Wholesale Dropshipping and Home Based Internet Business
Everyone loves the wholesale dropship home internet business business model. I know I do. I love the idea. We imagine ourselves at home or at our “home” office taking orders from customers and sending orders to the drop ship company, who stocks inventory and ships items under our business name. We imagine that this will be an almost no-effort way to run a business. There are some clear advantages and benefits to this business model. However,
it would be a mistake to think that just because the business is an Internet business and that products are dropshipped that the business would be any “easier” to run than an offline business.
What appeals to me are low start-up costs, setting my own hours, being my own boss, potential control over my own income, the sense of having my life and time to myself.
What dosn’t appeal to me are the long hours, level of financial risk, health insurance hassles for the sole proprietorship, accounting, bookkeeping and taxes, business insurance, other legal issues involved in running real business, customer service hassles, and reliable and high quality product supply.
Of course, for me, what I perceive as the potential freedom of being master of my own ship far outweighs the disadvantages I listed. Of the disadvantages, this blog is mostly concerned with product supply and overcoming the immediate obstacles to making money online.
There is a great misunderstanding about what wholesale means. Ask ten people and you’ll get ten different answers. For our purposes–your purposes as an online retailer–wholesale refers to products distributed by a licensed wholesale business. The true wholesaler has been authorized by the manufacturer of the products to sell them to authorized retailers. A true wholesaler can only sell to retailers having a sales tax permit. The sales tax permit is your “license” from your state of residence to purchase goods from a wholesale distributor without paying sales tax. That’s it. That is the definition that applies to you as an e-tailer. I’ll add that wholesale price is generally determined by quantity purchased. The greater the quantitiy, the lower the price. Wholesalers will rarely sell single items for the same price as a quantity of 100 or 1000, for example
Dropshipping is an arrangement that is made between you and your product supplier. It doesn’t really matter whether or not the product supplier is a true wholesaler or a distributor of discounted or liquidated items. Dropshipping is simply an arrangement where the supplier stocks the inventory and ships it out to your customers under your business name. These days, largely due to the popularity of Ebay and intense promotion by Internet marketers, dropshipping has attained a sort of high profile status as an easy road to riches. Nothing could be further from the truth, and it is a shame that dropshipping has been so misrepresented. A sign of this is the large number of dropship aggregators now online to feed the demand of people who want to dropship items sold on their EBay auctions.
Drop ship aggregators are essentially retailers who stock a vast number products across many different product lines. The products are sold at a discount and shipped to your customers–usually for a fee–under your business name.
In my opinion, you–as an e-tailer–shouldn’t be overly concerned about whether your dropship suppleir is a true wholesaler or not. More important is product price and the customer service of the supplier.
This post is way too long. I’ll just add that if ecommerce seems much too involved for you, there is still a way that you can make money from EBay as an affiliate. This is way off topic, but some of the tools developed to make this a no-hassle process or too cool to ignore. Check out the Build a Niche Store software–also known as BANS. This creates websites out of the box that are fully functional, professional niche affiliate stores.
Back to products supply–for more information:
Aid and Trade International Directory of Wholesale Product Suppliers
Find out how to drive your auctions sky high. download our free sky high auction report!!
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