How you can avoid the three M’s of drop shipping

by Brad Beiermann Ph.D.

Copyright 2006 Brad Beiermann Ph.D.

When you are learning to do something new, it’s common to make mistakes. Often our mistakes are the real lessons in life. We make mistakes because we simply do not have the past experience to know right from wrong. We can carry this same wisdom over to the world of drop shipping.

There are many Website owners trying to find authentic drop shipping companies for their online retail business. An authentic drop shipper is a supplier of wholesale products who will drop ship single item orders direct to your customers. Our business (www.hienotedirectory.com) is focused on researching and publishing information about authentic drop shippers for Internet based retailers. Our experience has taught us the do’s and don’t of identifying authentic drop shippers. Let’s now cut to the chase. In finding an authentic drop shipper, it is important to avoid the three M’s. What are the three M’s of drop shipping?

(M)inimum orders (M)iddlemen (M)embership fees

We are going to examine each one of these to get a better understanding of their meanings, and how they impact you as an Internet retailer.

Quick Lessons For Success

Okay, let’s see:

- You have your website running.

- You can accept payment from customers.

- You have good drop shippers to supply product…or, a least you are thinking you do. How do we know for certain?

As a quick check, we are going to validate the last bullet by seeing if we avoided the three M’s of drop shipping.

1. Minimum Orders. An authentic drop shipper does not require you to buy minimum amounts of product to do business with them. An authentic drop shipper will drop ship in single item quantities to your customers. Sometimes, companies require minimum orders because they cannot absorb the cost structure of single item drop shipping. Drop shipping is generally more expensive to do for the supplier. To offset their costs and unload the products, they will require you to order product you do not need. As an online retailer, you will want to avoid this situation.

2. Middlemen. This is the classic, unnecessary, middle layer of distribution. Middlemen, as the name implies, are the people in between you and a drop shipper. When you place an order with them, they order product from the actual drop shipper. Take their slice of the profit and have the real drop shipper send the products to your customers. They can also steal your customers as they are getting all of the shipping and contact information from you. At that juncture, they can send whatever they want to your customers such as advertising with lower prices. These folks should be avoided whenever possible. They are taking your additional profits by giving you pricing often close to retail. In some situations, they can also lengthen the delivery time to your customers. Again, you do not want this to happen. You need to ask the correct questions in order to avoid these folks. Questions such as, ‘Are you the manufacturer of the product?” Or, ‘Do you stock inventory of the products you sell?” are good questions to ask. We even ask folks to arrange a time for us to come visit their warehouse.

3. Membership Fees. An authentic single item drop shipper will not require you to pay membership or processing fees. Should you be paying someone to sell their products? No! Beware, they could be a middleman. Avoid any membership fees or dues. An authentic drop shipper does not require membership fees to sell their merchandise. In some cases, we have found that these so-called drop shippers charge membership fees for products that might not be doing well in the market place. The supplier wants to make sure they make money by charging ‘monthly fees” as they know you will probably be struggling to make money selling their products.

How you spot an authentic drop shipper.

Now that we have an awareness of the three M’s to avoid, we can summarize some of the rules and validations for our drop shipper search. Our checklist of rules can begin to look something like the following:

They will drop ship single item orders without minimum requirements. They will not require you to pay any member fees or monthly fees. They will offer you true wholesale pricing so you can make a profit. They will not put any of their own promotional materials in with your customer’s order.

Once a drop shipper can meet the above criteria there are other logistical items to consider such as the following:

They will put your company name on the shipping label. They will ship in a plain box without any of their company logos or information on the box.

They will include a plain invoice in with your order without any pricing.

There are other items to consider for an authentic drop shipper validation, but the above lists can get you going in the right direction. Remembering to avoid the three M’s can prevent those costly mistakes in your online retail business.

Brad Beiermann Ph.D., is President of Hienote Inc. Dr. Beiermann is one of the leading experts in business technology and e-commerce. Hienote Inc. specializes in product sourcing, exhibition marketing, and assisting small businesses locate wholesale drop shipping companies. You can visit their site at http://www.hienotedirectory.com .

