Essential Wholesale Tips for the Honest Online Retailer
Essential Wholesale Tips for the Honest Online Retailer
For some online merchants, drop shipping is an answer to their product sourcing prayers. At its most basic level, drop shipping is a system of product supply that allows you to market items from an inventory that you don't actually stock yourself. The drop shipper stocks the merchandise, and when you sell to your customer, your purchase the item from the drop shipper, who then sends it out under your business name. In this system, the customer pays you before you yourself ever own the product. Your profit is made of the difference between your selling price and what you pay the drop shipper. This is generally effective when working in a smaller niche that is not over saturated. Many successful eBay sellers use drop shipping for at least some of their inventory when the niche is right.
Some of the benefits of using drop ship wholesalers include:
1. Your inventory is held by the third party drop shipper. If the drop shipper is competent, you won't have to manage this end of the business, and this, in turn, will save you time and money.
2. The drop shipper does shipping and handling not you. A huge time saver for you allowing you more time for marketing.
3. You receive money through orders before you have to pay for the item.
4. You can adjust the profit margins for items on a case by case basis with ease.
Drop shipping has great benefits, but even so there are a number of other points to take into consideration:
1. The item or items you sell must be in demand. There must a niche of potential, willing buyers.
2. Your product must also be capable of being sold in large volumes. How you define high volume will depend somewhat on the item itself. If you are selling a very expensive item, such as high end exercise equipment, high volume may be 2 or 3 sales a month. The point is that you must do the research to determine whether or not the demand is sufficient to make it worthwhile selling the product.
3. Try to do business with established, better known suppliers. Veteran suppliers will know the ropes and if they are good at their game, will know just how to serve you. They will know what to do with product returns and may even be able to help you absorb some of the costs of doing business with respect to returns.
4. Start out selling just a few items. Don't think that you have to sell lots of products. Drop ship aggregators, also known as virtual drop shippers, will want to sell you pre-loaded stores. I suggest not going that route but setting up your own store or selling on eBay. But give yourself time to grow. If you start out with too many products you may find your business unmanageable.
When you are selecting drop shippers, I strongly suggest you avoid drop ship aggregators in favor of drop ship suppliers who own and stock the inventory. Drop ship aggregators are sometimes known as virtual drop shippers and are themselves retail businesses. In other words, they are a sort of middleman between you and the wholesale distributor and/or manufacturer. If you plan on using drop shippers, then I also recommend trying to find suppliers who are also true wholesalers, as well. One wholesale drop ship company you can try is Trademark.com. A wholesale tip for a closeout company also offering drop shipping is Topperliquidators.com.
Let me ask you this, "Is eBay a retail market place?" If you answered "no," you are correct. For our purposes, eBay is not a retail market because most of the prices are already below wholesale where mass market consumer goods are concerned. And even for non mass market items, such as the trade in meteorites, it is common practice to buy by the ton. My point is that when selling on eBay, if you buy wholesale and sell retail, you are likely to have problems staying in business. Choose your products and niches carefully. Generally, you want a smaller niche product market where you stand a chance of clearing 25% to 30% on your goods.
If you plan on using suppliers other than drop shippers, find out how long it will take for your non-drop ship suppliers to get stock to your business after you order to determine when to get more. A quick turnaround time from your supplier will make managing that inventory much easier. It will help you escape inventory shortfalls and keep you from over stocking. If necessary, run special discounts to rid yourself of products that you over purchased. Order enough in advance to give your suppliers the time they need to get your products to you. This sort of simple time management can help e
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