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Tuesday, November 15, 2016
Part 2 - How Did It All Start?
I ended Part 1 of How Did It All Start? by sharing that I didn't end up becoming a Dropshipping
Business/Retailer but didn't share the reasons why or the information that i learned about Dropshipping. I will share all of that here: (It's a long one)
Dropship or Drop Ship – Both terms seem to be used.
Dropship or Drop Ship – Both terms seem to be used.
Consumer = Customer
My research on becoming a Dropship Retailer began with visiting a Canadian website: Canada Business Ontario at Cbo-eco.ca, but unfortunately I can no longer find the original information. I did however come across this more recent article on their website: Opening Your Own Online Store? Consider Drop Shipping.
There are countless articles about Dropshipping online but these are a few that I gathered information from when I was conducting my own research:
What I took from the research at this point in my journey was the following:
1. Dropshipping is a service offered by (some, not all) Wholesalers, or by Manufacturers or Producers of product.
a. A Wholesaler is someone who purchases a large number (bulk) of products or items from a Manufacturer (producer) or Vendor (supplier) and shelves the inventory in their own warehouse.
b. Distributors are sometimes confused with Wholesalers. We found an article explaining the differences between Wholesalers, Distributors & Retailers: Small Business Chron
2. When you use/partner with a Wholesaler who offers Dropshipping (Dropship Supplier/Wholesale Supplier) you don’t have to carry or purchase any inventory up front and you don’t have to put out the money to ship the product (item) to your customer. Instead, what happens is:
a. You post the product items you want to sell on an Ecommerce website, your Ecommerce website.
b. The customer buys the product item from you and pays you for it through whatever method you have set up in your Ecommerce store website i.e. PayPal, credit card, etc.
c. You order that product item from your Wholesaler and provide them with your customer address.
d. You pay your Wholesaler for the order (product item) at a lesser amount than what you charged your customer plus the shipping fee (which you would have charged and received from your customer).
e. The Wholesaler ships the product item out to your customer.
3. Why does a Wholesaler Sell or allow us to be Dropship Retailers?
My research on becoming a Dropship Retailer began with visiting a Canadian website: Canada Business Ontario at Cbo-eco.ca, but unfortunately I can no longer find the original information. I did however come across this more recent article on their website: Opening Your Own Online Store? Consider Drop Shipping.
There are countless articles about Dropshipping online but these are a few that I gathered information from when I was conducting my own research:
- ecommercefuel.com - Finding Dropshipping Companies & Wholesalers - My Drop Shipping Business’s Fulfillment Process
- blog.hubspot.com Dropshipping 101
- abetterlemonadestand.com (72 hour dropshipping business)
- shopify.ca Picking Products to Drop Ship
- Canada Business Ontario cbo-eco.ca Exporting to World Markets
What I took from the research at this point in my journey was the following:
1. Dropshipping is a service offered by (some, not all) Wholesalers, or by Manufacturers or Producers of product.
a. A Wholesaler is someone who purchases a large number (bulk) of products or items from a Manufacturer (producer) or Vendor (supplier) and shelves the inventory in their own warehouse.
b. Distributors are sometimes confused with Wholesalers. We found an article explaining the differences between Wholesalers, Distributors & Retailers: Small Business Chron
2. When you use/partner with a Wholesaler who offers Dropshipping (Dropship Supplier/Wholesale Supplier) you don’t have to carry or purchase any inventory up front and you don’t have to put out the money to ship the product (item) to your customer. Instead, what happens is:
a. You post the product items you want to sell on an Ecommerce website, your Ecommerce website.
b. The customer buys the product item from you and pays you for it through whatever method you have set up in your Ecommerce store website i.e. PayPal, credit card, etc.
c. You order that product item from your Wholesaler and provide them with your customer address.
d. You pay your Wholesaler for the order (product item) at a lesser amount than what you charged your customer plus the shipping fee (which you would have charged and received from your customer).
e. The Wholesaler ships the product item out to your customer.
3. Why does a Wholesaler Sell or allow us to be Dropship Retailers?
Think of a single website
offering a single product and the amount of promotion they have to do to attract consumers to their website. Then think of 10 websites offering that same single product on their websites and the promotion they are doing to attract consumers to their websites. That’s 10 times the chance of that one single product being found online, but not only that. Every time a consumer sees that product name or brand online a mental impression is being made in the viewers mind so more people are becoming familiar with that product or brand. To take it even further, if that same brand has 10 different products for sale than people who have seen the brand are already starting to become familiar with the brand because of a mental impression or imprint in their mind that has already been formed.
