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The Best Form of eCommerce – Dropshipping

E-Commerce takes many forms and can be put into several different categories.

dropshipping

THE BUSINESS OF CONDUCTING BUSINESS

In its simplest form, e-commerce is the business of conducting business online – whatever that might be.

It could be consulting, advising, lending money, Forex trading, MLM’s, downline building, scams, schemes and broken dreams, and all the million and one different things that pop up on our screens every day of the week, but in the main, for those looking to start up online businesses, it usually involves SELLING SOMETHING.

For the vast majority of those who don’t have a skill-set or a knowledge-set to sell, that usually only leaves PHYSICAL or DIGITAL goods.

…So let’s leave all those knowledge and service based ideas to one side and concentrate on RETAILING of goods.

JUST GET STARTED

I am about to give you information that a lot of you might find a bit daunting.

Before we get started, let me say that a common theme that runs through all of my advice, on my blog, my email list, here or anywhere else, is – just get in and have a red-hot go .. if you wait until you are an expert, it will never happen. There really is no time like the present, because that is the only time that we can be sure of.

The longer you wait, the more other people can control your destiny, and in the words of the great Jim Rohn….

“If you don’t plan your life, someone else will, and guess what they have planned for you? ….  Not much!”

You can start a great business based just on what I am going to share with you here, for virtually NO MONEY – but having said that, you must then be prepared to commit yourself to researching, learning, testing, tweaking and working out what is working and what is not.

Once you put your time or money on the line, there is no treading water – just swimming or sinking!

If you don’t have money to get started, then make sure that you have plenty of time because your time is an investment that replaces dollars, and you need to spend it wisely.

If this is scaring you, then either decide to jump into the unknown or run for the hills!

WHAT IS RETAILING?

In its simplest form, retailing is taking a product that you:

  • made or have owned, or
  • bought from a wholesaler or manufacturer or another owner (either new or second hand e.g. antiques and collectibles) and selling it to the general public.

The possibilities are limitless, so let’s not throw around too many examples, as one of the concepts that I will stress, here, is that you need to choose your own niches and products, and most often, nobody can advise you as to how well that will go, until you “suck it and see…”

So, back to the subject……

What we are going to talk about here are the three MAIN types of (conventional) retailing that you can do online:

  • retailing from your own warehouse;
  • Affiliate marketing, and
  • Dropshipping – THE GOOD NEWS – a business that you can do from a standing start for just a few dollars and a few hours a week – this is the one that I want to concentrate on, but it is important to describe the others, so that you have a point of comparison.

RETAILING FROM YOUR OWN WAREHOUSE

I am not going to spend too much time on this because this article is primarily intended for those who want to get a business going without too much financial outlay.

A “Fulfilling” Business

First, a definition or two.

One of the terms that you will hear is “fulfillment”.  That means nothing more than the process of filling a customer’s order and shipping it out to them.

So, if you are warehousing stock for sale to the public, you will need to be doing “fulfillment” as a necessary part of that business. Initially, you might be doing it by yourself out of your spare bedroom, garage, or a shipping container, or warehouse, but if you want that business to grow you will soon need to be employing staff, and expand, or you will suffer the risk that you become chained to your business, while getting nowhere.

Every warehoused sale comes at a cost – inventory, rent, staff, accounting and all the usual costs of running a business. As your business grows, so does your “cost of sales”. So, to grow, you will need to feed the beast and always have funds in reserve, or great, flexible banking arrangements to keep the curve on an upward climb.

Nothing wrong with any of this, but if you are building a business to give you freedom to travel, not to worry about staff, figures, taxes, inventory, duties, government departments etc, then building a bricks and mortar business may not be for you.

Most of these online fulfillment businesses typically start out with people using Amazon or eBay to sell, where they buy quantities of goods from reliable wholesalers, stock them and ship them out when they get orders. This means you have to have good inventory control, packing facilities, fulfillment systems, staff (or do it yourself), financial accounting and all the other hallmarks of keeping score, as well as reliable freight companies to get the products out on time.

You have to deal with customer complaints, returns, refunds and the like. You have to know your competition, get your pricing spot on, then grin and bear it when that huge shipment of widgets that you paid for doesn’t sell like you thought it would.

You need to pick the right niches, order just the right quantities, in the right lead times, work out your margins, work out which wholesalers you can trust. Sometimes there are Minimum Order Quantities, so in order to stock that fantastic “whatchamacallit” you may have to buy a few hundred or a few  thousand, store them, pack them and send them.

Now, I don’t know about you, but as someone who likes to sleep at night, that is not for me.

AFFILIATE MARKETING

A great way to make money.

