Drop shipping is not a new industry it has actually been around for quite a long time it can be traced as far back as 1872 when a businessman name Aaron Montgomery Ward created the very first mail-order catalog for his business Montgomery Ward.

He figured out that by purchasing goods at wholesale and then reselling them directly to his customers via mail he would be removing the middlemen at the general store, and to the benefit of the customer, lowering the prices.

The first purchasing catalog was a single sheet of paper with a price list roughly, 8 by 12 inches, showing what products they had for sale and instructions on how to order it.

Montgomery Ward discovered a market of merchant-wary farmers in the old west and within two decades, his single page list of items grew into a 540-page illustrated book selling over 20,000 items.

At one point he even offered drop shipping for prefabricated kit houses, called Wardway Homes, by mail !

Even in 1872 Mr Ward knew that in order to make a profit the middleman had to be eliminated. To this day that theory still holds true, and to this day the middleman still hides behind every corner trying to get their piece of the profit. One of the most important things anyone getting started in the resale industry has to do is to eliminate the middleman.

Drop shipping Industry Chain

1. Manufacturer-- Manufacturers are the companies that make the products. You can buy from some manufacturers especially the smaller independent ones however, most of the larger corporations are located over seas and will only do business with wholesalers that are purchasing in large quantities.

2. Wholesalers-- Most products sold in America are made over seas especially any type of electronics, and designer clothes. The manufacturers send the merchandise into the states, but it has to be stored somewhere this is where the wholesalers come into play. They purchase the products in bulk from the manufacturers, break them down into bulk wholesale orders, retail shipments, and they will also drop ship for online merchants who have the proper business requirements.

3. Middleman-- People have been trying to avoid them since 1872 (probably longer). They go to the real wholesalers website then establish an account with them, place their merchandise on a website, raise the prices on the merchandise by 20-50%, and then pretend to be a stocking supplier. They make their money off of every sale you earn, and by having you pay them monthly fees.

The good news is you can bypass the middlemen, and work with the real suppliers for free. As bad as they don't want you to know. You can get your products from the exact same companies they use, eliminating all the unreasonable fees, and start making some real sales and profit!

4. You, your website, online selling platform.