"What Is Drop Shipping?"

People have been distributing products since before the first mastodon skinner traded a fur coat for a flint axe.

Here’s how it works.

Let’s say ABC Manufacturers makes a product called Mom’s Ankle Wax. We’ll say that Mom’s Ankle Wax has been around for years. It’s a very well known brand name product. It will without a doubt give you the shiniest ankles on your block, and everybody wants some.

ABC Manufacturers makes Mom’s Ankle Wax, but they don’t sell it directly to the public. They’re a manufacturing operation. They’re far too busy melting paraffin and waxing test ankles to go around building stores all over the place. They need distributors; companies who will take their product and distribute it to the places that will sell it.

For years, ABC Manufacturers has sold Mom’s Ankle Wax to a company called DEF Distributors. The founder of DEF Distributors knew Mom herself, back in the old days when she made her Ankle Wax by hand, out in the turkey barn.

Today, DEF Distributors buys Mom’s Ankle Wax by the truckload. They pay $5.00 a case for it, which is a very good price. It’s such a good price, it has it’s own name: the Manufacturer’s Wholesale Price.

However, DEF Distributors does not sell it to the general public either. They are a distributor. They distribute Mom’s Ankle Wax.

DEF Distributors works with a chain of retail stores called Wax R Us. This place was founded by a retail business visionary who saw the incredible potential of Mom’s Ankle Wax a long time ago. Today there are Wax R Us retail stores on every street corner in every major city in the country. Wax R Us buys truckloads of Mom’s Ankle Wax from DEF Distributors for $10.00 a case.

So, DEF Distributors makes $5.00 on every case of Mom’s Ankle Wax they sell to Wax R Us retail stores. This makes DEF Distributors very happy.

Cases and cases of Mom’s Ankle Wax arrive in the stockrooms of Wax R Us stores everywhere. The Wax R Us employees open those cases, and pull 12 cans of Mom’s Ankle Wax out of each case. With their pricing guns, they stick a price of $4.50 on each and every can.

Wax R Us stores make a total of $44.00 on each case of Mom’s Ankle Wax. (12 cans x 4.50 per can = 54.00, minus the 10.00 they paid for the case = 44.00).

Wax R Us is even happier than DEF Distributors.

However, the happiest people of all are the people who can stroll into Wax R Us and purchase a can of Mom’s Ankle Wax for only $4.50. They think this is a great price, and they’re walking around with the shiniest ankles in town.

Well, that’s it…basic product distribution. The manufacturer sells to the distributor, the distributor sells to the retailer, and the retailer sells to the end user (the customer). The manufacturer, the distributor and the retailer all make money because the customer is willing to spend money for the product.

Drop Shipping has been around for a long time, too. Probably as long as mail order catalogs; maybe longer. If you want to use a buzzword to impress a corporate type, call it “second party addressing”.

Above, we talked about the manufacturer-distributor-retailer relationship. When you use drop shipping to sell products on the Internet, (or anywhere else), YOU become the RETAILER in that relationship.

For our purposes, there are two kinds of retailer. There is the retailer who stocks products, and there is the stockless retailer. Drop Shipping means that you become a stockless retailer.

Retailers who stock products

Let’s imagine that you want to open a retail store on the Internet. You have to have products to sell, right? Let’s also imagine that you like to suffer. Mental anguish is your favorite pastime. You aspire to financial ruin. In that case, you will want to stock products for your Internet retail store.

To stock products for your store, you will have to rent warehouse space, or at least clean out your garage. You will have to have to pay for a shipping account with UPS or FedEx, unless you want to saddle up and trot down to the post office every day. Worst of all, you will have to pay for those products up front.

Yes, that’s right. Money. Probably lots of it. For example, if you want to sell Mattel Toys, you can contact Mattel and they will be happy to set you up as a retailer. I know…I’ve talked to them. We had a nice conversation about setting up an account, placing orders, and all the other wonderful things businesspersons discuss with each other when beginning a relationship. Toward the end of our conversation, this nice woman said to me, in an offhand manner, “By the way, your minimum first order must be at least $100,000.” That’s One Hundred Thousand Dollars, folks.

I nearly choked on my bagel. Needless to say, I do not stock Mattel products. Or anyone else’s, for that matter.

Stocking products costs money, that’s the bottom line. No matter what you sell, if you carry stock, you pay first, and then hope you sell later. If you don’t sell the products you buy, there are going to be some very happy people at your next garage sale, and your bank will be sending you an amazing amount of undesirable mail.

There’s a much better way.

It should be noted here, if only to keep the Punctuation Police happy, that if you use the method of drop shipping in your business, YOU are not the “drop shipper”. The company(s) who supply the products to your customers for you is the drop shipper. YOU become a “Stockless Retailer”.

Here’s how drop shipping works.

1.) You open an Internet Store, with a shopping cart and the ability to accept credit cards.

2.) You find a distributor who is willing to drop ship the products you want to sell. The best place on the Internet for this is www.DropShipSource.com. This is our website, and our Drop Ship Source Directory is recognized as the best source for legitimate wholesale drop shippers on the Internet.

3.) You establish an account as a retailer with the distributor you choose.

4.) You receive images and descriptions of the products you want to sell from the distributor, and post them on your Internet Store.

5.) A customer surfs into your Internet Store, and falls in love with a product that you have priced at, say, $80. They purchase the item with their credit card. Your Store charges their credit card $80 plus your shipping fee.

