Posts Tagged product sourcing
Many people in today’s dwindling economy have started to look at the the possibility of starting their own online business to take advantage of the internet while they still can. With the cost of living on the rise, this can be a very good idea.
The internet has become so widely available that many people from all over the world have access to it. The internet has become a place where people can socialize with friends, look up information, or even go shopping. The internet is growing everyday, so why not take advantage of these potential customers by starting your own e-commerce business.
Most people on the internet are classified as customers, or users. These are the people that are using the services provided on the internet instead of providing services. There are thousands of ways to start an online business, from banks to shoe stores, the list is endless.
Your best option is to create an e-commerce business selling retail products. This means you are selling items based on the demand of what your customers want. A wholesale supplier is the most efficient way to source these items. There’s a wholesale supplier for almost everything, from clothes to automotive goods. This is the most important thing you should look at when starting an online business.
First, you should determine what kind of products you would like to sell in e-commerce. You should try to carve yourself a niche instead of just selling a wide range of wholesale products. For example, maybe you would like to sell pet goods. Before you get your pet goods online business going, you should always make sure that there is a market of potential customers who are going to buy your products. If you are offering cheap and high quality products, though, you can rest assured that there will probably be customers buying from you.
After you have thought about what you want to sell, your next step is to create your e-commerce website. There are a couple of options when doing this, whether you want to use a generic solution or create a store that is specifically designed to meet your needs. Both ways are perfectly fine, just as long as the customer can purchase your products with ease.
Unless you have set up an e-commerce website before, it might be helpful to hire someone to do it for you. As an alternative method, you could see if your wholesale supplier offers an e-commerce solution that you could use.
Once your website has been created and you are ready to sell products through your online business, it’s now time to find your customers. This is easier than it sounds so don’t let it deter you. All you need to do is market and advertise in the right places and you should have customers in no time at all. Your goal when running an online business is to make as much profit as possible while also doing as little work as possible. If you are looking for some extra money to come your way, starting an e-commerce online business is definitely a viable solution. While it may be hard work at first, it will certainly pay off later on.
One of the primary benefits of drop shipping that many newcomers fail to recognize, is that you can increase your product line with different drop shippers who offer different products, and often with different countries of origin. In this way, drop shipping can be a real boon. But it depends really on knowing your drop shipper, and going the extra mile in cultivating drop shipping relationships, whether they are local or international in origin.
And therein lies the negative in drop shipping for the online retailer. You have to make the effort to cultivate those drop shipping relationships–there’s really a lot more to it than just signing up online and picking products from a catalog. If you simply drop ship with someone based solely on the convenience factor, you might find yourself without product or even worse, you might find yourself without a drop shipper at all. This happens as a result of one of two things. First, if you are without product for a long period due to production delays (which will happen regardless of source, by the way), it means your drop shipping source didn’t tell you he was running low, or you didn’t make the effort to inquire as to his projected inventory or production that would affect your product lines. If you cultivate those relationships, drop shippers will tell you in advance when things are getting dicey, and they might even tell you without your inquiry. Always keep up to date on your product. Always.
Second, and even more importantly, drop shippers who have cultivated relationships with you might tell you if they are going out of business. Think of the drop shipper as your friend: a friend will tell you before he goes out of business when things are out of control, whereas the general public will not get notice until the business is already liquidated and gone. When you cultivate these overseas or local relationships, you can save a lot of headache for your business, and you can keep your product and cash flow running smoothly because you know what is coming down the road that others might not get wind of until it is too late to do anything.
Seeing the hurricane and watching the weather reports can save a world of pain long before the hurricane ever comes ashore. Take it from someone who has seen the hurricane and prepared, and from someone who didn’t plan for the coming storm and paid the price many times over.
While the business of wholesaling can result in tremendous profits, there are a number of factors to consider prior to simply beginning your company. From surveying and understanding your potential market to weighing cost factors and margins to finding a product niche that suits you and your competitive needs, there are a plethora of elements to analyze as you get started.
With so many product markets seemingly becoming increasingly over-saturated, it can be challenging to find a niche that has the bandwidth to accompany yet another fresh, new idea. However, this shouldn’t deter up and coming wholesalers from overcoming potential obstacles. Do your research and get a firm grasp on your competitive landscape. Closely monitor what competitors are doing, including concepts that have worked as well as those that have not. See if you can modify any of the less successful ideas and transform them into top-selling products. Investigate ways that will enable your line of products to stand apart from the rest. Understand what your target audience is looking for and how you may be able to modify existing products so that they more effectively appeal to your consumer base.
