The world of drop shipping is often considered the easiest way to sell products online.The biggest difference between dropshipping and the standard retail model is that the selling merchant doesn't stock our own inventory.
Instead, the merchant purchases inventory as needed from a third party – usually a wholesaler or manufacturer to fulfil orders.
Table of contents
- Finding Wholesale Suppliers
- How to Spot Fake Dropshipping Wholesalers
- Dropshipping Countries
- 13 Best Countries to Dropship
- Countries to Avoid Dropshipping
- List of Places to Find Products to Dropship
- Costs of Dropshipping
- Finding Good Dropshippers
- More Tidbits on Drops
How to Spot Fake Dropshipping Wholesalers
Depending on where you're searching, you'll likely come across a large number of “fake” wholesalers. Unfortunately, legitimate wholesalers are harder to find and tend to not have a strong online presence.
This results in the non-genuine wholesalers – usually just middlemen – appearing more frequently in your searches, so you'll want to be cautious.
There are some things to look out for that will help you discern whether a wholesale supplier is legitimate.
They want ongoing fees – Real wholesalers don't charge their customers a monthly fee for the privilege of doing business and ordering from them. If a supplier asks for a monthly membership or service fee, it's likely that they’re not legitimate.
It's important to differentiate between suppliers and supplier directories. Supplier directories (which we'll discuss shortly) are directories of wholesale suppliers organized by product types or market and screened to ensure the suppliers are legitimate.
Most directories will charge a fee – either one time or ongoing – but this necessarily doesn’t mean that the directory is illegitimate.
They sell to the public – To get genuine wholesale pricing, you'll need to apply for a wholesale account, prove you're a legitimate business and be approved before placing your first order.
Any wholesale supplier that offers products to the general public at “wholesale prices” is just a retailer offering items at inflated prices. But here are some legitimate drop shipping fees you’ll likely encounter:
Per-Order Fees – Many drop shippers will charge a per-order dropshipping fee that can range from $2 to $5 or more, depending on the size and complexity of the items being shipped. This is standard in the industry, as the costs of packing and shipping individual orders are much higher than shipping a bulk order.
Minimum Order Sizes – Some wholesalers will have a minimum initial order size which is the lowest amount you have to purchase your first order. They do this in order to filter out window-shopping merchants that will waste their time with questions and small orders but won't translate into meaningful sales.
If you're dropshipping, this could cause some complications. For example, what do you do if a supplier has a $500 minimum order, but your average order size is around $100? You don't want to pre-order $500 of product just for the privilege of opening a dropshipping account.
In this situation, it's best to offer to pre-pay the supplier $500 to build a credit with them to apply against your drop shipping orders. This allows you to meet the supplier's minimum purchase requirement (as you're committing to buy at least $500 in a product) without having to place a single large order without any corresponding customer orders.
Finding Wholesale Suppliers
Now that you have learned how to distinguish between legitimate dealers and frauds, it's time to start searching for suppliers. A number of different strategies may work for you, and some are more effective than others. The methods below are listed in order of effectiveness and preference, with my favourite methods listed first:
Contact the Manufacturer
This is my favourite way to easily locate legitimate wholesale suppliers. If you know the product(s) you want to sell, call the manufacturer and ask for a list of its wholesale distributors. You can then contact these wholesalers to see if they dropship and inquire about setting up an account
Since most wholesalers carry products from a variety of manufacturers, this strategy will allow you to quickly source a selection of products within the niche you're exploring. After making a couple of calls to the leading manufacturers in a niche, you'll quickly be able to identify the leading wholesalers in that market.
Pro's & Con's of Dropshipping
Using a certified wholesaler that dropships, is a low-cost solution for people who work from home, don't have money to spend on inventory and want to sell products online. dropshipping does work and it works very well but you have to be careful with a few things.
First, you can't just sell any product you want and expect to be able to compete with drop shippers. When you dropship a product, you are buying and selling one thing at a time. That means your wholesale price is for one product when you have it shipped.
Wholesalers always provide discounts to retailers when they purchase in bulk. That means your wholesale price for one product (drop-shipped) can be higher than a competitor who is buying in volume from the wholesaler which means they can sell that product much cheaper than you can, and in some cases, even cheaper than your wholesale cost!
So how do you make dropshipping work?
