Dropshippers

Online resellers - especially those on e-bay -- have no business sense. They are all going for the quick buck and selling items for cost +10% or such that does not allow for a good profit margin to support a business. I will drop ship for e-bayers a few items but I charge more than for a brick& morter store since I do not want them to devalue the product by selling too cheap.

Most retailers get about 50% (cost divided by .50, NOT cost +50%!!!)

I have raised most of my retail prices over the last year as more and more competitors online go out of business due to foolish business practices such as low-balling.

My customers also enjoy our great customer service and they keep coming back.

 

Yup you have to store a lot of crap, but a closet is usually big enough until you clear space out in the garage. Yeah, you pay for the inventory but the markup is way more. The tough part isn't paying for the inventory, (any Amex small business card will give ya money) but finding the people to buy your product. And as for shipping, if something is late its ur head.

To be blunt, I think that most people like drop shipping because there is a low risk feature, ie. no unsold inventory. However, if you go into business with that mindset, you might as well not go into business. I'm about growing and maximizing my capital asap. On the internet, reputation is everything. Drop shipping is too slow and unreliable.

 

I'm surprised your markup is so high, Debunked. Most dropshippers I've talked to have said their margin is 20% or less. I want to start dropshipping, but that margin is more like spinning my wheels than being in business. Do you deal with unique or hard to obtain items?

 

High Tech items that are most popular have the lowest markup because big e-tailers have amazing prices in order to bring in customers. It's not a bad model, but you have to be able to support it with other sales of higher profit items. I'm not a big e-commerce guy, but I would think building up a good store isn't too much different from building a forum or other online community. You need to focus on bringing people back and doing the things that make them happy. Ingram is a good drop shipper - I've never heard of them not shipping something iin time and their inventory systems are as good as you can get. I have friends that work in their disaster recovery department. If their systems go down, you can count the minutes in millions of dollars. They've got technology there you wouldn't believe - giant mainframes they use 747's to transport, sattelite uplinks in third world countries guarded with guys with machine guns kind of stuff. I think for the most part a company like this is an exception to the rule.

Drop shipping from bob's wholesale is dangerous because you don't know how accurate their inventory systems are, how reliable their shipping department is, and how much inventory they actually maintain to protect from something happening like dock workers going on strike. Then there's whether or not Bob handles returns/exchanges in a professional manner.

With anybody, you aren't going to get the best prices unless you are a profitable high volume customer. It's hard to wiggle your way into a competitive market, but working a niche is a good way to start. That way you can give people fanatical support on a series of closely related products, build up a committed community, and expand once you have a solid customer base.

Just my 2 cents.

 

Most likely you are dealing with burnt-out drop-shippers. They are tired of people low-balling which causes the real business to drop their items because they can't make a legitimate profit.

If you are thinking like a real business - approach the drop shipper as such.

Having been in business for the last 7 years the companies we work with know we are legit and we charge suggested retail prices or close to it without question. We work hard with the suppliers to make sure we are keeping the value up on products and I even warn them who amongst our competitors are going to lowball the price and ruin the value of a product.

Most companies have a tiered pricing system that has online only stores at the highest prices and go down from there.

 

In some cases we have worked with a supplier on an agreement that the products ship in 5 business days or less or we charge them a late fee.

I am just a little annoyed with most of the discounters on the internet because they really are ruining it for everyone. Most U.S. made products are dropping like flies because no one is making a big enough profit and then it goes to china even if it junk.

 

http://www.worldwidebrands.com[/url]

This is good and recommended sources for drop shipping. I purchased some ebay secret ebooks. Many recommend it as main drop shipping source

 

Drop shipping probably works best for high priced items that are also large. The space needed for warehousing is much larger than what Summer needs for her store. But if you are selling small items it will be better to bring them in stock.

Personalized items in most cases you can't stock. That is what I offer to drop ship, since each item has to be laser engraved before shipping and I ship direct to the customer.

 

I'm worried that part may require a smarter person than me!

 

Will, there are usually "smarter" people who are willing to help who do similar things already. Do you know any older business owners? Ask them questions, they usually will be happy to help out and share their expertise.

 

My primary company has been in business since I founded it in 1998. We've been doing several million in revenue each year since 1999. That company does IT consulting.

