If You Want to Make Money Selling Goods You Never Have to Touch, Then You Must Read This...
Mark Hempshell of The Secret Source Alert
How do you fancy a business where, apparently, you don’t need any capital, don’t need any stock, and don’t have any risk or commitment? All you do is sell the product and take the money. Somebody else does all the hard work in sourcing, stockholding, shipping and customer service. It sounds perfect, doesn’t it?
Well, such a business model does exist, in theory at least. It’s called dropshipping.
Dropshipping isn’t a new idea. It’s been around for a few decades now. But in this review I’m going to quickly look at how it works – and then investigate some of the dropship business opportunity packages that are out there at the moment.
So what is dropshipping?
Dropshipping is a business model where the seller markets and sells a product but does not stock it themselves. They just pass the customer’s order to their supplier, who then dispatches the goods to the customer. The seller makes their profit on the difference between the ‘buying in’ and ‘selling out’ prices.
The pros of dropshipping are that you don’t need to spend time and money developing a product. You just hitch a ride on an existing, proven one. You don’t need any stock, storage, or do any shipping. You don’t need any capital for stock. The customer pays you, then you pay the supplier. You can spend more time where the money is – on sales and marketing.
It’s perfectly legal and legitimate. It isn’t the same as pyramid selling or multi-level marketing. In fact, if you buy something for home delivery from a big company like Argos, Tesco or B&Q they could well be selling it on a dropship basis. Quite a few sellers on eBay use dropshipping too.
There are a few downsides to dropshipping though: When you dropship you’re totally reliant on your supplier. You don’t have ownership or control over the product. They can control the supply and the price. There’s no product exclusivity either – other dropshippers can sell exactly the same product at the same price or less. Very importantly, your profit margins may be squeezed because the supplier has the inventory risk and does the stocking and shipping. You probably won’t get as low a trade price as if you were buying stock wholesale yourself.
What kinds of things can you sell?
You can sell almost anything on a dropship basis, but some things work better than others. Good things are products that don’t need viewing, or demonstrating, to sell. (Remember, customers don’t get a chance to try before they buy.) Products that are known and trusted (especially branded goods) are a good choice. Small, light, compact things mean that shipping costs won’t cut into your margins. Lastly, products that are consumed and need to be replaced regularly will mean you get repeat orders.
Products most often dropshipped include gifts, electronics, video and audio products, information products like books, household items, adult products, software, clothing and footwear, mobile phone accessories, car accessories, toys, PC consumables. jewellery, food and wine.
How do you get started?
While you could just approach any distributor or wholesaler and ask them to supply you dropship, there are quite a lot of ‘ready made’ dropship business opportunity packages on the market now. You simply sign up with them and market the product. Then, when you get an order from your customer, you send it through to them and they ship it for you.
Some of these business packages are free. The operators are happy to make their own profit margins on the items you sell for them. Others charge you either a one-off or even a monthly fee before they will dropship for you. Sometimes this fee includes support and maybe even a website, sometimes not.
If you’re looking for a dropship business package it makes sense to favour ones offered by manufacturers or major distributors. This means they should hold stocks themselves, and should also be able to offer genuine trade pricing. (A few dropship suppliers are just middlemen working between you and a distributor which isn’t ideal.) Also look for suppliers who offer a good standard of customer service, despatching goods promptly, handling returns and dealing with any problems for you. There can be suppliers who are slow on delivery, often out of stock, or poor on customer service. If they are it will reflect badly on your business.
If you pay a one-off or monthly fee then find out exactly what you get and make sure it is worth paying for.
Beware scammers!
Because dropshipping packages look such a tempting business opportunity the industry does attract its fair share of conmen. Problems include suppliers who take your money and run. (Not very common, but can happen, especially with unproven dropshippers based abroad.) There have also been some suppliers who send goods which differ from those ordered, or even fakes. Also some dropship packages which charge high membership/subscription fees to access ‘special dropship prices’ – which turn out not to be as good as promised.
While most suppliers are perfectly reputable it’s important to check them out carefully before building your own business around them.
That was just a quick walk-through of dropshipping. What Really Makes Money published a detailed how-to blueprint on dropshipping last year. If you missed that and would like to know more you can download it here: www.canonburypublishing.com/dropship
Dropship opportunities round-up
Now to the main purpose of this review. Next I am going to review some of the dropship business opportunity packages on offer out there at the moment. Incidentally, lack of space means we can’t cover every dropship package on the market right now. If there are any others you would like to see reviewed get in touch with me on secretsource@canonburypublishing.com and we might review them in a future What Really Makes Money.
