Web 2.0 provided the infrastructure necessary for you to be your own retail store. Who needs Wal-Mart? With just a few clicks, you can sell goods around the globe on Amazon, eBay, and Shopify. Drop shipping is a retail approach that frees you from buying, storing, and shipping inventory. The drop-shipping method allows you to rely on wholesalers to manage the shipping of your sold goods. What most people don’t know is that many big-box retailers will support your dropship business with just a few clicks.
Kohls is one of the easiest and most reliable retailers to utilize for your drop shipping needs. Kohls regularly offers coupons (e.g. dollar or percent off), discounts (e.g. free shipping), and cash back. These built-in discounts offset many of the fees you will pay using Amazon or eBay.
For example, Kohls recently offered the Star Trek Mega Blok Bridge playset for $59.90, a discount of 20% off retail. Kohls offered additional coupons worth 15% off and $10 cash back on every $50.00 purchase. Additionally, Kohls offers points for every purchase. Stacking these discounts can save you upwards of 70% off the retail price.
At the same time, the Star Trek Mega Blok Bridge sold for $65.00 on eBay. Listing and selling this item on eBay for $65.00 and drop shipping through Kohls netted a 10% profit on the sale of each unit, even after eBay and Paypal fees were deducted. Cashback and bonus points earned could be redeemed on future units, further reducing overhead costs.
JC Penny is another large department store that will drop ship goods for you. Using the same principle as above, goods can listed and sold through online platforms but shipped directly from JC Penny. For example, their heart-shaped Valentine necklace was discounted for $19.99 with free shipping. A 40% off coupon brought the total before tax down to $11.90. This item was sold on eBay for $20. After fees, sellers were making a profit of $5.50 per unit. JC Penny has reliable and timely shipping. It offers consistent inventory ensuring the availability of products.
Kmart is another big box retailer that can support your drop-shipping sales. Like Kohls, Kmart regularly offers discounts, coupons, and cash back (i.e. called free cash). Kmart has less reliable shipping. Where Kohls has never delivered a damaged packet, Kmart regularly ships poorly packaged products. With Kmart, the larger the item, the more likely the unit will be packed well and shipped safely. Smaller items are more likely to arrive crushed or damaged. Also, Kmart occasionally runs out of inventory, resulting in canceled orders. Still, after coupons and discounts, drop shipping through Kmart regularly nets 12% profit.
Estimating Fees & Other Discounts
Newbies to the drop-shipping method can estimate profits by deducting overall fees from online platforms. You should estimate 13% fees selling on eBay while receiving payment through Paypal. eBay is rolling out their own payment system this year which should bring this closer to 11%. Amazon’s fees vary per category but run around 11-14%. Shopify has a Shopify Lite offering of $9 a month, and 2.9% +30 cents for all credit card payments.
Regardless of where you are buying, use services like Upromise.com, CouponCabin.com, and RetailMeNot.com to generate additional revenue on purchases, further offsetting the loss of fees. Upromise offers 5% back on many online stores, including Kohls and JC Penny, but Sears/Kmart is no longer a featured store of Upromise. RetailMeNot regularly offers $20 back on $100 purchases at many big name stores, including Nike. And CouponCabin offers tiered earnings with bonuses at each level. Finally, always check the fine print for shipping to a third-party address to ensure your risk of product loss or damage is covered.