Drop shipping is a very simple way to make money using the internet. There is very little risk or capital investment required when setting up but, understandably for a business that promises easy money, there is a lot of competition.

All you need to do, is to advertise a product that you don't have in stock, take orders from customers and pass them on to the wholesaler. The products are then dispatched by the wholesaler, leaving you to pocket the difference between the retail and wholesale price. There are many internet outlets offering you the chance to buy your way into this business. They are in fact selling you lists of wholesale suppliers who will undertake delivery to customers in their country. The popularity of these lists and the lure of making money through the internet has attracted a lot of people to drop shipping. Inevitably that means it is hard to find products you can sell in this way with a sufficient margin to make it worthwhile. This problem is magnified if you are end up having to pay international shipping costs on individual products.

But because the way to make money through drop shipping is by using information, the web means that you can still find a niche or two in which to operate this kind of business. The key is to use the Business to Business (B2B) online marketplaces that are a growing resource. Here you can find for free, millions of listings of products for sale and trade leads. Once you have identified a product which you think you can sell and then locate a supplier who can handle shipping direct to your customers, you will be in a position to begin drop shipping. This is a term which may have recently acquired a bad reputation but is actually just an advanced form of supply chain management (why should the retailer keep costly inventory?).

Before you launch into it, there are a couple of problems to be aware of. Make sure you can trust your supplier. If you have taken money for orders that he can't supply, you are going to get involved in the awkward business of customer complaints and refunds. To avoid this kind of unpleasantness, you will need to develop a good relationship with your supplier so you know what he has in stock and what demand is like. Secondly, if you are using an online marketplace to sell the products such as Ebay, you need to make sure you can supply the product more cheaply than it is currently being bought. Thirdly, you need to be very clear what happens should the product develop a fault during its lifetime.

There are also a large number of scams in and around drop shipping, which involve the selling of useless, out of date directories of wholesalers and drop shippers to gullible people looking to run web based businesses who still believe that they can become rich without having to do anything but logging onto Ebay.

If you think you can handle these sorts of problems, then get busy on the B2B online marketplaces. You won't make millions without having to make any effort but there are products out there that offer the right kind of margin for online traders to make money out of through drop shipping - the secret is in the research.