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Drop Shipping question

Discussion in 'General Business' started by Trance-formation, Oct 29, 2004.

  1. #1
    I'm interested in the idea of setting up internet stores based on the drop shipping idea, but a search through google reveals that most people are simply trying to sell you information about drop shipping... one has to trawl through an awful lot of pay to access directories before finding one site from a company claiming to be a wholesaler offering drop shipping (and even then they might be lying!!)

    So I turn to the collective experience of this community ;) Has anyone experience of drop shipping? What do I need to know so as not to stumble and fall? Where can I readily find information on companys genuinely offering drop shipping services?
    SEMrush
     
    Trance-formation, Oct 29, 2004 IP
    SEMrush
  2. T0PS3O

    T0PS3O Feel Good PLC

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    #2
    Here's the process we follow:

    Find a product of your interest, if you think it is worth marketing (not slashed to death, not expensive in AdWords, easy to SEO) just find manufacturers and suppliers. Ring them up. Ask if they drop ship / do direct despatch. Aks for a trade catalogue to see prices. Specifically ask for shipping fees. Also ask how they want the order over. E-mail, phone or fax? Don't forget to ask about returns policy. Some make you take stock some allow returns direct. Also ask about replacement parts etc.

    That's it really. Just ask wholesalers. Easiest is to go to a relevant tradeshow. Will get you a lot more contacts than browsing the web for days coz you are right, it is a nightmare to find manufacturers/wholesalers.

    Tradeshows are the way to go, they're all right there and then.
     
    T0PS3O, Oct 29, 2004 IP
  3. lorien1973

    lorien1973 Notable Member

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    #3
    I drop ship a lot right now - I'm moving away from the model slowly but surely. If a product can be dropshipped - rest assured there are 10 million internet stores who are selling it. So you immediately throw yourself into a very big pond. Happily, 9.9 million of these stores are part time; so they aren't competition - but they keep their prices so low (Cuz they are only doing it for a little extra cash) that it can lower the overall value of the products you want to carry. Be wary of that.

    Truth is; most distributors who make you carry inventory have a VERY low opening order ($300 bucks or so, and $100 minimum orders after that), so its not hard nor does it take a lot of space to get more unique products that you can mark up to your heart's desire or what the market will bear (or is it bare?). And if you ask nice, some of them will even dropship some of their products for you (after you have done your opening order) - especially the expensive ones that take up room or cash. If you go that route, you can also outsource your warehouse to fulfillment companies who will ship for you so you don't have to do that (and its not too expensive either).

    Good dropshippers are hard to find. I have certain standards before I accept any new dropshipper's products - in terms of ordering, pricing, shipment time, and other things too that are more technical/boring. But I've been doing it for 5 years now; so I've gone thru a bunch of bad ones and have only kept the good ones I've found.
     
    lorien1973, Oct 29, 2004 IP
  4. debunked

    debunked Prominent Member

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    #4
    Both top30 and lorien have given great answers. Drop shippers are easy to find now days, most distributors or manufacturers will drop ship, but like they both pointed out - this means everyone can become a competitor and foolish people who like there little $100 month hobby/business spending money, kill the profit by gutting the prices.

    I spend time with newer manufacturers explaining this delima and tell them to charge more to internet stores so that they prices stay in line, unless that store has a proven track record of moving volumes at suggested retail prices.
     
    debunked, Oct 29, 2004 IP
  5. lorien1973

    lorien1973 Notable Member

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    #5
    As an addition, I found a dropshipper last week who would not let me sell their products cuz I have the word "discount" in my URL and they did not want that to happen to their products. I had to explain to them that I keystone (or more) every product I carry and almost keep pricing in line with what's already out there, to keep the quality of the product in tact. Dropshippers like that are very rare, and definitely a catch.
     
    lorien1973, Oct 29, 2004 IP
  6. debunked

    debunked Prominent Member

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    #6
    Lorien,
    you sound like you are like me when calling these vendors. Either you educate them or you confirm with them that you know what you are doing and not just billy-bobs-disounted-everything-internet-special-catalog.net store

    I have a few competitors like that who are just marking an item up $10 or $20 and the cost will be $65!
     
    debunked, Oct 29, 2004 IP
  7. T0PS3O

    T0PS3O Feel Good PLC

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    #7
    I hate those cowboys too. Slashing and bashing prizes just because that's the only way they can visitors... They don't know how to SEO or design a professional page so all they have to go by is low prices. And normally pretty crap customer service too.

    RRP is recommended for a reason. Market research has shown it is a fair price for the customer, it's a healthy price for the retailer and the trade price makes the manufacturer/wholesaler a sustainable living.

    Anyone offering 50% off RRP is crazy and ruining it for the rest. People supplying those cowboys should simply say "Put up your prices or this was the last one we sent your customers..." It's not price fixing, it's common sense. It's in everybody's best interest, including the end consumer's.

    I also dislike those importing containerloads of stuff, bypassing clear geographical sales boundaries set out by the sales right's owner. We were going to sell a vacuum cleaner, got a good deal. Only to find out some idiot sells it below our trade price because he bought a one-off load from the US, screwing the whole UK market.

    Of-course there should be bulk-discount but not like this.

    Wholesalers should be a lot tougher IMO.
     
