Mail Order and E-commerce Re-Selling Business

We have combined the Catalog Business and E-Retailing business because it’s basically the same.  You are building a platform that allows people to learn about and get their hands on stuff that you are trying to sell.  The keys to success will be the same as those employed by Richard Sears and Alvah Roebuck did in 1888 when they sent out their first catalog.  Basically, you act as the sales force for companies that make the products.  But before we get into mark-ups and suppliers, let’s look into the two ways you can get into business.

Chart of traditional e-retailing vs drop shipping

Chart of traditional e-retailing vs drop shipping. Their are advantages to both. Which is more cost effective depends on what you are selling and to whom.

E-retailing consists of selling stuff over the internet without a traditional store.  Unbeknownst to most customers, a lot commerce on the internet is by a relationship between a supplier and e-retailer known as a “drop shipper.”  The traditional e-retail set up is just like a retail store–in fact most retail stores also do e-retailing inside their brick and mortar stores.  The store buys from many suppliers and stocks the shelves either in a warehouse or retail store.  Then when they get an order through one of their on-line marketing channels, they product is shipped to the customer.  The drop ship e-retailer set up accomplishes the same goal.  The only difference is that the supplier handles the shipping and packing.

Advantages and Disadvantages of the Drop Shipping E-Retail Model

(+) The biggest advantage is that you do not have to spend capital on holding inventory waiting for a customer to buy a product (+)  Your supplier takes the out-of-style risk.  For example, let’s say you thought the latest boy band out of the UK would be the biggest thing since sliced bread.  You would have to buy and store a large quantity of their merchandise to sell in your online store.  But if it turned out that they were a dud, you would be stuck with that inventory. (+) You do not have to rent space to actually store the merchandise. (+)  You do not have to hire people to do the shipping.

But on the other hand, there are some disadvantages.

() Your supplier gives discounts to retailers that buy a large quantity of goods at one time.  You will not be receiving that big of a discount as your orders will be placed one-by-one. () Your supplier will want to be compensated a bit more because she is storing and shipping the products for you. ()  Drop shipping programs are set up by the suppliers, so you will have to compete directly with a bunch of other people who have the exact same products and cost basis as you. 

Okay, assuming you have sourced your products either with a drop shipper, traditional supplier, wholeseller, or you have decided to import your products directly, you need to have your publications stand out.  Why wouldn’t your customers just buy form Sears, Wall Mart, or Amazon?  Well our OCBusinessStartUp.com interns have identified four marketing strategies that seem to be in use.  If you are interested in the traditional e-retail model, check out our page on buying wholesale in LA and direct importing.  And there is no reason why you cannot do both–drop ship products and ship products from your warehouse depending on how you can get a better cost and product mix.

Don’t try to compete with Wall Mart on popular products.  A successful strategy would be to put together a well organized online store/catalog with products from different suppliers.  Either unique products that are not available elsewhere or products you can write a story about would do the best.

A good example of a drop shipping company is Blinds.com.  In 2011 this business did  $80 million in business, but does not won a warehouse, trucks, distribution centers, or retail space.  When you need blinds you call in or order on line.  They take your order, charge your card, and have their suppliers send the blinds you want to your house.  The founder of blinds.com  Marc Ostrofsky has written a book:  Get Rich Click!

Marketing Strategies for E-Retailing and Catalog Sales

 (1) Presence

Your advertising is available to the consumer when they are thinking about buying.  For internet sales, this means that you advertise on the internet where people are shopping or looking.  For E-Retailing this means putting ads that appear to be from a personal seller or deep discount retailers on the internet.

  • (1) Free advertising on E-Bay, Craigslist and YouTube are a great start.  Your customers should be channeled to a website where they can make a purchase or see more available products.  (2) You might also try advertising in local internet publications.  See this article on Local Internet Advertising.
  • (4) Work with the big Guys.

google shopping allows you to sell items from your website.  They will comes up when people search for low prices on google.  www.google.com/merchants  As explained in the video, this free service is a bit complicated.  You will need a verified website by Google Webmaster tools, and the ability to upload a spreadsheet with data on it to google.

Yahoo Stores  smallbusiness.yahoo.com/ecommerce  Tons of websites are run off this platform.  It costs about $40/month for a basic store which can be built with templates.  It handles taking credit cards and shipping.  And you can also integrate this with google merchant (above)

Amazon Store This allows you to sell right on Amazons Platform.  webstore.amazon.com  They will help you create a individual website that does not look like an amazon page so you can control your brand.  But they will list your products on Amazons’s search results, you can advertise on amazon, they can even ship the products to your customers.  And people pay with through their trusted Amazon Accounts that they have been using for years.  You don’t have to deal with getting a merchant account.

To get listed in print, you can try to place ads in local publications.  This page has all the information on local advertising in Orange County.   People flip through the local adds when they have nothing else to do.  We have heard about people making tons of money from placing two or three line classified ads in newspapers.  It’s worth a try.

