involved. It is highly recommended in such cases to find a supplier in that particular country & focus on sales to customers directly over there.

Also, a well-drafted return & payment policies should also be mentioned on the website of the retailer which should coherently match with the supplier’s policies.

How Does It Work?

Best Drop Shipping Companies of the World:

1. Salehoo
2. Alibaba
3. Wholesale Central
4. Inventory source
5. Doba

In 2009, it was stated that 31% of Amazon’s sales came from marketplace sellers – which is basically a large drop-ship operation.  However, most major retailers also “blind drop ship” orders, so no trace of the seller/manufacturers is shown.

Henceforth this particular concept has been gaining momentum, largely due to upscale digital marketing & global synergy.