Become a Retailer, Sell First and Pay Later

Have you seen this type of advertisements on the web? It Sounds too good to be true. I have found that it is common for this type of advertisements to include the following entries.

No Inventory
No Warehousing
Can operate from home
Most Profitable business on e-bay
You will be provided a professionally designed website with marketing campaigns.
Training provided

Any one trying to find a small business idea can jump to this kind of advert. They will tell you that these businesses are really cheap, No big investment needed, no shop rentals and good profit. They even provide you with a free website and a shopping cart. Everything is done for you. Yes, the advertisement is true, but this does not make you feel responsible, that is what I think. Before jumping to anything, do research on it. Talk with other people and get to know their experiences. First of all get to know this dropShipping business.

What is DropShipping?

DropShipping is becoming very popular in e-bay. It sounds very easy and people always do look for easy business ideas. You are being lazy if you try this business idea for the sound of being easy. People can sell their products online with their websites without having to carry any inventory, doing packing or shipping. What you have to do is to simply place ads and pictures copied from the supplier on your website and collect money from the buyer. Then you pay the supplier money and purchase the item and give the shipping directions to the supplier. Supplier then pack and ship the product for you in your company name or Supplier’s name as agreed between the two parties. This is an ideal home based business.

How to find a good Supplier

To run an efficient business you have to keep in contact with several suppliers. Suppliers are people who buy from wholesalers (manufacturers). Wholesalers usually do not sell products in one item each basis. They have a minimum order quantity and you have to buy in bulk. If you are not a brick and mortar business you can end up having heaps of rotting items in your backyard that is why there are Suppliers. They buy in bulk from the wholesaler, and store them in their warehouses, while you sell their items. Again, how can you trust a Supplier?

There are lots of suppliers springing up from nowhere on e-bay. You have to be very careful in selecting them. Some are not really suppliers; they are middlemen functioning as suppliers. If you register with them, your mark up price will be twice the normal price and you hardly will be able to do a sale. Lot of customers do some research before buying, and if you are not up to that price mark, you are opted out. Considering the money you spend for advertising and listing items, it is not worth a bit. You will be standing where you were before.

Before you start dealing with suppliers, do a thorough search. Compare prices. If you can get assistance with your government small business programs, consult people who are experts. Contact the suppliers and get to know them. A true supplier will not force you. Others are bound to force you. Go to forums and check. That is another method of getting to know suppliers. Fact is no matter how you do your research you might get a chance of being caught with a false supplier.

There are some websites who offer you free directory of suppliers. They will tell you “Your background research has been already done for you. You will be provided with a Website with every tool necessary for your business. Marketing sources are provided. Why not try now!”
This cannot be, because it takes lot of time and effort to find a real supplier, so how can they provide you with hundreds of suppliers. These are all middlemen. They provide you suppliers and when you sell an item the price is much higher, because these middle men earn a huge amount from your sale while you are struggling to sell a product and the person who supplies you with a dropshipper directory is earning a huge profit from your sale.

You can do your own research, and start by your own. First get help from your government small business development corporation. Before choosing a supplier, contact them and get to know the amount of stock available and their inventory order point. Inventory order point means, that usually a wholesaler keeps track of their inventory. If the seller usually keeps 1000 items in their inventory, they will order another stock of 1000 items when they reach the stock limit of 500 items. It is wise not to use a supplier who has less than 100 items available because these people can be new starters who are not keeping good inventory.

When listing items in your website, always list about 1/4th or 1/8th of the recorded inventory, 1/8th is more safer because your are not the only fish, there are others too in this huge ocean what you call e-bay. Limiting your display stock is also important that if your wholesaler tells you about certain amount of stock but they might not have that much stock available with them, you will be in trouble. You have to be careful also when listing items. Your customers might be looking for a certain amount of items and if you do not have that much they will underestimate you.

This is why even they say that you do not have to keep inventory, you should keep records and payments up to date. And while solving customer conflicts your records will come in handy. As I have stated in my article on managing a good supply chain, every point of the chain should keep good records and efficient management. All work done for you are not going to help you if you do not keep your records.

See my article on managing quality supply chains.

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