We’re seeing drop shipping e-business boom all over the digital world. Ebay stores, Yahoo! Stores, even private e-commerce web sites– who doesn’t love a business model with very low risk and easy maintenance? As a drop shipper you don’t have to store any inventory, hold very low overhead (if any), and just concentrate on advertising your popular items and providing great customer service. Eyes go wide when e-business owners realize orders come in and ship out without any interference or work from them!
But why only drop ship retail goods in ones and twos when there is an entire business to business market willing to buy in bulk? There are so many headaches in drop shipping at retail prices to an end consumer. An initial problem is finding retail customers in the first place. The Internet is an instant cost comparing tool– if your wholesale feed is available elsewhere on the web you will be competing in a race to rock bottom prices. With so many web retailers drop shipping in similar circumstances, there is just no wiggle room in the price to entice customers and keep e-businesses in the black.
Once you have a retail customer buying from your drop shipping web site, rarely will an end consumer want more than one item. Therefore, retail drop shippers are forced to carry the higher end products just to make a profit. Higher end wholesale products come with hefty shipping fees, either due to weight or value, and end consumers are conditioned now to expect free shipping on most orders over $50. No big deal, you will just lose shipping costs out of your profit margin right?
What happens when the customer also expects impeccable customer service by demanding a return? You’re now wasting man hours on resolving the issue trying to avoid a return– one that is completely reasonable to the customer but completely unreasonable to your business. The customer doesn’t like the color of the item, it doesn’t look right, it arrived too late as a gift (because they ordered it at the last minute) so they bought something else, or any other excuse in a long list of worthless complaints. Bottom line the product works, but the customer doesn’t want it anymore. Now, they not only want a refund on the order, but you are also stuck with the shipping costs of getting the item back.
Retail drop shipping only one or two items per order means each transaction is typically smaller than a business to business bulk drop shipping order. This is a problem for any e-commerce merchant as transactions have costs. There are administrative costs, whether it’s your time or an employee’s, fees from banks or Paypal, shipping costs, and insurance and business operations costs as merchants protect themselves against fraud. As a retail drop shipper you just can’t compete with any low priced single items available at a store.
So how can we make selling a $1.00 kitchen spatula work in a drop shipping model? Easy, sell them in case lots of 20, 50, or even 100! Where the retail drop shipping market is very over-saturated with every person able to buy and sell on eBay, the business to business (B2B) market is still in need of quality bulk drop shipping web properties. Wholesale vendors and even direct from the factory suppliers are usually too busy to trifle with selling on the Internet. But they’re more than willing to take your orders if you are willing to develop and run the web site and deal with the customers!
Or it may be smart business move for the wholesale supplier to protect their prices by selling through a third-party: YOU! There is so much that goes into pricing a durable good– how many is the buyer purchasing, what additional items will the buyer also procure from the same company, how often is the order to be filled? Large wholesale distributions don’t have the time or expertise to deal with smaller business buyers. Bulk drop shipping for B2B purposes protects wholesale suppliers from selling goods on various complicated contracts at the same price.
If you’re a drop shipping e-business owner used to only thinking retail, you’re probably wondering who on earth will buy from a drop shipping web site specializing in business to business? Easy, tons of people! Here are just a few:
1. Small Brick-and-Mortar Retail Stores
You know these as specialty stores or “Mom and Pop” companies. Often these are the small stores in malls or shopping centers. These business owners can’t afford to run around town to gather business inventory, they have a shop to run! Buying direct from a big time wholesale distributor doesn’t work either as they usually only need a case lot of two of an item in the stock room.
2. Swap Meet, Flea Market, or Online Auction Sellers
Even in a booming economy, there are always those customers looking for a bargain. They can be found at local public swap meets, flea markets, or bidding at online auction sites. The small business owners running these stalls or virtual auction houses need inventory to sell! Take a local trip to the flea market and give out information about your wholesale business to business website.
3. Offices, Nonprofits, and Charities
Most of these entities use a super store card or bulk membership to stock the break room, office supply closet, or any other needs. The employee responsible for buying in bulk at the local mega store will be thrilled to just point, click, and ship directly to the office!
So why don’t all of the online business men and women running retail drop shipping web sites diversify into business to business (B2B) transactions? Some don’t even know the market exists; others don’t want to take on a completely different web property. There is a saying “If you always do what you’ve always done, you’ll always get what you’ve always got.” There are eBay and Yahoo store owners out there satisfied with their e-business earnings and dealings. They don’t want to rock the boat.
History has shown truly successful business men and women are always after that next mountain top so to speak. Running a B2B bulk drop shipping e-business isn’t any more difficult than a retail one. In fact, it so much easier in many ways. A business customer is usually more reasonable to deal with than an individual end consumer. B2B customers are repeat customers, eventually little effort is needed to bring in new customers. Compare that to one-time retail customers you have to replace with other first-time customers! Orders are also larger on a B2B bulk drop shipping site, meaning more profits per transaction. B2B bulk drop shipping is just a better e-business investment by far.
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