If your online store has become an online warehouse and you’re wondering where to put your piling up inventory or if you would like to try to increase your profits by expanding your line of products but are reluctant to commit money to something you’re unsure of then dropshipping could be for you.Drop shipments are a method of doing business that could reduce your inventory, eliminate shipping worries and add flexibility to your business. First you open a drop shipping account with a manufacturer or distributor. When a customer places an order you alert the products distributor by phone or email and they ship the product out. The distributor will charge you for the shipping costs and the wholesale price of the merchandise. They won’t ship until you tell them to so you don’t have to pay for the product before you get your money. Assuming you’ve past along the shipping costs your business makes money for very little effort and practically no out of pocket expense. (Editor’s Note: Click here for a listing of the premier wholesale dropshippers.)Inventory takes up space and space costs money. Many small businesses rent storage units and dropshipping will make that expense disappear. Even if your business is run entirely out of your home your spouse probably gets tired of tripping over boxes in the garage. Besides damp basements and closets are not the best places to keep your valuable product.Speaking of keeping products, another advantage drop shipping offers is a complete lack of overstock. You won’t have to think about what to do with obsolete or out of fashion products because you won’t have any.After relieving the expense and headaches of shipping and holding inventory possibly the biggest bonus to drop shipping is how easy it makes it to expand or alter the products you offer. By not having to keep merchandise in stock you can literally offer dozens or even hundreds of different products. Often small businesses miss out of new sales opportunities because they are afraid that they can’t afford to make a mistake. Drop shipping largely frees you from this fear. If a new line of jewelry doesn’t sell you’ve lost nothing but a little time and while people like to say time is money usually they would rather lose time.Given its many advantages many small businesses rush headlong into drop shipping and are baffled when don’t make an immediate fortune. Before deciding that dropshipping is the key to success you should consider a few things.Not every product is a good candidate for drop shipping. For example, if you are selling small low cost individual products the shipping fees can be so high as to drive off customers. Nobody wants to pay freight that costs as much as the product shipped. The last thing you want to do is hurt your business’ reputation and bottom line by charging too much for shipping. A good rule of thumb when thinking about drop shipping is the item should cost at least $20 and weigh less than 70 lbs.When shopping around for a drop shipper there are a number of things to consider and questions to ask. First off, you want to avoid dropshippers who are in fact resellers. Dishonest companies will sometimes present themselves as a distributor but in reality all they do is pass your drop shipment order along to another drop shipper and either charge you a fee or simply pad the price you pay. Most reputable drop shippers will not charge you any set up fees except for extra services. You should never have to pay a regular participation fee. If your shipper demands one send them packing and look around for another shipper. Make sure you understand what you’re paying for.Speaking of extra services, ask your potential drop shipper if they can print and use labels identifying the products as coming from your business. Labels from the shipper can cause confusion for your customers and make it more difficult for them to resolve problems.Make sure you understand what manner of shipping your supplier will use. Most drop shippers will use UPS or Fedex but some use the cheapest method possible. Bad shippers lead to damaged products and plenty of customer service trouble for you. Make sure you ask your drop shipper to explain their return policy, if possible in writing.Backorders can be a real headache when using a drop shipper. It is inevitable that your supplier will be out of stock of the items your customer wants. You will have very little control over this issue and should be prepared to deal with unhappy people. If it is possible to have multiple suppliers for the same product you can avoid some backorder problems.In order to save time many business will purchase directories of dropshippers but these rather expensive documents are nearly always inaccurate and sometimes simply dishonest. Be particularly careful of directories that charge a monthly subscription fee instead of a one-time purchase price. Unless you know someone who has found a good one it is best to try to find a shipper on your own and resort to a directory only as a last resort.It is easy to get caught up in sort of drop ship mania that leads to too many shippers and too many products to keep track of but if handled with level head and careful planning, dropshipping can make a huge difference to your online business.Art Mickelwraith is the author of the Wholesale Buyer’s Guide at TopTenWholesale.com. He can be reached at artmicklewraith@gmail.com.