In its simplest form, you sell someone else’s product (most often online, digital products such as e-books or courses) but also physical products. You never see the customer or the product and you hope for the best, because the only thing that you can control is your own effort, your marketing, your lead generation and A/B testing, but you can join as many programs as you want.

You sign on with the Wholesaler, or supplier, and set up a FREE account.

Be very wary of any Affiliate program where you have to pay a fee.

The whole concept of Affiliate Marketing is that YOU, the affiliate, or author, are the eyes and ears on the ground for the seller, or merchant. If someone is trying to expand a network, why would they charge you for helping them out? If someone is charging a fee I, for one, would not be interested.

There are the very well-known affiliate marketplaces for selling digital products, such as Clickbank, or JV Zoo, and these days they provide a lot of help and support, but basically you are on your own.

Clickbank, for example, provides training but you mainly have to pay for it, and they don’t provide that much automation, but there are a couple of companies such as CB Pro Ads that aggregate for them – I am an affiliate of both Clickbank and CB ProAds. Not only do I use their sites but I also use my blog site and my e-commerce sites (how to manuals are a great upsell with physical products).

Also, a tip – many of the world’s biggest retail businesses have Affiliate Programs – they don’t always advertise it, but usually all you need to do is scroll to the bottom of their webpage, and look for an “Affiliate” link and sign on. You would be amazed how many of the smart ones have figured out how to expand their reach with affiliate programs.

The Merchant may give you your own sales page, or a range of affiliate resources such as banners, email swipes etc, or just an Affiliate Link, which leads the buyers to their page, but with your tracking link embedded.

Each time there is a sale, the Affiliate pays you a commission, usually to a PayPal or Payza account that you have nominated. The concept is pretty straightforward, but it takes a lot of promotion – whether it be from your own blog or website, or from social media pages, or banner exchanges, free classifieds and many more sources – if you master the art of lead generation and have a great following on social media, you can do very well, but you have limited control over the products that you promote and no knowledge of how the transaction goes after the client buys – you don’t know whether they returned the goods or got a refund etc – in many programs, you don’t get to harvest the customer lead, either, so you may never get return buyers, and unless you are selling in a repeatable niche, the customers will just move on.

You can do Affiliate Marketing in any number of ways, but be prepared to put a lot of work in, before you get a lot of traction, and remember that if merchants are offering high commissions, it may be because they have overpriced their products, and you have no control over that.

Last but not least, (not that I have tried it yet), but an Affiliate Marketing business may not be that easy to sell, if you decide that you want to move on, as you may not have established a lasting presence on the web.

Maybe one of you attentive readers has some experience of that? Please let us know, if you do.

THE BEST FORM OF E-COMMERCE (IN MY VIEW) – DROPSHIPPING – THE CRUISY OPTION

So, if you are buying from wholesalers, you have two options – the first is the self-fulfilment method that we discussed above, where you carry a lot of risk.

Or the second is DROPSHIPPING where you:

  1. Hold no inventory (none – nada – zero – zilch – zip!);
  2. take an order for an item that you DON’T stock (because you don’t stock any);
  3. take the full retail payment from the buyer, upfront, as soon as the buyer hits your Paypal or Checkout button;
  4. Immediately place an order with your wholesaler, electronically pay the wholesale price and send the customer’s shipping information;
  5. The wholesaler, as soon as it has received your payment (usually immediately) boxes up the item and ships it – in most cases, at little or no cost – and puts your details on the packing slip and label, so the buyer assumes that you are the fulfillment company; and
  6. You keep the profit, and you have already set the margin – you control the price, the shipping, the charges (usually only the PayPal, eBay or Amazon fee) and set the margin.

To me, that’s a no-brainer. .

The advantages are:

  • There is NO money invested in inventory – you only buy it when you place the order with the wholesaler, and always after the buyer has paid you (except in the case of Amazon);
  • There is NO requirement for a store or warehouse, so you are not tied down to real estate and can be mobile;
  • There is usually no requirement to have an account with a freight company, though you might in some markets, to give your clients comfort – I do it;
  • You are the one that captures the customer’s details and most wholesalers are ethical enough not to take it from you, as the real, genuine wholesalers don’t deal with the public, anyway;
  • You can make a mistake in choosing a niche or a product and it is a simple matter to get rid of it from your product list, at no real cost – you can change your own website at any time to make improvements or deal with changing trends; (or pay someone a small fee to do it for you);
  • You can run your business from anywhere – seriously, a smartphone, tablet or laptop, sitting in a bar in Bali or Hawaii – or anywhere else, which can be your office- that may have great tax benefits, but always consult your professional advisers on that;
  • You could be doing all of that on Frequent Flyer points, if you use a Credit card that provides rewards to place your orders, so even your holidays and travel can be paid for by your business;
  • you can employ outsourced people to do your client contact; and

I can think of a few more that I will cover in future posts.

