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Why You Won’t Make Money from Home Drop-Shipping on EBay
There are a lot of companies that claim you can make thousands of dollars a month selling drop-shipped products online. This is a parade that is screaming to be rained on. The reality is that you probably won’t make much money selling drop-ship products on Ebay.
If you haven’t heard, drop-shipping is a retail fulfillment method where the retailer never actually owns or stocks inventory in the product they are selling. The retailer sells the product to the consumer online and a wholesale supplier, known as the drop-shipper, ships the product to the customer.
There is nothing wrong with drop-shipping–in fact, many of the web’s largest retailers sell drop-shipped products every day. What’s wrong is that drop-shipping is being sold as a method to get rich quick. Starting a business that sells products online exclusively through drop-shipping is a recipe for disaster. There are too many factors that you have no control over that can severely dent your business.
- Low Margins
- Competition
- Reliance on a Single Supplier
- Loss of Branding
The drop-shipper you are buying from is probably not the manufacturer of the product you are selling. In fact, the drop-shipper is probably buying their inventory from yet another another middle-man. You are the last in line in the supply-chain and you are not going to get a competitive price from the drop-shipper. In fact, you should not be surprised if you find products on Amazon.com that are selling at a lower price than is offered by the drop-shipper.
Everyone wants to make more money and these drop-ship companies are marketing to everyone. If you can roll out of bed and sell digital cameras online then so can anyone else. If everyone ends up selling the same product the downward price pressure will further dent your profits–especially if they are sourcing from the same catalog of drop-ship products.
Smart retailers always have multiple sources for their products when possible. If you buy into the idea that any company can provide a constant supply of name-brand consumer electronics then you have a lot to learn. There is a reason why people spend so much time finding new sources and protecting their existing sources. Products sell out all the time–especially hot consumer electronics. Just because a drop-shipper has a picture of an XBox 360 on their home page doesn’t mean he is going to have them in stock when you have just sold one to a customer. If your only drop-shipper doesn’t have the product you will lose the order and the customer.
How will your drop-shipper represent your brand when your customer receives your package? You will be lucky if the drop-shipper will include a packing slip with your logo on it to the customer. Even if your customer does get a branded packing slip he will also find himself on the drop-shipper’s mailing list. Think about it: you probably paid good money through AdWords to get that customer’s order and now your drop-shipper has the customer too.
Unless you can get a contract with a supplier tailor-made to your needs drop-shipping online is a losing game. Effective e-commerce takes effort.
You need a defensible strategy for selling products online. A key to your success will be establishing long-lasting relationships with high quality suppliers. Start creating those relationships now by finding quality wholesale suppliers and manufacturers of specialty products today.
Still not sure what to sell? Here are thirteen wholesale sources for Halloween costumes. Go make some relationships and start selling!
Grow Your Retail Business through Emerging Talent
Retail is a brutally competitive business. Most retailers simply cannot compete against larger rivals on price. This can lead to retailers selling products carried by their larger rivals as loss-leaders. Smart retailers know that larger rivals can be easily outfoxed through a simple strategy. The larger rivals, by definition, serve the mass-middle of the economy. Retailers know that there is money to be made by serving above and below the price ranges of the big-box behemoths. Tools like the ProductBlazer wholesale supplier search engine can help independent retailers find new suppliers to provide high and lower end products.
Discover Suppliers of Innovative Specialty and Artisan Products
Smart retailers also take advantage of their smaller size by growing their business through identifying emerging talent. There are countless suppliers of unique craft and artisan products. Most of them work the trade show circuit with limited success. But a small number of craft and artisan manufacturers provide innovative products, including toys, jewelry, apparel, and even electronics. If you can identify talented artisan manufacturers, while they are still emerging, you can grow your business, and their business, by providing your customer with unique products they can’t find in other stores.
Take Advantage of Your Smaller Size
These emerging talents cannot provide the volume of products required by Walmart or Target. But smaller independent retailers can take advantage of their size and carry unique, sometimes one of a kind, products that the big-boxes simply cannot carry. Doing business with artisan suppliers isn’t any harder than doing business with a national distributor–it’s just different. Your account manager may be the designer, or the spouse of the designer. Embrace these differences and create a real relationship with the supplier founded on a solid stream of orders through your storefront.
Actively Manage Your Relationships
There are some differences in doing business with artisan suppliers. The most important difference to you may be that their view of channel management and support could be different than yours. Before you begin sending purchase orders understand how the artisan supplier views you, the independent retailer, as a channel. Are you selling online? Is the supplier also selling online? You may have far more experience than the supplier in channel relationships–don’t take advantage of them. Just figure out a way to build your business along side their business.
Find New Artisan Products Today
Doing business with artisan suppliers is much less of a challenge than actually finding them! Many work trade shows on a regional basis and occasionally visit national shows. ProductBlazer provides instant access to thousands of artisan suppliers of jewelry, toys, apparel, housewares, and a lot more. Here is a Supplier Spotlight of wholesale sources for beautiful artisan jewelry. Start getting in touch today and build your business on the beauty and innovation of artisan products!