Does a particular product category boast more potential in terms of margin, revenues, and profits? If you’re fortunate enough to have the option to choose among several various product categories, then profit margin is what you should use as your determining factor. Because it can be difficult to differentiate your product offering from those of competitors, you’ll want to ensure that you’re earning money with the items that you’re able to sell – particularly with those items that virtually sell themselves. Further, ensure that your total costs are significantly less than the amount of which you can realistically sell a high volume of product.
While you may not be able to create a totally unique product, it’s important that your offering boasts distinct features unique to your mission. Find products that can be and distributors that are willing to drop ship so that you can reduce your overhead costs. Moreover, ensure that there is substantial demand for your products and services. If there isn’t a distinct market need for what you’re hoping to sell, then cut your losses immediately, and develop an alternative business plan. Adding a new facet to a standard, convenient product can add to its resale value.
Despite your specific financial goals, it’s important to understand your market before you move forward with developing your business plan and just jumping into a product category. Make sure that you can identify potential pitfalls and drawbacks and immediately strategize ways to prevent these issues from affecting your future successes. Perhaps most importantly, refrain from spreading your resources too thin. While you may see potential in selling a vast variety of products, it’s best to start with one targeted niche and to work on expanding from there.
Drop shipping has garnered quite a lot of attention over the past few years, presenting an easy way to become an Internet retailer. Is it just another get-rich-quick scheme? Multi-level pyramid deal? Flash in the pan? Not really. Like anything, you do have to put some energy into it. When you first consider the concept of drop shipping, it seems remarkably simple. You don’t have to carry any inventory, and you don’t have to do any shipping. You just put up a web site, send the orders to the drop shipper, and collect the checks.
Well, it’s not really that easy, folks. Successful drop shipping involves successfully doing two things: Making a good product selection, and marketing. On the product selection front, it’s easy to just load up everything the drop shipper has to offer into your virtual catalog, but a more effective method is to create a niche for yourself—specializing in one particular area. Don’t try to be everything to everybody, because the customer will just get lost. Specialize in one area and position yourself as the expert in that area. On the second front, marketing—again, it’s easy to just put up a web site, but will anybody see it? How many web sites are out there today? With no marketing, again, it will get completely lost.
That said, drop shipping can be an effective management technique, especially for handling inventory.
Drop shipping, for the uninitiated, is a form of inventory control whereby the retailer sells his items to the customer, but instead of having a supply of the item on his shelves for immediate delivery, the retailer orders his items directly from the manufacturer or the wholesaler, who then ships them directly to the retailer’s customer. In this way, there is no need for the burden of carrying inventory. The retailer still retains his profit margin as a difference between the wholesaler’s or manufacturer’s price and that of the retailer.
Often, the final customer never knows that the retailer is drop shipping his merchandise because the retailer chooses not to disclose this up front, thereby hiding his inventory control from view. There are several ways to hide the drop shipping from customers. The best way to do this is to have the manufacturer or wholesaler ship the product with the retailer’s name and logo on the packaging slip.
The benefits are obvious: no inventory means less cost can be passed on the retail customer, and the retailer retains positive cash flow throughout the entire process. The potential downside is that it may take longer for the customer order to be fulfilled, since it’s going through a third party, there may be a backorder that the retailer is unaware of, and the retailer’s markup will not be as high as if they were sourcing, warehousing, and shipping the product direct.
In part two of this article, I will explain a few of the positives and negatives of drop shipping in more detail, and how the retailer who drop ships can benefit in the end. To be sure, there are negatives to the drop shipping idea, but they are manageable if you know how to navigate the drop shipping maze.
Importing from a wholesaler overseas is often a superior strategy for getting goods very cheaply. Let’s face it, many of the products you are going to sell come from Asia–and the closer to the source you get, the better your wholesale price. You may get a product from a stateside distributor at what seems like a good price, but where is that distributor getting it from? Either from another distributor in Asia, or direct from the manufacturing facility. Now I’ve always advocated just going there yourself to examine and select the products in person, and then arranging shipping directly, but that is admittedly a major task, and it probably takes some foreign language skills, and believe me, languages like Thai, Mandarin, Cantonese, or Japanese are notoriously difficult to learn.
Either way, it pays to understand the shipping terms. It may well be that although you would get a better wholesale price from the Asian source, your overall cost–including shipping–may still be cheaper if you have a distributor close to you. Here’s the first thing to know: Suppose you buy a shipment of items from a source in Asia, and the terms specify “FOB Hong Kong.” That means the source is responsible for getting the goods to the port in Hong Kong, but from that point, you’re responsible for the rest of the costs.
