The Dirty DozenEvery single day, enthusiastic entrepreneurs start about 2,000 new small businesses. Three years from now, about 1,600 of those new businesses will have failed.

Being in the business of helping others break into the retail business, we’ve had a ringside seat to witness competitors battle it out retail arena, and we’ve identified the 12 differences that separate the champs from the chumps.

In this article, we reveal those differences and use our observations, experience, and expertise to steer you clear of the most common pitfalls and ensure that your business becomes part of the elite group of successful startups.

Poor management

People launch their own businesses for a variety of reasons. Some think it will be fun and easy. Others aren’t happy with their current lifestyle and seek to better themselves financially. Still more look at their boss and think, “If he can do it, then I sure can!”

But the truth is that 80% of new businesses fail within the first three years. The number one reason small businesses fail is, by far, poor management.

Recognizing the essentials of good management

Good management boils down to developing a solid business plan and then effectively executing your plan or adjusting it to meet the needs of the current situation. Effectively managing a business, big or small, requires the following…

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What is Dropshipping? Finding Dropshippers, Its Advantages and Pitfalls!

by William King

Dropshipping is a type of retailing where the retailer does not keep goods in stock, but instead passes the customer’s order and shipment details to the wholesaler, who then dispatches the goods to the customer directly. The retailer makes their profit on the difference between the wholesale and retail price. Some retailers may still keep “show” items on display in stores, so that customers can inspect an item similar to those that they can purchase. Other retailers may only provide a catalogue or Internet presence.
Drop shipping can occur when a retailer receives a single large order for a product. Rather than route the shipment through the retail store, the retailer will arrange for the goods to be shipped directly to the purchaser.

Let us assume, you purchase an item from a dropshipping site for $20.00. You would sell that item for a price determined by you; let’s use $35.00 plus $4.50 shipping for an example. After you collect the total payment of $39.50 from the customer and their mailing address, you would forward the $20.00 plus $4.50 for shipping to the wholesaler, and keep the $15.00 as profit, never having to touch the product, as the wholesaler ships it out to the customer.

In short, dropshipping is simply selling products for wholesale companies, sending them the address of the person who bought from you, and they ship the product to them. This is an incredible opportunity, most times for the cost of a meal at a restaurant, to start a profitable eBay business.

Many sellers on eBay also drop ship. Naturally a seller will offer an item as new and ship the item directly from the wholesaler to the highest bidder. The seller profits from the difference between the winning bid and the wholesale price, minus any selling fees from eBay.

Finding Dropshippers

Startups and individuals new to the dropshipping world generally face severe difficulty in finding legitimate and authentic dropshipping companies. Several online directories have popped up in recent times on the net which help to make this task easy. Its best online example can be seen by working of the famous online dropshippers directory http://www.aidandtrade.com.

Whilst looking for dropshippers, there is a general misconception that dropshipping companies who charge an initial fee to sign-up and open accounts with them are not considered genuine. Although this might be true in some cases however the reason for charging this fee is that, these companies want to make sure that they are dealing with genuine traders and not individuals merely looking for quick bargains and one off items.

Advantages of Dropshipping

Working with dropship companies has numerous advantages for small companies and individuals looking to earn part time or even full time income. Following are some of its benefits.

- The dropshipper researches for products and provides their lists/catalogues of available items at trade prices - one can sell any of these items by any method they wish.
- The dropshipper acts on the order - Only when the item has been sold and the payment has been received, the dropshipper is asked to fulfil the order.
- The dropshipper packages the orders – No packaging costs are involved at the end of the seller.
- The dropshipper sends the orders out direct to the customer – No delivery costs and efforts are associated with the seller
- The dropshipper is transparent to the customer - As far as the customer is concerned their purchase has come directly from the seller.
- The dropshipper holds all the stock – No warehouse or storage issues at the end of the seller
- All the seller has to do is concentrate on sales and marketing and banking the profits!

Dropshipping Pitfalls

While it is true that the profits can be gigantic, the seller effectively has to rely on the goodwill and professionalism of the dropshipper/wholesaler. Eventually, one should always keep in mind that should the deal go raw (for instance, the dropshipper supplying a faulty product or a downright incorrect one), it will be the seller’s reputation that will take hit. The end buyer cares nothing for whether the seller used a dropshipper or not; all they truly care about is receiving the product that they paid for. For that reason, dealing with unconfirmed dropshippers can be risky.