For the primary company, we maintain a still-unofficial board of advisors. Those are folks in industry who help me make the right decisions in where and how to steer the firm. They are an incredibly valuable asset to myself and to the firm.

My secondary company publishes web pages and makes money via online advertising. That company is about a year and a half old and does well over $10k/mo in profit.

Unfortunately, none of my advisors for the primary company are very knowledgable about the second companies industry.

With the second company, I want to diversify away from the current model where 90% of our revenue comes from AdSense. It seems to me that the way to do this is to sell a product or set of products.

Then... I just sort of stall out. I can't seem to figure out what to sell.

Possibly the best bet is to add a PC store to The Tech FAQ, except margins on PC parts are just so slim.

Of course, this would directly violate VS's advice to stock product. There's no way I am stocking all of those PC parts. They depreciate almost as fast as fresh food.

If I go the stocking route, I will have to pick one product or a very small number of products.

I just can't imagine what that product could be.

In summary, I dunno.

 

If you are going to stock product, it helps if you are near one of the major shipping centers - like SF or LA where a lot of foreign products come in. Then it's a matter of doing some footwork and finding the best deals on the docks. There are usually a ton of people around there who can tell you who sells what products locally and you can piggyback orders on one of the local stores - who are usually pretty happy to help out by adding a point of profit in and helping to increase the volume of their purchases.

In LA, clothes, toys, video games, party supplies, and niche electronics are all in strong supply and the cheapest vendors are all in obvious locations (like the fashion district). For knick-knacks, there's an area where they have an interior design wholesale center and probably 50% of the products are from the docks with the other half being local artisans and furniture made somewhat locally.

Hit your yellow pages wholesale section and look around to see if anybody has anything you think you can sell. Then you just need to get your resellers permit and more than likely you can fax in or e-mail orders directly. Unless you are going with a biggie like Ingram Micro or you have a source who buys product directly from outside the country you are probably better off with a local wholesaler.

If you are near the docks and are considering stocking a bit of product in your garage you would be amazed at the kinds of prices you can get if you are willing to deal with some language barrier and quality control issues. You can order a pallete of cameras at 70% off retail price. If you are really serious, go on a mileage run to Hong Kong and tell a cabbie you want to import some product into the states. They'll take you all over to see a million different places ranging from fake Callaway golf clubs to High End tech stuff you can't get here in the states yet because the instruction manuals read like "All your base are belong to us". Alternatively, you could head down to Mexico and pick up coffee, leather, or clothing pretty cheaply and there are electronics manufacturers around that will design and build you knock-off electronics - again, you are going to have quality control issues, but you could have something made like an iPod fm transmitter or a laptop cooling fan/lapdesk thing.

If it's really tech products, you probably want to consider specialty products - like laptop accessorries rather than laptops. There are probably a ton of pocketpc case manufacturers that are dying for some exposure. Stuff like that where you can have higher profit margins because there is less competition out there and most people in the business are sticking to suggested retail.

Just a few thoughts. I'm no expert.

 

What products are you inquiring about? We have warehouses in Texas and Toronto Canada. You need to look at the duty and tax cost of the products you sell, and if you want them on consinment, duty paid or in a bonded warehouse.

 

Hi Everyone, I'm a newbie to this site and find this thread very valuable as I've been exploring e-commerce. I totally agree with some of the comments about how ebayers are diluting the retail market - I tried selling some brand new collectibles that had been gifted to me and found that people wanted to pay $35 for something valued at $150 plus. I am very business savvy, including international business and have been researching market trends. Based on your experience, how do you recommend I go about establishing an online presence (e.g. what category of goods are likely to sell well online?)? I'm not keen on dropshipping for reasons already stated in this thread, so what's the next best option? Thanks very much for your time and for being willing to share your experiences. Peace!

 

the more unique the better imho

 

WorldWide Brand's Directory started everything off for me, great list of reputable dropshippers that are waiting for you to call. The Free Ebook written by Chris Malta is the dropship Bible.

-JOEY

 

Spam spam spam spam, spam spam spam spam.

 

try posting that on www.wholesalespotter.com/forum/ in the product locator category. you'll probably get a better response.

 

For those who were looking for Canadian Drop Shippers, this fellow writes a fair bit of information and also lists a few suppliers at the bottom of the page (including us )
http://www.dagandesigns.com/dropship-Canada.php