How To Get Started In E-commerce
The fundamentals of e-commerce are exactly the same as for a normal store
. You buy stock from a wholesaler in bulk and you sell that stock to customers for more than it cost you.
A normal store has premises, fitments and shop assistants. A website doesn't have those expenses, but the items for sale must be stored somewhere, and when a sale is made, the item must be shipped to the customer.
Picking and packing the item and preparing for shipment are labor intensive, but there is another way; it is called drop shipping.
Anyone new to e-commerce would be well advised to look at drop shipping to see if this is an option for their business.
Drop shipping is when one person operates a web site and advertises an item for sale. When(and only when)that item is sold, they buy the item from a drop ship supplier. This supplier maintains stock of the item in his/her warehouse and provides the labor to pick, pack and dispatch the item direct to the customer.
In most cases it is cheaper to buy products in bulk in the traditional wholesale arrangement, however the need for warehouse space, the risk of buying products which may not sell AND the need for labor to pick pack and prepare for shipping, mean that despite lower inventory costs, businesses built on a drop ship model may make more profit.
If your aim is to have your own website (rather than sell on eBay or Amazon) you will want a shopping cart which is compatible with the drop ship model, ideally one where orders can be passed direct to the drop shipper when they are received, without further intervention from you.
You will also need to calculate your costs carefully. Some drop shippers charge a 'drop ship' fee per item or per order or per address in addition to the cost of the item and you'll need to factor this in when calculating your prices. If the drop shipper charges a membership or monthly participation fee, beware. This is the hallmark of a go-between who is simply taking your money and passing orders to the real drop ship supplier, whose prices will be lower.
If your aim is to sell on eBay or Amazon, be sure to check this with your chosen drop shipper. Some will not set up accounts with eBay or Amazon sellers.
Finding a drop ship supplier is relatively easy. You can do your own research by buying the product you want to sell and trying to trace the labels and serial numbers on it back to the manufacturer who should then be able to tell you who the wholesalers are.
You can then contact each one to find out what their terms are and whether they do drop shipping or what their minimum bulk orders are, whether they work with sellers on eBay or Amazon, etc.
You could also use Google and search the innumerable web sites which claim to be drop ship suppliers.
As an alternative you could look for a list of reliable drop ship resources. A good one will have done a lot of the above research for you and provide you with a list of reliable drop ship suppliers who will do business with smaller companies.
Building a website and driving traffic to it is big job so, at least to begin with, take all the help you can get. Find a drop ship supplier to stock and ship your products so you can relax and get ready to join the ranks of the internet entrepreneurs.
by: Kirsty Hale
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