How to Start a Dropship Business

If you are interested in starting a dropship business, ask yourself this... do you want to sell products online from dropshippers or do you want to become a wholesale supplier that drop ships? Yes, these are two entirely different things.

A retailer that sells products online, can work with drop shipping wholesalers to supply products to them.
A wholesaler that dropships, supplies products to online retailers.

The easiest entry into the world of dropshipping is to become a retailer that sells products on your site or online auctions that are drop shipped. In order to work with genuine wholesale companies, if you are in the USA, you will need the following;

1. A registered business name
In order to get a registered business name, you will need to either; make a visit to your local county clerk and let them know you want to setup a sole proprietorship or many states have forms you can fill out online by visiting your state's Department of Revenue.
2. A sales & use tax ID. This is also called a seller's permit or a resellers certificate.
You will need to contact your state's Department of Revenue to obtain a sales & use tax ID. Many times they have forms you can fill out online, but you need to get your registered business name first.

It isn't free to start a business and get a business name and tax ID, but it is relatively cheap. Usually around $50.00

Real wholesale suppliers will always ask for this information. The only exceptions to this rule are; wholesale suppliers that are located in tax exempt states, or wholesale suppliers that are offering products that aren't taxed in their state.

To work with a real wholesale supplier that drop ships, you supply this information to them, and they will then provide you with images, descriptions & wholesale prices so you have what you need to post the products that you want to sell in your online store or auction listing.

To become a genuine wholesale supplier that dropships, you will need to have a lot more money on hand. You will need a wholesale license, purchase in VERY large quantities from manufacturers, stock the products in a warehouse, have an inventory system, setup accounts with shipping companies, purchase a lot of packing and shipping supplies, individually pick and ship the products out. There is a lot involved to wholesaling products.

So most new to the world of wholesale and online sales, choose becoming an online retailer and sell products from genuine drop shippers for their dropship business. After your business grows and you see the need to expand your business, then you should start purchasing multiple quantities of the products that are selling well for better profit margins. Then after that, you could consider buying direct from manufacturers and open a wholesale division as well. Your business can always grow, you just have to work hard at it, and set it all up the right way, the first time.