This content has been marked as final. Show 8 replies
Drop shipping is a supply chain management technique in which the retailer does not keep goods in stock,
but instead transfers customer orders and shipment details to wholesalers,
who then ship the goods directly
to the customer. The retailers make
their profit on the difference between the wholesale and retail price.
Why would you open and run a business that just doesn't seem like your cup of tea??
Info wasn't for my startup..and I wouldn't start a business that isn't my cup of tea. Please see my post in the Financing/Loans section.. Thank's for the information though!
The obvious advantage with this type of business is that you can start it immediately and for almost no money. The main problems with this type of business are saturation, service, and competition.
Saturation - Many of the businesses you're referring to have more than 50,000 reps already -- that's 50,000 other places to buy exactly the same thing in the same way for the same price. Three of the opportunities that are pitched here fairly often have over a million active reps. It's hard to distinguish or build your business in that situation. There are only so many buyers out there.
Service - Many of the products sold in this way are not that good to begin with, so when the customer has a problem, it's your business that sold it and has to resolve the complaint -- even though you didn't make or ship it. So while the selling side of these businesses is represented as being super easy, the service side often isn't. A lot of manufacturers and dropshippers are non-responsive when problems aride, and their sellers get stuck holding the bag when customers refuse to pay the credit card bill, and claim a product was never shipped, arrived broken, was returned, etc.
Competition - Products that are good are generally available for the same price (or less) from major retailers, which creates tough competition. (If a decent company is standing behind it and there's real money to made selling it, an analyst at WalMart is probably all over it, don't you think?) Given a choice, if someone can buy it from a business they've never heard of, or buy it for less from someplace they know and have confidence in, they'll choose the latter.
One thing I personally dislike about this business model is that most of the products are one-time purchases -- meaning that if you do satisfy the customer and could build a good relationship, you still don't have anything else to sell them that they really need. You perpetually have to find new customers to stay in business. That's costly.
As for a "success formula" -- there are a few innovative "not sold in stores" manufacturers who use centralized dropshipping, targeted e-mail and/or infomercial campaigns, and a network of exclusive distributors and protected territories to get their products to market. This arrangement can eliminate the problems above. If the product requires installation, service, or maintenance after the sale -- or if it naturally leads to supplemental or follow-up sales of other products offered by the same seller -- that's even better, because the seller can build on an established relationship and grow a legitimate business.
Hope this helps. Best wishes.
but there is always SEO...
1 of 1 people found this helpful
The dropshipping may work only on high price items in my opinion.
The highest cost on e-commerce are promotion, exposure, and advertising, if your margins are small you may not stay in business for long.
I know some people dropshipers, doing nothing on their site, not promoting because of the cost, or don't even know SEO, etc... and making barely enough to pay hosting and domain name, that's about it.
Wholesalers need to give a decent margin to run your business. Otherwise go with eBay, you don't need to take care of the technical part.
Go to original post
Reply to original post
Is there a really an opportunity for sucess with these droppshipping websites.. I have a few friends that are looking to operate these sites and it just doesn't seem like my cup of tea.. Any up positives and mainly negatives you could think of in regards to this process? Similarly, what would be your formula for success in this type of venture?