The second thing to know is that shipping costs aren’t just what you pay the shipper. There may also be a customs tariff due upon arrival, as well as a customs bond, cargo insurance, and a clearance fee. there may also be an additional “last mile” fee involved. Where is the nearest port to your home or office? Sea freight comes into the nearest port. Your shipping fee may cover the cost of shipping from Hong Kong to San Francisco, but your office is in Nevada–so there’s an extra fee for shipping it over the last leg, unless you want to make the trip to the port and pick it up yourself.
When you calculate it all out, you may still be better off paying a slightly higher price to your stateside distributor, as opposed to going direct, especially if you are buying in smaller quantities. On a per-square-foot basis, shipping over a couple boxes from Taiwan or Bangkok is a lot more expensive than shipping an entire container load. Your distributor is getting an economy of scale on shipping, more than likely bringing items over in large containers, and as a result they don’t have to add on as much to the price when they sell it to you. Shipping cost per item may be several times more for you, if you’re just buying small amounts.
When you bring in goods from overseas, there are some complexities involved, and the US customs department will make your job just a little bit harder–or maybe, a lot harder, depending on how you approach it.
If you’re working with an overseas supplier, they will take care of most of the paperwork; all you’ll have to do is pay the customs bill. But if you’re overseas yourself acquiring goods, and you want to ship them back to yourself in the States, you’ll have quite a lot of paperwork to do. Your shipping company can give you a good idea of what you need, and can probably provide you with the paperwork.
You will complete a bill of goods, which shows exactly what is in the box–and here’s where a lot of importers spend unnecessary money on customs duties. On this list, you need to itemize everything. But what you need to realize is that tariffs are enormously complex, and you need to be very precise. For example, the tariff you will pay to receive a box full of cotton shirts will be different from the tariff on a box full of silk shirts. The same holds true for any item, and you always must specify as much detail as possible. Have a box of chopsticks? If you simply list it as “chopsticks,” customs may delay your shipment, because they don’t know what they’re made out of. Say “wooden chopsticks,” “ceramic chopsticks,” or “plastic chopsticks,” to be more specific. You’ll also have to specify the country of origin, failing to do so can also cause delays. And so, the tip of the day is this: Be painfully specific, even when it’s obvious. Customs officials never make assumptions, and if you don’t explicitly say what they need to know, they’ll send your paperwork back to you.
If you’ve been thinking about starting a business that uses wholesale suppliers to drop ship products to your customers, make sure you don’t miss the first, and most important step. You need to decide, in the beginning, what niche you want to choose for your business. The niche you choose will impact everything about your business, from the wholesale suppliers you choose to the type of marketing plan you decide to implement.
You see, an entire market is too broad for all but the largest of companies to try to take on. For a small business, especially one that’s just starting out, it’s best to divide the demand in the market into smaller, more manageable niches. By operating your wholesale business in a specific niche, you can focus your efforts on a specific type of buyer who’s looking for certain specialized goods.
One of the most important components in choosing a niche for your wholesale business is doing a market survey. You need to do a market survey in order to understand what products are being sold in a niche, as well as the areas that your competitors are already entrenched. By taking a look at the market, how much product is being sold and who is selling it, you can figure out where you belong. Ideally, you’re looking for an arrangement of factors including price, service, quality and product type that will maximize your sales while facing the least amount of direct competition.
You also need to consider your own interests and abilities when you’re choosing a niche for your wholesale business. For example, if you have no interest whatsoever in consumer electronics, it probably isn’t a great idea to start a consumer electronics drop ship business. The fact of the matter is that your desire and passion are a key element in being able to see your business succeed. Choose a niche that you know something about, and that you have some interest in.
As you go through the process of finding a niche, try to avoid thinking only about wholesale suppliers and costs. You might be able to buy products at a wholesale price that’s extremely competitive, but if you can’t find someone to buy those products or you can’t effectively market those products, your business won’t succeed. In addition, low wholesale prices also mean that your competition probably also has access to that kind of pricing, meaning you’ll have to find another area, whether it’s service or marketing, in which you need to offer something to your consumer that your competition can’t offer.
One of the best way for retail establishments to expand their offering of products is to utilize drop shipping wholesalers. Utilizing drop shipping wholesalers also helps the retailer to reduce their on-hand inventory, thereby lowering some of their overhead costs.
For a retailer to make effective use of drop shipping wholesalers, you need to first understand the process. Drop shipping is a different sort of business process from traditional retail sales. In a drop shipping arrangement, the retailer markets the product, collects payment for the product from a customer, and then orders the particular item from the drop ship wholesaler. The wholesaler then ships the supplier directly off to the customer.
The profit margin is different when you’re using this type of process than with the traditional retail supply chain. Your profit on any given product is the difference between the amount that you collect from your customer and the amount you pay the drop ship wholesale company. You don’t hold inventory, and you are not involved in the shipping process at all.
