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Finding the right products to sell online


gwen83211
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28 May 17 04:48:08 pm
I am a new drop shipper and i'm getting my products from a wholesale website that I found on Salehoo. The wholesale price listed on a Salehoo drop shipper website is not low enough to make a profit drop shipping. Once you add wholesale cost plus shipping fees and a 30% mark up the price is not competitive online, not to mention Amazon's referral fee of 20%, eBay fees, and online marketing (pay-per-click). My profit margin is very low and I still cant compete with the prices on eBay, Amazon, and Google Shopping. I need help finding products that you can make money on with drop shipping. I'm good at building an eComm website, I listed 1100 products on my site in two days and pushed the products over to Amazon and eBay.

I just need help finding the right products to sell and products that will help me stand out from the rest of online retailers.

Thank you


fudjj
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28 May 17 07:42:18 pm
Hi Damon,

I notice that you mention you are getting products drop-shipped at wholesale price, there seems to be some confusion here. Wholesale price and drop-shipped price are very different. Wholesale price is set on volume purchasing, not drop-shipping, you essentially get a better price per item because you are spending more cash on stock.

Drop-shipping doesn't give you the same price because you aren't spending the same amount of cash to buy stock upfront.

Now some wholesaler suppliers may offer a drop-ship service as well as wholesale, but that service with be at drop-ship prices, not at wholesale prices. The only way to secure wholesale prices is to purchase wholesale, not drop-shipped.

You mention that this is a SaleHoo approved supplier. If this supplier is assuring you they are providing you with a wholesale price on items they are drop-shipping on your behalf, can you forward me the supplier's name and any communication you have from this stating that is what they are doing and I will have that followed up for you.

Drop-shipping has many advantages over wholesale, for example the low to no cash flow required to get into the market and not requiring storage space to hold stock, as well as not have to do any of the packaging or shipping yourself, but perhaps one of the biggest advantages is that it's low to no risk,

Wholesale is a much higher risk supply model to use because you do need to spend cash flow up front to secure stock. So if the market slows in your particular market or the market in general, then you can get caught sitting on stock that isn't just hard to move, but may well not be worth what you paid for it upfront.

Then of course you have to have the storage space to hold the stock and do all the packing and shipping yourself.

So that is why there is a big difference between wholesale and drop-ship pricing. The lower the risk, the lower the potential reward (profit) The higher the risk, the more potential reward (profit)

This has flow on effects into the general market of course and is most noticeable in multi-seller markets like eBay and Amazon. What it does is put drop-shipper's in direct competition with wholesalers and of course those using wholesale as a supply source are always going to have more margin in the products to shut drop-shippers down.

Then you add in another couple of factors like wholesale suppliers themselves using these platforms to sell direct to the public at prices that those buying wholesale to resell struggle to compete against. Then of course you get loss leading causing chaos in the market, where sellers are selling products at cost or below cost to use as a marketing tool to generate traffic flow.

On top of all of that, you then have desperate drop-shippers cutting their already small margins down to virtually nothing in an effort to just make something.

It all ends up pushing the entire market prices down and makes it a super competitive place to try and do business, especially for someone without a seriously well thought out plan of how to compete.

The entire online e-commerce market is a very complex beast to understand, but it's vital to understand the forces at play within the market that dictate the prices if you want to stand a chance of really competing within that market.

So it's simply not a matter of just finding the right suppliers that can give you a price to stand out from the crowd, if they existed, then everyone would use them and then it would be very quickly back to the status quo once more. Standing out from the crowd is the challenge for every seller on these platforms, but you have to find a way to do that yourself, because the market is at a point where a supplier isn't going to be able to help you unless you are in a very fortunate position where you are cashed up and can afford a very large bulk shipment of product that you can then move in and dominate a particular market segment with.

I hope that sheds some light on how it all works for you. .


Mark (fudjj)

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reg
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28 May 17 09:49:32 pm
Hello Mark,

What I'm getting from your response to gwen8321's inquiry is, trying to compete on any of the sales platforms, i.e. eBay and Amazon using drop-shipping, or even self shipping, is a waste of time, effort and finances. Since you are not only competing against other resellers, the very same people whom you rely upon for products, the wholesalers, are competition as well. I can personally attest to this being factual. I've had to shut down my Shopify store after discovering that the manufacturer's of the products that I was selling through a "wholesale drop-shipper" was selling on Amazon below the "wholesale price" Naturally, I became very discouraged with this reality. I have yet to reopen the store or to sell any products other than used things stored for years in my home. It appears that flea market, thrift store, and garage sales arbitrage are the only profitable means of surviving in the eCommerce marketplaces; unless as you say, "you are cashed up and can afford a very large bulk shipment of product that you can then move in and dominate a particular market segment with." That does not give me much hope for trying get started by bootstrapping. However, I personally thank you for your honesty, I wish that I'd heard it before losing a significant amount of money on marketing, advertising and hosting fees.


