One of the biggest advantages of drop shipping is that it eliminates the need to acquire and store inventory. Instead the wholesale distributor takes care of that for you, keeping the overhead costs quite low for the drop shipper. Since the distributor plays such a big part in the drop shipping process, one must do explicit prior research and choose a distributor carefully. As you start researching, keep these tips in mind.
Try Manufacturers First
Before you start looking for a wholesale distributor, it’s wise to seek out your products manufacturers and inquire about buying directly from them. Most likely manufacturers will ask if you meet certain requirements before doing business, but if they are met you can get the lowest prices on the goods, increasing potential profit margins. If you operation does not meet those requirements, they might be able to refer you to some reputable distributors. As your drop shipping operation and reputation grows, you might be able to work with manufacturers later.
Attending Industry Trade Shows
Assuming you have determined the type of products you want to sell first, attending an industry event like a trade show is a great place to contact distributors. For example, you are interested in selling make-up, look for wholesale beauty product events and shows to network at. In-person meetings are great because you can avoid false or outdated information that plagues the web, as well as develop personal relationships with representatives. Trade shows also cuts research time down significantly, as you can look at several different wholesale distributors at the same time.
A very prevalent scam in the drop-shipping industry involves parties selling fake lists of distributors. Distributors with a good reputation would never need to rely on selling their name on a list. Chances are that any company on a list (if not fake) is not a company you want to do business with. There really is no way to get around the time needed to research for a good distributor, trying to cut corners will just hurt your business in the long run.
As you are contacting distributors, let them know exactly who you are and what you’re looking for. While it might be tempting to pass yourself off as a bigger operation, it’s wiser to be forthcoming about your situation. Getting in over your head with a distributor that thinks you can sell more product then you actually can is simply bad business. The two areas you need to discuss with then are minimum order requirements and wholesale unit prices. If you can work within the distributor’s parameters, then you can do business.
It sounds crazy, but making mistakes is a good learning process and can be quite beneficial. If a distributor is not working out for you, don’t be afraid to change to a different one. Make note of why the relationship did not work and factor that into your decision to work with another one. Chances are the first distributor you work with will not be with you forever.
Brett is the author of this article on finding a wholesale distributor with drop shipping. If you're looking to start an eCommerce store he advises his readers to get started quickly with the help of drop ship products such as wholesale beauty supplies.