Choosing suppliers is one of the hardest tasks when starting out. You can avoid a lot of heartache and expense by ensuring that any supplier you are considering using is reputable.

• Always check out the supplier's website thoroughly. Ensure that they are displaying full contact details, VAT registration number (UK and Europe) and, if a Limited Company, the company registration number and registered office address. Look at their Terms & Conditions: are they reasonable? Is the site littered with spelling and grammatical errors? Lack of attention to such details often denotes sloppiness in other areas of business. What payment options do they offer? If Western Union is the preferred payment method, avoid.
• Next, do a WHOIS check on the domain name. Check that the ownership details match the information on the website. How long has the site existed? How frequently has it been moved? Regular changes of nameserver generally indicate that a site is being repeatedly closed down for some infraction of rules - selling fakes, perhaps, or just outright scamming.
• Google the business name with the word "scam" appended. This will show up any forum discussions etc on the legitimacy of the supplier. Do read and weigh up the comments carefully, though. Bear in mind that many people will unfairly label a business a scam simply because it doesn't have the products that person was hoping for, or because the prices are higher than was anticipated.
• If a site requires that you pay a registration fee before you have access to pricing, drop them a line and ask for sample prices for a handful of items you are interested in. A reputable supplier will be happy to provide this information.
• Once you have signed up with a supplier, always place a test order. Have it sent to a friend or relative, preferably in a different town. Check the standard of the packaging, and make sure there is no reference to the supplier's company. Some carriers require that the supplier's address is shown on the package, but there should be no mention of their name unless they actually manufacture the goods.

One tactic we DO NOT recommend is the following, which has been touted by many forums as an excellent way of checking out a potential supplier:

"Ask what this particular guy called "pitfall questions." A pitfall question is one where you ask a misleading question about the technical details about the product (which you've carefully researched before contacting the supplier) to see if you can trip him up (if he's a scammer) as he tries to close in for the kill.

For instance, he might ask a vendor, 'Will the Ipod Nanos have the good AC/DC plug, I need the 220/240V European norm?'

If the vendor replies: 'Yes of course, we have the European models!', he's probably a scam artist, because a professional’s reply would be: 'Since Nanos are charging via a USB 2.0 cable, power plug is an option. They will charge on any computer on earth equipped with USB 2.0. Language can be chosen at first start or changed later.'"

Another variation on this says that if the supplier has to check and call you back, it is "proof" he is either a scammer or a middleman who has to contact the "real" dropshipper for the information.

This is, of course, utter nonsense. Would you expect a shop assistant or even a store manager to have an expert knowledge of every single item s/he sells, and to be able to quote the specifications of a product without at least looking at the box? If your supplier offers only a tiny range of goods, then I suppose you might expect a detailed knowledge of those items. However, a supplier who offers a catalogue of hundreds or even thousands of products might well need to pop down to the warehouse and look in the box to answer a technical question.

Reputable suppliers will be busy enough sourcing stock, processing orders and dealing with genuine enquiries from real customers, without having to fend off "pitfall" questioners as well!

Dropshipping is a highly successful form of selling in the USA; but is relatively new to the UK. Unlike the traditional ways of running a business, sourcing and buying stock in bulk, storing and hoping you manage to sell it all, dropshipping means you don't actually have to buy any stock (be that one item or several) until you know you have already made the sale. This method of selling works for online or offline mail order and it means that you can start a business with very little outlay or capital.

Dropshipping is quickly becoming a popular way of setting up your own home based business or simply earning a second income.

How does dropshipping work?

You advertise the items you sell under your own business name. There are various ways you can do this, including:

• your own web site
• online auction sites
• mail order - print and distribute a catalogue
• sell to family, friends and work colleagues
• advertise in the classified ads section of your local newspaper

Most products have a recommended retail price (RRP), but generally you sell at whatever prices you choose bearing in mind what others are selling the same item for. You keep the profit above your cost. Please be aware that dropshipping may not provide massive profit margins. Some items will provide higher margins than others. It depends on many factors. As time goes on you will build up the experience of knowing which items sell well and whether you need to sell lots of the items with a lower profit margin or concentrate on the items that provide higher margins but fewer sales or a combination of the two. The choice is entirely yours. The great thing about dropshipping is that you can chop and change as much as you like since you have not bought any stock.

Once you have a sale, you purchase the item(s) from your dropship supplier, and the order is shipped directly to your customer. A reputable supplier will always ship under plain cover.