So you want to become a drop shipper and find the best way to incorporate a store into your business. Before you jump into the drop shipping game, there are some things you need to consider.
Things To Consider Before Becoming a Drop Shipper
First off, you have to get legal; this is where most Solopreneurs falter. They think it sounds hard, complicated, and expensive, but actually it's neither of those. Just visit your state's official government website (New York City) to find out what you need to do in order to do business. You may think online businesses are exempt, but there are rules you must understand as a drop shipper. Learn what you can through reading official government websites and speaking to others who are successful in your industry.
In most cases, a DBA (Doing Business As) name can be used in place of a Business License. But either way, most states charge around $20.00. Some states, not all, require you to get a Seller Permit or Resale Certificate. Regardless, all the resources you need should be available at your states home website, usually under the small business section. While you may not have any employees I highly recommend getting a federal tax id or EIN (Employer Identification Number). It's FREE and you get it instantly. Apply here for yours if you don't already have one.
Next, you need products to sell. (Duh!, I know.) However, you have to beware when looking for online drop shipping suppliers because there are many shameless folks that will take you for all you're worth.
Here are two rules to follow when choosing a drop shipper:
- A real drop shipper will never charge you a fee to sell their products.
- A real drop shipper will want proof that you are a legitimate business.
Items they will require as proof include: Business License, DBA, Federal ID (EIN), and/or Sellers Permit. A very good source of real wholesalers you can check out is the WorldWide Brands OneSource Directory. They've done most of the work for you! They sell a directory of REAL drop shippers and light bulk wholesalers that they have researched for you. I suggest doing some research yourself before you settle on a drop shipper to make sure you've made the best choice.
Third, you need a venue, or headquarters, where you can reach your prospective customers. Ideally, you want to use your own website or sell your products on websites like Etsy or Amazon. For your own website, you will need the usual: a domain, a web hosting account, and shopping cart software. EZ Dropship Cart is a great cart for drop shippers. You can also use WooCommerce Dropship Manager plugin on your site to track your orders and communicate with your vendors. The Dropship Manager plugin streamlines the back-end order process for you, allowing you to focus your time and energy on building relationships with your customers – where it belongs.
Finally, you need a way to accept your customers' payments. Paypal is a quick, simple way to get started. You pay fees only when you have transactions and for certain pro-business options. While credit card processors offer lower per transaction fees, they require setup fees and monthly fees that are geared toward large volume sales. However, more and more companies are offering credit card processing alternatives for businesses. Check out Stripe, which not only gives you a quick setup option for your website, but also offers some flexibility missing from PayPal payment options. Warning: if you go the route of Stripe or any processor allowing you to make sales directly from your site, you need to purchase and install an SSL certificate to remain compliant. Learn more about SSL certificates and why they are important and vital to any online business here.
Becoming a drop shipper doesn't have to be complicated and can be a great way to jump start your business eStore. You've made the commitment that you want to take the step into retail, now you have to set your brand up for success. Go through the proper channels, do your state homework, and apply for your EIN. Soon you'll not only have your products chosen, you'll also have your website ready to sell to your customers with little to no hassles.
You'll be a drop shipping pro before you know it!