Northeast Coffee Company
Nantucket Brand
Swimsuits for All
Fat Brain Toy Co.
P&S Fishing Tackle, Inc.
Tire Wholesalers
Bait N’ Hook
American Recreation Equipment, Inc.
Karate Depot
Handbag Crew
Bargain Wholesaler
Dog Supplies
RMF Scrubs LLC
Allegro Medical Supplies Inc.
All Authentic Sports Memorabilia
Wholesale Gifts Direct
Sport Supply Group
Puppia International Inc.
ATAFA
Alternative Healthcare
Vitamix Laboratories

For more information about dropshipping or to sign up for a package or a free trial (no credit card required), please visit GoGo Dropship.

Wrong. A manufacturer typically does not want to have anything to do with any company that is not capable of purchasing from them in massive quantities. The reason for this is they are selling the product at a mark up over manufacturing cost, which is typically very far beneath its eventual retail cost. To make it worth their effort, they need to sell in large quantities… sometimes numbering in the hundreds of thousands of units at once! Most up and coming stores, be it brick and mortar or online, simply cannot do that. What are they to do?

The solution that was reached is that another company will come forward and purchase the inventory from the manufacturer, and resell it to us in smaller quantities. This company, the distributor, typically has capital, but is not interested in marketing or advertising. They are more than happy to resell the item in a smaller quantity, allowing us a foothold in the industry. It is through these distributors that the concept of dropshipping came into being.

However, how does this all relate to our initial question of the necessity of these identification numbers? The answer is simple; there is a barrier of entry necessary for these distributors to ensure that they are dealing with actual members of the trade. Most manufacturers do not want their product hitting the market at just above-cost. They don’t want individuals purchasing their items at next to nothing, as many manufacturers have lucrative arrangements with departments stores and the like to sell their product. If everyone was going to be able to sell for a fraction of the store cost online, why would anyone ever go to the store?

This is a very bad scenario for the manufacturer, regardless of how nice it might be for us as consumers, and to combat this many manufacturers require any distributor that they work with to verify that anyone whom they resell their product to is a licensed member of the trade… hence the necessity for us as prospective resellers to have this documentation.

With this hard restriction on most suppliers, it is very important that we do go through the tasks of establishing our identification numbers, federal or state, so that when we do get to the point where we have a supplier we want to work with, we’re not stuck in a rut, entirely unable to move forward because our supplier is requiring legal documentation that we just don’t have. We may try to fight this step, but in the end, if we want to move forward with our business, we’re going to have to get legal, or get out.

Some of you might be wondering how a wholesale price could ever stack up poorly against retail price. We’d talked previously about this phenomenon, and this is definitely one instance where we’re seeing first-hand the effect this concept has with us and our business.

Without being willing to carry inventory, our only recourse is to research the effectiveness of our supplier prior to creating a website where we will utilize them. This way if we see that our supplier will not be effective price-wise, we can turn around and look for an alternate supplier, or even an alternate niche, before we’ve passed the point of no return and created a site.

There are a few website tools that we can utilize to do this. First and foremost we have the Google Product Search, a tool powered, aptly enough, by Google that will allow us to see what people are pricing our specific item on online, utilizing the power of the Google search engine to give us a very good picture into all the available products out there. Conveniently accompanied by images, and with the ability to sort by price, Froogle is one of the easier ways to see what our competitors are pricing their same items at, to see if there’s room to be competitive.

A second resource I like to utilize is PriceGrabber. This website functions quite the same way as Froogle, but it gives us a different system for pulling their results, which in turn gives us an even more complete view of what our competitors are doing.

This is all well and good, you may be thinking, but how do we make sense of all this information? We can see the prices, big whoop. How does this help us? Are we supposed to try and see if we can be the lowest price? Do we just want to see the highest price and price our items accordingly?

Our goal in doing this research using these sites is to see where the price extremes are, both high and low, and find a median fair price. We don’t want to try to be the lowest; someone can always get a better discount than us, and someone is always willing to undercut us, even at their own peril. We can briefly flirt with being the lowest price out there, but it simply isn’t something feasible to try to sustain.

At the same time, we do want to make sure we’re not the highest. If we’re the highest, than it is quite probable that people will utilize many of the same tools that we can to see that there are cheaper alternatives out there, which they will most likely go with. For that reason, our goal is to find a fair price that lies between those extremes, and price ourselves there.

