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.