Hi, I am thinking on opening an online store (I have been for a while but sort of allowed myself to got talked out of it, someone I now had problems with dropshippers). To be honest I am looking at this from a purely business point of view, therefore I don't have a particular product/products in mind at the moment, all I know is it won't be an adult site. I want something that uses a dropshipper, so I don't have to shell out upfront, and buy in stock. Does anyone have any experience in this area, if so I'd love to hear what you sell, and how much you make. If you're willing to share I am used to working hard, so I'm not looking for something easy, although that would make a nice change Dee
from my perspective, dropshippers are a good and safe way to run a online business store. you don't have to risk yourself from buying an inventory that don't sell. The question is, where can i get a good source and trustworthy. Sorry but i haven't been in this line of area but i do have a online store which didn't sell. So it's tough getting people to buy unless you know about sales. that's what i think
We currently run a few online stores, for our current stores we have all the inventory we list on the site. About 7 years ago I used to have a few sites dedicated to selling items that came from wholesale companies who drop ship. Back then there were a few occassions that people ordered something that the wholesale company said was in stock, only to learn after the sale that the items were out of stock. Not a great situation when that happens. If you go with large reputable wholesale companies the odds of that happening are reduced. Here are some tips I can offer you to make things smoother: 1) Research your wholesale company who you want to drop ship for you. You should try to ensure that the drop shipper is a legitamate company who actually has the inventory themselves. There are many drop shippers who actually drop ship from somewhere else, meaning they have no inventory and they themselves have items drop shipped for them. You could easily find yourself in problems if this is the case, and there are many different scenarios of how things can go wrong in that case. It can sometimes be very hard to tell who is a real wholesale company and who is not. Some things you should look for include: - Do they have a phone number? Give it a call...can you speak with someone, or does it go to an answering machine? If they do not list a phone number that is usually a good indication, that they are not the Big wholesale company they claim to be. If you can talk to someone on the phone ask them if you are allowed to visit the warehouse for a tour. You don't have to go to the warehouse, just see what they say. Real wholesale companys will normally offer tours upon request. - Do they list an address? Try to determine if this is an actual address or a forwarding address/P.O Box. A picture of a large generic warehouse on their site does not mean the warehouse is actually theirs. It could be a stock photo. Try the address on Google Earth to see what the building itself looks like. 2) Try to find a wholesale company who offers unique items. You will find with most of the large popular wholesale drop shippers, that everyone and their brother is selling the exact same items, which will make the items harder to sell. Well that is basically all the tips I can think of at the moment. There is money to be made using this method if you do it right. The good part is there is minimal investment, so very little risk. Lots of luck.
Thanks loads, that sure was some really useful information Rep Given I will do all the research you suggested, the one I wouldn't of initially though of was asking to come and visit the warehouse, so thanks for that. Would you mind if I sent you a PM? Thanks Dee
Back in November, we started a specialty online store that sells collegiate gear for a specific school. Most of our products are through a wholesaler/drop shipper so as to minimize inventory costs (which can be substantial). Raptor gives great tips on dealing with that above. Fortunately, we have a drop shipper that supplies just about everything we need so we don't have to worry too much about multiple drop shippers driving shipping costs up. Our store did surprisingly well during the Christmas madness, raking in over $35,000 in sales, but it helped that we have a very popular website to channel traffic from. Tips and thoughts off the top of my head: 1) Try to find a drop shipper that can provide most of what you need to minimize headaches and shipping expenses (for example if a customer orders three items and each of them are from an unique drop shipper, you're going to get hit with shipping charges three times from each shipper). 1a) I know this may seen contradictory, but our goal down the road is to eliminate the drop shipper when it is economically feasible to do so where we control our own inventory and pricing. For now the middle man in this case benefits us. So keep that in mind as a potential goal. 2) I would suggest you learn some retailing basics - they're always helpful and give you some guidelines to follow. For instance, how do you set prices? For the most part, we use what's called the keystone method, i.e. basically taking the wholesale price and doubling it with shipping factored in. Another instance is how to handle abandoned carts (folks adding items to their cart and leaving the store without buying) -- there's plenty of strategies on how to handle that and certain software will let you reach out to the customers to try and save that abandoned cart (i.e. email them and offer a one time 5% off coupon if they finish their order). 3) Software is really important - there have been a ton of usability studies done for the best way to present your store and the mechanisms behind shopping cart software. For example, studies have clearly shown that having one page checkouts substantially increase your orders (as opposed to filling out multiple pages of forms). In my opinion it is worth it to put your store on a hosted shopping cart solution so you can get thousands and thousands of dollars worth of shopping cart software at a steal for a monthly rate. We use Volusion.com and have been happy with them so far. 4) Shipping/handling costs. Again I point to best practices and studies... They have consistently shown, for most retail sectors, that free and flat rate shipping help increase your orders. There's a variety of ways to try it, i.e. free shipping above a set dollar point, or one flat rate period, etc. We charge what we call $3.97 "All you can order" shipping. We calculated our average weight and cost and arrived at that number which gives us a slight profit. Since we're in the states (and we do not do international orders -- too many headaches), we primarily use the US Postal Service's Priority mail since it's a flat rate up to a certain point and we get free boxes, thus keeping overhead further down. We also use first class mail in some cases. 