Article by Bridgette Barrett

Whilst most of our shopping is still done in person, more and more people are turning to the internet as a way of making purchases without having to leave the comfort of their sofas. This has led to an increase in people earning a living by selling on the internet. On Ebay alone it is estimated that 75,000 people make a full-time living by buying and selling on the site. Nearly 4% of all purchases are now made online - an increase of 12% over the last year. One specific way to make a living on the internet is through ‘drop shipping’.

Drop shipping is a method of product delivery. It is also known as ‘direct dispatch’. The concept is very simple, and is increasingly being use by smaller companies such as Stardust Kids, as well as the dedicated dropshipping sites like Dropshipland, Doba and UK Dropship Group.

Dropshippers hold large quantities of stock which they list on their site. Once you have paid to register with a drop shipper, you can then list their products on your own website or Ebay. Customers buy the product, making their payment for the product and shipping to you. Once you have the payment, you then order the product from the drop shipper at wholesale price, and it is delivered to the customer directly. The difference between the retail price and the wholesale price is your profit. This is known as the ‘drop ship chain’.

At its best, drop-shipping has many advantages. It means that the retailer does not have to carry any stock and products are not purchased until an order has been made (meaning there is no possibility of over-ordering and ending up with surplus stock). There is no need to pay rent for premises or storage, so the overall financial investment is low - all that is required is a signing up cost with a drop shipper.

As with all business models, there are some risks involved. The retailer has no control of delivery speed and is reliant on the drop shipper to fulfil the order. The retailer also doesn’t get to actually see the product, making it more difficult to vouch for the quality.

With many people looking to earn extra money during the recession, drop shipping offers a relatively low risk way of making an income. However, it is always important to ensure that anyone looking to start drop shipping does their research and only deals with reputable drop shippers.

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