However, this is not so simple a thing as seeing where our supplier’s price is, and just gauging things that way. We want to make money after all, so we need to make sure that we are basing these numbers off of our supplier’s price plus our profit margin. Typically a new business owner should try and shoot for a 30% profit margin, which roughly translates into a $15-$20 per item profit.

This may seem like a lot of extra leg work, but if we can find out whether or not our supplier is effective before creating our site around them, we can be much more confident moving forward with the knowledge that we can be priced effectively, and expect many more sales as a result.

For more information, please visit GoGo Dropship.

The reason for this is simple; if we do not see if our supplier or niche is going to be competitive before creating the site, we put ourselves in a very bad position if we’re now finding this out after the fact. For the sake of example, let’s say that we’ve found a great supplier that’s going to provide us with all our remote control car needs. They have a ton of available products, and they’re bursting at the seams with variety. Sounds like a slam dunk so far.

We figure that the variety speaks for itself, and the price is probably right, so we move forward, spend a few weeks making a great website to complement the supplier and the products… weeks go by, and we still haven’t seen hide nor hair of a sale. The products are great, the website is solid. Why aren’t we getting a sale?

Needing to know what we’re doing wrong, we decide to take a look at one of our competitor’s websites. Their site is pretty good; ours might be better… but their retail price is our wholesale price! This could be a fluke, we say, and we look at another site. Uh oh, their retail price is a little higher, but still lower than ours by a fair bit.

One time is luck, two times may be coincidence… so we take a look at a third site. Lo and behold, this one has followed suite; its lower than all the rest! All of these are sites we found just looking up our product. Chances are very good that our customers who are looking around can see these as well.

Now we’re stuck with a site all complete, but a supplier that just doesn’t seem to compete. We either have to market really aggressively, or cut into our profit per item; either way we look at it, the only way to make things work at this point is to take some losses, and hope for the best.

But how do we avoid this situation? There are a few techniques that we can utilize to avoid landing ourselves in such a pickle, which we will discuss in our next article!

For more information, please visit GoGo Dropship.

Christmas and Black Friday are the poster children of this phenomenon, but they are not the only holiday offenders out there. Even ignoring the big ones, like Halloween, or Easter, we’ll still need to become very aware of what times are of significance to our specific demographic. If we’re selling paintball guns, is there a paintball super event that we need to be aware of? Is there a season when demand for our products is going to be off the charts? These may seem like very simple questions to ask, but many forget about them until it’s too late.

The significance to these questions is because they will have a very real and very potent effect on our suppliers’ ability to meet our orders. If we know that there is going to be a massive movement in our industry during a certain time of year, we want to plan ahead well in advance. Let our customers know there may be delays in processing their orders, make sure our suppliers’ inventory levels are high. The last thing we want to do is have a major event roll in, and have us caught entirely unawares.

Holidays or special events are always an excuse for a buyer to be a little spend-happy, and that’s a great force for us to work with to our advantage. However, we need to keep on top of our suppliers, and make sure they have the inventory and the ability to keep pace with the demand, because in the holiday frenzy, if anything goes wrong, its going to become a giant headache for everyone involved, but by keeping the lines of communication open, and the remaining inventory watched diligently, we can avoid a lot of the normal holiday frustration, and make it a happy one instead!

For more information, please visit GoGo Dropship.

However, if we are set on using that supplier and trying to secure that product, there are a few things that we can do to try and protect ourselves. The first main contender we have with effectively working with a Chinese supplier is getting past the logistic issue of shipping. There is the very real problem that we have to get a product halfway around the world. Our customers are going to be very impatient, and many will balk at having to pay more to wait longer. Our best recourse is to try and communicate with the supplier as to what their average shipping time and shipping costs are. They will typically be upfront about it, and it will serve a dual purpose in allowing us to see whether or not we can even speak with the supplier easily or not.

The second resource we can utilize in the great “authenticity wars” is a website called http://whatsitworthtoyou.com. This website is intended to allow us to research products and find out whether or not they are going to be legitimate or not. This is not a free resource, but for a price they will be able to help determine the authenticity of a product, which will allow you to know whether or not you can confidently and ethically sell the item on your site. Without handling the item itself, they cannot definitively and empirically make a statement on its authenticity, but we can very quickly and efficiently determine using this service if our source is legitimate. However, with a form from this site to verify that the site or product is, indeed, something that is not entirely questionable, it will allow us to list on eBay and our own site with much more confidence. It is not a bullet-proof vest to protect from any problem at all, but it is a great way to list without fear that your item is a clear counterfeit.