WHAT IS THE DOWNSIDE OF DROPSHIPPING?

OK, so, in life, everything with upside usually has corresponding downside, but where dropshipping is concerned there is not much.

The one or two include:

  • lower margins on items sold – but you can fix that by selling unique products where you set the market, especially when you sell from your own website and do your SEO really well;
  • increased competition due to the fact there will be more people in the game through the lower barriers to entry; and
  • you may not know your wholesaler very well, and since you are not stocking goods, may have less control over fulfillment, but those can be overcome pretty easily, with a bit of knowledge, trial and error, and thought.

The beauty of Dropshipping is that any mistakes you make will not usually cost you too much money, because you can change direction pretty quickly, with little or no financial consequences, if you:

  • Use good trusted suppliers – we can teach you how to find them;
  • pick profitable niches – we can teach that, too;

Don’t get “down in the weeds” – in other words, work out the best pricing niche – usually around the $100 – $200 mark – or sell really high quality products at the top end, … but remember this – if you sell too cheap you will spend your life placing orders and dealing with complaints, and if you sell too high, you will spend your life holding people’s hands, so get the pricing segment right, sell high quality products with a low return rate, preferably with lots of accessories, where you can get really high margins with little effort (“upsells”) and you can run your business from that “bar in Bali” .. and I can show you examples of people who do.

WHAT SORT OF PRODUCTS DO I SELL?

Short answer – anything where there is demand, a bit of uniqueness, where your product has accessories that you can use as upsells, where you can deal with reputable and multiple suppliers, and where they are generally easy to ship – just a bit of research and don’t forget that “Google is your friend”.

It could be office furniture, carpets, clothing, musical instruments, cameras, outdoor furniture, kitchen appliances, anything, where there is demand.

They don’t have to be “sexy” or “Innovative” or “New Age” – just products that people want, need and research and are ready to buy because you offer them a point of difference.

HOW DO I SET UP?

This is almost a full time 10-part course, in itself, but in short:

  • Build an e-commerce website – this should cost you less than $250 and take about two weeks to fully set up and launch.
  • If you want to get off to a quick start, start dropshipping from AliExpress to your website, but bear in mind that you won’t build great relationships with wholesalers that way.
  • You can use any number of site builders but the ones that we recommend are Weebly with its fantastic new e-commerce features, Big Commerce, Magento and Shopify.
  • If you don’t even want to spend that much, as an alternative, sell on e-Bay or Amazon – these are virtually free and have the advantages that they are their own search engines and very large and established e-commerce markets and platforms, but clearly pricing and competition are going to be important issues there. Having said that, they are the giants of the industry and have fantastic plugins and support.

It is not recommended to dropship from AliExpress to Amazon or Ebay, and we can cover the reasons for that at another time.

HOW DO I FIND GOOD SUPPLIERS?

Research, comparison using Google, word of mouth, sleuthing (ringing around) and by purchasing a reputable Dropship Supplier Directory from either SaleHoo or Worldwide Brands. Many other ways that we don’t have time to cover, here – using common sense and thinking things through, logically is also a good one.

WHERE WILL MY TRAFFIC COME FROM?

If you sell on Amazon and Ebay, that is not an issue, but, otherwise, if there is one rule of e-commerce, then it is that there is no substitute for having a list, and this site and all the other good ones on the internet will tell you no different.

For a quick start use paid ads, and Google is probably one of the best, since it is a search engine and it is logical, if your product is unique that it should rise to Page 1 pretty quickly. Otherwise, Bing Ads also do the same job.

THE MONEY IS ALWAYS IN THE LIST

If you are selling on your own website, then you need to tap into all of the traditional traffic sources.

OPTIMIZE YOUR SITE FOR SEARCH ENGINES

But if you are on a limited budget you should also pay huge attention to SEO – and all of the e-commerce platforms that I mentioned above have great features for optimizing SEO.

If you can’t afford to spend money on SEO, you may not see immediate results, but if you take the time and trouble to have great products, great keywords in your item descriptions, original content in your item descriptions (copying and pasting the wholesaler’s is no-no) great pricing and great service, the Search Engines WILL find you..

THANKS FOR JOINING US

That is it for now and what I have written here is easily a ten part course and video series, that we will be putting together in the next little while.

I hope that this inspires you to get out and “have a red hot go” – you have very little to lose and plenty of fun and freedom to gain. Please don’t wait for us to train you, just get the hell out there, use Google, find some gurus that you can trust and just get started – have a go, or as we say in Australia – AVAGOMATE!!

I would really love to hear your thoughts, your concerns, your experiences or just any feedback, below – maybe we will run into each other in that “Bar in Bali”, but let me assure you that I am here to help and I would be thrilled to answer any queries or comments.

About John Gates