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Traditional Wholesale Trading Vs Drop Shipping

by WilliamKing

Drop shipping differs from traditional wholesale trading in that it is a form of ‘just in time’ shipping. Basically, drop shipping means that the online seller will order the product from the wholesaler as and when customer orders are received. The seller simply receives the order and passes on delivery information to the wholesaler for delivery. The customer pays the seller, the seller pays the wholesaler and the seller earns the profit from the difference between the sale price and the cost price. So, the product does not pass through the hands of the seller at any time, and goes directly from the wholesaler to the customer in the drop shipping model.

The traditional wholesale trading method implies that the seller orders a stock of the product from the wholesaler and maintains this stock to service customer demand. The physical possession of the product is the differentiating element. This clearly has a cost associated with it. Firstly, there are storage costs, which can be daunting if the product occupies a large amount of space. Secondly, there will be shipping costs from the wholesaler to the seller. Additionally, there is the cost of carrying unsold stock for a long period of time that eats into profits from sold goods.

So suddenly, drop shipping seems like a great idea. But drop shipping has its drawbacks too. In most cases, especially if you are a small business, you will pay the full MSRP, which will squeeze your profit margins. Additionally, you may have little or no information on the status of your order from the wholesaler, affecting customer service levels. Since you are essentially passing on the cost of carrying inventory on to the wholesaler, you will be charged for it. But, on the upside, you will only need to pay when you receive customer orders.

Reliability is an issue when drop shipping – as a seller, you will be able to control and track your product’s delivery much better if you hold inventory. In case of drop shipping orders, the seller relies on the wholesaler’s delivery system, which may be surprisingly lax. Finding a reliable wholesaler is a critical task on its own.

If you are worried about the label on the box that is shipped to the customer, you may be pleasantly surprised to find that many wholesalers will include your packing slips and labels when they ship to your customers.

A couple of hybrids exist that are useful to know about: Buying from local wholesalers and hiring fulfillment houses. An alternative to carrying inventory and drop shipping is to buy from nearby wholesalers when you receive an order and ship it out immediately. Amazon started this way, but it works best for small start up businesses. The other option is to make a deal with a fulfillment house. This is an intermediary service that offers to maintain small amounts of inventory, assemble, order fresh stock, pick, pull, pack and ship out your product in accordance with your instructions and using your packing materials. A fulfillment house may provide a shopping cart online and customer call center, depending on the scale of operations. They will charge a fee based on various factors – amount of storage capacity etc, and may charge a small percentage of commission on sales. This model may work best if you are a seller of high margin items.

William King is the director of UK Wholesale Drop Shipping Supplies Directory, Wholesale Drop Shippers Trade Supplies, Wholesale Drop Shipping Directory, and Canadian Wholesale Drop Shipping Directory. He has 18 years of experience in the marketing and trading industries and has been helping retailers and startups with their product sourcing, promotion, marketing and supply chain requirements.

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Quick Start Your Online Business With Drop-Shipping

by Jenny Harvard

You plan to start you own business and decide to sell your products online. After doing some market analysis, you decide a range of products to sell. Things just get started, there are many others factors to consider before you can start running your online business. After deciding what products you will sell, you are immediately faced with many challenges:

First: “Where to store my products? I want to sell my products online and operate my business from home. I do not have much storage space for inventory at home, should I need to rent a store or a warehouse for this purpose?”

Second: “Since I do not have a physical retail shop because I operate my business from home, are the suppliers willing to deal with me?”

Third: “Many suppliers and distributors have a minimum order requirement if I want to purchase at wholesales price, it may cost thousands of dollars, but I don’t have that much of money, do I need to apply for a loan from bank to purchase them? What if these products not sell well, Will I tie up with debt for the money I owe to bank? Why should I tie it up in inventory?”

Fourth: “I will have to upgrade or install security system at my home as I keep my inventory here. And I may budget out my money to buy extra insurance to cover for my inventory to avoid heavy losses which may due by theft, fire, flood or twister”.

