PDF Wholesale Drop Ship Sourcing Guide - Homenotion

[Pages:14]Wholesale Drop Ship Sourcing Guide

Created By Elizabeth McGee of

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Welcome!

This guide was created to help you find out what wholesale dropshipping is all about, including how to get started, tips for finding niche markets and advice for finding reliable suppliers.

If you have questions along the way you will find some great answers here

Let's get started...

What is Dropshipping?

Drop Shipping is a method of selling products whereby an individual retailer will advertise, sell, and collect the money for the products, then contact a wholesale dropshipper to ship them to the customer.

For the retailer it's buying wholesale, selling retail and collecting the difference, the benefit to the retailer is they don't have to stock inventory or package and ship the products, the dropshipper does all of that and they'll even put your company name on the boxes they ship.

Drop shipping is great for those who are new to online selling as it means there is little to no start-up cost and virtually no risk involved, as you won't need to invest in a bulk lot of items that you aren't 100% sure will sell. Using drop shipping services also eliminates the issue faced by many online sellers: where they will store their items - there is no need to hire any storage which means big savings for you!

However, drop shipping does have some drawbacks. Firstly, drop shipping is slightly more expensive than buying in bulk. Often a drop shipper will add US$2-US$5 dollars onto the cost of the item to cover their costs of processing the item. This means that keeping up with the staying competitive in high profile categories like electronics and clothing may be difficult but it certainly does not mean that you cannot make money when you drop ship, it simply means that finding a niche market will be even more important.

The 5 step guide to drop shipping:

Step 1: Find a drop shipper

You can do this by either Googling your product name + "drop shipper" or you can check out online wholesale directories.

Step 2: Set up an account with your drop shipper

You may have to pay a small account set up fee - while this isn't always ideal, it is common practice for drop shippers. You should be weary, however, of suppliers who insist on you paying monthly or annual fees.

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Different drop shippers have different types of accounts which you can set up. You can either credit your account and use the credit to pay for items you purchase for your buyers or you can pay as you go and use the money you receive from buyers to purchase the items

Step 3: List the items you wish to sell on your website, estore or online auction site such as eBay.

You can list as many as you like, seeing as you don't have to pay for them until they sell! Use the photos and item descriptions that your drop shipper supplies.

Step 4. Have Your Items Shipped.

When the item has sold and you have received payment from your buyer, log on to your suppliers web site and purchase the item you have sold and have it sent out to your buyers address. If your drop shipper does not have an ecommerce site set-up which you can buy directly from, simply send them an email with the details of what you want and where to send it to.

Step 5. It's all up to the drop shipper now!

They will package and ship the item out to your awaiting buyer.

What is a wholesale price?

When you hear the words "wholesale price" do you immediately deduct 50% off the retail price? It's no surprise if you do, as there are so many sources out there telling us that this is what wholesale is.

Take for example, electronics stores selling iPods, they make as little as 10% from each sale. It's the same for many designer cosmetics.

Here are some of the facts about wholesale pricing and how to ensure you are always paying the true wholesale price when you buy in bulk

How is a wholesale price calculated?

It's really not that complicated: a wholesale price is based on four different factors:

1. The commodity price. e.g. the price of the raw materials which are used to produce the product

2. The manufacturing costs (including labor) 3. The packaging costs 4. And finally, the cost of the mark-up the wholesaler adds on from the price they pay when they buy from a manufacturer.

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Why do wholesale costs vary so much?

Quite simply because the costs above can vary greatly from product to product. For example, an item which requires very little specialized human labor, for example, someone to turn on a machine and watch that items don't fall off a conveyor belt will cost a lot less than a product which requires a lot of expertise to produce. Likewise, a plastic bottle with the main raw material being petroleum will cost much less than a ring made from gold. Surprisingly though, a cheaper item made from plastic will often have a higher percentage mark-up than a luxury item such as a bottle of perfume.

How do you know if a supplier has true wholesale prices?

To get true wholesale prices, you need to buy from a true wholesaler. In order to be able to sell at or below wholesale prices, a supplier must be a well established wholesaler with a proper business set up (with a business license and tax ID). The only way a supplier can sell to you at a price that is truly wholesale is if they buy from a manufacturer in massive bulk.