(2) Price

Well, the internet is all about finding the lowest prices.  As soon as people found they could save a bit of money in airline tickets by booking on-line, there went at least 2/3 of the travel industry.  As long as your online presence seems reasonably credible, people will input their credit card number to save a few bucks.  But your site has to come off as well put together.  If your web site looks like it’s a bit out of date, there are spelling mistakes, or it crashes people will balk when they see the buy it now button.  This is why people pay to have a professional web designer develop their site.  And you can get (read buy) credentials by joining the BBB, local chamber of commerce, or trade organizations.  All of these may be “non-profit” but the operate as business that need members to join.  You will pay a fee, and in exchange you will be able to display their “member of ______ ” logo on your catalog or website.

In terms of catalogs, it used to be that readers were not that price sensitive, but now most readers will google your product on the internet if it costs more than 20 bucks.  So you are competing with the on line businesses.

(3) Product Expertise and  Unique Products

Publications, print and online, will offer some sort of expert advice on products.  That will get people to read your publication and view you as a credible source when it comes to buy.  Photography publications, for instance, may offer advice on photo taking.  And let you know that’s the best new products are hitting the market.  And gee wiz there is an opportunity to buy the product right next to the article.

If possible, your products should be unique.  The simplest way of doing this is by changing the product names.  (For example, we have heard of a mattress store that guarantees it will beat any competitor’s price–and they are so confident their prices are the lowest they will give your a reward if you find a lower price.  But the fine print says that it’s for the same — not similar — mattress.  And they have manufacturers put the store’s selected and trademarked names one each mattress so it’s just not possible to find a competing retailer selling the same mattress.)   Another advantage to changing the product name is it stops the instant google price check.  If you have a unique name, only your product will pop up.

(4) Review

Many sites review products.  Theses sites are set up by e-retailers to get traffic and offer viewers a link to the product.  Type in “product name” and “Review” into a search and these sites will come up.  These sites allow people unhappy with the products to vent, and their bad reviews drive traffic to the site.  Ads are displayed along side the reviews.  These sites seem to be popular with anything techie.  But people are looking for advice.  If you can offer an expert review, this would also help drive sales.

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Locating Suppliers for your E-Retail or Catalog Business

One good place to start is to look into the traditional suppliers for retail and swap meet businesses.  If you are thinking about re-selling used items over the net or with classified ads, check out the bottom part of our Swap Meet Business page.  There might be some profit in buying stuff by the pallet and selling them off one by one.  But if it’s something that you have to see to appreciate, then it might not work as well on line as at a swap meet.  Another possibility is to buy from whole sellers in LA or import directly from over seas.  See our whole sell buying page for more information.  This will involve a trip to LA.  Importing direct form China, India, … is about 1/2 way down that page.

Vetting Most suppliers will want to do some vetting, to make sure you are not just trying trying to buy cheep.  Every year before the holidays, people think that they are buying so much stuff that they might as well try to buy it wholesale.  For whole sellers, you will be buying a large quantity of goods, and have a resale license from the state of CA.  Drop shippers and overseas suppliers will demand a bit more.  They will want to make sure you have a legit business including a business name, office address, and city business license.  If you are able to buy small quantities “wholesale” with just your credit card number, you may be paying close to retail.  We checked out one “wholesaler” and found the prices, in some cases, were 30% more than the same item on Amazon.  So shop the products before you buy them to make sure customers cannot buy the same thing for less at Wall Mart, Amazon …

Drop shipping wholesale distributors

We ran across these interesting companies.  You might want to check them out.  We have no knowledge of how well they will work out for you.  Because they do not want to become retailers or compete against their legit retail buyers, they do not offer wholesale prices on their websites.  To our knowledge, none of these are multi level marketing (MLM) programs, so you do not have to worry about a sponsor talking you into buying a lot of inventory, or pressure to sign up people who will work under you.  We do have a page on popular MLM programs, if you want training, motivation, and a time tested system.  But in most cases, they have failed time after time.

Again, this can also apply to the catalog business.  Just use the products described by the drop shipper and add your creative text.  Your catalog can have products from several different drop shoppers, that you identify with your product numbers.  When a customer mails in an order, you just go to their website and send the orders to your customer who doesn’t need to know that they are not coming from your distribution center/warehouse.

AIS  http://www.youradultstore.net/partner/default.asp?eng=google_smc_business This company sells adult oriented products.  You can partner with them by selling on line.

B and F Wholesale  www.bnfusa.com/index.lasso  They will also drop ship to your customer and they do not charge a handling fee for orders over $100.  You only need to have $500 on deposit to get started..  You need to get approved to see their catalog with wholesale prices.  Their info is not on the packages your customers receive, so it’s as if it came from you.  They even provide product  images that you can use on your website or in your catalog.  They offer discounts for larger orders if you want to buy and sell out of your own inventory.

Doba www.doba.com  This company has a huge catalog of products to choose from.  They have a “push to e-bay”feature that allows you to get stuff up.  And you can sell their products in you online store or catalog.  They have designer names, tech products including Apple, household goods and much more.

 

EZ Dropshipper  ezdropshipper.com  This company has a wide variety of goods for sale.  –Looks like they are back in business.

Merling Wholesale http://merlingwholesale.com/Drop-Ship-Info  This company offers a variety of products, but it’s main deal is licensed sporting good products.  NFL, NHL, NCAA, and NBA.  They have a $5.00 drop ship fee.

