Hi Fran,
Glad to have you with us! I'll try to address each of your concerns. :)
You can’t expect to create much profit margin from drop shipping. This method is great for you have a feel of the reselling business and to get your feet wet, without having to cough up much capital. But to enjoy good profits, you can source your items wholesale or through liquidation. Some resellers get products and resell using a combination of these supplier types – drop shippers, wholesales and liquidators.
Due to competition, the best pricing scheme are never listed in the wholesaler’s website. You need to fill out an application for drop shipping or wholesale purchase before you can negotiate for good reselling prices. Most suppliers will also often tailor these prices to your order, the more items will be given discounts for example. And once you have established a good business relationship with the suppliers, you can request once more for better prices! :)
And if you are comparing prices with the ones listed at eBay, please note that it is not uncommon to find products selling at prices the same as or lower than wholesaler. The reality is that a lot of wholesalers are also on eBay selling directly to the public. This seems unfair but yep, this is the unfortunate truth.
Here’s what you can do about it –
* Order in bulk quantities to drive the wholesale price down
* Sell on another auction site other than eBay – there are heaps to choose from and profit margins are usually better. Craigslist is also a good place to sell if you live in the USA. (Let us know if you need more suggestions for places to sell online)
* Buy liquidation – this lets you get product for pennies on the dollar. (I’ll let you in on a secret, this is how lots of powersellers make money on eBay these days)
* Find a niche market with few competitors – collectibles and one-off items have amazing profit margins, even on eBay.
And when it comes to finding a good niche, you are into a treasure hunt. :)
This entails looking for clues on what will sell well. And what will sell well is dependent on a lot of factors – your market (target customers and location), your interest, the supply and the current product trend/ demand. Before you can decide on which product to work on, you need to do a lot of research. Some sellers spend months, if not years selling a variety of items before they start finding niche items that they will stick with. Some try on several niches.
There’s a video that you can check out Link hidden: Login to view where Alice revealed one of her niche hunting methods. An important point she shared is that what is popular doesn’t make a good niche, because popular items also tend to be highly competitive to sell.
Welcome to SaleHoo!