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  1. #1
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    From another thread:

    <BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>SSanf wrote:

    Also, what I need to start my drop shipping has arrived. Thousands of pages to build, now! <HR></BLOCKQUOTE>


    SSanf,

    I am VERY interested in this topic. I think it holds great potential, and could be an additional revenue stream that all successful affiliates would have the background and arsenal of skills to do quite well with.

    I wrote this in a thread several weeks ago:

    <BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>Here is an article on drop shipping: http://www.webpronews.com/2002/0219.html (scroll down a bit)

    I've never done this, but I am intrigued. It seems the major difference between this and affiliate marketing is that we take the orders directly from the customer, and then re-order from a distributor at wholesale (who then ships direct to the customer).

    So, on the upside there are *no* concerns about cookies, hidden options for merchants, tracking, bleeding some of our profits to a second middleperson (which is one way of looking at affiliate networks). In theory, there should be the potential for much higher profits. Overall, it probably is no more risky for us than affiliate marketing, when you consider risks associated with tracking, merchant fraud and the like.

    On the downside, there is more responsibility for us. We have to be there to place orders when we receive them, turning our businesses into more of a real time operation (unless there is some way to automate the re-ordering process -- and there probably is). Depending on the arrangement, there might be more of a customer service responsibility for us. There is credit card fraud to deal with. And...it probably makes for a more complicated tax situation (!).

    It's really good to examine things like this...it makes one really think about the genuine purposes and benefits of affiliate networks. As we all know, there are many. But viable alternatives like this could at the very least work out to be an excellent complement to affiliate activities. <HR></BLOCKQUOTE>


    You've probably discussed this many times in many threads (all of which of course I've missed [img]/infopop/emoticons/icon_frown.gif[/img] ), but I'm just curious what draws you to drop shipping...or where you're getting the stuff you need to start your drop shipping...or whatever you'd like to say on the subject (if you're not already too busy building pages for it!) !

    elbowcreek recommended thomasregister.com, which seems to be THE place to be for drop-shipper wannabees.

  2. #2
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    rex, I'm not doing drop-shipping, but I have spent some time investigating it. One of the resources recommended by people I respect is MyDSSD.com.

    It has both paid and free services and I do know I found the free services educational.

  3. #3
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    Please use this link to The Drop Ship Source Directory: [img]/infopop/emoticons/icon_biggrin.gif[/img]
    http://www.myaffiliateprogram.com/u/worldwid/t.asp?id=10 30

    Or if you really must: http://www.mydssd.com/ [img]/infopop/emoticons/icon_frown.gif[/img]

    [ 07-31-2002: Message edited by: Cyclone ]

  4. #4
    Super Sh!t Stirrer SSanf's Avatar
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    I'm not deliberately ignoring this thread. It is just that this is all so new to me that I really don't have any great insights yet. I am getting my sales tax ID ASAP. I also think I have to get something for the county.

    Thank you for the resources. I am going to need all the help I can get on this.

    <BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>I'm just curious what draws you to drop shipping<HR></BLOCKQUOTE>

    Money! Lots of MONEY!

    <BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>where you're getting the stuff you need to start your drop shipping<HR></BLOCKQUOTE>

    I don't want to say because I don't want any more competitors than I have to have. Also, this time I will be keeping the URL of my site under wraps. [img]/infopop/emoticons/icon_wink.gif[/img]

  5. #5
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    Cedric,

    Thanks. I've just now worked my way through all the free stuff - very informative. It gives a very good account of life as a drop-shipper, plus shares lots of widely applicable sales street smarts to boot.

    I still think there excellent prospects here. In the "Pricing your Products" section he says, "If you don’t see at LEAST 15% profit, don’t bother", and many of the examples he uses factor in around 40% profit per sale, after expenses. This, without concerns about tracking, being rejected at Overture, or just about all of the typical affiliate foibles.

    The thing I find least appealing are the typical formalities of traditional businesses that for the most part I've been able to happily avoid doing affiliate marketing. Incorporating, business bank accounts, direct customer service, and the like, plus of course the real time element. The moment I would engage in drop shipping I would destroy the asynchronous aspect of my current business that I do so enjoy....