Dropship Package Review 1
Pixmania-Pro
Cost: £0
Tel. 08700 11 88 11
Website: http://www.pixmaniapro. co.uk/dropshipping-dropship-ukdropshipment/ ukuk_drop.html
Using Pixmania-Pro you can dropship sell electronic products such as digital cameras, camcorders, printers, scanners, MP3 players, computer components, iPods, TVs, DVD players, video and sound equipment, mobile phones, etc.
Now, this is one dropship opportunity you don’t need to worry about the reputability of. Pixmania is the French-based arm of DSG – the same company that owns Currys. They are, so they say, Europe’s largest business-to-business supplier of electronics with over 40,000 lines and 7m customers to date. (Only around half the range is available for dropshipping.) Another good thing about this one is that they don’t charge a membership or subscription fee if you want to resell their goods – there isn’t even a minimum order. They also have a pretty good reputation for customer service.
All in all, I like this dropship package. They offer the type of products that are in demand right now and their credentials are impeccable. Any downsides? Well, most of their dropship discounts are in the region of 1%-6%, so your margins would be a bit tight. Also your customers can buy direct from Pixmania if they wish, which isn’t ideal.
WRMM Rating: 4/5
Dropship Package Review 2
Activ8 Distribution
Cost: £0
Tel. 0845 45 85 008
Website: http://www.activ8uk.co.uk/cat/Dropshipping_Inform ation.html
This company dropship mobile phone, MP3 and gaming accessories. Like Pixmania they are not just a dropshipping company, they also supply direct to the trade and public themselves. The company have been in business for eight years and have a good reputation in industry.
Activ8 don’t charge a subscription fee and there is no minimum order. Other things I like are that they will keep you up to date with what are the best selling lines each month. They will also send you a database which you can download to get the latest details of stocks, trade prices and recommended retail prices. You do need to open an account to use the service, but you can download a price list before you do so, so you can get an idea of what prices and profit margins are available.
One point I thought a bit unusual is that Activ8 insist that you tell them where you are going to sell their products when you start and say that ‘we protect our customers from being undercut on major platforms’. I know that quite a few eBayers buy from Activ 8. So if you intend to dropship sell their products on eBay you could find yourself in competition with people buying from the same place... yet unable to compete on price, which again isn’t ideal.
WRMM Rating: 3/5
Dropship Package Review 3
Devilwear
Cost: £30 to £79 annually
Tel. 0844 8844779
Website: http://www.devilwear.co.uk/store/dropshippingwebsite- p-785.html
No, this isn’t a supplier of party outfits for Halloween! Devilwear are dropshippers of popular designer branded clothing such as Armani, Abercrombie, D&G, Diesel, Gucci, etc. They also do sunglasses and watches. Like many other suppliers Devilwear isn’t just a dropship supplier. They also sell to customers direct and (unique in the business) have a bricks and mortar shop.
With Devilwear you have to pay an annual fee to get dropship discounts: You can pay £30 and get 10% discount, £50 and get 20% discount and £79 for 20%+ discount. They can also provide you with a website if you want it for £99. Devilwear say that their prices are up to 80% off RRP, and on a 20% dropship commission you could sell a shirt for, say, £45 and make £9 dropship commission on it.
I quite like this one. They have a good product range and my feedback from users says that they give good service. My only slight concern is how difficult you might find it to sell designer clothing in a recession. Also, many of their items are pastseason and other surplus stocks (which is why they are heavily discounted) so your resale prices are going to be much less than the manufacturer’s original RRP anyway.
WRMM Rating:
4/5 Dropship Package Review 4
Puckator
Cost: £25
Tel. No telephone, contact is by e-mail only: customerservices@puckator-dropship.co.uk
Website: http://www.puckator-dropship.co.uk
Puckator is an importer/wholesaler of gifts, homewares, toys and furniture, supplying shops, tourist attractions, mail order, eBayers, etc. with a dropship operation as a sideline. Their lines include: Metal art. Scarves. Statues. Animal soft toys. Aromatherapy. Candleholders. Candles. Chimes and hangers. Christmas lines. Collectables. Curtains. Dragons (not real live ones though!). Egyptian items. Fantasy and fairytale. Garden. Homewares. Incense. Jewellery. Money boxes. Motor. Picture frames. Porcelain and ceramic. Stationery. Toys.
