Topic: Selling on eBay using Drop Shippers: How to Make a Profit
Host: Colette Marshall, President of Worldwide Brands
Date: Thursday, June 11th
Time: 11AM-Noon PST
Location: eBay Workshop Board
Description: Competing against other sellers on eBay using drop shipping can be a challenge. Join Colette Marshall, President of WorldwideBrands.com, to learn some tips about selling on eBay using drop shipping and how Worldwide Brands can help eBay sellers find the best profit margins when drop shipping.
Hello, this is Colette Marshall, President of WorldwideBrands.com and I’d like to welcome you to today’s workshop!
Many eBay sellers use drop shippers as a source for products. It is a common practice, but only a few use drop shipping successfully. At WorldwideBrands.com, we are frequently asked about drop shipping and ways to really sell products successfully on eBay using this product sourcing method.
In this workshop, you’ll learn tip and tricks of the trade to help make more profit with drop shipped products.
The workshop content will be posted directly below. After you’ve read through today’s workshop, I’m here to answer your questions about how to deal with drop shippers and where drop shipping fits into your overall product sourcing strategy.
I look forward to talking with you over the next hour!
Colette Marshall President www.WorldwideBrands.com www.Twitter.com/ColetteMarshall
About WorldwideBrands.com: Worldwide Brands researches and qualifies drop shippers and wholesale suppliers that will allow their products to be sold on eBay and will work with eBay Sellers. We help directly connect you to the right source of product for your eBay Business.
Single item drop shipping is a solution that some wholesale suppliers offer. The drop shipper (aka wholesale supplier who drop ships) will ship their products, one-at-a-time, directly to your customer. You post the product in your eBay store or auctions, and pass your customer orders along to your drop ship wholesaler to fill them. You pay your wholesaler after the customer pays you. It’s a low-risk entry point to get started sourcing wholesale products.
Note 2 key points here: 1) The term drop shipper references the wholesale supplier, not the retailer 2) Not all wholesalers will do single item drop shipping. The majority will volume wholesale and some will allow low minimum orders (light bulk wholesale). Some will drop ship small quantity lots (for example, a box of the same product) but they won’t break it up and single item ship due to the cost associated.
3) When Worldwide Brands researchers find suppliers in a particular niche, we have a long qualification process to qualify the suppliers. One of the many questions we ask is if the supplier will single item drop ship and what their associate drop ship handling fees are. There are definitely more “Not at this time” conversations than a “yes” response. The biggest reason stated by the suppliers: Cost associated to running a drop ship wholesale business.
Tip #1 & 2 to making a better profit with drop shipping:
The most successful sellers I’ve met who use drop shipping have two things in common. First, they sell products that are niche specific, that only a particular group of people would be looking for. Medieval archery, African beaded art, Camping gear with a specific purpose; House decorations that solve a problem => These are just examples of specific niches geared to very targeted audiences.
Second, they focus on selling in higher quantities. The sellers I’ve worked with all have said they make their money in the quantity of sales they make not in the individual margins. This is a common mistake I’ve seen new sellers make. They focus on the individual profit margin and don’t take a look at the bigger picture.
So when you’re deciding on what product to sell and if you’re only going to use drop shipping, focus your attention where it counts so that you can make more money.
Note: Suppliers can not offer deep wholesale discounts when you are selling by single item drop ship. The price will be wholesale, but the more you buy in bulk the better your discounts in price will be. If the drop ship wholesale price from your supplier is still higher than the buy it now price of your top competitor, ask your supplier what bulk quantity you would need to buy in to be able to receive that same wholesale price as your competitor. Worldwide Brands members have access to the Whole Sale video education series that teaches in more depth wholesale terminology and wholesale negotiation tips to help you get better pricing directly from your suppliers.
Tip #3 Make sure you’re working directly with the manufacturer or authorized wholesale supplier
Drop shipping means a higher wholesale price compared to bulk wholesale which means that the closer you can get to the original source the better your wholesale price is going to be. If you found your supplier on your own, take a time and do the research to make sure that you’re not dealing with a middleman. You will save money on the wholesale price.
If you’re selling a product that has a variety of different manufacturers, make sure to price shop. This will depend on how specific your niche is but you may be able to find the same type of quality product at a better price.
Note: Worldwide Brands can save you valuable time for this time consuming process, because our researchers are conducting this research every day. We add new suppliers to the database, and we update the supplier database every day. As a member, you can also submit product requests or supplier verification requests if you’re not sure on a particular supplier you found yourself.