You must be able to pick the right products to sell and the right types of products to dropship. You can't assume that just because you might think a product is a ‘good idea to sell' that you should jump in and start selling that product.
You have to find the products you can have drop-shipped that you can compete within the current online market. Doing a bit of market research before you start the selling process is critically important for you to emerge as a successful dropshipper.
The Pros of dropshipping:
– You don't have to buy or store inventory
– Very low startup cost
– Easily add or change your product offerings
The Cons of dropshipping:
– Not all wholesalers offer dropshipping
– Wholesale cost is based on one product only
– Must spend time researching to pick the right product(s) to sell
Finding Good Dropshippers
It's difficult to find certified dropshipping companies and it’s almost impossible to do an internet search for “dropshipper” without running into hundreds of scammers and middlemen.
Most of the results you'll find online are companies claiming to be dropshippers but they are nowhere near the quality and pricing you get from working with genuine dropshippers. It’s important to be patient when searching for trustworthy dropshipping companies.
Certified dropshippers don’t charge setup fees or monthly fees. So while doing your search, if you stumble upon a company claiming to be a “dropshipper” or offer “dropshipping” and they ask for a setup fee, monthly fee, or annual fee, that’s an immediate red signal.
Dropshipping can be confusing, especially when dealing with scammers, so here is a list of 10 tips for finding a wholesale distributor.
1. Understand Your Industry's Distribution Channels
There are many ways a product can go from manufacturer to retailer. Not all wholesalers serve the same market. Understanding your industry's distribution channels, and knowing where you fit in the supply chain can help you find the right wholesale supplier for your retail or online business. The different types of wholesalers include:
- Manufacturer: For some products, you can buy directly from the manufacturer. This is basically what a “boutique” store does — buys from small (sometimes one person) manufacturers.
- Importer/Exclusive Distributor: In some industries, a company might have the sole rights to import and distribute a product in a certain country. Some may sell directly to retailers, but more often, they set up or sell to smaller local wholesalers.
- Wholesaler/Regional Distributor: There are usually regional wholesalers who take delivery of boxcar-sized lots, break them down and sell truckload boxes of products to local wholesalers.
- Jobbers, “wagon peddlers”: These individuals make daily deliveries to local grocers and retail brick-and-mortar stores.
Each product industry has its own unique distribution channels. Some retailers will move enough volume to bypass jobbers, or maybe in a smaller industry, importers sell directly to retailers.
When you first start, you'll be buying from the smaller wholesalers at higher prices. As your volume increases, you'll be able to get better pricing and/or move up the supply ladder to a bigger wholesaler.
2. Try the Manufacturer First
You might as well start at the source. If you're selling branded items, go directly to the manufacturer of the product. They might sell to you depending on their minimum order requirements.
If you're too small for them or they only sell through established distribution channels, ask them for a list of distributors you can contact. By starting at the source (the manufacturer), you can either get the lowest prices or at least get a list of the most reputable distributors to kick off your search.
The fewer people you have to go through, the lower your cost will be, allowing you to be more competitive in the marketplace.
3. Have a Productive First Contact With a Wholesale Supplier
Take the list of wholesale distributors you got from the manufacturer, and start contacting each one. What you're looking for are minimum order requirements and their wholesale unit prices.
To get the best responses, be honest about what you're looking for (don't try to sound “bigger” than you are), keep your emails short and to the point, and be friendly. You may also consider picking up the phone to make initial outreach calls or to follow up with the people you've sent your introductory emails to as well.
4. Try Searching for Wholesalers on Google
As mentioned above, you can start your preliminary research with some basic Google search terms. As you get deeper into your research, you'll probably get more specific about the products you're seeking.
Conduct Google searches for the words “wholesale” or “distributor,” plus some keywords from your products or niche. Try product names, model numbers and brand names. Go through each result and look for the “wholesale account” link or an email address or phone number where you can get more information.
In the rare case that the information is difficult to find or not readily available, you could do a WHOIS search to find the website's contact information.
5. Look for Wholesale Lots on eBay
If all else fails, some retailers or small wholesalers will sell bulk quantities of your product on eBay. Since eBay mainly targets retail consumers, the wholesale options you'll find here are usually only suitable for very low volume retailers.