Puckator’s business is all done online, and they have a nice, easy-to-use site and interesting products which you won’t find anywhere else. They have a good reputation for quality and delivery in the dropship business.
Now, Puckator do charge a £25 annual fee before they will supply you by dropship – and you can’t get details of their actual dropship discounts until you register on the site! They suggest that your RRP is around 2.35 times the price you pay them. However, I think it’s fair to say that not all their lines will sell for more than double what you pay. If you’re interested in this sort of product you need to pick and choose and decide what you think is a fair price for yourself before going ahead.
WRMM Rating: 4/5
Dropship Package Review 5
The Select
Cost: £99.99 to £4,999
Tel. No phone number given out.
Website: http://www.theselect.co.uk
The first thing that will hit you about this website is how glitzy it is. It’s fronted by overexcited customers (well I think they’re probably models) jumping about like crazed lunatics with all the money they’re apparently making from their packages! They also offer to dropship some really hot products... Wii’s, Xboxes, Motorola phones, Armani, all really popular and desirable stuff.
The Select is a subscription-based dropship opportunity. There are several levels of membership starting at £99.99 up to – wait for it – a massive £4,999! (The higher the fee you pay the more dropship discount you’re offered up to – ‘up to’ being the important word – 50%.) However, the whole website is angled towards getting you to sign up ASAP while being rather vague about exactly what (and what dropship discounts) you’ll get.
Now on the face of it this looks a very professional operation. But people who’ve tried it are very sceptical. The Select gets a fair bit of flak from dropshippers on eBay and Dropship Forum (more about this later). Many of them complain that The Select don’t tell you what their dropship prices are until after you sign up, that their margins aren’t big enough to make a decent profit, stock levels are patchy – and that they won’t refund your membership if you later decide you’re not happy with them. Need I say more?
WRMM Rating: 1/5
Dropship Package Review 6
Chinavision
Cost: £0
Tel. +86 755 26451869 (China)
Website: http://www.chinavision.com
Now Chinavision isn’t strictly a dropship supplier. But it is used by some dropship operators and comes up very regularly if you search for ‘dropship’ on Google, etc. so is worth looking at. Chinavision is a wholesale supplier of electronics and gadgets. They do things like mobile phones, DVD players, MP3/MP4 players, digital cameras, camcorders, picture frames, Bluetooth accessories, etc. However, they will send anything you buy direct to your customer for you in a plain package – i.e. dropshipping.
Chinavision have an extensive range and some very competitive prices. However, the most important thing you need to know about them is that they are based in Shenzhen, China. So, orders are sent out from China and any customer service enquiries dealt with in, you guessed it, China.
Chinavision gets good and not so good reports from dropshippers. So you need to decide if the benefits of obtaining ‘factory gate’ type prices outweigh the disadvantages of dealing with the other side of the world. I’m not so sure that, for me, it would – but you might feel differently.
WRMM Rating: 3/5
Dropship Package Review 7
DHgate
Cost: £0
Tel. +86 10 82257676 (China)
Website: http://www.dhgate.com
Staying in China for this one so, again, you need to decide whether you’re happy with that before you proceed. Like Chinavision, DHgate isn’t a dropship supplier as such, but you can’t go far in the dropship industry without coming across this name.
Essentially, DHgate is a portal where you can find manufacturers and distributors who will dropship products for you direct from China. It lists products like apparel (clothing), arts, baby and kids, bags, shoes, cameras, cars (not really ideal for dropshipping from China!), mobile phones, computing, crafts, gifts, health and beauty, home and jewellery, musical instruments, gardening, office supplies, sporting goods, toys and hobbies, video games and watches.
Again DHgate gets both good and not so good reports from dropship operators. And this is what I think the reason is: If you dropship through DHgate you’re not dealing with DHgate, you’re dealing with a supplier who simply advertises there. In other words, there are good ones and bad ones. So it can be pot luck, and you need to pick your suppliers carefully.
WRMM Rating: 3/5
Dropship Package Review 8
DVD Dropship
Cost: From £24.95 annually
Tel. 0844 884 5968
Website: http://www.dvddropship.com
DVD Dropship is another name that comes up regularly (well, lots in fact) if you search for ‘dropship’ on Google. They dropship, funnily enough, DVDs.