4. Being a Dropship Retailer allows you to sell any and as many products or variations as you want without putting the money up front (other than to set up your Ecommerce website i.e. purchase a domain, build and host your website; register your business (if you choose to do so) [from my experience you’re more likely to get Wholesale or Manufacturing partners on board if you have a registered business. There are many that will not work with you unless you have a registered tax number both in the US and Canada if you are ordering or selling your product in both countries]). (I will share my experience of getting an EIN (US tax number in a later post)
5. You can’t assume that any product you want to sell will be available to Dropship. You have to do your research.
I read numerous articles advising to focus on what you are passionate about because it would make it easier to write or offer helpful or insightful blog posts, information, video’s etc. (These are the types of things that will draw customers back to your ecommerce website and potentially purchase from you).
My thoughts were that there was a huge market out there for this type of product, and selling this type of product would give me great satisfaction of knowing I was doing something heartfelt to make someone feel better. I even had a great idea for an open forum that would be part of my site that i felt would attract more potential buyers, and I had an idea for my own design.
My research for a Manufacturer and Wholesaler began with visiting a variety of funeral-type sites online, until I formed a list of people to contact. I had also registered for a free membership with an online company who lists Manufacturers, Suppliers & Wholesalers so I could gather more names that I could contact to move forward on Dropshipping cremation jewelry. (More on sites who list Dropshipping Wholesalers, Manufacturers to come).
The result was that there were no related types of companies in this database of Dropshippers that offered this kind of product. The list I had gathered on my own from the Internet returned not a single email or phone call, even after explaining how I could help their sales grow, what dropshipping was, etc., so this was another door closed.
8. Purchasing individual products from a Wholesaler, although still less cost than purchasing the item at retail price, will cost more than if you were to buy a bulk amount and put it into your own storage space ready to resell. But, if you don’t have the money or storage space available to buy larger quantities then you can still make money purchasing individual items each time a customer orders from you.
9. Once you develop a partnership with your Wholesale Supplier or Manufacturer, the nice thing is they most likely have several products available, which means you can offer a variety of items on your Ecommerce site by working with just one, if you choose.
10. Wholesalers offering Dropshipping will already have a system in place where you can access product images, description, etc., online to add to your own Ecommerce website, Many will also have ‘real time’ inventory so at any moment you can go to their website to see the actual number of items they have left of a specific product. (I did speak with a company who was interested in partnering with me as a Dropshipper but he wasn't familiar with it so while he was educating me on his product I was educating him on what i knew about his role as a Dropshipper. I could not direct him any further than what i share with you here. Eventually we lost contact as I learned more about his product and became hesitant on selling his product line. (Once again, research on these product items would have prevented me from spending the time i did with that particular company as i would have discovered earlier on that these products were not the items i wanted to be associated with selling).
11. Many Wholesalers will ship the product with your name on it (there may be an added fee for this), or some may ship it blind so the customer doesn’t know where it came from, or some may offer either. You decide which is best for you and ask early on in your discussions when choosing your Wholesale partner(s).
12. Customer Service and Returns: This is where I backed out. I take customer service very seriously and feel in today’s marketplace, especially with consumers speaking and sharing so freely online through social media, product and service has to be top notch.
I ran several scenarios through my mind and became a bit overwhelmed with not being the ‘hands on’ seller.
Some of the Scenarios:
a) If an item is shipped and doesn’t reach the customer on time, how long does it take me to be notified so I can reach out to the customer before they make a complaint, since my Wholesaler is shipping from their end?
b) If the item is damaged during shipping and arrives to the customer broken, who pays to send a new product to the customer and how can i be sure my Wholesaler delivered a perfect product in the first place?
c) If a package is damaged or lost during shipping who goes after the shipping company to open a case, me or my Wholesaler?
d) If the customer wants to return the item for whatever reason who do they ship it back to if my name with no address or a blind delivery address is on the product?
