Starting a Dropshipping Business

RFW

If you can turn over a £million per annum or more you should be fine if not you'll probably fail.
I suppose this may sound rude but it isn't meant to be, but the fact you are asking advice on here means you aren't confident in it yourself and therefore should not do it that way. Would you have exclusivity with your supplier, if not and you are successful what's to stop them starting dropshipping themselves?

As someone else said its hard to work out why you'd want to dropship, if you can manage to handle the goods yourself why not sell them yourself?

PierreF_2

Thanks all for the input.
The logic behind the idea, is that by buying bulk from the supplier I get much better discounts than before. It makes it possible for me to make 10% and sell at the prices that i previously would have bought for! So it means that my customers would make the same profit as i used to make.
The reason why i dont just sell the items myself is that it was a lot of work for the money that i was making. But the money would be great for people who are just selling.
Also with returns, i can return faulty/broken items to supplier and get a refund, so returns wouldn't be a great problem

cyberbob

10% Margin is still very small. It doesnt take much to eat into that sort of profit

PierreF_2

I though it would be a good idea to post an item with price e.t.c as an example
I would be able to supply a uk to USA/Canada plug for 75p, currently selling on ebay for £2.99 with postage included. Postage on this item would be £1.14. If you had a shop listing would be 20p and final fee would be 30p and so would paypal fees. This means on the first item you would make 30p and the items thereafter 50p. So thats around 65% profit.
Although a very small amount of money 31 have sold in 4 days! So £15.30 profit on one item in 4 days

soolin

I don't think though that you understand the returns issue. As a business seller you have to accept returns for any reason and refund all their outward postage, just one return every few weeks is going to start eating into your profits very quickly.

Also your £15,30 profit appears to overlook tax and NI so reduce that even further.

No way would I accept margins in the low pence for such a risky category.

The line i have just given up made me around 25% profit after all fees and tax , and I thought that was too low on a sub £10 item which is why I stopped that particular line of goods. I much preferred it when I could clear near 75% as clear profit.

PierreF_2

Thats a very fair comment.
To find a dropshipper that offers a return of 75% is almost impossible. Lucky to find those which offer a small margin profit. But many people who sell on ebay only use ebay to direct traffic to their own websites. So if items are sold on your own website the margins increase significantly. Most items have a postage of less than £3 so if there was to be a return, although it will take some profit, it wont be all that significant.
I sold for just over 3 weeks sold just under 600 items, and had 4 returns!

soolin

I am a little confused now, you mention in your first post that you were thinking of drop shipping and negotiating a deal, now you are doing it and making a miniscule profit but appear happy.

As no one else here is likely to go into a market to trade against you with such low margins I am not quite sure what else you need to know?

Pssst

It sounds dodgy to me. Let us know how you get on.
I do wonder why you would choose to share such a good idea with us?

PierreF_2

Im not too sure what you mean. But what i am talking about is me dropshipping for other people. So i would buy the items in bulk from the supplier, and then i would dropship these items. So i would have customers who sell to their customers. When they sell to their customers i send their customers the item.

PierreF_2

Pssst wrote: »

It sounds dodgy to me. Let us know how you get on.
I do wonder why you would choose to share such a good idea with us?

Theres no harm in you knowing as you don't know the supplier which is the key
Its just that i dont have much experience in this field, so was hoping for some words of wisdom, which i have received quite a lot, albeit many negative