DVD Dropship are another supplier who charge a subscription fee. Various grades of membership are available. The cheapest one is £24.95 a year and for this they claim you could earn from £300 to £600 a week. All DVDs are new and sealed, prices start from 99p and there is no minimum order. Over 850 DVDs available in all subjects: drama, children’s, horror, thrillers, Disney, adult, sport, action, etc.
The main snag I have found with DVD sources, including this one, is that they often only handle older DVDs rather than the latest releases – and interest in these is quite limited. So, when considering these opportunities I suggest you check the actual titles on offer to see what demand there is likely to be for them, as well as what resale prices and profit margins are realistic. Having said that, if you just wanted to add dropship DVD lines to an existing business for a small sideline income this might work well enough.
WRMM Rating: 3/5
Dropship Package Review 9
Comspec Custom Built Computer
Dropshipping
Cost: £30 refundable
Tel. 028 2826 8100
Website: www.comspec-dropshipping.co.uk
This is quite a unique one. Comspec are computer system manufacturers and dropship suppliers. They offer a full range of custom-built PC systems, laptops, accessories and components backed up with a full support package for your customers. Basically what this allows you to do is set up your own computer sales website, or sell on eBay or whatever. When you get an order Comspec build the system for you and send it off to your customer.
I love the concept of this one! It’s original, and Comspec get some great feedback from dropshippers. The only little doubt I have is not with the dropship package itself, but with the product. Remember, selling computers puts you in direct competition with big names like PC World, Dell and so on. So you really do need to check out the competition in the PC and laptop business before you go ahead. They charge a £30 one-off admin fee, but this is refunded with your first order.
WRMM Rating: 4/5
Dropship Package Review 10
ATS Distribution
Cost: £40
Tel. 01773 608062
Website: http://www.atsdistribution.co.uk
ATS Distribution are specialist dropshippers of PC accessories, computer games, mobile phone and iPod accessories, Bluetooth headsets, electricals, outdoor/camping equipment, watches, household items, children’s products and more – over 2,500 lines, all popular consumer products.
They charge a one-off fee of £40 to register for dropship, which I think is quite a lot just for the chance to sell someone else’s products. Although you can order direct from them (£50 minimum order) non-dropship if you want to test potential. As with a lot of other suppliers you have to register to see the prices on offer, but as an example they quote a bottle of Hawaiian Tropical Royal Tanning Lotion (200ml) and say that you can sell this for £9.99, but they will supply it dropship for you for £4.87+VAT of 73p. (You’d need to check in the shops to see if that price is competitive, although I’m not so sure there’s a roaring mail order trade for tanning lotion anyway.)
ATS also use the Royal Mail logo a lot on their website although, as far as I know, it’s nothing to do with Royal Mail. If it’s used to add credibility to their offer, well, I’m not so sure that it does! I think this is one you need to go through with a fine tooth comb and decide whether it stacks up for yourself.
WRMM Rating: 2/5
Dropship Package Review 11
Music Dropshipping
Cost: £99 or £9.95/month
Tel. No phone number given out.
Website: http://www.sounds-amazing.co.uk
These people do CD dropshipping. It’s purely a dropship package offer, not a music wholesaler. Their home page starts with a very flashy presentation of what they do and why you should join them. It costs £9.95 a month subscription to join (or £99 lifetime membership) which makes it one of the more expensive packages I know of.
They can supply you with over 1,000 music CD’s on a dropship basis including all genres – pop, rock’n’roll, classical, jazz, country, tributes, blues, children’s, Christmas, dance, R&B, soul, reggae, soundtracks, musicals, karaoke, etc. Prices start from £1, with boxed sets from £4.
While, generally, CDs are a sound enough (if you’ll pardon the pun) product to be involved with you need to bear in mind lots of other people are doing it too. I do think some of the titles in their list are a bit long in the tooth as well. Perry Como and Dean Martin? How easy do you think it would be to sell their CDs? And at the end of the day you’d need to be shifting a fair few of them to cover your membership and make a decent income.
WRMM Rating: 2/5
Dropship Package Review 12
Alma Group
Cost: From £199
Tel. 01474 359 550
Website: http://www.almagroup.co.uk
Alma group sell trade price, second-user computer products – laptops, multimedia PCs, new ink cartridges, etc. This offer is a kind of part dropshipping, part small bus. opp. There are a variety of packages available, from £199 to £399, which include a website for you to run your business from.
