Looking through our tag report page recently, the dropship tag jumped out as the 5th most watched, so I thought we’d introduce our Flippa peeps to the wonderful world of building drop ship websites. If your looking for a new angle on developing websites for sale here on Flippa, this might give you a few ideas.

What Is Drop Shipping?

Dropshipping is when an e-commerce website owner outsources the warehousing and distribution of the physical products they’re selling. You (the website owner) look after the website shopfront including the marketing, sales and customer service, while the drop ship company stores, packs and ships the product to your customers.

Why Would You Use Dropshipping?

There’s some great advantages to this e-commerce model:

  • Usually margins are much better than promoting physical affiliate products, particularly if you setup an exclusive arrangement with a manufacturer or wholesaler.
  • You don’t have to worry about storage, packing or shipping.
  • You can use multiple drop shippers to expand your product offering.
  • You can potentially service a different marketplace. Say, for example, you’re living in Australia: You could potentially set up a pet snake food dropship site with a dot com domain, servicing the United States.  You don’t have to worry about the cost, time and frozen packaging involved in shipping dead mice half way around the world. (Little niche tip for you there – 120 Google phrase match searches per day for “frozen mice” and frozenmice.net is available as of writing)
  • In most cases, you don’t have to pay upfront for stock. When someone purchases through your website, you forward the order and payment (minus your margins) to the drop ship company.

What’s the Catch?

Sounds too good to be true doesn’t it? You focus on what you’re good at (web development, online marketing, the sales funnel etc) while the dropshipping company does all the tedious boring stuff. It’s a marriage made in (choose your preferred afterlife paradise).

Not so fast, cowperson. Consider the following before you decide dropping your ships is the bee’s knees:

  • Customer service. If you’re looking for a hands off passive online business, don’t consider drop shipping. In most cases you still have to handle all the customer service inquiries, complaints and refunds.
  • You don’t control the distribution process. Depending on your relationship with the dropshipper, you have little control over the speed of the delivery, packaging and general care taken in distributing the product you sell. You can have a customer on one end demanding their product, and the drop shipper on on the other shrugging their shoulders saying “it gets there when it gets there”, so choose your dropship partner wisely.
  • Multiple drop shippers can be challenging. If you’re selling products from multiple dropshippers and a customer orders one of each, you’re going to have to have some clever postage charge logic in your shopping cart. It’s also more than likely customers will receive the products separately.

How to Find Drop Ship Partners

So you’re good to go, you’ve read the warning label and you still want in. How do you find a dropship partner who’s nice enough to do all the stuff you don’t want to? Basically, there are two methods:

  1. The Direct Approach. You approach a manufacturer or wholesaler and negotiate a drop ship partnership. While this is probably the more challenging method, it can be the most lucrative – particularly if it’s a unique product and you negotiate exclusivity to sell online.
  2. Worldwide Brands (affiliate link) These guys offer one of the best dropship company sourcing services available. For a one off $299 you get lifetime access to a database of over 8,000 verified drop shippers operating worldwide. You can search for suppliers by product type, country, and category. Aside from using Worldwide Brands to source dropship suppliers, it’s also a great way to discover new niches.
    Wordwide Brands

Which Shopping Cart Platform to Use

If you’re partnered with one drop ship supplier then the e-commerce cart solution you’re most comfortable with should suffice. There are a number of WordPress e-commerce shopping cart solutions if  that’s your flavor. There will however be manual order processing involved when you forward the customer orders to your dropshipper.

Dealing with multiple drop shippers gets tricky and you probably want to consider a more dedicated solution. Magento’s e-commerce platform is a powerful e-commerce solution available as a limited free open source version or commercial version. Magento has a strong community which translates to people developing lots of useful plugins such as the Magento dropship extension. This extension has a range of features which make dealing with multiple drop ship suppliers somewhat easier.

What Now?

OK, so building a dropship website is not as easy as throwing up a WordPress site with a few articles and a pretty theme. But if you want to build sites that target different buyers in the market, buyers who (arguably) might be prepared to pay more, then extra effort is required.

If you’re keen to learn more about building drop ship websites, here are a few other resources to check out:

Already running a dropship website? Share your experiences by leaving a comment below.