The difference between a true wholesaler and a fake wholesaler lies in who they buy from, and how much they spend. A true wholesaler will invest tens of thousands of dollars at a time when buying from a manufacturer. A fake wholesaler will buy from larger wholesalers in medium to light bulk and therefore, they won't get items at the best possible prices and be able to pass them on to you, the retailer at the best price possible.

Unfortunately, many retailers are fooled by individuals acting as wholesalers when really they are simply middlemen who don't have the money or the contacts to invest in huge bulk.

To really ensure that you are only dealing with true wholesalers you need to make sure they are trusted and legitimate. The best way to do this is to access supplier databases from trusted sources. You can find these online by Googling "product sourcing directories". Most directories will charge a joining fee, but this is worth it as it can save you a lot of money by preventing you from being scammed in the future. is a trusted and reputable directory which also acts as an online community for online sellers with regular blogs and plenty of information and support for sellers to take advantage of.

Easy tips for easy online market research

Market research will be your best way to find new products and more importantly, determine whether they will sell.

When you perform market research, you are researching three things

(1) the audience (2) the products and (3) the competition.

Think of it this way, would you ever open a cafe in a street without knowing if there are other

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cafes nearby, or without researching how many people walk by each day? It's highly unlikely!

Without performing adequate market research, online sellers can find themselves with a garage full of $5000 worth of stock and no interested buyers. To avoid getting yourself into that kind of dreaded situation, here are 5 steps to easy online market research.

Step 1 Come up with a few product ideas. You may already have a few to get you started. Keep in mind the best items to sell are niche items which means they will appeal to only a small audience. This might seem strange, but new sellers become PowerSellers by appealing to a very small number of people then expanding their product range later. A few examples might be: plus size men's sleepwear, fishing rod holders, left handed can-openers or women's golf shoes.

Step 2 Next, research these products individually. You can do this by searching through eBay's completed listings. This will take couple of hours of your time but won't cost a thing.

Start by going to and clicking the "advanced search" icon right next to the search bar. Find the heading "search including" and check the box for "completed listings"

Step 3 Next enter a few keywords describing the item you are selling, select a category and hit the search button.

Step 4 You'll now be presented with a list of search results. Scroll through the results and look at how many items sold (represented by their price being written in green) and how many did not sell (represented by their price being written in red). Count up the number of green listings in relation to the number of red. To find a profitable niche product, you need to find a product with at least 60% of its completed listings being green. Scroll through at least 5 pages to really make sure you are onto a good thing.

Step 5 If you're item meets the 60% threshold; it's time to find a supplier! If you're item doesn't hit the 60% mark, enter a new product idea into the search bar and start over!

5 Amazing Niche Markets

Finding a niche market is one of the key ingredients to really making it in online selling. Did you know that beginner sellers are much more successful when they appeal to a very small market, rather than trying to appeal to everyone?

Finding a niche isn't always easy - it takes time and persistence to find the right product to sell. To get you thinking, and to give you a few inspiring ideas, we have researched 5 product niche ideas to share with you. While some niche ideas might seem abstract to newbie sellers, that is exactly what a great niche is - very precise and seemingly difficult to source. Niche Item #1: Heart Rate Monitors

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These are used by athletes and gym bunnies or by people who need to keep an eye on their heart rate.

Why they are an exciting niche item:

* They have a 75% success rate on eBay (75% of all monitors listed on eBay in the last three months sold!)

* They are lightweight and easy to ship and store * One size fits all

Niche Item #2: Plus Size Shoes

Many big-foot's out there find it very difficult to find shoes that will fit them comfortably from regular retail stores.

Why they are a super niche item:

* While these are commonly made by popular shoe makers, stores often order only a handful of pairs in larger sizes, which means that more and more, our big-footed friends must turn to buying online to get what they need.

* They have a high success rate on eBay (women's size 11 sell at 61.9% and men's size 14 at 75%

* Both men and women alike can require plus size shoes (Hot tip: women's size 11+ high heels could make a great little niche)

Niche Item #3: Plus Size Maternity Wear

Another plus-size item with huge success on eBay

It's a profitable niche because:

* Maternity and baby gear always works because people are always going to have babies, so you'll never run out of customers!