Fifth: “Shipping cost is another thing to worry. I need to pay the shipping cost for buy my products and I may need to pay to delivery goods out to my customers if I want to offer free delivery service to customers.”

Six: “How much do I need to spend in packaging and fulfilling orders? Will I need to hire employee to do the packaging job?”

Wow! There are so many things to take care before I can start my online business. Is there a shortcut for these? The answer is “Yes”. These problems can be reduced or eliminated by drop shipping.

Drop shipping is a method that enabled you to sell your products without the need of stocking your inventory, your drop-ship partners will take care of packaging, shipping and handling of your orders and they will directly delivery the orders to your customers.

First of all, you need to open a reseller account your selected distributor which can provide you with drop-shipping service, the distributor will become your drop-ship partner. Normally, some fee involve in reseller account set up. Once your reseller account has been set up, you can start your online business right away.

When you make a sale, your customer will pay you at your selling price plus shipping charge, you will route your order to your drop-ship partner and make arrangements to pay for the order at your wholesale price plus shipping charge. Your drop-ship partner then ships the product to your customer with your invoice and shipping label.

There are many advantages of using drop-shipping partners in your online business:

You eliminate the high costs of holding inventory at your place
You don’t get stuck with goods that don’t sell
You don’t need to pay for other expenses associated with maintaining inventory.
You not need to worry about packing, handling & shipping to fulfilling your customer’s order; your drop-ship partner will take care of it.

In Summary

The real advantage to drop-shipping arrangement lies in keeping your costs variable. Instead of being stuck with these expenses up front, whether you sell or not, you pay only when you make a sale. With drop-shipping arrangement, you can set up your online business fast & easy.

Jenny Harvard is author from onlinebusiness.studykiosk.com. Get More information on drop-shipping and wholesales from Drop-Shippers & Wholesalers network.

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How to make money on Ebay for Beginners by Robert Sharman

Making Money Tips for new ebay beginners - AuctionBucket.com

Ebay has been around for almost 12 years now (9 years mainstream). Every day people sign up and expect to make a lot of money on ebay as beginners selling their items online. 90% fail, because they don’t have a startup plan. The biggest problem is not having enough positive feedback. Once a potential bidder sees that you do not have a high ebay feedback rating, they will immediately think that you are a beginner or even worse a scam artist. Here is a tip for you to make money as an eBay beginner :

“It is not necessary to have an ebay feedback of 50+ to start selling, even if you are a beginner in online auctions.

I would suggest that you buy 10 ebooks on ebay for around $2 each (from a DIFFERENT seller each time) and once they have emailed you the eBooks, you immediately leave a good feedback for them.

After that, you email each and every one of the ebay sellers and ask them to also exchange a positive feedback for you. That should give you a +10 Feedback within a couple of days. Not bad for a beginner.

Then you start selling some low valued items for around $3 each … That way you are sure that ebay buyers will bid on your items, even though you have a low positive feedback and are a beginner. After selling the 10 smaller items, you should have a +20 feedback within 10 days, depending on shipping time. Again, not bad for a beginner

Now if a potential buyer checks your feedback, they will see a +20 feedback (100%) and they will also notice that NOT all of your feedback are from sellers. The potential buyer/bidder will read positive feedback comments from previous buyers and be more comfortable. They can trust you. Trust is the most important factor on ebay. Remember that the buyer is not able to see you or the item in person, so reading positive reviews from other people will make them feel at ease and they won’t even care that you are an eBay beginner.

Now you can start increasing the quality of the items you are selling and be sure that there will be more bids on your items. When you started out a couple of weeks ago as a new ebay beginner, there was the same amount of potential buyers looking at your eBay auctions, but they were not comfortable enough to bid on your items. But now you have given them reason to trust you as an eBay seller (remember the +20 100% feedback ?)”

Check out AuctionBucket.com for absolutely FREE TIPS on Making Money on Ebay

Visit AuctionBucket.com - FREE TIPS to make money on ebay

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