Tip #4 Understand what the drop ship handling fee covers A drop shipping fee (aka handling fee) is standard in the wholesale industry. With drop shipping, the wholesaler takes on extra work and expense on their part. For example, they have to send employees to go and pull each product, as it’s ordered, and to repack it, address it, and ship it out. This requires manpower, inventory management systems, special tracking software, and extra packaging supplies. These are all very real expenses that the wholesaler has to cover.
When you drop ship your products, your wholesaler is doing the majority of the work, so their Drop Ship fee is basically the “handling” part of the “shipping and handling” charge.
But you need to make sure you understand what the drop ship fee covers. Ask your supplier to explain what is included in the drop ship fee. Maybe they charge for labels or extra packaging. You could offer to send your own packaging and labels (as long as you can beat their cost) and that might be a way to save on handling.
You may be able to use some of what you learn as a marketing tool. For example the handling might be higher because they use only recycled shipping materials. Well then, take advantage of the green movement and promote that to your customers. Tell them that the shipping costs are a little higher because only recycled shipping materials are used.
Note: Many suppliers will not charge a separate drop ship handling fee. It will instead be included in the what they call the “drop ship wholesale price” or “single item wholesale price.” Our researchers don’t allow certain suppliers in the Worldwide Brands directory if their drop ship handling fee is too excessive. It’s one of our qualification methods.
Tip #5 Talk with your drop ship supplier – Be inventive
Your relationship with your supplier is the biggest advantage that you’re going to have. Talk with them about ways that you can source the products to get better value. For example, maybe you can buy in volume but you leave the product there and they just ship it for you as the orders come in. That way the supplier knows they have a guaranteed minimum order. But remember, every supplier is different and every sellers situation is unique so just talk with you supplier and ask, then make sure to look at the costs. If there is savings, go for it. It may or may not work for you, but you won’t know until you look into it. Another option is to buy in light bulk quantities and have that product shipped to a fulfillment center which will then take care of the drop shipping for you. It’s a way to drop ship without using a drop shipper. You’ll get better wholesale prices and you can be more creative with your product offerings like offering bundled products.
Workshops are interactive, so please feel free to ask your questions that directly relate to this topic.
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We are an eBay seller and plan to post some of the best deals in a few of our product categories. What are some of the criteria that eBay users look for when it comes to finding the right deal for them.
I am a current member of World Wide Brands, and have been receiving quotes from companies. But all quotes have not been able to see a profit in the eBay market, I am unable at this time to purchase larger quantity's, so a drop shipper is my best resolution. Please inform me of a strategy that will work for my circumstances.
How do you handle backorders without upsetting the customers too much when using a drop shipper? A drop shipper I am thinking of using doesn't have a system for notifying me in advance what products are backordered but they would go ahead and process the rest of the items in the order. I'm concerned that while some customers might be okay with that, some might be upset. Plus, I would have to incur additional shipping cost (can't pass that on to the customer) when the backordered item becomes available. Thoughts on handling backorders?
hi aukshun1, great to see a Worldwide Brands members joining us on the eBay workshop boards.
By "quotes", you're referring to the wholesale supplier price lists.
Your question is a difficult one to answer just in text alone. What you need to first consider is, what is the niche you are trying to sell in? If you're trying to compete with a product that has lots of sellers and you're unable to buy in light bulk then you'll want to continue doing your research to find another niche that you can compete in using the dropshipping model.
Electronics is the perfect example of this. There are a large number of sellers selling electronics. The profit margins on a dropshipping model are way to small to compete. Another niche will be more suitable for the dropshipping model.
I was inquiring more on the attributes that matter to the eBay user - is it price that matters most? or is it seller ratings? or is it the way the item is presented? or something else? I am sure its all of these but I am expecting a tangible response that we can follow to improve our buyers' experiences.
Hi, I'm a subscriber to Worldwidebrands and I'm fairly new to dropshipping. Can you please explain how shipping fees are calculated via dropshipping? And How does the wholesaler charge the retailers for shipping costs? We won't even know the size/dimensions of the boxes to put in eBay's shipping calculator.
Always purchase a few of the products and stock them yourself. Then when you run into the problem of backorders, you can ship it out yourself. Your customer will not know the difference and then you have time to adjust your listings.
