Busting Common Drop Shipping Myths

by Stuart Lisonbee, Doba Education Specialist

Because the concept of drop shipping is relatively new, most people know little about it, so they fill in the gaps with rumors and conjecture, resulting in misinformation of mythical proportions. In this article, I reveal the 4 most common drop shipping myths, and then proceed to bust those myths.

Myth #1: Drop shipping means big money for little work

Sure drop shipping saves you from warehousing, inventorying, packaging, and shipping items, but those tasks play a relatively minor role in building a successful online retail business. You can now invest the time and resources you save on menial tasks in the retailer's labors of love:

• Market research
• Product research
• Advertising
• Customer service
• Developing more efficient ways of doing business
• Expansion

The truth is that even though drop shipping eases your workload in other areas, you still have to work hard to build, maintain, and grow your business.

Myth #2: All drop shippers will be happy and willing to work with me

Some drop shippers are happy to work with anybody, as long as that anybody can boost their bottom line by agreeing to one or more of the following conditions:

• Pay upfront fees
• Pay higher prices for wholesale items
• Order a pre-established minimum amount of product (typically per month)
• Pay a non-refundable application fee. (If they decide you're not big enough to work with them, you lose your application fee)

Of the more than 100 suppliers Doba works with, several have application fees, a few have monthly fees, and several more only agree to drop ship for us because we promised them high volume--something we can do thanks to the combined purchasing power of our membership. Doba does not pass along any application or monthly fees, and you never have to meet minimum requirements.

Myth #3: Making money with drop shippers is impossible

Drop shipping thins your profit margins, but some of the internet's largest retailers use drop shippers exclusively as their product suppliers.

Pricing is only one small part of retail merchandising. I once sold a product in a very competitive market. The product had a mean price of $19.95 and an average return rate of 10-15% . I sold my product for $33 and had a return rate of 5%. My website also had a conversion rate about 2-3 times that of my competitors.

How can you sell a product for 65% more than your competitors, maintain a higher conversion rate, and yet still experience far fewer returns? Very simply—attend to all of the essential components for achieving retail success.

Myth #4: Drop shipping is the magic solution

Drop shipping fills a specific need, but it's not a perfect solution for all retail merchants.

Think of drop shipping as only one powerful tool that can help your retail business succeed, and then note the following points to put drop shipping in perspective and maximize its potential:

• You couldn't build a house with only a hammer, so don't rely on a single business tool to build your retail business. Research, marketing, advertising, your web storefront, and your creativity and drive are essential
• Before jumping in, be relatively certain that your business will benefit from drop shipping, and make drop shipping an integral part of your business plan
• Check out our tips on how to maximize the benefits and minimize the drawbacks of drop shipping.