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Although manufacturers or direct distributors are large companies, some of them may not have an established website. You can still contact them by calling them or sending them a mail. I would recommend that you call them personally so that there is more room for negotiations, and also a warmer ‘touch’ to business relationship.
Before calling your drop shipper directly, you will need to establish your business as a legal entity before starting any business trading. Registering your business with government involves getting your Tax ID number, and also your official business name. You can contact your state’s administration and find out how to register your business. U.S. citizens can get a lot of resources and information on registering a business at http://www.sba.gov.
After your business registration is done, you can start contacting your drop shipper and negotiating with them. There are several important issues that you have to discuss with them:
1) Shipping. Most of companies outsource delivery of their products to a delivery service like FedEx or UPS. Once you email a customer order to your drop shipper, you will need to be able to keep track of status of delivery. If any customer were to query you on when goods are to arrive, you will then be able to account for them fully. Established delivery services like FedEx offer online real-time tracking services. With tracking numbers issued by services, you can log on to internet to track delivery status of goods. Alternatively, you can choose to include tracking number in email autoresponders sent to your customers, so that they can log on to FedEx or UPS website to track shipment.
You would also need to find out what is delivery service that your drop shipper uses, and calculate shipping costs. Shipping costs within a country should be significantly lower than international shipping, thus it is advisable to select a drop shipper based in country where most of your customers are. This not only cuts down a lot on shipping costs, it will also reduce hassles of international shipping like customs security and slow delivery time. Additionally, lower shipping costs would encourage more purchases from your customers, as compared to cases of international shipping where high shipping costs can sometimes account for up to half price of goods, deterring them from making purchases.
Usually, logistics department of drop shipper is willing to label their products with your company name and logo, so that it will appear as if you were one who shipped products to your customers.
2) The wholesale price of their products. Although this would not vary much among manufacturers of same products, some manufacturers do offer a slightly lower wholesale price than other suppliers for same product quality. It would pay off much in long run if you scout around for wholesalers with lower price, as you would make a bigger profit on each sale. You can also negotiate among several wholesalers first because some wholesalers allow greater room for negotiation than others. If your online businesses can have a guarantee of selling a large quantity of products, you should be able to get a lower price for them, similar to discount given for bulk purchases.
3) Credit and Billing. You would have to make clear with your drop shipper how you are going to pay them, whether it is by credit cards or by checks. Will payment be made immediately after each purchase of goods, or will it be paid after a certain minimum quantity of goods is purchased, or will it be paid at end of each month? These details may appear trivial, but it is important to clarify all this at start to prevent disputes later.
4) Product Return Requests. Because your customers expect their products to be of a pretty high standard, your drop shipper will need to guarantee you a certain standard of product quality, and be willing to replace any defective products. Be wary of drop shippers that do not offer these guarantees! If it turns out that many of their products are defective, then your reputation is at stake, and you would end up with many useless defective products. Clarify process of returning defective products. You may want your customers to return products directly to your drop shipper, instead of sending products first to you, then from you to drop shipper.
An agreement with your drop shipper on their refund policy should be finalized. If they do, you need to determine whether funds are to be transferred first to you or directly to drop shipper.
In conclusion, process of establishing a business relationship with a drop shipper can be quite complicated. However, if many of details are clarified right before any transactions are made, your online business should be able to handle all hassles smoothly.
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About the Author: Ray Yee is the founder and president of Dropshipperscentral, a website which provides a wealth of informative articles, tips and resources on everything you’ll ever need to know about setting up a Drop Ship Business and marketing it. Click here for the Wholesale Drop Ship Directory from http://www.dropshipperscentral.com