Now I’m not saying that I will not become a Dropship Retailer, because there certainly appears to be a lot of Pro’s as opposed to Con’s to operating this type of business in my opinion, but I will need to do more research before I make the decision to move forward with this or not. As a side note, an Ecommerce guru made a statement in February of this year during a webinar I was attending, “Dropshipping is on its way out”, so I definitely would want to research Dropshipping before diving in myself to try and find out if this is true.
"There are only three levels of exposure in psychological, not media, terms: Curiosity, recognition and decision." Herbert E. Krugman
4. Being a Dropship Retailer allows you to sell any and as many products or variations as you want without putting the money up front (other than to set up your Ecommerce website i.e. purchase a domain, build and host your website; register your business (if you choose to do so) [from my experience you’re more likely to get Wholesale or Manufacturing partners on board if you have a registered business. There are many that will not work with you unless you have a registered tax number both in the US and Canada if you are ordering or selling your product in both countries]). (I will share my experience of getting an EIN (US tax number in a later post)
5. You can’t assume that any product you want to sell will be available to Dropship. You have to do your research.
I read numerous articles advising to focus on what you are passionate about because it would make it easier to write or offer helpful or insightful blog posts, information, video’s etc. (These are the types of things that will draw customers back to your ecommerce website and potentially purchase from you).
Then I also read numerous articles that advised to forget about what you are passionate about and choose a product that consumers want or need to buy, and then learn and become passionate about that product later.
Here’s where I started:
a) The first product I really wanted to sell was Funko Pop toys, which are licensed toys from Marvel, Hasbro, The Walking Dead, Game of Thrones, DC Comics, NBA, and many others.
I purchased one to find out who the manufacturer was by looking on the box. I went online to find that company and emailed them. They didn’t respond immediately but when they did they advised me to contact their distributor in the US, so I did, with no response. In the meantime, I had found another distributor in a different US state for Funko (this may have been on the website), so I contacted them. They referred me back to the original distributor, but this time I asked for a contact name and for the name of who I was speaking with so when I called back the first distributor I not only knew who to ask for, but I was also able to say ‘so and so from the other distribution centre for Funko advised me to call and speak with you’. This way my foot was already kind of in the door...that is until I was advised that there was no opportunity to Dropship Funko Pops.
What I did find out was that I could apply to become an affiliate. (More about affiliate later). So that door to Dropship that particular product line was closed.
Here’s where I started:
a) The first product I really wanted to sell was Funko Pop toys, which are licensed toys from Marvel, Hasbro, The Walking Dead, Game of Thrones, DC Comics, NBA, and many others.
I purchased one to find out who the manufacturer was by looking on the box. I went online to find that company and emailed them. They didn’t respond immediately but when they did they advised me to contact their distributor in the US, so I did, with no response. In the meantime, I had found another distributor in a different US state for Funko (this may have been on the website), so I contacted them. They referred me back to the original distributor, but this time I asked for a contact name and for the name of who I was speaking with so when I called back the first distributor I not only knew who to ask for, but I was also able to say ‘so and so from the other distribution centre for Funko advised me to call and speak with you’. This way my foot was already kind of in the door...that is until I was advised that there was no opportunity to Dropship Funko Pops.
What I did find out was that I could apply to become an affiliate. (More about affiliate later). So that door to Dropship that particular product line was closed.
b) My next idea I was truly passionate about was to sell jewelry to consumers that would hold the ashes of their pet, or a lock of their hair, referred to as cremation jewelry. The year before I lost my 10 year old Shih tzu, Mya, to cancer. If I had heard about more promotion for this type of jewelry, I would be wearing something to this day with Mya’s ashes or a lock of her hair in it to carry her with me each day. If you have a pet then you know how much they are a member of your family and it is hard to lose them.
 |
| My girl Mya |
My thoughts were that there was a huge market out there for this type of product, and selling this type of product would give me great satisfaction of knowing I was doing something heartfelt to make someone feel better. I even had a great idea for an open forum that would be part of my site that i felt would attract more potential buyers, and I had an idea for my own design.
My research for a Manufacturer and Wholesaler began with visiting a variety of funeral-type sites online, until I formed a list of people to contact. I had also registered for a free membership with an online company who lists Manufacturers, Suppliers & Wholesalers so I could gather more names that I could contact to move forward on Dropshipping cremation jewelry. (More on sites who list Dropshipping Wholesalers, Manufacturers to come).
