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Posts Tagged ‘Drop’

Drop Shippers Versus Broker Networks

Drop Shippers Versus Broker Networks
A drop shipper, otherwise known as a wholesaler, is a company which keeps an inventory of a particular product or line of products. When one of their marketing affiliates makes a sale, this drop shipper picks, packs and ships the product to the customer. The marketer never has to see or touch the product, and they can save a fortune on warehousing and logistical expenses. Keep in mind that some drop shippers are the actual manufacturers of the products in question – but more often than not, “wholesaler” is the more accurate term. In a legitimate drop shipping operation, the marketer does not need to buy any products, and the drop shipper makes absolutely certain that the marketer is a legitimate business in itself. The notion of a “work at home” drop shipping business is typically a scam – but we’re not talking about a scam in this article.

What we are talking about is the difference between a drop shipping arrangement and a broker network. A broker network is an operation which is often advertised as a work from home opportunity – but it isn’t actually a scam, as they never misrepresent their operation. Typically, a broker network is more like the traditional, product based multi level marketing type of business, in which someone recruits a “down line” of people who buy large amounts of a given product, and resell them to other people for their cut of the profits. While broker networks are not scams, they do tend to be a bit on the unethical side of the spectrum.

Consider that a drop shipping company’s main objective is to secure agreements to move their merchandise. The longer a product sits in their warehouse, the less money they will ultimately make for it. A warehouse has all sorts of expenses to pay – and they never stop. Thus, the desire to bring in money never stops, either. While it would be a lovely success story to have a lone entrepreneur selling massive amounts of products from sheer determination, and bringing millions of dollars of profit to himself and the drop shipping company, this is just not practical. A key method of identifying a legitimate drop shipping operation is whether or not they will work with you if you do not have a tax ID number. If they seem interested, even if you don’t have one, they are most likely not legitimate.

However, a legitimate drop shipper will want to make certain you will be able to fulfill their needs. This desire for working with “serious” entities extends into broker networks, as well. Many broker networks will require you to provide them with proof that you have thousands of dollars, to make certain that you will buy a large amount of inventory. Yes, you will be expected to become your own warehouse and shipping hub, if you work with a broker network. While this does allow you to impose your own markup (and control your own profit margins), this also requires a significant initial cash outlay. This also means that you will have little to no support from your “network” after you’ve bought the products – they’ve already made their money!

We’ve all heard caveat emptor – let the buyer beware. But in the case of choosing between types of logistical arrangements, a more applicable term would be caveat venditor – let the seller beware.

You can find a great range of wholesale dropship products from the dropshipper directory at Worldwide Brands

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