This is an example of the sort of profit Alma say that you can make: A laptop costs you £75 to buy from them. You sell this on your site for £149. Delivery to your customer costs £12. Your customer pays you a total of £161 (£149 + £12 ). You then pay them £75 for the laptop and £12 for delivery = £87. You keep the balance (your profit) of £74.
In theory, this sounds like it could be a lucrative dropship opportunity. In the credit crunch used computer systems could be a good line to be in. But I’d recommend you look at exactly what you will be selling, and what competition there is in your area, before buying into a package like this. Remember, these are used systems – so they won’t sell for as much as brand new. And you’ll be in competition with other people selling similar systems (some of which could be Alma’s other dropship customers) locally. You’ll also have to sell a minimum of three systems before you even get your start-up fee back.
WRMM Rating: 3/5
Dropship Package Review 13
Style Volume
Cost: £10 refundable
Tel. 0121 604 7188
Website: http://www.stylevolume.com
Style Volume is a manufacturer and wholesaler of costume jewellery/fashion jewellery and fashion accessories who offer dropship as a sideline business opportunity. You can also sell their jewellery through party plan and whatever other places you like. Style Volume can also provide you with your own online jewellery shop if you wish. There is a reasonable £10 dropship application fee, which is refundable in the first month your orders exceed £100. For the website, the basic e-commerce package is £49.50 plus £9.90 a month. An enhanced version of the ecommerce package is £149.50 plus £9.90 a month.
Now jewellery is always a popular, saleable product and ideal for dropshipping. You probably can’t go wrong with it as a dropship product and this seems a genuine opportunity. One slight fly in the ointment is that Style Volume say their dropship prices are typically 30% higher than their trade prices, which seems a bit odd to me. In other words, if you decided which lines you wanted to sell it would make much more sense to buy in stocks and simply resell them as in a traditional business... you’d make 30% extra profit immediately.
WRMM Rating: 3/5
Dropship Package Review 14
Sex Shop 365
Cost: £0
Tel. 0844 588 4888
Website: http://dropship.sexshop365.co.uk
Finishing off on a slightly fruity note, this one is, as the name says, a sex shop dropshipping package. Well I prefer to call them adult products, it sounds a bit more tasteful! I won’t go into graphic detail about what they dropship. Save to say that if you’re interested in this sort of thing you will probably have an inkling. If you’re not interested, well, you probably don’t need to know. There are over 3,000 products to choose from, with 100 more added every month.
This is a simple, straightforward dropship opportunity. There are no start-up fees, although you can buy ready-made catalogues for 50p if you want them. Their minimum order is £10. Here’s an example of the possible profits Sex Shop 365 say are possible: Bunny Vibrator (whatever that is), sells for £19.95 but costs you £8.75 dropship. With the markup on the postage they also claim this would make you a profit of £10.51.
So what do I think of this dropship package? Well, if you are comfortable selling this sort of product it might suit you very well. You just need to think who you are going to sell them to, and how. The suggested resale prices seem a bit high to me. After all, there’s a recession on, and the number of people willing to treat their bunny to a £19.95 sex toy – and put up with all the hassle from the RSPCA, etc. – could be a bit limited right now.
WRMM Rating: 3/5
More useful information: Sources of dropship opportunities
** If you want more help with tracking down dropship sources then I strongly recommend you take a look at our Secret Source Finder website. Secret Source Finder contains a searchable database of companies who may bse able to supply whatever you want on a dropship basis, plus information, tips and techniques for getting great deals. The Secret Source Finder website contains only genuine manufacturers, importers, wholesalers and trade suppliers... we’ve handpicked and screened all the entries ourselves. You can find it at: www.secretsourcefinder.com
** You can also sign up for my FREE weekly Secret Source Alerts. Every Thursday I’ll e-mail you my latest tips, info and details of little-known suppliers including dropshippers, plus auctions, wholesalers, importers, distributor and manufacturers of almost anything at trade prices. Sign up here:
www.canonburypublishing.com/secretalert
Don’t forget your FREE DOWNLOAD at www.canonburypublishing.com/dropship
Dropship Forum
If you want to know more about dropshipping then join in at Dropship Forum – www.dropshipforum.co.uk
On Dropship Forum you’ll find dropshippers large and small coming together to chat about dropshipping, and share ideas and thoughts. Although it is sponsored by some dropship suppliers (including Devilwear and Puckator) it is, by and large, impartial.