The result was that there were no related types of companies in this database of Dropshippers that offered this kind of product. The list I had gathered on my own from the Internet returned not a single email or phone call, even after explaining how I could help their sales grow, what dropshipping was, etc., so this was another door closed.
Since then, I see that there are numerous sellers of this type of jewelry on Amazon, as well as online companies promoting cremation jewelry for your pet that has passed, if you are looking to purchase any.
Please keep in mind I am not new to sales. A huge part of my career experience has been successfully selling to others. Although not products, I have sold many intangible services, so I don’t feel that non-returned phone calls and emails were a result of my sales approach, persistence, or lack thereof.
What I did learn was that I should have done more market research on these products prior to getting too excited about selling them. Although there were not the numerous amounts of online sellers of cremation jewelry for pets at the time I was considering Dropshipping these, there were several on Amazon, but I found this out later after i put hours into trying to find and contact Manufacturers and Wholesalers.
6. There are Wholesalers out there and then there are Wholesalers out there. What I mean is there are Wholesalers purchasing directly from the Producer, Manufacturer that are ‘Certified Wholesalers’. It’s free to work with these.
A true Certified Wholesaler does not charge a set-up fee or a monthly fee. The only fee they will charge is a Dropship or Handling fee for each order sold and shipped. Picture a box of candles that holds 24 candles and your customer buys one candle. Someone has to go into the storage area, find that box of candles, open the box, pull one candle out, package it, prepare and apply the shipping label then take it to where it will be picked up by the delivery carrier. This person or persons have to be paid for their time. The Dropship or Handling fee covers this and can range from $1.00 to $5.00, I understand. (What I’ve learned already in my own ecommerce experience is that it takes a lot more time & packing material to ship a delicate or breakable item than it does a book or clothing item).
The other Wholesalers who call themselves such are working as a third party, so they are buying from another Wholesaler or Distributor then reselling to you, which means you don’t make as much profit because they have already marked up the cost so they get there profit first. Be direct in asking who they buy their product from, whether it is another Wholesaler or Distributor, so you know who you're dealing with. Be aware, if they are charging you a fee for set-up they're not the Wholesaler you want to partner with.
7. All Wholesalers have their own pricing structures so you have to contact each one to ask for their prices to see how much profit you can make. If you want to sell a specific type of blender for instance, than you need to find the Wholesalers that offer this blender via dropshipping and get quotes from each of them so you can compare prices to make sure you are making the best profit and partnering with the best Wholesaler. Always compare apples to apples, so to speak.
Please keep in mind I am not new to sales. A huge part of my career experience has been successfully selling to others. Although not products, I have sold many intangible services, so I don’t feel that non-returned phone calls and emails were a result of my sales approach, persistence, or lack thereof.
What I did learn was that I should have done more market research on these products prior to getting too excited about selling them. Although there were not the numerous amounts of online sellers of cremation jewelry for pets at the time I was considering Dropshipping these, there were several on Amazon, but I found this out later after i put hours into trying to find and contact Manufacturers and Wholesalers.
6. There are Wholesalers out there and then there are Wholesalers out there. What I mean is there are Wholesalers purchasing directly from the Producer, Manufacturer that are ‘Certified Wholesalers’. It’s free to work with these.
A true Certified Wholesaler does not charge a set-up fee or a monthly fee. The only fee they will charge is a Dropship or Handling fee for each order sold and shipped. Picture a box of candles that holds 24 candles and your customer buys one candle. Someone has to go into the storage area, find that box of candles, open the box, pull one candle out, package it, prepare and apply the shipping label then take it to where it will be picked up by the delivery carrier. This person or persons have to be paid for their time. The Dropship or Handling fee covers this and can range from $1.00 to $5.00, I understand. (What I’ve learned already in my own ecommerce experience is that it takes a lot more time & packing material to ship a delicate or breakable item than it does a book or clothing item).
The other Wholesalers who call themselves such are working as a third party, so they are buying from another Wholesaler or Distributor then reselling to you, which means you don’t make as much profit because they have already marked up the cost so they get there profit first. Be direct in asking who they buy their product from, whether it is another Wholesaler or Distributor, so you know who you're dealing with. Be aware, if they are charging you a fee for set-up they're not the Wholesaler you want to partner with.
