Part 5: Becoming a Stockless Retailer
You want to open a retail store on the Internet. You have to have products to sell, right? Let’s also imagine that you like to suffer. Mental anguish is your favorite pastime. You aspire to financial ruin. In that case, you will want to stock products for your Internet retail store.
To stock products for your store, you will have to rent warehouse space, or at least clean out your garage. You will have to have to pay for a shipping account with UPS or FedEx, unless you want to saddle up and trot down to the post office every day. Worst of all,
you will have to pay for those products up front.
Yes, that’s right. Money. Probably lots of it. For example, if you want to sell Mattel Toys, you can contact Mattel and they will be happy to set you up as a retailer. I know…I talked to them a while back. We had a nice conversation about setting up an account, placing orders, and all the other wonderful things businesspersons discuss with each other when beginning a relationship. Toward the end of our conversation, this nice woman said to me, in an offhand manner, “By the way, your minimum first order must be at least $100,000.” That’s One Hundred Thousand Dollars, folks.
I nearly choked on my bagel. Needless to say, I do not stock Mattel products. Or anyone else’s, for that matter.
Stocking products costs money, that’s the bottom line. No matter what you sell, if you carry stock, you pay first, and then hope you sell later. If you don’t sell the products you stock, there are going to be some very happy people at your next garage sale, and your bank will be sending you an amazing amount of undesirable mail.
There’s a much better way.
Stockless Retailing (Drop Shipping):
Stockless Retailing is commonly called “Drop Shipping”. It should be noted here, if only to keep the Punctuation Police happy, that if you use the method of drop shipping in your business, YOU are not the “drop shipper”. The company(s) who supply the products to your customers for you is the drop shipper. YOU become a “Stockless Retailer”.
Here’s how drop shipping works.
- You open an Internet Store, using an ECommerce Hosting Provider or an Internet Mall, with a shopping cart and the ability to accept credit cards. You can also use Internet Auction sites.
- You find a distributor who is willing to "drop ship" the products you want to sell.
- You establish an account with the "drop ship" distributor(s) you choose.
- You receive images and descriptions of the products you want to sell from the distributor, and place them on your Internet Store or Auction.
- A customer finds your Store or Auction, and falls in love with a product that you have priced at, say, $80. They purchase the item with their credit card. Your Store or Auction charges their credit card $80 plus shipping.
- You email the order to your drop ship distributor, along with the customer’s name and address.
- The distributor sends the product directly to your customer from the warehouse, with YOUR business name on the package.
- The distributor charges you the wholesale price of, say, $52.00, plus shipping (you’ve already passed the shipping charge on to your customer, so the shipping costs you nothing).
- Your customer gets a great name brand product from your store or auction shipped to their door, and they tell all their friends about you, and you make even more money.
There you have it. You just made a $28.00 profit on one item. You didn’t have to buy a whole bunch of the product and keep it in your warehouse, hoping you would sell it. You didn’t have to pay to have it shipped to you, and then pay to ship it to your customer. All you did was send an email to your distributor.
Be careful! There are a LOT of people out there who
want you to believe that they are drop ship distributors. We'll talk more about them next. These people are no better than the scam artists who want to fool you into buying a useless web site.
You need to find REPUTABLE distribution companies. A good rule to go by:
a real wholesale drop ship distributor does NOT charge you an "Account Setup Fee" for an account. (We'll talk about different fees that can be associated with drop shipping in a following Chapter).
Our primary focus here at The Drop Ship Source Directory is researching and identifying
REAL wholesale drop shippers. We publish the
Internet’s premiere Directory of Factory-Authorized Distributors and Direct Manufacturers who will drop ship for YOUR Internet business.
The distributors we list are all genuine wholesale companies. They will NOT charge you an account setup fee. They will NOT force you to buy a minimum number of products. They WILL ship the more than HALF MILLION products our Directory represents straight to your customers from their warehouses, one at a time.
You can Preview our Directory using our Guest Entrance.
You can find out much more about our Directory on our Home Page.
But for now, back to business. :o)
We'll talk more about the nuts and bolts of opening accounts with real wholesalers a little later. Let's move on to the differences between REAL Wholesalers and Scam Artists.
Let’s go on to Part 6:
Wholesalers: Real vs. Ripoff