* Clothing items are easy to ship as they light and not fragile.

Niche Item #4: Military Insignia

Collectibles always make great niches and you can dig really deep to find the best ones. They are also perfect for people who are interested in them - you'll find it much easier and much more rewarding when you sell something you enjoy. To really niche it up, go for US military insignia from the Vietnam War which is big on eBay.

Why military insignia makes an excellent niche:

* It rarely dates or goes out of fashion * There are so many sub-niches to discover like Russian war medals and World War 2 helmets.

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Niche Item #5: Antique Clocks

Another great collectible item

They are a first-rate niche because:

* You'll appeal to both collectors and home decorators * They have an eBay success rate of over 67% * You can often pick these up very cheaply from flea markets and yard sales, then sell them on to make a profit

Niche items really are the way to go for newbie sellers and there are so many out there to keep you interested and best of all, make you money!

Reliably Profitable eBay Markets

Over the years there have been eBay categories that perform consistently well, season after season, year after year. Let's see what they are...

Clothing, shoes and accessories

Clothing is such an exciting category to get involved in as it encompasses so many niches such as plus size gym wear, novelty underwear, and comfort shoes. Clothing is also easy to sell and ship, and best of all, there will always be a demand for clothing (at least until global warming really kicks in).

Selling tip: Always give buyers as much information as possible in your eBay listings, especially about the item's size. This helps buyers to assess whether it will fit them - one factor which can easily cause uncertainty in potential buyers.

Collectibles

eBay is without a doubt the world's most popular place to buy and sell collectible items. Collectibles can include antique items, baseball cards, posters, medals and war artifacts, comics and branded items like Coca Cola and much more.

Sourcing Tip: Visit yard and estate sales for arbitrage items which you can buy very cheaply and sell on to make a pretty profit.

Electronics

Possibly the most competitive, yet potentially profitable markets on eBay - particularly when it comes to items such as iPods and mobile phones. The best way to approach this market is in a big way - to really make a profit, you will need to do a big bulk buy and sell in big volumes. Consider supplementing your product range with accessories such as iPod skins, spare cords,

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or hands free kits for mobile phones.

CDs and DVDs

Did you know that eBay sells over 1 million DVDs and CDs and each month? However, for every one million sold, there are around 2 million listed. Yip, you guessed it, this is another highly competitive market. The trick to making it in DVDs and CDs is to niche it up - go outside of mainstream movies and TV series', or music albums and find a new niche market like exercise DVD's, classic films or learning languages. Gaming systems

Many gaming enthusiasts use eBay to buy and sell their games and gaming systems. A typical gamer will buy the latest system, play it for 8 hours a day for four weeks then sell it on and find something new to entertain them, which means there is always an abundance of buyers on the hunt for a new system to entertain them.

Health and Beauty

There are so many items within the Health and Beauty market: weight loss supplements, antiaging creams and vitamins, hair care, dental care, makeup (nail polish, lip gloss, lip stick, lip balm, concealer, powder, foundation, eyeliner, mascara, eyeshadow, illuminators, bronzers and blushers - phew!), perfume and cologne, moisturizer, eye cream, microdermabrasion kits, hair and makeup brushes and applicators, hair removal kits or razors and shaving creams, manicure kits, eyelash curlers, tweezers and much more!

As with all categories, it really helps to sell something which you are really interested in or have experience with. For example, if you suffer from dandruff, selling dandruff treatments would be ideal as you can relate to your audience and give them a few tips along the way. This would be great in your eBay About Me page as well.

Hot Tip: While brand-name items are top sellers in health and beauty, be very weary of Chinese suppliers offering these items very cheaply - they are likely to be fake and eBay cracks down very hard on anyone selling these

Baby Gear

From toys to feeding equipment and strollers, baby gear is a highly profitable eBay market. Like clothing, there will always be a market for baby equipment and with the huge costs associated with bringing up a baby, it's no wonder parents turn to buying online to find bargains and save themselves some money.

Hot Tip: Don't be afraid to source second-hand or sample grade baby clothing - babies are messy little things and parents need them to have an abundance of cheap clothing to change them into after they splash around in the puddles, play with mud or start a food fight with their sweater.

Keep in mind these markets are reliably profitable only when they are well executed! The

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