I spent a whole year playing the drop shipping game. It is definitely not the way its made out to be in those TV infomercials, e-books, and so on. It’s not a get rich quick scheme – you will actually have to work, a lot. When people find out you are an eBay seller, they tell you to look into drop shipping, as if they’re the first person to ever give you that idea. Everyone thinks its easy, until they actually try it.
Drop shipping definitely has its pros – but a good amount of cons as well.
It takes the same amount of work as a traditional inventory holding store – at times even more. Instead of juggling inventory, warehouse space, and the money tied up in inventory, you are repeatedly getting rejected by suppliers and manufacturers, constantly updating inventory quantities, and babysitting your suppliers to either ship on time, or take care of various issues. So the trade-off in carrying less (or no) inventory, is more work for you. Having said that, you can definitely make some money after the initial growing pains. You just need a bit of a road map.
Drop ship manufacturers and suppliers don’t exactly advertise their drop shipping capabilities. So a majority of the time, you’ll have to ask if they do. A lot of manufacturers will actually drop ship for you in one way or another, they just prefer not to.
If you do a search for drop shipping, or how to find suppliers, or something like that, you’re going to find millions of results. And a lot of those are from either affiliate bloggers who just copy/paste the same rehashed information that hundreds of other sites have, or drop shipping sites that offer a monthly membership fee.
Information on finding ACTUAL drop ship suppliers is rarely found in either of those two places. If you’re just starting out as a drop shipper, or if you want to add inventory to your current eBay or Amazon store, here are a few tips about how to break down all the fluff, and get the actual information you need. I went through all of the usual google results, and ultimately had to learn the drop shipping business on my own. These are the actual steps that I took. It will take time (took me over a year), but if you do it right, you will make money online.
Before you read on, here are a few things you will need, and/or should have. 1.) A valid business (business license, sellers permit, Tax ID, etc.) Actual suppliers and manufacturers – legit businesses – will rarely work with you if you don’t have the necessary legal information. 2.) It’s a good idea to have a website. As an online seller, a lot of manufacturers will not sell to you if you represent yourself as an eBay or Amazon seller. So basically, you apply as either your legal business name, or your website, get approved, and then sell on eBay or Amazon.
And most importantly, 3.) Understand the difference between a brand and a manufacturer. A brand is something like Calvin Klein or Sony, etc. A manufacturer is usually a company that you haven’t heard of that makes the product for the brand. Sometimes they are the same, but most of the time, they are not. To get access to the merchandise, you will need to find the actual manufacturer. More times than not, they will offer some sort of drop ship service.
1.) B-Stock Supply – If you are just sick of searching for inventory, check out bstocksupply.com. This is an auction platform where huge and mid-size retailers liquidate pallets in auction form. You will actually find great deals if you search thoroughly, and bit patiently. Major national retail chains use bstock to liquidate their excess or customer return inventory, so you’ll find a lot of popular and common merchandise available.
2.) Attend trade shows – Manufacturers present their goods here for both people like you, and actual designers and brands. This is a good way of meeting many suppliers at once in any given category. Or you can also cheat and go to the trade show website. For example, go to lasvegasmarket.com, and click on “exhibitor directory”. From there you’ll have access to the entire list of manufacturers and suppliers.
3.) Search Google – Again, this comes down to understanding the difference between brands and manufacturers. If you search for Calvin Klein jeans suppliers, you’ll get mostly nothing. You might even get a few places selling salvage or liquidation merchandise, but nothing that is really useful. Instead, search using terms like “manufacturer for Calvin Klein”. Thomasnet.com is also a very good (and free) source of manufacturer listings. You’ll need to do a bit of digging there to find wholesalers and suppliers that you can actually use – but it’s worth it! Good suppliers don’t grow on trees.
4.) Contact the manufacturer or supplier – Finding actual sources is a lot like dating. You’ll contact the manufacturer, and they will ask you if you are a stocking dealer. When you say no, they will reject you a good amount of the time. So you need to apply with about 5 or 10 suppliers to get one approval. Once you get into the habit of applying to 20 or 30 suppliers a day, it’s not that big of a deal. Avoid places and companies like “authorized dealer/distributor”. These are just middle men, and it’s very hard to get competitive pricing from these places.
Once you find their website, look for either of two links. Most manufacturers or suppliers will have a “vendors” or “wholesale” type of link somewhere on the page. From that link, you can apply to become a vendor with that manufacturer. If you don’t see a link like that, try the contact us link. Send them a message asking them how to go about purchasing wholesale.
5.) Salehoo – Salehoo is a resource I personally use myself. With over 8,000 suppliers in over 150 categories, its definitely an interesting option. At $67 for an annual membership, its actually
quite a bargain. Click the blue Salehoo link if you’d like to learn more about it.