Monica
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fudjj
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28 May 17 10:43:47 pm
Hi Monica,

I'm sorry to hear about your personal experience, but your experience is certainly not unique and is only going to become more familiar I would guess.

Quite some time ago wholesale suppliers worked out that instead of selling 500 units @ x cost to a single customer, they could use these popular multi-seller platforms to sell those 500 units and the same exact cost to 500 individual buyers and make the same exact profit margin simply through quick turnover.

The market was already condensing quite dramatically before that, but that move into the market by wholesalers just poured fuel onto the fire. Now in an effort to find ways to be even remotely profitable, sellers have pushed the market to the point where many simply have no way in at all anymore, unless they go outside of the box.

You've identified a real market opportunity in my opinion in those avenues you have suggested. Most people choose drop-shipping because it's an easy, hassle free way to get into the market. That's certainly true, it's definitely both of those things, but it's also the most competitive and difficult way to try and make margin on platforms like an eBay and so on.

If you know how to spot a good deal and talk a good deal, you can be shocked at how much you can turn a lazy $50 into on an eBay like platform for very little effort. The bonus is, it gets you out of the house on a weekend lol.

Drop-shipping definitely still has its place in my opinion, it's just not as most people try to use it. For me, drop-shipping is the perfect tool for test marketing products before outlaying cash on a wholesale purchase. Very low risk test marketing strategy using drop-shipping.

It's also a great way to build your stock profile on your own website, far away from the eBay's of the world as well and providing you have the marketing in place to drive traffic to your own site, you can make margin on those products far easier because you aren't subject to the listing or sales fees that you are on multi-seller platforms.

For those determined to only sell on an eBay, bundling package deals can be an effective way to create a POD that sets you aside from other drop-shippers, it can even put you ahead of the game with may wholesale buyers and sellers as well. The trick there is to combine 2 or 3 items that closely relate to each other, make your regular margin on one product, sell the other two at cost.

You have to be careful because you do start to shrink your market because you are moving the price up every time you add something else, but this is where making sure all the items in your bundle work well together so you encourage customers to think ... well I want to buy all of them anyway, so I may as well take advantage of this package deal now and grab them all while they are cheap.

You can make money in e-commerce, you just have to be smarter than the general market and turn what seems to be disadvantages into advantages where ever possible :)


Mark (fudjj)

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reg
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30 May 17 01:10:59 pm
Hi Mark,

Thank you so much for the feedback. You've actually got me thinking about the type of products that can be bundled easily. At the very least I may be able to recoup some of my seed money and get a better idea as to what would sell in my store to buy at wholesale. Again, thanks so much for your inspiration, :)


Monica
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fudjj
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31 May 17 12:09:53 am
Welcome Monica, good luck with it :)


Mark (fudjj)

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mcculloughc9271
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23 Jun 17 03:32:59 pm
My name is clifton mccullough

I would like to know whats the best thing to start drop-shipping products and also. Is selling cell phones on Ebay and Amazon good profit to get into. I'm new to this looking for help on making substantial amount of money monthly.

Also, I'm looking into selling everything to get my business off the ground and running.


Last edited by fudjj on 23 Jun 17 08:44:55 pm, edited 1 time in total.
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fudjj
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23 Jun 17 08:51:30 pm
Hi Clifton,

We often see that question, "what's the best thing to start selling online" In reality, that really comes down to a few factors, but your cash-flow plays a MAJOR role. For example, if you are looking at the top 10 hottest online selling items, you can certainly make money in hat market, if you have the upfront cash to invest in that market.

If you are going to drop-ship, then these markets are a nightmare to compete on an even footing, because the even footing doesn't exist. These types of markets are full of wholesale sellers, as well as wholesale suppliers selling direct as well. You will never compete with cashed up sellers like those with margins that drop-shipping will provide you.

In regards to cell phones, that's really one of those markets that you will find it hard to compete in due to the competition. It's not impossible, but it's a difficult market so you would need to get very creative to try and carve out a foot hold in that market I would suggest.

Cheers


Mark (fudjj)

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