Garage

Hi all.

I am a newbie who is doing a lot of research into wholesaling and dropshipping. I've checked out a lot of forums and articles in the last week regarding the subject but I am still wet behind the ears in most aspects of trading so my views and opinions may be naive or at worst, just plain wrong That being said, I'm willing to learn.

The wholesale forums seem very busy and theres clearly a lot of people here who are both knowledgable and successful on the subject so I thought I would give you all a little background info on myself (please skip to the next section if you dont want to fall asleep!).

I have been self employed via the internet for around 4 years. I have been making money and building websites since 2000 though for the first few years I was still working in the finance industry (mostly pensions, investment and mortgages). Although I fell into the finance industry after uni, I have a background in maths and IT.

2-3 years ago I did a lot of research and emailing into doing some wholesaling. I have run a poker community for 4 years and at the time the cheapest clay chip sets were going for around $60. I spoke to a few chinese manufacturers who were going to sell them at around $15 a set however I had to fill a crate. I had just come back from travelling and had a lot of debt so I was reluctant to invest in it at the time because I was still unsure about a lot of things. Of course, looking back I wish I had taken the plunge as prices didnt come down for another 6-9 months after that.

As you can see, my experience in trading is pretty limited. I am hoping that my experience with affiliate marketing and web development in general will give me a head start on other new wholesalers.

Therefore, the following comments from me is from a beginners point of view. As I said, I have did my best to research the subject but I dont have my head in the skies thinking that I know it all, far from it.

Directories

One of the hardest part about wholesaling and dropshipping seems to be finding a good company/supplier. No matter how hard you search for a distrubtor online you always seem to see the directories at the top of the list.

I have no qualms about paying $10 a month, heck I'd be happy to pay $50 a month if the directory had some good suppliers listed. However I have seen a lot of people in this forum (and on dropshipforum) say that these directories are a waste of money.

It seems that
* There are many scam companies in these directories ie. it doesnt seem like the directory owners vet those who are placed in the directory, more emphasis is on quantity rather than quality
* Customer service from these directories appear to be awful at best and most are not even based in the uk
* Product prices don't seem to be updated that much. Quite a lot of prices listed are more expensive wholesale than you can get in the shops just now.

Since I still have a lot to learn though I think I will still benefit from joining a directory. It will give me exposure to some suppliers and will help me learn more about how everything works.

I am thinking about joining Simply Wholesale, they're based in the UK, appear to be run by a respectable owner and I can't find any bad threads about them. Do any members here use them?

Dropshipping

I first came across Dropshipping a few years ago however I didn't really research the subject other than knowing what the term meant.

From what I can tell, there are some good dropshipping companies out there however there are just as many if not more scam artists and companies who who offer poor service.

I think that dropshipping could be a good way to get my nose into this kind of business however the main problem is that good quality service remains out of my control. I can provide fantastic support and great prices to customers but if the dropshipping company runs out of stock im screwed. Also, I have read that a lot of poor dropshipping companies occasionally send inferior products.

One of the biggest problems with dropshipping appears to be finding a good company. Some dropshipping only show their prices to paying memers however the ones which do show prices seem to be expensive ie. their prices are usually the same price or even higher than the prices on ebay or in the shops. The few products that I have found cheaper would only bring in a ?1 profit tops (for example, I found babylist hair straighteners which were ?5 cheaper than in argos but when you add postage and packaging and ebay/paypal fees your just about breaking even). At that kind of profit level I'd rather flip burgers at mcdonalds haha

The other problem with dropshipping seems to be the monthly fee. If profits are small then a high membership fee would definately reduce your monthly profit.

I am going to continue looking into dropshipping to see if it is an option however I still hate the fact that a dodgy company could leave me looking like im trying to rip someone off. Reputation is very important in trading and I wouldnt want a dropshipping company screwing up any future projects/websites of mine

Wholesalers

As I mentioned before, I think half the battle in this game is finding a good reliable supplier. This is not as easy as it seems. Other traders dont want to share their supplier info and I can understand this 100%. I doubt I would share this information so freely.

This of course leaves the problem of finding a good supplier. I'm looking for reliable suppliers which I can speak to on the phone, which I can contact by email. I have sent about a dozen or so quick enquiry emails to some wholesale suppliers in the last few weeks and not one has replied. It seems a little strange to me that these distributors all have websites which look like they were designed in 1995 and it seems clear that some of these companies dont respond to emails as quickly as they should.

I'm actually quite surprised that no wholesales have replied to me as yet but two years ago about 50% of the chinese companies got back to me within days with price lists. I definately think that using a chinese wholesale company is an option, particuarly since I will be cutting out some middle men and increasing my profit.

Overview

I still have a lot to research and a lot to learn so I'm sure I will be on this forum a lot.

I don't expect anyone to walk me through any of this but if anyone could give me any basic tips I would be very grateful. I am starting this business with my friend. He used to work for Reuters and has a lot of experience in business etc so I'll make sure he joins up here too!

Also, I don't profess to be an expert but I have been a domain reseller for 6 years and have my own dedicated server so if anyone has any general website questions I'll do my best to help you and if I can't, I'll do my best to point you in the right direction

Thanks Garage

yasmin

A couple of quick comments. A correct response would take some time.

True dropshippers, also called "Tier One" dropshippers will always - hold their own inventory, ship one item at a time for you, ship "blind" under your name and not have an extra fee for dropshipping, as that is what they do. (They may have a "small order fee", as do many sources, for low value orders.)

Other so-called "dropshippers" are simply "middlemen" or "order gatherers". They can be scammers and they will often have fees and want you to use their payment processor, etc.

There are several types of "wholesalers". This depends to some degree on the specific products involved.

There are "importers" or "distributors" who in many cases MAY have an exclusive arrangement with the manufacturer to be the sole distributor within a country or region. They may also wholesale to retailers, but often they will develop a series of "wholesalers" in different sections of their assigned territory. The wholesalers may then supply retailers and "wagon peddlars" or "jobbers" who are smaller wholesalers who will often sell direct from their trucks to small retailers.

You've seen wagon jobbers making deliveries to the local c-stores and groceries. There aren't many making deliveries to jewelry stores. It just depends on the industry.

So, making any kind of flat statement on the subject is always spreading mis-information. Every product type has it's own distribution channel, and there are always exceptions since humans are involved. Things can always slip out the back door, a distributor may sell direct to a retailer (referred to as "house account") that buys in enough volume to bypass a wholesaler. Etc.

The thing is that with few exceptions there are no laws in this area. So, anything can happen.

Very nice article by the way Garage, Welcome to the forums and keep it up