    Hmmm maybe if I began hearing about major drop shipping success stories, but for now I'm not quite sure. Needless to say I will be keeping a close eye on SSanf's posts from now on. [img]/infopop/emoticons/icon_wink.gif[/img]

  6. #6
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    >> The moment I would engage in drop shipping I would destroy the asynchronous aspect of my current business that I do so enjoy...<<

    Yep, that's where I ended up, as well. [img]/infopop/emoticons/icon_wink.gif[/img]

  7. #7
    Super Sh!t Stirrer SSanf's Avatar
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    Thinking out loud....err...well, not exactly out loud.

    OK. looks like I have to really start a business to do this right. Have to get a business name, bank account with credit card, tax ID etc.

    My next question was about adding S&H to the orders. I can't just use PayPal buttons any more since customers may order more than one item. It looks like PayPal has a shopping cart that does this. I have to add what the drop shipper charges me plus my PayPal charges to S&H. This is going to be a sort of complex formula. I think I will see what the S&H charges are elsewhere.
    I need an easy formula to figure out what to charge and not lose my shirt.

    Looks like if you get even one contested order, your whole business can be tied up until it is resolved with PayPal. May have to just swallow the cheats.

    Can't do overseas orders. Too much risk.

    It looks like for big orders and any order where the product does not go to the address on the credit card, I will be better off calling the buyer and confirming the order. I have to factor in a few phone calls. Maybe, I should add a dime S&H to each order or something.

    I will have to pay state and federal income taxes on this. That isn't too bad but I also have to pay 2.25% of net earnings to the county! Cost of Business license, $10.00.

    I guess I an going to be a " Sole proprietorship". Cost of DBA $9.00.

    Price of products going up!

    Question?????

    Since S&H will vary a lot according to how much is ordered, when do you tell the customer about the S&H cahrges? Do you mention it up front or just let them find out at check out?

    My supplier says say nothing and let them discover it at check out. She says that is what everyone does. Is this right?

    [ 08-01-2002: Message edited by: SSanf ]

  8. #8
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    <BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>Since S&H will vary a lot according to how much is ordered, when do you tell the customer about the S&H cahrges? Do you mention it up front or just let them find out at check out?<HR></BLOCKQUOTE>

    For shipping, you'll likely want to state a general guide of this on your FAQ/information page. If possible, state the weight of each object on the product page and give a chart of the weights and shipping costs. Also, find the base cost you need for each order. For example:

    Base charge of $5 shipping + .50/pound.

    Just be clear that the shipping cost is figured based on the size and weight of what they buy and may be slightly higher or lower than the chart.

    Personally, I recommend you go with a merchant account. However, Paypal is much easier to integrate than a real merchant account.

    <BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>Looks like if you get even one contested order, your whole business can be tied up until it is resolved with PayPal. May have to just swallow the cheats.<HR></BLOCKQUOTE>

    I don't exactly know how Paypal works here, but you shouldn't worry about this too much as long as you aren't getting a rate of something more than 1.5-2% here and are providing good customer service. The biggest problem you will have is customers not recognizing the charge on their credit card and contacting their card company to chargeback the charge. However, this shouldn't be too bad.

    Good luck in your ventures.

  9. #9
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    I would use 2checkout over paypal in a heartbeat. They also have great anti-fraud measures in place and generally feel more professional than pay-pal.

    When we used to sell games, we found our sales increased and dropped shopping carts lowered, when we told the shipping up front. Also, depending on how many distributors you are working thru, you should be able to get the weight from them, you should be able to figure the shipping from the weight, and 2checkout will make this easy to setup for you.

    My biggest question for anyone doing drop shipping. Who will handle returns? How will you handle returns? The first time you get a few hundred dollar return, it is too late to start wondering.

    Are you stuck with the return? Do you all of a sudden find yourself having stock? If the drop shipper handles it, do they notify you so you can discuss it with the customer and maybe save the sale? Make sure it is very clear how this is handled. (also if you don't mind, can you post how the drop shipper says it will be handled, I am curious if things have changed)

    Having done it before, I don't think I would go back to selling hard goods again. Returns are a nightmare, and don't make me giggle by saying - we will just say all sales final. Because visa/mastercard will blow that idea right out of your precious little hands. Selling hard good where you do not get a signature is a nightmare.

