Drop shipping Website Profitable?

[Andrewdennis]

Was curious whether drop shipping is profitable? Seems a little too-good-to-be-true to be able to run a retail site from my office and not set foot into a post office. How is this model profitable? Is it worth my time? I need an actual income stream, not just pocket change.

[gamerfan]

Understandable questions. Drop shipping can absolutely turn you a profit, you just have to handle it like any other business venture. Protect your investment, take it seriously, and you’ll do well. Like any other foray into sales, you want to choose your supplier very carefully. Keep an eye on the bottom line, keep a few things in mind, and you’ll do great.

● I’d first recommend doing research on the forum, which is exactly what you’re doing right now. Ask about reliable drop shippers; look for products that are in demand but have relatively limited competition. For example, avoid the likes of DVDs, consoles and the other more obvious choices. Demand for those products is high, but the level of competition is one of the highest. Even resellers buying hundreds of thousands in stock from wholesalers and distributors struggle to make a return from those products. Therefore always consider the ratio of demand to competition, for example: product x has demand of 10 (out of a scale of 10) and competition of 10 (very high competition). The ratio in this example is 10/10 = 1. This means that if you chose a different product (let's call it product y), with less demand (eg 5) but also with less competition (eg 2), your ratio would be more attractive (5/2 = 2.5). Lower demand doesn't always mean lower profits; always look at the demand vs competition ratio.

● You want to focus your efforts. Pick a handful of products, maybe even just a couple, and sell those exclusively. If you just take the buckshot approach to selling, you’ll get all jumbled. Customers will assume you’re some kind of robot site selling junk and false hope. There’s thousands of them out there.

● No valid drop shipping supplier is going to require you to pay for the privilege of being their customer. It’s amazing how successful these fake drop ship sites with “access” fees for prices and product lists are. Think about it this way- does it make sense to charge people for the privilege of just looking at your catalog, and then another fee to see your prices? People fall for this, don’t you do it.

● Stick with suppliers you already trust. Amazon does drop shipping, lots of other traditional suppliers do also. Just ask around. No body’s gonna fault you for being curious.

● You want your drop ship supplier to be, essentially, invisible to the customer. Think of them as a sort of ghost writer for your business story. You present the face and take the orders; the supplier is the invisible Hand of Fulfillment.

Can’t stress enough the need to take this seriously, which it sounds like you’re already bound and determined to do. That’s good to hear. The “catch” you want to find in drop shipping is that it’s real work. That’s pretty much it. Hang in there, do some research, you’ll do fine.

[MICROmud]

To the topic of research, I’d pick a product, e.g. briefcases. Whip Google with a combination of manufacturer, wholesaler, drop shipper, dealer, and the like with “briefcases” and see if you can’t track down the original source for the product.

You want to do this because you need to be as close to the source as possible. The more gates you need to go through to reach the source, the more your prices grow to resemble retail. This is a very bad thing, obviously.

[Andrewdennis]

I’ve found some access-fee-based supplier databases that claim to do verification on the suppliers they list. Any thoughts on these? Are the fees worth it? How else can I find suppliers?

[gamerfan]

The databases are different from the suppliers because the actual service the site provides is the listing.

Do know, though, that a lot of people use these lists, and they aren’t always entirely up-to-date. If there is one list I would recommend, that's esources. Stay focused on your handful of products, and make sure the market isn’t saturated. You don’t want to push yourself into a niche with a lot of built-in competition.

Check out trade exhibitions and publications for suppliers, too. Of course, you’ll need to pay for a membership to the exhibition and the subscription to the journal, but it’s typically worth it. Exhibitions give you face time with suppliers, and you can often exchange references and the like right there. Journals, of course, you’ll want a subscription because you want to make sure you stay absolutely up-to-date.

[Joshjdojohn]

To the subject of analysis, I would choose a item, e.g. briefcases. Search for a mixture of producers, suppliers, and the likes for “briefcases” and see if you cannot find a unique source for the item. You want to do this because you need to be as near to the source as possible. The more steps involved in getting the product to your store and customers, the more your cost price will increase.
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