7. All Wholesalers have their own pricing structures so you have to contact each one to ask for their prices to see how much profit you can make. If you want to sell a specific type of blender for instance, than you need to find the Wholesalers that offer this blender via dropshipping and get quotes from each of them so you can compare prices to make sure you are making the best profit and partnering with the best Wholesaler. Always compare apples to apples, so to speak.
8. Purchasing individual products from a Wholesaler, although still less cost than purchasing the item at retail price, will cost more than if you were to buy a bulk amount and put it into your own storage space ready to resell. But, if you don’t have the money or storage space available to buy larger quantities then you can still make money purchasing individual items each time a customer orders from you.
9. Once you develop a partnership with your Wholesale Supplier or Manufacturer, the nice thing is they most likely have several products available, which means you can offer a variety of items on your Ecommerce site by working with just one, if you choose.
10. Wholesalers offering Dropshipping will already have a system in place where you can access product images, description, etc., online to add to your own Ecommerce website, Many will also have ‘real time’ inventory so at any moment you can go to their website to see the actual number of items they have left of a specific product. (I did speak with a company who was interested in partnering with me as a Dropshipper but he wasn't familiar with it so while he was educating me on his product I was educating him on what i knew about his role as a Dropshipper. I could not direct him any further than what i share with you here. Eventually we lost contact as I learned more about his product and became hesitant on selling his product line. (Once again, research on these product items would have prevented me from spending the time i did with that particular company as i would have discovered earlier on that these products were not the items i wanted to be associated with selling).
11. Many Wholesalers will ship the product with your name on it (there may be an added fee for this), or some may ship it blind so the customer doesn’t know where it came from, or some may offer either. You decide which is best for you and ask early on in your discussions when choosing your Wholesale partner(s).
12. Customer Service and Returns: This is where I backed out. I take customer service very seriously and feel in today’s marketplace, especially with consumers speaking and sharing so freely online through social media, product and service has to be top notch.
I ran several scenarios through my mind and became a bit overwhelmed with not being the ‘hands on’ seller.
Some of the Scenarios:
a) If an item is shipped and doesn’t reach the customer on time, how long does it take me to be notified so I can reach out to the customer before they make a complaint, since my Wholesaler is shipping from their end?
b) If the item is damaged during shipping and arrives to the customer broken, who pays to send a new product to the customer and how can i be sure my Wholesaler delivered a perfect product in the first place?
c) If a package is damaged or lost during shipping who goes after the shipping company to open a case, me or my Wholesaler?
d) If the customer wants to return the item for whatever reason who do they ship it back to if my name with no address or a blind delivery address is on the product?
As an unrelated customer service scenario, there were a variety of product lines that i decided i wanted to Dropship but i could not find one Wholesale supplier that offered all of these products. In fact it wasn't just two either. This created more overwhelm because a system would have to be created so that if a customer ordered three products that came from three different Wholesale suppliers in three different cities or countries, the products would all arrive at or near the same time. In addition to that, the shipping costs would be a challenge to calculate when charging the customer since shipping items from three different places combined would be very high resulting in an unhappy customer.
There were several other scenarios that I thought of also but am not able to recall at the moment what they were. Like I said, I became overwhelmed, only because I like to be prepared with solutions to potential problems before they happen. These questions would have been easily answered while speaking with my potential Wholesale partner(s), but it was at this time that ‘Affiliate Marketing’, which I knew nothing about, seemed to make a huge presence before me. This is when my path changed, which leads to my next post, Part 3 - How Did It All Start?
There were several other scenarios that I thought of also but am not able to recall at the moment what they were. Like I said, I became overwhelmed, only because I like to be prepared with solutions to potential problems before they happen. These questions would have been easily answered while speaking with my potential Wholesale partner(s), but it was at this time that ‘Affiliate Marketing’, which I knew nothing about, seemed to make a huge presence before me. This is when my path changed, which leads to my next post, Part 3 - How Did It All Start?
The information shared in this post is my understanding of what i have researched and any opinions expressed are my own, unless stated otherwise.
I hope you've enjoyed the post and I welcome any questions or comments.
Have a wonderful day wherever you are in the world reading this!
Up On Retail
Friday, November 11, 2016
Vintage Your Style This Season!
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