Additionally, profit margins can be low when working with smaller dropshipping companies. Typically the biggest discounts from manufacturers go to larger volume resellers who further pass their discounts to sole traders and individuals. Using smaller dropshipping companies one might end up paying much more per unit of product than by contacting manufacturers direct. Most manufacturers refuse to deal with individuals, but many will offer low volume quantities at wholesale price. For a fast selling product it could be worthwhile buying small quantities directly from the manufacturers.

William King is the director of UK Wholesale Directory and Dropshipping 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.

Article Source: U Publish Articles

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How Do I Find a Good Wholesale Merchandise Drop Shipper? by William Doggett

People wanting to get into the wholesale merchandise drop shipping business will find it quite the challenge to locate a legitimate and then a good quality company to purchase their wholesale merchandise inventory from. Finding the right company is not only difficult, it is imperative to operating a successful drop ship business.

There are no shortcuts to getting this done right, so do not try to expedite finding a good wholesale merchandise distributor. You should research the available companies thoroughly. I setup a spreadsheet and list the items that I am looking for in a solid company before I even begin. This allows me to track everything and compare when I have concluded my company research.

This spreadsheet can be done in any program or even on paper with your handy pen if you should choose. List some questions that you want answered and list the requirements of the companies for your business.

One of the most important requirements that I have for a wholesale merchandise drop shipping company is whether they have a datafeed or not. A datafeed allows you to download all of the items and their specifications through an ftp software program.

What is an ftp software program?

If you aren’t clear on what an ftp program is, you should begin your education on this subject immediately by doing some Internet searches. Ftp programs are easy to use but do require some familiarization and practice to use properly.

Why would I want a datafeed?

The datafeed puts all of your item information in one file for easy use. This file can be broken down and toyed with however you like within a spreadsheet program and then used to populate your webstore with merchandise. This may be another area you should research before getting started.

If your store is only going to carry a few products, a datafeed may not be necessary. You could always populate the inventory in your store by hand. This may be time consuming, and updates will be time consuming as well, but would give you a very in-depth education by doing this by hand. I no longer do my inventory updates by hand as it takes too much time. You will find this true as you open one store after another.

What about product pricing?

This can be one of the trickier parts of finding a good wholesale merchandise distributor. Many companies will not just freely give you access to their wholesale pricing. There are many valid reasons for this and frankly, I don’t blame them. So, you must honor the secrecy of wholesale pricing by not giving it away once you have access.

To gain the pricing list from a distributor, you must first get an account from them. To do this, you will have to prove that you are a legitimate business. This will require a copy of your business license and your EIN number granted to you by the IRS. Some wholesale merchandise companies even go as far as requiring a photo of your store front. At times, you can email them explaining that your company is strictly a website and they will waive this requirement.

A strict requirement to gain an account from a wholesale merchandise distributor is a very good sign. If you can simply get one by asking, then something is not right. And even worse, if they charge a fee to access their database, then something is very funny about this company. Move on without looking back.

Is it ok to email a wholesale merchandise distributor and ask questions before applying for an account?

This can be very important in saving you time and effort. Always feel free to either email or call a company and speak to a new accounts representative. Be professional, but don’t feel like you have to have any magic questions or specific statements to communicate. All you have to do is have your company name handy and possibly your business license information. They will be happy to talk to you as they are in the business of gaining new accounts and making money just like you are.

Ask questions and don’t hold back. The worst the new accounts rep can do is ask you to apply for an account before they will answer any more questions or certain questions. You should try to gain as much information as you can before choosing a company and a quick phone call can be very fruitful.

Remember, how a company handles new accounts can be a very strong indicator of how they handle existing ones. The potential wholesale merchandise distributor should be very friendly and helpful to a possible new account. If not, imagine how they will treat you once your have an account.

If you don’t like the feel of it or the treatment you receive, simply move on.

Remember, jump in with both feet. Do not hold back on questions you have of potential drop shippers. And, always be ready to learn.

William “Cole” Doggett is an entrepreneurial fanatic and guru. He is an expert in the fields of drop-shipping, online retailing, wholesaling and entrepreneurship. He runs an informative blog on Wholesale Merchandise at http://wholesale-merchandise-1.blogspot.com to aid you on the path to success.

Article Source: U Publish Articles

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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.

Article Source: U Publish Articles

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