I am curious what exactly a dropship website is. All that I know is that it seems you basically create a website with say, books, and you have a 'store' but when the user buys the books, they come from another warehouse and you get a percentage of profit. So basically you are the mediator. Is this correct? Also, how do you go about starting one? How are taxes handled? Any info on all of this would be great, thank you!
Yes, you are correct. You have a web store which sells a products or products. When someone orders one of your products, you place an order with your wholesaler. The wholesaler then ships the product to the customer (usually with your store info and return address so it looks like it came directly from you). The important part is to find real wholesalers who will dropship for you. There are a lot of people out there pretending to be wholesalers but who are really just middlemen. They will end up charging you an inflated price and make it hard to make any profit. There are some legit wholesale directories like Worldwide Brands (worldwidebrands.com). They screen the wholesalers to make sure they are legit and that they will work with small businesses. To start one up, you should first decide what you want to sell. Then find a wholesaler who will dropship for you by using a Worldwide Brands type company or calling the manufacturer of the products and asking who their distributors are. Then you can call them and try to set up an account. You should then get a good domain and set up a web store with a good shopping cart system. I like Zen Cart. You will be responsible for collection of taxes and payment of them to your state. You should set up a resellers account with your state and they will give you a resellers permit and number. They can also tell you what items are taxable. Any legit wholesaler will ask you for this number so you will not pay sales tax on what you buy from them.