5) Order fulfillment - there's plenty of companies out there that will handle your order fulfillment for you, i.e. they'll package the products, pop in the invoices, slap the postage on the box, and ship it out. Some drop shippers will also do that for you. Since about 25% of our stock is ours (no drop shipping), we use order fulfillment for the rest. What we did in our case was make arrangements with a retired couple who do our order fulfillment (including taking overs over the phone) and also warehouse our items in their big house. We save a lot of money this way and the couple are bonded plus we have an insurance rider for our inventory in case their house burns down, etc. They have been extremely reliable and very helpful with our customers (most retired folks are pleasant to deal with and they care!) so it's a win win where we save money and they get extra money to support them in their retirement years. 6) SEO/AdWords marketing -- we have yet to seriously optimize our site for SEO (thankfully, Volusion's software is SEO friendly for the most part, so we show up on the first page for many results for our products) and we don't really do any AdWords campaigns because we haven't had the time to research it (I always research everything I do to make sure I get the best bang for my buck). I realize we're probably losing some potential sales as a result, but again, it helps tremendously that we have a very popular website that drives traffic to the store. 7) Email campaigns - although we have not been aggressive enough in this department, whenever folks sign up for an optional account with our store (never force folks to get an account -- let them order without being registered -- why put up a wall in front of them?), we ask if they want to subscribe to our email newsletter and about 90% do. We use this to email new product notices to them and whenever we have big sales, etc. We do this sparingly - no more than once a week otherwise folks will unsubscribe. 8) Security/Confidence - it's very important to give your customers confidence to shop with you. Make sure you use secure SSL (since our store is hosted by Volusion, we use their SSL), sign up for BizRate and display their icon on your site (which lets members review your site), and display all the necessary logos/icons on your site vouching for your security. The big companies don't necessarily need to do this (Amazon, etc.) but most of us need to do this because we're not a worldwide brand name (just yet! ). Also make your privacy policy clear on the site. This all belies the point that you've got to be able to accept credit cards. There's no way around this. 9) Clean look and feel - speaking of confidence, it's important to make sure you have a nicely designed store that won't scare folks away. Make your products easy to find, use relevant product categories that they can drill through, offer search capability, etc. Don't make them click through a bunch of crap just to add a product they want. 10) Customer service - we've always strived to provide excellent customer service because we're a small fish in a big pond so this is a crucial way to help differentiate ourselves from the competition. Go the extra mile to keep your customers happy so they'll come back and spread word of mouth. Have a liberal refund/return policy and make it visible on your site so they can see it. You will always have to deal with some bad apples, but for us they represent a tiny part of our customer base. If you have someone that consistently gives you trouble, it is okay to "fire" them as your customer and let someone else have to deal with them. Important thing is to keep the majority of your customers happy. We do not compete on price (otherwise we wouldn't make money as we are still small compared to the giants who can get products cheaper than we can) so excellent service is essential. 11) Self financing products - in the cases where we stock our own inventory we basically apply for credit with the wholesaler and use our business credit card on top of that. In other words when you are approved for credit by the wholesaler, you have an average of 30 days to pay up - on the 29th day pay with your business credit card and then you have another 30 days to pay up before getting charged interest. It's a creative way of floating your inventory costs over a couple months interest free. Hopefully by the two months you would have sold most of your product. You can also take it a step further when 60 days are almost up and paying the balance with yet another business credit card, making it three months of interest free financing for the inventory. Do this with caution - if you're not sure if you're going to sell at least half of it by 60 days (assuming keystoning), then just deal with drop shippers for awhile so you can get a good idea of inventory flow/product sales. Bonus: 12) Once you think you've learned all there is to know, learn more! There's always plenty of stuff to read out there to find out what works best, what's not working, and ways to do things better. For instance, currently we're averaging around $50 a day in sales with at least two $100+ days a week. We know we can get more than that with a good AdWords campaign and SEO optimization (see above!), so we're going to buff those areas up. Plus, we know we can do more email campaigns and add new products, etc. The more products we have, the more folks will add them to their carts. Right now I'm not satisfied with the amount of product we have so we are adding more. Those are but a few examples of what I mean by continually learning and improving! In short: Read... read... read... and research. Find out what the best practices are and trends in online retail and arm yourself with that information which can go a long way to reducing your learning curve. Hope this helps. Apologies for being long winded! Ray