    T0PS3O, Oct 29, 2004 IP
  8. Cyclops

    Cyclops sensei

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    #8
    My daughter tried drop shipping but gave it away, problems were..... finding product, she is in Australia and most of the companies that drop ship product seem to come from the US, shouldn't be a problem as the internet is the world wide web however US companies either won't ship outside the US or won't deal with companies/people from other countries .

    Bigger problem though is companies not shipping soon enough or don't have the product in stock, lot's of hassles with customers demanding money back and also charge backs.
    Some companies shipping stock but putting brocure in with order so no follow on sales.

    Now she has found connections in China and buys the stock and ships it out.
    She finds the hassles have dropped and is making far more money.
    She is also an affilate for a couple of products which are doing well and says she won't touch drop shipping again.

    Michael.
     
    Cyclops, Nov 3, 2004 IP
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  9. T0PS3O

    T0PS3O Feel Good PLC

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    #9
    Good point. We send the companies out stickers to replace theirs with. But additional marketing brochures indeed kill future business.
     
    T0PS3O, Nov 3, 2004 IP
  10. Help Desk

    Help Desk Well-Known Member

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    #10
    But the consumers love them.
     
    Help Desk, Nov 3, 2004 IP
  11. T0PS3O

    T0PS3O Feel Good PLC

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    #11
    On the short term they will, but on the long run even the consumers will suffer IMO.
     
    T0PS3O, Nov 3, 2004 IP
  12. Help Desk

    Help Desk Well-Known Member

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    #12
    How so????
     
    Help Desk, Nov 3, 2004 IP
  13. debunked

    debunked Prominent Member

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    #13
    The consumers will not be able to buy the same product anymore, do to oversold at lower prices bringing in competition from the chinese market of even lower prices copies that are usually lower quality and the market gets flooded. The original company will then go down or drop the product(s) in question. I witnessed this happen first hands for the last company I worked for which was also a product I sold from my store.
     
    debunked, Nov 3, 2004 IP
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  14. T0PS3O

    T0PS3O Feel Good PLC

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    #14
    It's a negative spiral. Like Debunked mentions, after the products get slashed, literally to death - they just vanish. No one will sell them if there's no money in it. Regardless of how good the product is.

    Try selling Pokemon shite, or any of the other old hypes. Just not worth it. Same with regular consumer products when slashed. It sucks but it keeps happening, mostly due to unintelligent bedroom merchants because nowadays everyone can sell online whether through a website or eBay etc. Good merchants need more protection from their suppliers IMO.

    And if that happens we will see less cheap plastic throw-away crap from the Eastern markets coming our way.
     
    T0PS3O, Nov 4, 2004 IP
  15. Help Desk

    Help Desk Well-Known Member

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    #15
    You guys are making it way more complex than you need to. It's all supply and demand. If the supply increases, the price will fall. If you can't keep up with that then you need to find a product with the same demand but less supply.
     
    Help Desk, Nov 4, 2004 IP
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  16. T0PS3O

    T0PS3O Feel Good PLC

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    #16
    We aren't making it complex... It's those who slash the prices on day 1 are the ones that kill the business. I know it's luckily not in all cases but still.

    Even Amazon starts annoying a lot of merchants. They sell everything you can think of and almost per definition at rock bottom price. Tough to compete against.
     
    T0PS3O, Nov 4, 2004 IP
  17. debunked

    debunked Prominent Member

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    #17
    When we have competitors who get the same item at $50 and normally you would mark up to 100 and they just mark it up to 60, it ruins the product value. The manufacturer may be hit with many orders but then they began loosing other retailers due to the bad competition.

    It isn't complicated, but if you are foolish enough to be that kind of discounter you will most likely not last like many of our competitors, the problem is there seems to be someone else who takes their place.

    The reason amazon and others have you add to your shopping cart before you can see the price is because the manufacturer/distributor does not want the item ruined by published prices. They usually have contracts to sign that companies can't publish any price below their published retail prices.
     
    debunked, Nov 4, 2004 IP
  18. tish2269

    tish2269 Peon

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    #18
    Hi Tafadzwa

    I just had to register to thank you for the drop ship website http://www.interdropship.com/. Its excellent & they have a good list.

    Thank you

    tish :)
     
    tish2269, Jun 12, 2005 IP
  19. ROAR

    ROAR Well-Known Member Affiliate Manager

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    #19
    I sell a widget with a National list price of $795. If I am win the lottery lucky, I will be able to get $500 for it. That is if, the consumer has done no research whatsoever.

    But if that was the case...how would they have found my website?

    In my particular case, I think the pricing guidelines are completely out of line.
    I also have some competetitors that buy material by the shipping container and turn into de-facto distributors.

    There are some widgets that cost me more from my authorized distributor, than the going rate on google. Its a double edged sword and I am extremely grateful to be having these problems. The dynamic of my little company has completely changed in the past yr. with the advent of a reasonably decent site.

    Grassy-ass to DP.

    now if anybody could think of a way to bring back the old profit margins to the new customers....
     
    ROAR, Jun 12, 2005 IP
  20. kfman

    kfman Guest

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    #20
    I used a company called TruPrice for the last 8 months small company but very friendly and they limit the numbers that drop ship for them. but I have done well enough in 8 months I am now starting my own business so no more time to work as dropshipper.
    Try them www.truprice.biz
     
    kfman, Sep 16, 2005 IP