Coming on Board with Drop Shipping | Merchant accounts for Drop Shipping

Aug 12, 2014

In today’s market, entrepreneurs and business owners have to find smart ways to cut costs without harming the quality and profitability of their products. Drop shipping is a fulfillment model that lets owners partner directly with wholesalers who then ship out listed items to customers. Owners are then charged for the price of the shipped item.

The Good

With a merchant account for drop shipping, you have a few distinct advantages that will save you money, time, and frustration.

  • Come to Market Early. You’ll be able to start up your online business faster than the competition. With no inventory to wait on or collect.
  • Less Risk. Starting an online business is made easy because you don’t have to spend hundreds or thousands of dollars on stocking your online store with inventory. That means if you don’t sell an item, you haven’t lost a penny.
  • Wider Product Availability. Having a relationship with a warehouse gives you access to a much larger inventory than you would have otherwise. Customers are able to see the full list of items within the warehouse, increasing the likelihood that your store will make a sale.
  • Freedom. Because there are no warehouses to worry about, you can run your business from anywhere on the planet as long as you have internet access and a computer.

The Bad

Owners who have a merchant account for drop shipping still face a set of unique challenges.

  • Order Processing Problems. You must have a good and communicative relationship with your warehouse. If not, the order process can become long and tiresome for the customer. For example, once the customer places an order, you have to ask the warehouse if the item is available, the warehouse has to check, then the warehouse has to notify you and the customer all before the product can be moved. Discuss appropriate response times with the warehouse to limit delays.
  • Information Issues. All items offered must have a written product description, shipping weight, price, and the available inventory. Some manufacturers are slow to relay this information, so there are gaps in your inventory information. This is unprofessional and frustrating from a customer perspective.
  • Shipping Problems. Having a merchant account for drop shipping allows you to work with different vendors. However, if a customer chooses different items from different vendors, you will have to cover the costs of shipping three separate items for the same person instead of paying for one shipment.

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending on the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.

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