The Entrepreneur Highway Part 6

Working with product sourcing companies can be easier than you think.

When planning your online business, or any business for that matter, a lot of research can be involved in locating wholesale or dropship companies that can reliably provide the products you want to sell at prices your budget can handle.

Wholesale companies buy vast amounts of products directly from manufacturers at extremely low cost per unit prices. When you purchase wholesale, you are buying for the purpose of reselling. You get a better price than purchasing retail but to do so you also have to buy a larger quantity of products. Basically, the more you buy the lower your cost per item.

The two most notable disadvantages to using wholesale companies are the need to pay for the total cost up front before the merchandise is shipped and then requiring storage and insurance for your purchased products.

Dropship means a company has purchased huge quantities of wholesale goods or provided their own manufactured products and makes this merchandise available to you for resale. Usually you pay only for the products you sell. This service also includes shipping the order directly to your customer, often without the customer knowing that it came from the dropshipper. But for this convenience you pay more than if you owned the merchandise and offered your own shipping.

Some of the disadvantages with using a dropshipper include never actually seeing the products you’re selling, or having to deal with a third party on their time schedule if the shipped item is lost or damaged. And unfortunately, there is also the eventual possibility of having to notify a customer that the item they just purchased has suddenly sold out, been discontinued, and is no longer available for shipping . . . ever!

Type into any search engine the words wholesale directory or dropshipper directory and you’ll find plenty of offers to sift through. The directory home page usually provides information about the number of product companies you will have access to, a sampling of product categories, how often new suppliers are added to their growing database, how long they’ve been in business, FAQs, contact us info, advertisers, affiliates, and so on.

Wholesale and dropship companies signup with one of more of these directory outlets so that sellers looking for products can find information and links to hundreds of businesses all centrally located on one website.

Most of these directory sites require a yearly membership fee that varies in cost. If you’re on a budget a yearly fee of $20 can be well worth having access to hundreds of companies around the world and in your own backyard.

While the internet can provide plenty of links to product sourcing companies, don’t forget about checking your local phonebook yellow pages. You’ll be surprised at how many wholesale and dropship companies are in your city or close by. Think of the savings in shipping and delivery time if you could pick up the order yourself.

When you’ve found a supplier you like, do your own prequalifying by:

  • Checking out their website for professional characteristics.
  • Confirming the listed business name, address and telephone number.
  • Making a phone call and speaking with an employee to confirm terms, products, and shipping information.
  • And placing a minimum first order to see how smoothly the transaction goes and what condition the products arrive in.

Before contacting a wholesaler, make sure you have enough space to store bulk orders. Decide what quantities you will need to buy to guarantee plenty of stock to sell for a month or so that will also meet the supplier’s minimum order demand.

Once you’ve selected the type of products you want to sell, if possible buy only one or two of the items first to judge their quality and to also see how well they sell from your website or auction/selling platform.

Buying from smaller wholesalers can be an easier route at first as such companies often need your business as well and are more inclined to have smaller/no minimum orders or free shipping incentives. However, as your business grows, many of these smaller wholesalers can have trouble keeping up with demand in the fast-paced sales seasons like Christmas and other holidays.

New sellers may find it difficult getting wholesalers to open an account for them. There are a lot of wholesale companies out there. If one says no then try another. Once your business has been established for some time definitely revisit any suppliers of interest again. This time when they ask about you and your business, you can confidently answer:

  • How long have you been in business?
  • What other products do you carry?
  • What type of customers do you cater to?
  • How much stock do you expect to sell in a month?

You should also be asking each supplier such basic questions as:

  • Do they charge a fee to setup a wholesale (dropship) account?
  • What are their return policies for damaged or unwanted stock?
  • How long will it take to process your product re-order?
  • Do they accept PayPal or credit cards?
  • Are they able to provide true wholesale pricing?
  • Are the products stored in their own warehouse at the address listed?
  • Do you need to provide the supplier with a Tax ID/Resale Number?

 Like anything else, you’re going to come across good and bad wholesale and dropship companies. Fortunately, you’ll find most are the real deal and are only too happy to help you succeed.

I’m an online entrepreneur. How about you?