But if you're just starting out, eBay might be the easy start you need to dip your toes into e-commerce and start shipping your product.
6. Check Major B2B Marketplaces
Start at Alibaba.com which is the biggest of all the B2B marketplace of manufacturers, importers and wholesale distributors. Other B2B marketplaces include Global Sources (USA), Buyer Zone (USA), EC21 (Korea), EC Plaza (Korea) and Busy Trade (Hong Kong).
7. Join Industry Groups, Forums, and Other Professional Networks
Other retailers are not eager to share supplier information with competitors, so it'll take some networking to find the best possible wholesale suppliers for your small business.
Start building relationships with industry insiders, and eventually, you'll be one of those insiders. Participate in online forums, build your LinkedIn profile and start building connections, subscribe to industry newsletters, and generally build your professional network.
8. Subscribe to All of Your Industry's Trade Publications
Get every magazine or newsletter that targets retailers in your industry. Every advertiser in the magazine will be a product manufacturer or distributor looking to reach out to you.
You should have a few dozen options from the ads in the back of the magazine. Also, subscribe to all of the online newsletters, blogs, and other sources of information available to you.
9. Attend a Trade Show
Attending trade shows is one of the most powerful ways to build and grow your business. These events are for retailers just like you. When you can talk face-to-face with manufacturers and wholesale distributors, it avoids all the noise of inaccurate information that can plague the web.
The largest directory of trade shows is at tsnn.com. You can search for a trade show by industry, date, city, state or country and/or event name.
10. Don't Be Afraid to Make a Mistake
Your first wholesale supplier may not be your lifelong vendor. Creating your perfect supply chain is an evolution involving a lot of trial and error. Remember, all you need from your first supplier is a product that you can ship at a profit.
It may not be the best wholesale price for you, but don't sweat that in the beginning. Your first goal is to get your product shipped. Then you can improve your bottom-line by trying other wholesale suppliers.
More Tidbits on Dropshipping
English speaking countries – Many drop shippers are native English speakers and online stores are launched in English.
Number of the population – this is elementary; greater the number, more people you can sell out to
If suppliers ship to the countries you plan to target – this point should be checked as logistic and packaging issues are resolved by merchants.
If your carrier arranges to ship to the country you plan to target – check a list of countries of your carrier.
Economical shipping and short delivery time – you wouldn’t want your order to be delayed by a month or more. Enquire about the estimated delivery dates before proceeding to place your order.
Product type – make sure your products are allowed for shipping to the country you plan to target, for instance, leather, wooden, bamboo and related goods are not allowed for importing to some countries. Or they should meet the import conditions.
International Dropshipping: Challenges
Let's see what international drop shipping challenges expect those who plan to go international. The following 8 issues should be thought over before you start an international drop shipping business.
- Find suppliers – You may ask your current supplier if he/she dropships worldwide. Or use sources like Dropwow or AliExpress. On both marketplaces, there are merchants from China who drop ship internationally. If you are confused choosing between US-based suppliers or China-based suppliers, read the answer.
- Calculate delivery expenses – Contact your carrier to learn about expenses for further calculation. Or visit a product page on the Dropwow marketplace to see a shipping cost there.
- Resolve customs charge issue – This information may also be provided by your carrier. However, non-expensive items which drop shippers often select don't usually require customs charges.
- Use ePacket – Work with suppliers who provide ePacket. This shipping method is the best one if you cooperate with Chinese merchants. It's available for many countries, it's much cheaper than other variants through it has limits (small and lightweight packages) that don't actually limit dropshippers. Learn more about ePacket and its limits.
- Find products – Choose products that may be easily shipped (lightweight, small, not delicate).
- Set up shipping rates – You're able to set up your shipping rates on your store. There are two variants to do it – by price or by weight. The shipping rate affected by price will depend on an order price. The other variant will depend on a total weight in return. Learn more about each variant and how to set up shipping rates here.
- Apply currency converter app to help your customers. Find the app in the Shopify App Store.
- Do not translate – Sometimes beginners ask if they should make a translation or not before they start promotion to other countries. In most cases, dropshippers do not do it. As there are no limits for targeting other nations like Germany, France, Spain, etc. The point is that it's not about translating the text into a store. Your advertising, emails and online chat for customer support should be translated too and Google Translate will not help you much. Focus on your sales first but not localization.