Make sure that you get the restocking turnaround time to post for potential buyers, so they will be aware of how long they may need to wait.
Another suggestion is to locate a backup supplier of the products. Even if the 2nd wholesaler is a little higher, at least your customer will get the product quickly.
I was wondering if its a good idea to go through a middleman that aggregates products from various suppliers or is it better to deal directly with the supplier? The former saves me time and effort but the latter gives me better visibility control.
Your supplier will give you all the details you need about the product. So you will have shipping dimensions. If your supplier does not provide them in the price list. Make sure to give them a call or email and ask.
as for the pricing, suppliers are different in how they handle shipping. Some charge a flat fee, some include it in the Drop ship fee, some charge based on the price, and others charge based on the weight. The best way to know is to read the wholesale supplier policies and procedures . If you don't find it there simply ask. But suppliers are very good about giving you the information you need to be able know shipping costs.
valuedealscom - it is always better to work directly with the manufacturer or factory authorized wholesale supplier. You want the best profit margins possible and this is the only way to get it.
Another thing you want to consider is how many suppliers and products are available for you to list, you want to avoid oversaturation of a particular niche market.
Our researchers at WorldwideBrands.com are constantly striving to add new suppliers to our already over 8000 supplier database which represents over 8 milliion products. There is no overstauration concern when you're dealing with that many suppliers.
Each buyer is unique. We do position eBay as the place where buyers will find great deals. Finding great deals encompasses a few things:
1. Finding what you are looking for 2. Good price 3. Great Seller
Price is always a decision factor for buyers, but it's not the only decision factor that helps a buyer to decide which seller to buy from.
Check out a recent article on our blog titled "Six Consumer Decision Factors When Purchasing". The blog article summarizes the top decision factors consumers make when choosing to buy online, eBay included.
Hi, thank you for taking your time to answer our questions. I would like to ask..
The only way to get a wholesaler's pricelist is to open an account with them. If they take the time to open an account for us, then we don't order from them (because dropship prices are too high/non-competitive/other reasons) they won't like us very much. A segment of the video in Worldwidebrand talks about developing relationships with our wholesalers, how do we develop relationships with dropshippers (or wholesalers in general) if we're not sure we're going to order anything, and they feel like they wasted their time with us?
I wouldn't recommend selling items at a price below your cost. I would suggest that before you list items on eBay, do some research to ensure the item you're listing has been selling at a price that will bring you a profit while still offering the buyer a good deal or better.
Since you are new to eBay, you should ramp up your sales slowly and growth slowly. This allows you time to amass feedback, learn eBay and stay on top of delivering a great buyer experience. Then as you've got the "hang of things" increase your volume.
first off you would want to consider the product you're buying. If you buy in light bulk wholesale (less than $500 minimum order), then you could find yourself not needing a fulfilment center because the product is small enought to sit in your closest or downstairs. (i.e. cell phone accessories, belts, dog collars, fancy cigarette cases) .... but if your product is very large or weight a lot or you're buying in volume wholesale (greater than $500 per order usually in the $1000s) then a fulfillment center is for you.
To find them, you can look in your local area under fulfilment centers.
At this time, Worldwide Brands does not have a list of fulfilment centers. But as you only pay a one time fee and the membership is for the lifetime of the product, when and if we do come out with a list you'll be able to access it.
Thanks Colette! You did answer my question, and I really appreciate the advice about keeping some inventory.
How about packaging and fulfillment? I know I probably have to get comfortable with the idea of not having direct control over the packaging/fulfillment process. I can only hope the packaging looks decent when it gets to the customer. There's probably not much a drop shipper can do to customize packaging for a retailer - if they do that for one, they would have to do for others - unless they are big retailers with scale, right? What can a little retailer like me do, if anything?
linc730 .. no problem... I think that's a fantasic question.
You don't have to always request a wholesale account with a supplier before finding out their wholesale list when you're a Worldwide Brands member, email the supplier or give them a call and tell them that you found their listing in the Worldwide Brands database and you're interested in working with them but you'd like to be able to see their wholesale prices before you decide whether or not you will set up a wholesale account. If they say, I'm sorry please apply. Just let them know your plan ... and if you decide not to use them. Be curtious and let them know that you would like to close the account because at this time their prices are too high for you too compete. That will open the door to possbile negotiations too for finding ways to lower the price. Many times you can request a catalog and which will have some prices in it as well.
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