Mkelley – Drop shipping has been mentioned a few time, and I wanted to give you my thoughts on the business model.
I've had a lot of success with drop shipping eCommerce and have been doing it full-time for more than 4 years. Robryan is right to some extent - it can be harder than it looks - but with some dedication and a good niche, it's a great way to create online income. A few tips from my own experience:
- Picking a niche where you can add value is crucial. The more complex niches are often best as these are the ones where you can create the most educational content related to your products. If you aren't able to offer some kind of value-added information, you have to compete on price. And I don't recommend that.
- Finding good supplier(s) is really important, and I highly recommend only getting into a market if you have TWO suppliers. As Robryan alluded to, it can be difficult to keep warehouse inventory synced up with your website, which is why I ALWAYS use multiple suppliers with overlapping product lines. The vast majority of the time Supplier A doesn't have an item, I can get it shipped from Supplier B.
- Multiple suppliers prevents you from being totally dependent on one source of inventory. It also gives you geographic diversity, allowing you to save on shipping costs - and reduce transit time - by routing orders through the warehouse closest to your customer.
- Not seeing the physical products you sell CAN be a challenge, and it's often a good idea to order a few of your best sellers. However, I can tell you from personal experience it's possible to become an expert for a line of products that you've never touched. With the wealth of product pictures, reviews and information online you really don't have to touch something to know a lot about it. As your business grows, you'll quickly learn the ins-and-outs of the niche through your customers experiences, opinions and problems.
- You WILL need to be be good at - or willing to learn - marketing and SEO. PPC advertising has gotten so expensive that you won't be able to make much of a profit using that as your primary traffic driver. PPC is a great tool early on to drive some traffic and make sure it's converting at a reasonable level, but long-term you'll need to build organic traffic if you want to make any serious money.
- One of my favorite aspects of eCommerce is that it's a great model for automated, passive income. If you invest a LOT of time up-front in building an information rich-store and market it well, the operations side of the business (fulfilling orders, dealing with returns, solving customer problems) is fairly simple to outsource. I recently took a 7 month working vacation to travel around-the-world while my team back home managed the business. Did it require a lot of up-front work? Absolutely. But I believe the long-term ROI (return on investment) with eCommerce beats many other business models.
I'm not sure if eCommerce would be the right path for your wife, but I hope it is helpful! If you're interested in learning more, I blog about building eCommerce stores and would recommend a post detailing how I got started:
I also spent the last week working on a 50+ page eBook that covers how I pick a niche, find suppliers and evaluate market demand and competition. It's a free resource I'll be giving away on the blog in the next few weeks, and would be happy to send you a copy if you're interested. Feel free to email me, or reply here in the comments.
Another way to differentiate yourself from the plethora of eCommerce sites around is to have really good customer service and delivery. I once setup a small online shop selling one particular hot form of consumer electronics at the time, and what gave me the edge over drop-shipped competitors was overnight delivery to anywhere in the country. We always had stock on hand. People are willing to pay extra for good service and certainty, especially when they need something quick.
The way the business worked was that I was working full time in an unrelated s/w development job. My wife would pack the orders in the morning and the courier would pick up from our home ___location every afternoon. I looked after the invoicing etc. at night; but with an automated process it really didn't take up much extra time. I did try drop-shipping as well but it didn't work out as well for us, although of course drop-shipping would probably enable you to have a larger sales capacity.
You're exactly right - outstanding service is a GREAT way to differentiate yourself. And it's often some of the best marketing you can do, too.
I'm constantly amazed at how many companies will make you send something back to get a refund / replacement, even if it only costs a few bucks.
If our customers receive a defective item that costs less than $20, we simply ship them a new item immediately, without asking them to return the old one. It only costs us a few bucks, saves the customer up to 2 weeks of wait time, save us having to process the return and usually earns us a life-long customer and vocal advocate. It's a no-brainer, and I don't understand why more companies don't do it.
If the defect is recurring, or on a really expensive item - yes. It will go back to the manufacturer. But many defective items aren't indicative of a mass problem, but rather a one-off slip up.
If it costs $10 to ship a product from the customer to the wholesale, and then another $10 so ship it back to the manufacturer for a refund, it just doesn't make sense to do for inexpensive items each time a defective one is discovered.
Very true - and it becomes a self-fulfulling mission to maintain that high level of service. Its hugely rewarding to get positive emails and testimonials from customers every day.
That's very interesting. Congrats on your success. I've been interested in understanding the whole dropshipping process, so I'd like a copy, if you don't mind (email in profile). Thanks.
I've had a lot of success with drop shipping eCommerce and have been doing it full-time for more than 4 years. Robryan is right to some extent - it can be harder than it looks - but with some dedication and a good niche, it's a great way to create online income. A few tips from my own experience:
- Picking a niche where you can add value is crucial. The more complex niches are often best as these are the ones where you can create the most educational content related to your products. If you aren't able to offer some kind of value-added information, you have to compete on price. And I don't recommend that.
- Finding good supplier(s) is really important, and I highly recommend only getting into a market if you have TWO suppliers. As Robryan alluded to, it can be difficult to keep warehouse inventory synced up with your website, which is why I ALWAYS use multiple suppliers with overlapping product lines. The vast majority of the time Supplier A doesn't have an item, I can get it shipped from Supplier B.
- Multiple suppliers prevents you from being totally dependent on one source of inventory. It also gives you geographic diversity, allowing you to save on shipping costs - and reduce transit time - by routing orders through the warehouse closest to your customer.
- Not seeing the physical products you sell CAN be a challenge, and it's often a good idea to order a few of your best sellers. However, I can tell you from personal experience it's possible to become an expert for a line of products that you've never touched. With the wealth of product pictures, reviews and information online you really don't have to touch something to know a lot about it. As your business grows, you'll quickly learn the ins-and-outs of the niche through your customers experiences, opinions and problems.
- You WILL need to be be good at - or willing to learn - marketing and SEO. PPC advertising has gotten so expensive that you won't be able to make much of a profit using that as your primary traffic driver. PPC is a great tool early on to drive some traffic and make sure it's converting at a reasonable level, but long-term you'll need to build organic traffic if you want to make any serious money.
- One of my favorite aspects of eCommerce is that it's a great model for automated, passive income. If you invest a LOT of time up-front in building an information rich-store and market it well, the operations side of the business (fulfilling orders, dealing with returns, solving customer problems) is fairly simple to outsource. I recently took a 7 month working vacation to travel around-the-world while my team back home managed the business. Did it require a lot of up-front work? Absolutely. But I believe the long-term ROI (return on investment) with eCommerce beats many other business models.
I'm not sure if eCommerce would be the right path for your wife, but I hope it is helpful! If you're interested in learning more, I blog about building eCommerce stores and would recommend a post detailing how I got started:
http://www.ecommercefuel.com/my-corporate-escape-story/
I also spent the last week working on a 50+ page eBook that covers how I pick a niche, find suppliers and evaluate market demand and competition. It's a free resource I'll be giving away on the blog in the next few weeks, and would be happy to send you a copy if you're interested. Feel free to email me, or reply here in the comments.
Best of luck!