Costs of Dropshipping
According to Dropship Lifestyle (DL), dropshipping outside of the U.S. costs a minimum of $274 to start. The largest cost is $238 to register your business in the United States. Then you have a monthly cost of $29 for running your Shopify store.
All costs are in U.S. Dollars:
- Domain Name – ~$2 to $16: The price depends on which provider you use to register your domain name.
- Hosting – ~$25/month: With our special offer on Shopify, you can get a 21-day free trial that offers you 10% off on all months following the trial. This lets you pay around $25/month instead of the basic $29/month.
- Business Email Address – $0 to ~$5/month: This can be done for free with zoho.com or you can choose an email with more features. For instance, Google Apps charges about $5/month.
- Logo Design – ~$5.50: We recommend you use fiverr.com, where you can find a good artist to make a logo for about $5.50.
- U.S. Based Phone Number – $0 to ~$30/year: Google Voice will give you a free U.S. Based phone number you can use to route to a Gmail account. From the Google Voice account, you can check voicemails, receive, and take calls. There are also paid options like Grasshopper that cost about $30/month.
- Incorporating a U.S. Based Business as a Non-citizen – $238: This will likely be your biggest starting expense. You can incorporate in U.S. states like Delaware, Wyoming, or Nevada. Please note: When using this service you don’t have to pay to get the U.S. federal EIN number, you can do this yourself for free! Use My USA Corp for this task.
- Advertising – This will depend entirely on your niche and how competitive it is to advertise. We have members that pay less than $0.10 per click and others that pay well over $1.00 per click based on their niche. However, there is a free $75 Amazon Ad credit and free $100 Google Ad credit for all members. A good rule of thumb is to budget about $100/month in advertising to start with, after using your free credit.
Dropshipping is a practice adopted all over the world and this guide will help you find the best drop shipping companies in your area.
Here are few major factors used to classify countries based on drop shipping patterns and statistics.
Proven to work – as for the dropshipping business model, countries like the USA, Canada, and Australia are popular among drop shippers. The only catch is that there is a lot of competition.
High purchasing power and high average purchase size are two important economic factors. For instance, the population in the US consume more than any other country in the world. 25% of all the goods of the world are purchased there.
Online purchase frequency – the chart below shows how many online shoppers around the world are spending, according to Statista's Digital Market Outlook.
13 Best Countries to Dropship:
- New Zealand
According to the analysis of ShippingEasy clients, Canada, the United Kingdom, and Australia are by far the most common international destinations for e-commerce.
Countries to Avoid Dropshipping
Entrepreneurs have a possibility to dropship in multiple countries without any limit. No countries are considered unsafe in e-commerce. Despite that, beginners ask me often about risky areas to avoid so that they could be excluded in Shipping settings. Our list of markets to avoid dropshipping:
- South America
- Some Caribbean nations
- Some European nations and Asian nations
This list might change based on your experience dealing with different countries. So, how do you exactly assume that a country poses a high level of risk? Here are four factors to consider:
- In some countries, people prefer not to buy online
- Shipping charges are high
- Delivery period is long
- Fraud and chargeback are frequent
List of Places to Find Products to Dropship
The world of drop shipping is often considered the easiest way to sell products online, and Oberlo is seen as one of the easiest ways to get started with this. Although drop shipping comes with various difficulties, it is a viable way to start an online business without much upfront capital.
The basic idea behind drop shipping companies (aka drop shippers) is that you contact a manufacturer or wholesaler who might be willing to partner with you. After that, you build an e-commerce shop and start selling some items that fall in a niche, like electronics or glow in the dark items. The more niche the categories the better.
One of the toughest parts of drop shipping is to find a company that would provide products.
Drop shipping is used all over the world and in this guide, I've put together a list of killer places to find products to dropship and sell on your store. It will also help you to find drop shipping companies in your area.
Free Webinar: How to Quickly Start a Profitable Dropshipping Store
Learn how to find high-margin products, import them into your store, and start selling — fast.
The primary feature you get from Oberlo is the importing from AliExpress. Since so many drop shippers use AliExpress to find and sell products, it’s a wonder as to why a tool like this hasn’t come around sooner.
Not only do you gain access to thousands of suppliers on AliExpress, but the product images, details, and prices are all situated right there for you.
