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Drop Shipping Basics


Drop Shipping Basics

Starting a drop shipping business and running the show while traveling the world is indeed possible. This article covers drop shipping in the United States, but some principles may apply to people living outside the US. Please bear in mind that this is basically intended to be a simple introduction to drop shipping. 

What is drop shipping? Drop shipping allows you to purchase goods individually and directly from a wholesaler or manufacturer and have it shipped to your customer.

Who and what is a drop shipper? The drop shipper is your provider who will be supplying, packing and directly transporting the item or product to your client.

Digging Deeper: A Real World Example

Let's say you'd like to sell ukuleles using the drop shipping business model. Back in the day, you'd have to purchase 25 or more ukuleles, open a physical shop then make an attempt to find customers to sell to. Should you sold 3 ukuleles, this wouldn’t be enough to cover the advance purchase you made for the ukuleles and other expenses to run the business. You are then left with a room filled with stringed instruments and an empty bank account. Bummer dude.

Here’s how the drop shipping business model functions using the ukulele as an example. You have an online shop called superflyukuleles.com. Your shop sells the Woody Ukulele for $200. A client orders a Woody Ukulele from your online store. You collect the payment and forward that customer’s order of 1 Woody Ukulele to your provider or supplier. You pay the item to your supplier at a reduced rate which will cost you $100 for the ukulele and $5 to send it directly to your client, the profit is yours to keep. Your provider then fulfills the order, ships and packs the ukulele to your client. 

Another drop shipping example is event exchange business which services the event marketing industry. How does it work? If Company X wants to buy something from Company Y, eventXchange.biz arranges an agreement and have the item sent from one company to the other. eventXchange.biz never really owns or sees your item, they simply facilitate your transaction and your transport and keep any profits out of the sale which is the service fee they charge. This is less drop shipping and more of a broker model, but the idea works in a comparable fashion. 

Businesses like these can be managed while traveling in a different place such as the United States, Vietnam, Cambodia and anywhere else, even in the comforts of your own home. However, just like any other business, expect to encounter various challenges but the bottom line is that it supports the goal of having the ability to work from anywhere. Don't downplay the thrill of that. In the end, if you are an adventure seeker and love to travel, you might enjoy it in business as well.

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