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How to Start a Dropship Business

How to Start a Dropship Business

Dropship Business is not a new term. It’s been around for a long time. But there is still the misconception of WHO the dropshipper is. If you are interested in starting a dropship business, ask yourself these questions… 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 is Not A “Dropshipper”

a retailer working from home with a dropship business

A retailer that sells products online, can work with drop shipping wholesalers to supply products to them. So as a retailer, YOU ARE NOT A DROPSHIPPER. You are a retailer that utilizes dropshipping services from real wholesalers.

A wholesaler that dropships, supplies products to online retailers one product at a time. The wholesaler is the dropshipper. So if you say.. “I’m a dropshipper”… you better be an authorized distributor that has products in your own warehouse and you sell at wholesale prices to retailers.

Getting into a Dropship Business

The easiest entry into the world of dropshipping is to become a retailer that sells products online that are drop shipped. Remember! This is real business. So, if you are in the USA, in order to work with genuine wholesale companies that dropship you will need the following;

1.  A registered business name
In order to get a registered business name, you will need to either;
A. make a visit to your local county clerk and let them know you want to setup a sole proprietorship or…
B. Many states have forms you can fill out online by visiting your state’s Department of Revenue. Find your State HERE!

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. Find your State link here!

⚠️ It isn’t free to start a business and get a business name and tax ID, but it is relatively cheap. Usually less than $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 what you need to sell online. Images, descriptions & of course what your wholesale prices are.

The Other Side of Dropshipping

To become a genuine wholesale supplier that dropships, (AKA Dropshipper) you will need to have a lot more money on hand. You must have a wholesale license and purchase products in VERY large quantities from manufacturers. Then you stock the products in your own warehouse, have an inventory system and setup accounts with shipping companies. Of course don’t forget purchasing a lot of packing and shipping supplies, so you can individually ship the products out per order. Oh and yes! A website is super helpful! That’s not it. There is a lot involved to legally 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 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.

Are you an online retailer looking for more dropshipping suppliers for your business? We list thousands in our Wholesaler Directory! Check it out!

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