Profit on Dropshipped goods

Discussion in 'Ecommerce Forum' started by Bushman, Aug 9, 2019.

  1. Bushman

    Bushman UKBF Regular Free Member

    117 26
    We are manufacturers and are considering offering retailers a dropshipping service for our goods, and was wondering what sort of profit resellers expect to make when selling drop shipped goods. The goods would be low value usually under £20 at retail.

    TIA
     
    Posted: Aug 9, 2019 By: Bushman Member since: Nov 17, 2015
    #1
  2. Mr D

    Mr D UKBF Legend Free Member

    15,593 1,718
    You would usually sell them to dropshipper at higher price than wholesale and charge a shipping fee that covers time, packaging and postage costs. For instance £3.99 for a parcel, when in reality its costing you £2 odd for the postage side alone.

    A quid or two profit is OK, some want more and set their selling price appropriately.
    For dropshipping its about volume of stock for sale to get a small percentage sold.

    More importantly, have you worked out how to let dropshippers know the stock level?
     
    Posted: Aug 9, 2019 By: Mr D Member since: Feb 12, 2017
    #2
  3. Bushman

    Bushman UKBF Regular Free Member

    117 26
    Thanks for the response, we would show stock levels on our website.
     
    Posted: Aug 9, 2019 By: Bushman Member since: Nov 17, 2015
    #3
  4. thetiger2015

    thetiger2015 UKBF Regular Free Member

    141 36
    You'll need to be more detailed than that. Most dropshipper websites now integrate automatically using a CSV/API that allows them to have real time access to your stock levels. Just having them on your website isn't much use, unless they check your website every day and visit every product page every day to check you still have items in stock.

    Dropshipper margins are much smaller than wholesale but they leave the logistics to you, hence the ability to have a narrower margin. Where a B&M style retailer might be able to achieve a 60% gross margin, a dropshipper may only see a 30% gross margin or even less if they're competing against every Tom, Bob and Lynda on eBay etc.
     
    Posted: Aug 9, 2019 By: thetiger2015 Member since: Aug 29, 2015
    #4
  5. Mr D

    Mr D UKBF Legend Free Member

    15,593 1,718
    Dropshipper may have 100k products listed on a site (bigger ones are millions of products) and want to know when you are out of stock.
    Whether they can scrape that info from your website or access some file somewhere they aren't unless very small going to be able to check your website daily.

    Have heard of big dropshippers with automatics set up so a computer runs in a room and generates an income without human interaction needed.
     
    Posted: Aug 9, 2019 By: Mr D Member since: Feb 12, 2017
    #5
  6. fisicx

    fisicx It's Major Clanger! Staff Member

    30,590 8,983
    As already suggested, the whole thing needs to be automated. You update the sellers website with stock levels, tracking and delivery info.
     
    Posted: Aug 9, 2019 By: fisicx Member since: Sep 12, 2006
    #6
  7. crackerjackcommerce

    crackerjackcommerce UKBF Contributor Free Member

    38 0
    Hi, for us we would like auto updated stock level feed somewhere we could download it from or ftp.

    We like to earn at least a 20% margin once all cost of sale fee's have been taken into consideration. If it was a higher volume with less customer service required i.e. sell more and little after sales support then we would be prepared to work on a lower margin.

    Good point, this would be our main concern.
     
    Posted: Aug 12, 2019 By: crackerjackcommerce Member since: Aug 1, 2019
    #7