SMC  — Specialty Merchandice Company.  Smart Living Company  This is a company that has been getting people in their own business for over sixty years.  http://freeinfo.smcorp.com/LearnPack6.aspx website not working.  New website http://www.startwithsmc.com  It looks like they lost their old website name and it has been taken over.  Their new name is Smart Living Company.  smartlivingcompany.com  It looks like you now have to get their product/pricing info through the mail, or log into a secure site.  Could be  helpful, sot they do not compete with their re-sellers.  They have been doing this for over 60 years.  And you may have bought stuff from them through their business partners with out knowing it.  Basically the sell a lot of products that are cute–stuff that grandma would appreciate.

Sunrise Wholesalers sunrisewholesalemerchandise.com  Tons of stuff and they drop ship.

Rawleigh Another company that uses this model is Rawleigh They sell medical ointments and other products of that nature.  They also sell natural pet products.  If you google them, most of the pages that pop up are for their distributers.  They haven’t put a lot into their webpage as a result.  To get move information contact at join@rawleigh.com.  Most of their distributors come from word of mouth, so they ask that you tell them why you want to be a distributor in the e-mail.

JR Walkins  https://www.jrwatkins.com/broker-sign-in  Offers skin creams, baking goods, beauty products and the like.  Their goods are NATURAL.  They no longer put up their dealer catalog on-line.  Perhaps customers were seeing the real price.  You need to become a dealer to see what can be drop shipped.  There are hundreds of independent dealers drop shipping from their websites.

High Tech Suppliers

MegaGoods megagoods.com  This LA company drop ships a lot of electronic goods including cell phones, lap tops, toys, audio. …  They require a resell permit, but not a business license.

 

Unique.com www.uniqbe.com  As with the others, this Hong Kong based company offers drop-shipping services.  But this site focuses on High Tech Consumer Electronics–Mostly Digital cameras, cell phones, and tablet computers.  Everything sold is a new product and cell phones come unlocked.  “Uniqbe Limited, established in 2007, offers drop-ship and wholesale services for a wide range of brand new and original consumer electronics from mobile phones, digital cameras, camcorders, PC tablets to accessories… Our Reseller Rrogramme is a one stop solution for your business as the process of placing an order to tracking a shipment is just what you need. While we provide you an effective sourcing solution, you can focus on marketing and selling our product offerings.”  (From their about us page)    Small quantities are shipped with a company like FEDEX or DHL which can handle the customs/import duties.  When you go tho their website you see the products they offer at their retail price–about the same as Amazon.  And they also let you know how much it costs to drop ship the product to your US based customer’s home.  To sign into their retailers’ part of the website, you need to register.  They require a company name and they would like to look at your retailing website or e-bay ID #.

Tools

 MSC Depot mcsdepot.com  They have no minimum orders, and only charge a $3.50 drop ship fee.  Pricing is shown on their website–you don’t need to sign up to see it.  Tons of imported tools.  We are not sure about the pricing.

Getting Started with E-Commerce — Drop Shipping Business

To get started, you will need a business bank account so you can accept credit cards or set up a Pay Pal account.  Either way you will probabally be paying big fees.  See our links section for some not-that-high cost alternatives.  You may also want to get a website with shopping capabilities.

Funding your Inventory

One source that you might want to look into is www.kabbage.com .  The will fund your inventory if you sell through major e-retailers like ebay, Esty or Amazon.  They do Merchant Advances not Loans.  We’re not exactly sure of the difference, but it seems like they are willing to do this because the funds lent from you are paid back out of your accounts at your on-line retailers.  So if you owe them money the e-retail platform cuts them a check from your sales before you can get your hands on it.  So obviously you have the have an established business and you have to have good credit.  They can loan from $500-$50,000.

Self Publishing your own Catalogs for Drop Shipping Products

See our section on publishing to see commercial printers that can provide a catalog.  You provide the artwork with a program like Microsoft Publisher or Adobe Page Maker.  Good looking full color mini-catalogs on glossy paper can cost less than $0.20 each.  See the “publishing it yourself” section of our community publisher section for info on local printers.

If you search the internet you will see people have been successful with this type of arrangement, while others have not.  Let us know what you think.  We have little expertise in this business.

E-Commerce and Catalog Education

Well as discussed above, there is a lack of resources for getting into this business.  People are making money, buy why would they share their secrets to people who are going to compete against them?

We did find a couple of review websites where people discuss and rate various players in the business.  But just like Amazon reviews you should take very good reviews and very bad reviews with a grain of salt.  (1) Reseller Ratings www.resellerratings.com  This site seems to rate a whole bunch of companies on the internet.  There may be some good information there, but it seems like every store has written a good review of itself to get good links back to it’s site.    But they do have some merchant discussion boards where people vent.  So if you are thinking about signing up with a supplier, you might want to check out these comments.  (2) The second one is based in the UK, but since many of the suppliers are international it might give you some insight www.thewholesaleforums.co.uk.  (3) http://www.wholesalecentral.com/Dropshippers.html

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