Dropshipping is a retail fulfilment method where you, as a retailer, doesn’t keep the goods that you sell in stock, but rather you forward the orders to third party, who then ships the products directly onto your customer.
As the manufacturer, another retailer or a wholesaler has such an important role in the success of your business - its vital to take the time to research the supplier that works best for you.
This article will outline some of the key points to consider to help you find a supplier. We’ll also cover how you can protect your profits by cutting the costs of international payments to suppliers, with a TransferWise for Business account. More on that later.
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A smart way to make sure you find a good dropshipper, is to learn more about the distribution channels used in your chosen niche. Knowing the way product typically moves through the system will help you find a partner who can help you. Depending on the product you want to sell, you might look to work with any of the following:
- Import companies
- Exclusive distributors for a brand - these may cover a specific regional territory, or have complete control over distribution throughout the country in the case of imports
In basic terms, the fewer middlemen involved in the deal, the better the prices are likely to be, so you’ll usually want to work with partners as far up the distribution chain as possible.
Finding your supplier is one of the most important steps in starting your dropshipping business. You’ll need to take the time to research your options, as finding the right supplier can have a huge impact on your costs - and thus your profit margins.
Buying goods from abroad? Learn about import duty taxes in UK.
If you’ve taken the time to decide on the products that you want to sell, and have researched some of the manufacturers of these products - then this can serve as a great starting point in your search for a wholesale supplier.
If you know the products that you want to sell, you can contact the manufacturer directly, and request the details of their wholesale distributors. This provides a way to find legitimate wholesale suppliers relatively quickly, and also opens up potential opportunities. Opportunities such as new product ideas - as suppliers will likely stock related products that you may be interested in selling.
It’s also worth checking out smaller manufacturers or suppliers if you have a specific or niche product in mind. Personalised or tailor made products can make a great option to help your dropshipping company stand out.
By using a simple google search for your product type, and distributor or wholesaler, you’ll start to generate a list of potential options. Narrow your search by using more specific search terms such as the brand names and model numbers of the products you’re interested in.
This approach can take time, so you’ll need to be prepared to sift through a large number of search results. Also, it helps to vary the terms that you’re searching for - such as using terms like: bonded warehouse, reseller, or bulk supplier.
Trade fairs are a way for you to meet manufacturers and suppliers in-person, and investigate who may be able to help supply your products. It’s a great way to meet manufacturers and potential suppliers - and develop an in-person working relationship. It can also help trigger new product ideas, as you can find related stock to your niche, that you may otherwise not have considered.
It’s also a good idea to look at some of the large directory-style listings which are available online, to build a picture of what’s available. Try the lists on thewholesaler.co.uk¹, or esources.co.uk² as a starting point.
As dropshipping is becoming increasingly popular as a business model, sites such as thewholesaler.co.uk have sections that are dedicated to dropshipping suppliers. For example on thewholesaler.co.uk, if you wanted to find a UK based supplier that specialises in giftware products, they list:
- Ancient Wisdom Drop Shipping
- Puckator Ltd.
Whilst most suppliers are honest, be aware that there are some scams out there. These could mean you lose money, receive poor-quality goods, or even no goods at all.
Take the time to make sure that you’ve found a legitimate dropshipper, to make sure you don’t fall foul to any unscrupulous companies out there. Some things to bear in mind are:
An established supplier or manufacturer should have testimonials or reviews from past clients, so that you can check their performance as a supplier. If they don’t have such feedback on their official site, take the time to research the supplier via online forums. If you are not able to find any feedback, then this may be a bad sign and you should continue your search.
You’ll need to do a significant amount of due diligence on whatever options you turn up when talking to suppliers and distributors. Get references, feedback and reviews from whatever sources you can, so you can learn more about how they work and the sort of service they provide.
Before you commit to a large scale order from a new supplier, it can be extremely beneficial to request a test purchase, if possible. This way you can check that the product is up to the standard that you want to provide to your customers. Providing a quality product, is key for a new business to develop their client-base, so testing a product can save you the headache of a large scale order of faulty or sub-standard products.
Check the terms of service thoroughly for fees, either as a set up charge or to maintain your account. Usually charges for set-up, or fixed monthly fees regardless of order volume are a warning sign, as high quality dropship companies won’t look to make extra profits like these from their partners. Chances are if you see fees like these, that you’re looking at a middle-man, and the charges being added go to cover their profit. Cut them out by going direct to the manufacturer or supplier if you can.
When you’re choosing a dropshipper, it’s important to remember that they represent your business. Some companies you’ll come across are actually middle-men working on behalf of manufacturers. They need to make a profit, which may mean the price you pay is higher, or the quality and service you get is second best. Most experts recommend avoiding companies like this if you can, unless you’re sure they will be able to meet your needs. If you have doubts, you may be better off finding manufacturers and suppliers you can work directly with.
Once you’ve worked out the products you want to sell, and know a bit about the manufacture and distribution chain, you can start to make contacts. If you know the manufacturer, ask if they also cover supply. If they don’t they may still be happy to tell you who their recommended wholesalers or agents are, so you can continue your search.
Be specific when you’re contacting potential partners. Ask about unit prices, minimum order levels and values, costs per order for packing and shipping, and whether or not they impose other terms when dropshipping. You may get better results if you follow up with a phone call where possible.
You’ll need to do a significant amount of due diligence to make sure the suppliers you’re looking at can meet your needs. Because they’ll handle and supply your products, your supplier will represent you and your company. If the products don’t meet the specifications, delivery is slow or service inadequate, this reflects on your company.
Spend less on bank fees and keep more for yourself, so you can sit back and enjoy watching your business grow. Don’t lose out when paying your suppliers overseas, or receiving payments from international clients - see why TransferWise is 19x cheaper than PayPal.
Sources checked on 19-September 2019.
This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from TransferWise Limited or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date.
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