Salehoo is definitely good for beginners who don’t know how to find a wholesale supplier, and don’t know which products they should sell online. Intermediate and advanced sellers who have experience selling online, but are struggling to find legitimate suppliers can also benefit greatly by finding legitimate suppliers in their niche. Or even by finding wholesalers and manufacturers of complimentary items.
Salehoo is bit like the Thomasnet,com directory mentioned above, but like a Cliffs Notes version. Whereas Thomasnet lists all sorts of manufacturers, contract manufacturers, outsourcing, etc, Salehoo provides suppliers and manufacturers that will sell to you in either light bulk, or drop ship capacities.
6.) DOBA – DOBA is a drop shipping marketplace for online retailers and wholesale suppliers. With a paid membership, you have access to thousands of suppliers, and millions of products. You list the items, and then purchase them from the supplier when it sells through the site. Kind of like eBay for wholesale.
It sounds easy and fun – except DOBA (like everything else in life) isn’t what it used to be. In spirit, DOBA is/was meant to connect drop shippers with actual manufacturers. But in reality, it doesn’t work out that way. The vast majority of the sellers on DOBA are middle men and suppliers, not the actual manufacturer or wholesaler. So by the time you pay for the product cost, per order fee if any, shipping costs, and eBay or Amazon fees, your total product cost is higher than the average eBay selling price. By the time you add on a little profit, your selling price is on the higher end, and you can’t really compete. And that’s not even considering the membership fee. All of that to say – you’ll get a few sales, but nothing of real substance.
If you’re just starting out, and want to get some inventory up into your store, DOBA is something to consider. You can quickly accumulate thousands of items in your eBay or Amazon inventory without having to apply to become a dealer with the individual suppliers, but it is something that you will phase out fairly quickly as the profit per sale is not very high, if at all. And their customer service is very lacking.
7.) CameoEz – CameoEz.com is a network of suppliers and manufacturers, and it is free to join. You make one account with CameoEz, which you can then use to log in and purchase from a host of other suppliers and manufacturers. This network is a bit limited, and a lot of their suppliers will not sell in drop ship quantities, but their wholesalers are the real deal. No fake suppliers and middle men.
8.) JOOR – Jooraccess.com is hit and miss. Joor is somewhat like DOBA – it is a wholesale marketplace – but instead of buying on the website, it’s more of a platform to meet manufacturers, and apply with them directly. JOOR is like the match.com of marketplaces. You apply or “make a connection” with a brand or supplier. If they accept you, then you go from there. It is intended for a more established business; especially those with retail front, but you will find actual manufacturers for popular brands here.
9.) Drop ship clubs – Stay away from drop ship clubs. These are the sites that offer you thousands of products that they sell, and drop ship for you. They will usually have a monthly membership fee, as well as a per order fee. They also offer prices that are above the average selling price on eBay.
10.) Update inventory quantities – Ebay and Amazon are very sensitive to out of stock items – as are some of your buyers. Ebay and Amazon consider an out of stock purchase to be a transaction defect, which obviously isn’t good. And about a quarter of buyers will act like it’s some kind of travesty when you tell them their purchase is out of stock – and open claims, leave negative feedback, etc. So you will have to avoid these issues by updating your inventory quantities. You can get this information directly from the supplier/manufacturer. A good rule of thumb is updating every 1-3 weeks, but that will vary from supplier to supplier. With some, you’ll never have to update until a product or product line has been discontinued.
11.) Minimize out of stock issues – No matter how often you update, you will come across out of stock items, or similar issues. In these cases, act fast, minimize losses, and as a last resort, cancel the order. You’re much better off fulfilling the order at break-even, or a (very small) loss. When I have an out of stock item, I will usually just drop-ship through another eBay or Amazon seller. In these cases, you will either make little profit, no profit, or incur a small loss.
If you just cancel the sale, you will receive a defect for the item, as well as any revenge actions from a possibly upset customer. Fulfill the sale as fast as you can through a different seller (or a different site – Overstock.com for example). Avoid small websites, especially those that look like a drop ship site, as they are probably getting the item from the same place you are, and they too will be out of stock. In these cases, the site will not notify you that they are out of stock for a few days – not good for you!
If you can’t find the item anywhere, you can also message your buyer and ask them if they are able to wait until you have the item back in stock. Most buyers will agree.
As a last resort, cancel and refund. But do so quickly. If you don’t, and you just sit on the order, the buyer will open a case, and leave negative feedback. So the goal here is to minimize losses in every form.
If you need anymore information that what is listed here, please feel free to contact me.