    Chet

  10. #10
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    <BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR> If the drop shipper handles it, do they notify you so you can discuss it with the customer and maybe save the sale?<HR></BLOCKQUOTE>

    This reminds me of one of the biggest problems in Drop Shippers:

    9 out of 10 droppers have been known to contact YOUR customers even IF they state that do not.

    So . . . you may want to handle all angles like customer product returns, etc. This would also help you in terms of your merchant account (if you have one). If you leave it up to the dropshipper to handle your returns, you are doomed because they're looking out for their assetts, not yours.

  11. #11
    Super Sh!t Stirrer SSanf's Avatar
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    The saga continues
    <BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>Who will handle returns<HR></BLOCKQUOTE>
    The returns will be sent to me. I can then return them to the shipper for a refund at my own expense.....Not too bad a deal.

    I have started making some good sales on the old site and had several pages almost complete. They are for an affiliate program and since I see a lot of potential there, I decided to finish them today.

    Talked with my accountant and we are setting the new site up right. I am sure I will be glad we did if it takes off.

    Still confused about the drop shipping charges and that is the main thing intimidation me about building the new site.

    Example

    For orders between $0.00 to $20.00 drop shipping fee is $5.00

    For orders between $20.01 to $40.00 drop shipping fee is $6.00

    For orders between $40.01 to $60.00 drop shipping fee is $7.00

    For orders between $60.01 to $80.00 drop shipping fee is $8.00

    For orders between $80.01 to $100.00 drop shipping fee is $9.00

    For orders between $100.00 or more shipping fee is $10.00

    Additionally,

    PayPal will charge me 2.9% + 30¢ for each transaction.

    Pay Pal has a shopping cart. "Shipping can be calculated as either a percentage of the subtotal or a flat amount based on the subtotal."

    Thoughts and suggestions about how to do this, please.

    Writing this is helping me. I see it must be a flat amount based on the subtotal. How does this look?

    For orders between $0.00 to $20.00 drop shipping fee is $5.90

    For orders between $20.01 to $40.00 drop shipping fee is $7.50

    For orders between $40.01 to $60.00 drop shipping fee is $9.10

    For orders between $60.01 to $80.00 drop shipping fee is $10.70

    For orders between $80.01 to $100.00 drop shipping fee is $12.30

    For orders between $100.00 or more shipping fee is $14.30

    [ 08-05-2002: Message edited by: SSanf ]

  12. #12
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    SSanf,

    Make sure when you figure your PayPal percentage that you figure it on the retail price and not your cost. It may be worth your time to get a merchant account and a different shopping cart. Most of the carts will allow for some form of shipping calculations and the merchant account may be less expensive.
    Also I noticed in an earlier post that you are going Sole proprietorship, you may want to check with a lawyer(yuk) as well as your accountant on this. It has an impact on taxes but also on liability. In the event something went wrong you need to be protected as well as your other sources of income.
    Just my two cents.

  13. #13
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    <BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>Pay Pal has a shopping cart. "Shipping can be calculated as either a percentage of the subtotal or a flat amount based on the subtotal."

    Thoughts and suggestions about how to do this, please.<HR></BLOCKQUOTE>

    Do it right. Offer more than paypal. 2checkout is only $50. They take a little higher percentage, but our sales really took off once we offered straight credit cards. Offer paypal as an option, not a requirement.

    Chet

  14. #14
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    Just "Dropped" into this thread and it is an interesting business concept.

    What I didn't see is any mention of Yahoo or eBay Stores mentioned. Do these entities offer the drop shipper any benefits by going with them? I was curious if they offered shopping carts and checkout and management assistance for their store owners. Anyone have experience with these?

    Jim in Texas [img]/infopop/emoticons/icon_smile.gif[/img]

  15. #15
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    I have a Yahoo Store. The best thing about it is the ease of setting up a store (which if you are a into controlling every aspect of your store like me, this is actually a negative) and the great amount of free traffic you receive. The free traffic is reason enough to have a Yahoo Store. All of your products are listed in the Yahoo Shopping Search Engine which produces a very steady stream of sales for me.

    And yes, they do provide a very good shopping cart. All that is required is to plug in your merchant account into it and you are good to go.

  16. #16
    Super Sh!t Stirrer SSanf's Avatar
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    <BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>Make sure when you figure your PayPal percentage that you figure it on the retail price and not your cost. <HR></BLOCKQUOTE>

    Yep!

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