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Drop shipping has now become one of the most lucrative sources of online business. Individuals pursuing drop shipping, act as retailers for merchandise of one or more wholesale companies and try to sell the merchandise to retail customers. Just type any product you can think of into a search engine and look at how many pages of websites come up - most of them are indeed retailers making living online selling wares using drop shipping!

Why Drop Shipping is Lucrative

Drop shipping has suddenly caught everyone’s fancy because it is simply the most efficient way to retail over the Web. This is how drop shipping normally works:

- A prospective buyer surfs the Web for a product and make a purchase.

- The website owner (retailer) passes that order to his drop shipper or wholesaler.

- The wholesaler processes the order, ships the product to the buyer with the name of the retailer on the package. Buyer thinks the website owner has sold and shipped the product to him.

Here the profit margins are phenomenal for the retailer. This is because the retailer himself purchased the product at wholesale rates and then sold it to the customer at the best possible price he could offer.

But there are some more advantages to this. Drop shipping requires zero overheads as there are no rentals, labors or salaries to pay for. There is no inventory to maintain as all products are stored, managed and shipped by the wholesaler, in fact, this is more lucrative than even a Wal-Mart model. You see, Wal-Mart also follows the same principles of buying wholesale and selling at retain prices, but It has to take in the inventory and lots of operating costs, which is why you make a better profit per sale than Wal-Mart does.

Drop Shipping’s Secrets

Veteran e-retailers don’t even bother wasting time and effort on promoting and operating their own e-commerce website, which are too time consuming and troublesome. It’s almost like reinventing the wheel. They use eBay, where they post their products at retail rates, offering ‘discounts’ and other freebies to attract buyers. eBay gets millions of clicks and retailers don’t have to worry about maintenance, shopping carts etc. All of this is taken care of by eBay.

It’s no wonder that people make entire careers from drop shipping and eBay. Maybe you should also give it a shot, who knows, you could be on your way to success and riches!

About the author:

Lewis Low is founding editor of OnlineBizPromo. For more practical online business ideas and work-from-home opportunities, visit http://www.onlinebizpromo.com.