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How do they deal with product returns?
Be sure to find out what their policy is regarding returns. Most reputable companies will offer some kind of guarantee or warranty on their products and will deal with returns for you. This way, if a customer contacts you with a return, you can simply tell them that the manufacturer will be happy to speak with them directly. If your manufacturer doesn't accept returns, look out! You will be the one stuck replacing defective merchandise for your customers.
You'll also need the manufacturer to send you product information, such as descriptions and images of the products for you to put up on your web site.
Many companies will simply tell you to take the images directly from their own site. Others will e-mail you a link to their product information. Companies with large inventories may want to mail you a CD-ROM of their product images and descriptions.
When setting up an account with a distributor, ask lots of questions about shipping and order fulfillment, as these are the two areas that can potentially cause you the most problems. Make sure that they are able to confirm your orders quickly, and that they can provide you with tracking numbers. You need to be confident that you will be able to deliver your customers' orders promptly.
Avoid These Common Drop Shipping Scams for your Drop Shipping Business
Wow, all of this sounds great, doesn't it? And the truth is, there ARE lots of people making tons of money using the drop shipping model. But there is also no shortage of crooks and scam artists just waiting to take your money in exchange for the promise of "Instant Drop Shipping Riches" or "Ready-Made Online Drop Shipping Stores."
Here are a few things to watch out for when you're researching drop shipping:
Companies offering to sell you lists of drop shippers for $3, $4, $7. The old saying about "You get what you pay for" applies here. Spend $4 on a drop shipping list, and you'll get an e-mail listing 200 company names, addresses, and maybe phone numbers. A few calls to out-of-service numbers and you'll realize that the list is years old and basically useless.
Companies charging you a "monthly fee" to be your drop shipper. Think about it: Why would a company charge you to sell you things? Answer: Because their products are either worthless junk or they're marked up WAY too high. In either case, they know your online store won't be able to sell any of them, so they need to make their cash from you through a monthly fee.
Companies offering you a turn-key online business, complete with web site, wonderful products (that can ONLY be purchased from them), and a merchant account that allows you to accept credit cards. The strategy here is to get you to spend YOUR money advertising and selling their products that they are buying from REAL wholesalers, marking up, and selling to you. These companies usually also charge a one-time and/or monthly fee.
Here's the bottom line: No one is going to do your work for you. If you want to set up a real online business, you're going to need to do some legwork. Any company that seems to be making your job easier by providing you with lists of products to sell or setting up your site is just going to be eating into your profits! As always, ask yourself if their offer seems too good to be true. If it does, you can be sure that they'll be taking their cut!
Based on our research, I'm NOT going to recommend spending money on any of the "drop shipping resources" that are for sale online; anyone should be able to locate potential drop shipping partners by doing a little research and making a few phone calls.
Common Drop Shipping Problems -- And Simple Solutions for your Drop Shipping Business
Of course, no business model is without disadvantages -- and drop shipping your products can lead to some serious problems if you aren't careful. Below are a few of the most common problems, along with some tried-and-true solutions to help you save some serious time and money:
Problem #1: Shipping Delays
Remember how I told you that the best thing about drop shipping is that you don't have to worry about shipping your products? Well, this can occasionally create issues.
Let's say you send an e-mail to your drop shipper asking them to send an order to your customer, and it just so happens that they are sold out of that item at the moment. The longer it takes them to let you know that the item is unavailable, the longer it will be before you can pass that information on to your customer, and the worse you'll end up looking.
Solution: Insist on prompt order confirmation from your drop shipper. Ask them to send confirmation e-mails or faxes to you when they've processed your order, letting you know that the order has been shipped. If they find that they're out of stock, make sure they let you know IMMEDIATELY.
Problem #2: Tracking Shipping Status
Your customer calls you up a week after ordering a product and asks what the status of their shipment is. Unfortunately, since you didn't ship the product, you have no idea what to tell them. And if your customer is demanding a refund for an order that has already been shipped, YOU'LL be paying for it when your drop shipper sends you the invoice!
Solution: Most of the nationwide delivery services (like UPS or FedEx) now offer online tracking services. If a customer calls to check the status of their shipment, you can instantly tell them where their package is by entering their tracking number at the UPS or FedEx web site. Better yet, include the tracking number in your confirmation e-mails to your customers and let them track their orders themselves. Just be sure to ask your drop shipper to provide you with tracking numbers once your orders have been shipped!
Problem #3: Drop Shipper Backs Out
Occasionally, a manufacturer or distributor will simply back out of their drop shipping agreement with you. They may decide that the work involved in packaging and shipping their products for you simply isn't worth the trouble.
Solution: Unfortunately, you'll never really know how reliable your partners will be until you've placed a few orders from them. When you are setting up your agreements with your drop shippers over the phone, you should be able to get a good sense of how reliable they are based on how they answer your questions. This is one of those areas of your business where you'll have to follow your instincts!
Problem #4: High Shipping Costs
Finally, you can run into problems with shipping costs if you work with a number of different manufacturers and distributors. For example, let's say a customer orders 6 products from your web site, with each one being drop shipped to them by a different manufacturer or distributor. They'll have to pay shipping and handling costs on each individual item, and that can add up to a lot of extra money. If your customers see that they'll have to pay $40 to ship $80 worth of goods, they'll abandon their order every time.
Solution: You'll avoid those abandoned orders by just using one manufacturer or distributor on your web site. Keep in mind that many distributors deal with thousands of products (usually related to each other), so you can usually source all of your products with one distributor. Of course, your site may never run into this problem.
If you take my advice and focus on selling one or two niche products (like toasters), you can reduce the likelihood of customers ordering more than one product in the first place. (Who needs six toasters?)
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