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Making money with wholesale products is a blizzard of new terminology, unfamiliar business models and more than enough to disturb a new businessperson’s comfort level.

First you must find your dropshipping vendor. We will go into this in great detail over the coming weeks, but I want you to see what you are getting into first.

Setup An Account With A Dropshipper

You will have to contact the shipper to set up an account. This is a process that has gotten easier over the years, with many being about as easy to set up as an internet affiliate program. Dropshippers usually require a little more information than an affiliate program. Soem may require a Tax ID number (EIN). In truth a Social Security Number is every bit as good as an EIN, but dropshippers often require this to try to screen out sellers. It is very easy to get an EIN. They may well ask for credit and trade references, dont be afraid if you don’t have any references like this, just be prepared to prepay for your goods (which is not ideal, but if you can maintain good relations with the shipper, they understand the efficacy of offering you terms and you will usually quickly get the chance to go at the very least to Net 7 or Net 15 (”Net 15″ is a fancy way of saying they will ship the goods and you owe them money within 15 days.)

Selling a Dropshipped Product

When a customer places an order on your site, you will usually get an email message alerting you of this. Obviously, your full retail price needs to account for all the costs of shipping the product that the drop shipper passes on to you. You have a legal requirement to collect sales tax when you are shipping to a state where you have physical operations.

You will turn around and place the order with your dropshipper. If you can become a big success, you will be able to automate with a dropshipper (although certainly not all drop shippers are capable of handling that, it is a case by case thing, but time is on your side, backend systems for the wholesaler and your ecommerce site are getting better every year).

Post-Sale

The dropshipper will fulfill your order and ship to your customer. You MUST know how long this takes, and you must set the expectations of your customer accordingly. When they ship, the drop shipper will charge you the wholesale price, the shipping cost and the dropshipping fee, if any.  Your profit is the difference between the amount you charged the customer and what the shipper charged you.  The supplier will provide you with shipping confirmation, and usually expect you to deal with any problems that occur in transit. It is easy enough to turn around and transfer this information to the customer. I think it is very bad form to let the customer realize that you are not the person ultimately responsible for fulfillment of the order. But, amny lazy merchants try to offload the customer service responsibilities on to the shipping company or on to the dropshipper. You  will lessen the chances of repeat business, but most of all: it is your responsibility, you accepted the customer’s money and the customer quite justifiably expects you to hold responsibility for safe transmission of goods.

The above hopefuly makes it clear that dropshipping, while a good way to make money FAST, is not EASY money. You have a lot of responsibilities to other parties, the government, the wholesaler and the customer, and this is a process you must treat respectfully if you wish to sustain it.

You heard me dropshipping!

This is kind of a triple threat tip. Whether for:

1. Blogging
2. Making Money Online (i.e. starting and succeeding with a Profitable Web Site
3. Or for expanding the revenues of your wholesale business

Dropshipping: Its a business model. Sellers do not keep any goods in stock. Sellers get orders and send them to wholesalers where orders are filled direct from their warehouses and shipped to the customer. This model is perfect for web entrepreneurs , it allows you to focus on web site creation and promotion–leaving fulfillment to the dropshippers

There are entry level dropshipping solutions like DOBA and Salehoo, but they require fees in advance to get to the information/ordering part. If you are looking for a total turnkey solution, use DOBA, but you can figure it out all on your own.

The first thing you need to do is think of an item to sell.

You don’t need to be an internet marketing expert or a dropshipping afficianado to think of an item to sell. You can just look around for ideas. Here’s several different ways to find an ideal product for dropshipping.

1. Look around your house - Yep, you buy stuff, and what you buy is available for dropshipping. Get a legal pad and write down the first 100 items you can think of. I would avoid heavy or bulky items, and focus on things you own that you personally like.
2. Choose from your hobbies or interests - Do you like computers? Directron will drop ship them for you. Or if you want to pick a niche, how about mouse pads. You can sell cool ones from Cafe Press - you can even use your own designs to make great mouse pads. Cafe Press is the easiest way with no upfront layout, but what if you have a great original idea? Custom printing even for specialty items like mousepads will only run you around $300 for low quantities. If you have a really great idea or can capitalize on an existing trend, you can make them in larger quantities for less than a dollar apiece.
3. Think about activities that people have to buy things for - this is a particularly good one around this time of year because of New Years Resolutions. Basically, even though they shouldn’t, lots of people pick up a new activity (like jogging or scrapbooking), the first thing they do is go out and buy a bunch of stuff to help them get started. Maybe you do this…exploit your own weaknesses mercilessly and think of all the ideas that seduced you into buying something.
4. Do a little research. Once you have a list of products, you can find out how popular they are. I think the best way to do this is to estimate their search volume. I use Aaron Wall’s Keyword Tool to do this. Ideally, you would pick a product with more than 1000 searches daily. And then you want to estimate competition from other websites for that keyword. A quick and dirty way to estimate competition is to use a special Google Search. Type this into Google:

intitle:ballpoint intitle:pens

The above search asks Google for all the pages that have “ballpoint” and “pens” in their Page Title. Basically the theory here is that every sensible website that is trying to compete for the term “ballpoint pens” is using “ballpoint pens” in their page title.

The rough guideline here is 500 daily searches for the product and less than 50,000 competing pages. Of course, 1000 daily searches and 100,000 competing pages is fine too. Basically multiply the daily searches by 100, but that involves math. Plus there are no hard and fast rules.

Much More About Using Dropshippers with your Online Business in upcoming posts.