One of the great benefits to this arrangement is that it doesn’t require a large cash flow. The retailer is paid by the customer before they have to purchase the goods . In a traditional retail arrangement, you have to purchase the goods prior to being paid by the customer.
One of the key components to success is choosing a reliable, reputable and dependable drop ship wholesaler. There are several ways you can find a good supplier. You can start with your current list of vendors, and see if they offer drop shipping. You can also go directly to the manufacturer, to see if they drop ship. An online drop ship wholesaler directory is one of the best places to find reliable suppliers, as the directory does much of the legwork for you .
It’s also important to choose your product or products wisely. You should use the same kinds of criteria for selecting drop ship wholesale products that you would use when you were finding products for your retail stores. You want to choose a product that will be on demand, and you need to choose a product that you can sell at a profitable mark-up.
You’ll also need to plan for returns and other customer service problems. While some drop ship wholesalers will handle returns, many do not. These issues are easier to deal with when someone walks out of your retail store with a product, but become more complex when using a drop ship wholesaler. Make sure you know the supplier’s policies in regard to returns before you commit to doing business with them.
If you’re like many of the successful Ebay entrepreneurs out there, chances are you happened into the business quite by accident. Perhaps you found an item in your attic that sold for more than you thought it was worth, and decided to hit every rummage sale in the state until you found every last one of them and sold them for a profit. At some point, however, if your business is going to grow, you should consider drop shipping. Drop shipping is one of the best ways for you to expand your Ebay business.
Here is how the drop shipping process works for Ebay sellers. First, you place an ad on Ebay for an item that you don’t have, but that you can get from the drop shipper. Your Ebay buyer then buys the item, sending you the money for the item and the shipping costs. You then take a portion of that payment and send it to your drop ship wholesale supplier. The supplier charges you wholesale prices, allowing you a profit on the item. Finally, the supplier will ship the product directly to your Ebay buyer.
When this process works correctly, drop shipping can be a dream business. You have no overhead, because you have no inventory, storefront or shipping costs to bother with. You merely accept payments, and then send a portion of those payments off to the supplier, and you get to keep the difference between the two as your profit. As you can see, this is quite a bit easier than scouring every garage sale and flea market within 100 miles to find the perfect Ebay item.
However, in the real world, things are almost never quite that simple. There are pitfalls to avoid, and regular hiccups that can interrupt the flow of your Ebay business. Being ready for these problems before they actually arise will help you to have a distinct advantage when the time comes, however.
You can do this, at least in part, by treating your Ebay drop shipping business like a business. Follow up with your customers, for example, to make sure that they’re satisfied with the products they receive. You should also try to be constantly aware of your drop ship wholesaler’s supply of products. There is nothing worse than collecting payment for a product only to find that your supplier is out of stock.
If you implement it right, drop shipping can be a tremendous boon to your Ebay business.
If you have a business on Ebay, you may be able to increase your profits and expand your business by using wholesale suppliers. Many wholesale suppliers will drop ship products for you, allowing you to focus on what you do best: getting people to bid on your Ebay auctions. Still, there are some important things to keep in mind if you’re going to successfully integrate wholesale suppliers into your Ebay Business:
First of all, you need to keep a close eye on what your fulfillment times look like. Don’t be afraid to send your customers emails asking them for feedback, or even filling out some sort of customer survey regarding the time it took to fulfill their order. If your orders are taking longer than you think they should take to get to your customers, chances are you’ll hear back pretty quickly. Because your feedback score, and the reputation of your Ebay business rely so solidly on shipping issues, this is key. Ebay and online customers often expect better service in terms of shipments, and if your shipments are regularly being delayed you’re going to have payment reversals and negative feedback that are going to severely hurt your business in the long run.
You also want to keep a close eye on stock. It helps, in this regard, to choose a drop ship wholesale supplier that allows you access to stock level information. When you’re selling items on Ebay, there is a time delay between the time you advertise the item and the time you receive payment for the item, and when you order it from your wholesale supplier. If your supplier runs out of the particular product you’re looking for in that time, you’re going to find yourself having to issue refunds and risk negative feedback. Remember, too, that Ebay sales are a contract. You’re not allowed to cancel an Ebay sale due to a product being unavailable. In fact, if you can’t provide a product to a customer, the buyer can petition Ebay to give you a seller nonperformance violation. When you get a certain number of these, Ebay will shut down your seller account.
You also need to be prepared to mediate returns. If a customer isn’t satisfied with the exchange or return process, you risk negative feedback that can hurt future sales. In some ways, you may wind up having to mediate the return process.