Are you looking for help finding your own drop shipping wholesalers or tips for starting your own stockless retail business? A very nice – and FREE! – ebook by Dr. Brad Beiermann may be just the ticket (click here). I thought it was a pleasant read and certainly worth my time. In fact, I thought it really was nicer than other ebooks I’ve seen selling for $47. At 80 pages, it is also a bit long as these things go, so I decided to highlight parts I thought would be most useful to people:

1. Have a marketing plan (p. 17). This section includes brief tales of folks hoping to start a web store without much idea of what they’ll sell or how they’ll get customers to buy products from them rather than a competitor. Names of the guilty are mercifully withheld. You might think the stories are amusing, or you could be distressed to see parts of yourself in them. “I’m going to sell on eBay!” Great, sell what? Don’t be too embarassed if any of the examples sounds eerily familiar!

2. The power of niche-a must read (p. 29). An entrepreneur puts a new twist on what has been a less than successful product and makes big bucks! Getting a drop ship wholesaler isn’t the be-all, end-all of developing your niche business.

3. Quick and very valuable tip for anyone listing drop shipping products for sale online (p. 34). This really is effective. If you haven’t been doing this, I know you’ll be kicking yourself after you read it.

4. Novel way to find wholesale drop ship suppliers (p. 51). I’d never thought of this before!

Enjoy the ebook and I wish you the best of luck finding a few drop shipping wholesalers and getting your business underway.

Why are good drop shipping wholesalers, or any wholesalers for that matter, hard to locate? The reason is simple: bona fide tier one wholesale suppliers are often busy places that don’t have to advertise. They don’t need to be contacted by just anyone with an internet connection. Many of them do have websites, but they’re usually not highly optimized to rank on hot keywords, so any wholesale drop shipper you find online without too much effort is most likely a middleman. Small accounts can be more trouble to them than they are worth, so the established wholesalers might only want to deal with bigger fish. Think about it. if you were a wholesaler, which call would you rather take:

A) “Hi, this is Sharon Turner. I just opened my home-based business and I’d like to sell your cute toys to make money online!” -or-

B) “Hi, Joe. This is Mike Patterson again from Sears. We like your product and we’ve budgeted $200,000 for our order. How soon can you ship it?”

If you discover that a supposed drop ship wholesaler is paying for sponsored links in search engines, this should be a major red flag to you. It is probably a middleman. Another warning sign is a place that wants to charge a monthly fee for you to do business with them. Buy low and sell high is great in theory, but making it work is always the trick-just as with the stock market. Finding good drop shipping wholesalers in your niche is vital when you have a small starting budget. There is no point to setting up to sell anything if you have no prospect for earning a profit.

Reliable and trustworthy wholesale dropship companies do exist and can be used successfully. You’ll have to hunt around and also do your market research to see how competitive your pricing will be. While some hot areas-certain electronics niches come to mind-may be difficult to compete in, there are many others where you can work profitably. The manufacturer of a product should be happy to refer you to their distributors, which is a good way to check whether or not a business that represents themselves as a distributor is actually another reseller.

One problem with drop shipping wholesalers is that most distributors who claim to be “true wholesalers” are actually middlemen instead.  In other words, a place you think is a wholesale drop ship business might be receiving goods not from the manufacturer but through another distributor. Naturally, they’ve marked up the price to make money themselves.  It is hard to make money online if you cannot get the goods yourself at good wholesale rates. You will in turn have to mark up the prices, but of course buyers might refuse to purchase if prices are too high.  At the rates you would have to charge, it may not be possible to make money online at all or the margins could be razor thin.

A second problem is that in some niches you may have a hard time getting distributors to work with you if you do not have a physical storefront, especially when your business is also brand new. You’ll have to be sure to check around for different suppliers or you may need to be flexible about what niche(s) to pursue for your business. Usually, you can find another brand with a similar product to sell. You could decide to source products through a middleman if you can find one with acceptable prices.

Many people want to sell things on eBay for starters rather than open an entire online store on their own to minimize the startup time, but eBay will take a cut from you and Paypal will, too, when you make a sale.  Especially with competitive things like electronics on eBay, it is very difficult to make any money if you can’t get low enough wholesale prices.  There are lots of other eBay sellers ready to compete with you and the buyers can drive a hard bargain, too.  A bunch of middlemen wholesalers charge a monthly fee to use them so you would have to earn enough to cover that as well. Avoid any place that requires a monthly fee!

When I first looked into a dropship based business, I was initially happy when I found a place to drop ship wholesale products after a little searching.  They had what looked like great accessories in a popular electronics category, so I decided to check for related eBay listings.  Reality smacked me: there were already 20+ listings on eBay.  About 18 of them had the same product photo that I’d seen at the supplier catalog, so I figured they must have been all using this same source.  Some of these things had not sold during their prior listing period and the ones that did sold at lower prices than I could sell at without losing money.  I found a second item that wasn’t as bad.  I saw that I could make a couple of bucks per sale…but of course then I realized I’d have to cover the monthly fee from the “drop shipping wholesaler”.  If I couldn’t sell at least 8 of these per month I’d be losing money.  All the sudden, the drop ship wholesale business model didn’t seem so great or so easy to do as I’d been led to believe.

Good drop shipping wholesalers can be a great asset for a small retail business.  Wholesalers receive goods from manufacturers and then break down these bulk deliveries to supply retailers, who in turn market and sell the items to the customers.  In a drop shipping business, the retailer carries little or no inventory and routes customer orders through the wholesale distributor, who ships the item directly to the customer.  Some distributors will provide blind drop shipping, where they’ll ship using your retail company label and shipping information.  This can be nice because then the customer doesn’t know exactly who your supplier is or, more importantly, what your cost was to get the item.  

Certain distributors will handle drop shipping with as little as single quantities, while others will require bulk purchases.  Wholesale companies can be reluctant to handle very small orders, since it may not be as efficient or cost effective for them. The degree to which this occurs will vary with your product niche. In general, smaller manufacturers are more willing to drop ship directly for a retailer to get more exposure for their products. Smaller manufacturers can be great suppliers to recruit.

If you are a new, small retailer the main benefit of drop shipping wholesalers is that you don’t have to be able to manufacture your own product or stock your own inventory to sell products and build capital.  If the drop shipper handles single, or low, quantity orders, then you can also limit your risk of getting stuck with merchandise that you cannot sell.  This can work well for everyone so long as the retailer can get the goods at a true wholesale price. Getting goods that are in demand at the right price is the trick, though.