Our biggest concerns with Chinese suppliers will always be present; we can never be 100% sure that an item is not a counterfeit, that the shipping cost and time will not grow unreasonable, or that we’ll even be able to reach the supplier if there is a problem, but if we are very careful, it is not an impossible hope to be able to utilize Chinese suppliers. However, to quote an old food adage, “When in doubt, throw it out”: if we have good reason to think that our supplier is not legit, we are almost always going to be safer abandoning the product idea, and moving somewhere else.

To learn more about dropshipping and how it works, please visit GoGo Dropship.

When sourcing from Chinese suppliers, there are a few things that we need to be aware of. First and foremost, the copyright laws that we’re accustomed to in the United States do not apply to Chinese suppliers. They can market an in-house product as a name brand if they so desire, and there is nothing by their laws that has them at fault. This is what is called the “Grey Market”. It is not necessarily illegal in China, for instance, to market a non-name brand as a name brand, or to replicate an item exactly. However, we are still bound by the laws of our land, so if we’re unknowingly marketing the Chinese iPad as an iPod, it is we who will be in trouble for it. We will be flooded with returns almost immediately from our dropship website, but if we’re trying to source these counterfeit items on eBay, then we’re going to quickly find our accounts banned for it.

A second issue we run into is that the product that we’re purchasing may be coming from black market sources. Black market sales are strictly speaking illegal, and as such it will exist as an ephemeral thing. Since we are not receiving from our supplier a consistent source, when their stock is gone, it is gone, and even if we’ve placed the order, we have no assurance we’ll ever receive the order, or see the money again once its been sent.

Now, taking a huge leap of faith, if we find that the items we are receiving from our Chinese-based supplier are the real deal, we now have the logistic problem of getting it halfway across the world in a reasonable amount of time… and while still being able to maintain a profit. In recent years, tracking technology has made leaps and bounds when it comes to international orders, and we’re going to need to take full advantage of that. We will want to know where our item is exactly… because its going to be spending a fair span of time getting from the supplier to the customer. The shipping cost to allow for a more reasonable amount of time will typically be much higher than a buyer is willing to pay, and the increased cost of having to go overseas is going to eat into our profit.

The biggest thing to remember when sourcing from Chinese suppliers is that these problems lie directly on our shoulders; any instances that come up are our responsibility. eBay does not accept “I thought it was legitimate” as an acceptable excuse if we try and source counterfeit products from a Chinese supplier, and our buyers on our website also tend to be less than forgiving when their $300 iPad arrives at their door. It is our responsibility to ensure that our supplier is legitimate, but how will we do this?

The reason for this is that the wholesale price is generally based off of the amount of product you are willing to purchase at one time.  At the dropship level, for instance, you are receiving a wholesale price, but your price point is going to be lower, because you are ordering a single item at a time.  If one of your competitors approaches the supplier, and asks if they can get a better price if they purchase ten items at once, for instance, most suppliers are willing to do so.

The strength of having a dropship site is that we are not having to carry any inventory, or do any of the shipping ourselves, but that of course comes with downsides.  Our profit margins can be solid, but if we are trying to compete price per price against a competitor, it is he who orders the most at once who will be able to negotiate the lower price.  Purchasing at wholesale is the natural evolution of our business, which is why it is important to realize that there is not any singular wholesale price, but it is instead a fluid concept, that we can use to our advantage as our business grows!
 

This is a classic friends-bridge situation! When choosing your niche, you have to stop looking enviously at what everyone else is doing and start looking at yourself. After all, trying to sell in a market where everyone else is milling about is just like jumping off that proverbial bridge: its a bad idea!

A good idea is thinking of something that isn’t just hip or trendy, but instead a product that is going to stand the test of time. Your goal in business is not to sell something that’s hot; there are a lot of “Hot or Not” business out there, and they’re scrambling to keep afloat as they leap from ‘hot item’ to ‘hot item’, fighting cutthroat and viciously to scrounge out a tiny profit in the proverbial Thunderdome.

Focus on something that people want right now, and are continuing to want later. Sustainability is the key to a strong product line, so it pays to keep that in mind and avoid the perils and pitfalls of the hot item market. You’ll want your store to be thriving and your customers coming back long after everyone realizes that the singing electric sock phone might not have been the wisest investment!