Also, Oberlo Supply is a special feature for Oberlo app users- with hand-picked suppliers who are much more trustworthy than those on Aliexpress. Oberlo Supply also has additional features like bulk ordering (you can place up to 1000 orders at once) and faster shipping times.
Update: Now Oberlo is offered as an embedded app for New Shopify users.
Drop Shipping Companies: Doba
Doba is one of the more comprehensive drop shipping companies since it not only provides a detailed directory of manufacturers and wholesalers but offers an interface for simply grabbing the products you want without having to partner with multiple drop shippers.
Generally, you may have to partner with and communicate with ten or twenty drop shippers. With Doba, you simply find a product you want to sell, list it on your website and process the sale with Doba. The Doba company contacts the drop shipper and sends the product to the customer, cutting out the tedious drop shipper management process.
Salehoo is similar to Doba, but it has more of a focus on presenting a detailed directory for companies you can partner with for your business. The website has beautiful category tools for you to filter and search based on the products you're trying to sell, along with a market research lab to decide on the most popular products to sell on your store.
The best part is that Salehoo manages a consistent blog and forum so you can learn and chat with others who are in the same boat as you.
Alibaba is one of the largest websites in the world, and one of the best parts of the site is that you can find manufacturers for your products, at relatively low costs. Keep in mind that you shouldn't just type in the product you want to sell and contact the manufacturer.
You must go to the search bar, type in “drop shipper,” then filter down to the desired product.
The Alibaba platform has thousands of manufacturers, and many of them don't offer dropshipping.
When you complete a Google search for finding drop shippers, you may notice that many of the directories are filled with spam or non-existent companies. This is a huge problem since you don't want to waste time and money finding a viable dropshipping partner.
With World Wide Brands, every drop shipper in the directory is certified, so you can expect a response from each one. The World Wide Brands site sets you up with the manufacturer's contact info after you find a suitable match. After that, you can contact them whenever you want and build a relationship.
The WholeSale Central company doesn't have the best website, but it's a decent tool for filtering through categories like apparel, electronics, and leather.
The drop shippers are then listed with details for you to click on and view. When you click through to one of the drop shippers it sends you to the manufacturer's website, meaning there are no middlemen to work though.
Feel free to contact certain drop shippers, and use the WholeSale Central page to find options that are close to you geographically. Traditionally, this can lead to a more reliable business partnership.
Dropship Direct lets you create a free account, giving you access to its huge inventory of products. This solution works similar to Doba, in that you choose your product first, then you can request to have that item shipped to your customer.
This way, you don't necessarily have to be in contact with the drop shipper. However, that option is available if needed.
Sunrise Wholesale is a service that dropships products directly to your customers. You gain access to over 15,000 brand name products, and you can search for these products through the Sunrise Wholesale site.
Profit from the site by selling through places like Amazon and eBay, or consider setting up your own website for a better online presence. Not to mention, this solution also helps you connect with e-commerce platforms like Shopify and Bigcommerce.
Wholesale 2b requires you to sign up for a plan, but you don't get charged a dime for simply browsing the product database. Search for certain items and categories, and when you find something to sell, post it on your site for people to buy from you.
After that, the Wholesale 2b site takes a commission, but it also sends out the product to your customer.
Contact Relevant Businesses and Go to Trade Shows
Quite often the best way to find a long-term partner for your drop shipping business is to start locating businesses in your area, or around the world, with a simple Google search. Cold calls the companies and asks for someone who might be able to help you with dropshipping.
The goal is to locate manufacturers who may be willing to take orders from you and ship upon request.
You can also check out trade shows, which puts in some face time with the wholesalers, improving your chances of building a relationship with them.
The key to drop shipping is that you don't carry any inventory. The wholesaler makes the products for you, stores them in their warehouses and ships them to the customers when you submit the orders. So, in a sense, you don't even have to see the items in order to make money.
Downsides to dropshipping include less product control, less shipping control, trouble with returns, slower deliveries, and smaller margins.
However, if you're on a tight budget and you generate a quality strategy, dropshipping might just work well for you.
Over to You…
Have you ever had the chance to take on dropshipping as a business? Share your story, or let us know if you have any questions about getting a dropshipping company up and running.
header image courtesy of George Bokhua