6.) You turn around and email the order to your distributor, along with the customer’s name and address.

7.) The distributor sends the product directly to your customer, with YOUR Store’s name on the package.

8.) The distributor charges you the wholesale price of, say, $45.00, plus shipping.

9.) Your customer gets a cool product from your store shipped to their door, and they tell all their friends about you, and you make even more money.

There you have it. You just made a $35.00 profit on one item. You didn’t have to buy a whole bunch of the product and keep it in your warehouse, hoping you would sell it. You didn’t have to pay to have it shipped to you, and then pay to ship it to your customer. All you did was send an email to your distributor.

That’s the drop shipping process in a nutshell, and we've placed information in the Drop Ship Source Directory about everything from setting up your store to accepting credit cards.

Chris Malta

Worldwide Brands, Inc.

Visit http://www.youcandropship.com for more information.

One of my best friends, someone that I’ve known since I was a teenager (which seems like a long time ago!), had a great collection of T-Shirts with some of the funniest slogans on them that I’ve ever seen.

One of my favorites was his T-Shirt that read: “If You Can’t Dazzle ‘em with Brilliance, Baffle ‘em with Bull****” (You can probably fill in the blanks quite easily!)

There are a tremendous number of web sites selling Information on the Internet who are doing just that. Completely lacking in anything even remotely resembling brilliance, they are spending a great deal of effort, and seriously taxing their few active brain cells, in order to Baffle you into buying sub-standard Information Products.

We are in the business of providing information on genuine Drop Shippers. We publish a Directory of brand name product distributors who are willing to Drop Ship those products directly to your customer from the warehouse, one at a time, at wholesale. It’s an excellent way to do business without spending a ton of money on stocking an inventory. We’ve worked very hard for years to provide absolutely honest and complete information.

However, there are other information providers in this business who are either too lazy to do the time-consuming research this business requires, or are just outright scam artists looking to cheat you out of your money.

They have a wide range of methods they use to Baffle you into buying from them, but one of the most obvious is Free Gifts.

Now, we have to be careful here, because there are two kinds of Free Gifts.

1.) Free Gifts given to you before the sale are usually a good thing. We do that ourselves; we offer a very comprehensive Free EBook that gives you a tremendous amount of FREE information on starting your Internet Business. We give you that for free, no questions asked, no personal information required, and you never have to buy anything from us. THAT kind of Free Gift is OK, because it really is Free!

2.) Free Gifts that are promised after the sale are the thing to watch out for. They are designed to make the offer look so attractive to you that you simply cannot turn it down. They are, in fact, given to you because the main informational product itself is so lousy that it’s creators feel that they have to suck you in with after-the-sale freebies, or they’ll never sell anything to you at all. However, in order to get all these Free Gifts, you have to buy something first.

Here’s how these scam artists work:

They pitch their junk Informational Product to you with all kinds of wonderful promises, telling you that you’re going to make incredible amounts of money very quickly.

That in itself is not true! NOBODY makes incredible amounts of money quickly on the Internet. In the real world, it takes time, patience, and work!

THEN they tell you that if you order their information, they will include “$750 Worth of Bonus Free Gifts!” with your order, or some such ridiculous statement. They tell you that you will get Marketing Information, Email Generation Software, Important Articles and Reports, Expensive EBooks, Bonus Wholesale Guides, etc., etc., for FREE, after you buy their product.

Freebies that you only get AFTER the sale are there for two reasons:

They make you think you're getting much more that you are paying for, when in truth you are not; you can pick up that stuff for free without buying anything. All that Free Stuff is just that; it’s FREE, it’s garbage, and you can find it all over the Internet for nothing, without having to pay a cent for anybody’s products. The scam artists certainly do not pay for it; why should you?

They are a distraction. The scam artists are counting on the very good probability that you will spend so much time with, and get so caught up in all that extra free stuff that you will forget that the original product you paid for is junk, and you'll never bother to ask for a refund!

So Beware of Informational Web Sites offering Free Gifts after the sale, folks. There is a reason for it, and it’s not a good one!

Maybe they should also offer a T-Shirt with those “gifts”…I know a guy who can suggest a good one…

Chris Malta

WorldWide Brands, Inc.

Visit http://www.youcandropship.com for more information.

What? Why is that? You’d think that people would LOVE to pay Very Low Prices for products!

Well, that’s true, when they’re getting value for their money. But there is one thing that will make your customer back up so fast, they’ll have to make a “beeping” noise, like a big truck in reverse:

Shipping charges.

Ah, yes. Shipping Charges. The bane of the Internet Retailer. Ground shipping, air, motor freight. Residential delivery surcharge. Shipping insurance charge. Signature release charge. They get you coming and going. (Literally!).

We sell brand name products on the Internet using the Drop Shipping method. We have genuine wholesale distributors who will fill our single-item orders by wending the products we sell DIRECTLY to our customers from the warehouse, with our business name on the package. Very low cost and effective.

BUT…they still have to charge us shipping, which means we still have to charge our CUSTOMERS shipping.

Normally, that’s just fine. Internet customers understand shipping charges, and with most products, it’s not even an issue.

However, what happens when you have a site that sells an “accessory” type product that goes along with your general product line, but only costs about $5 retail? A customer comes along and wants to buy that inexpensive accessory, but during the process of completing the order, they realize they are going to have to pay about $7 in shipping.

Ouch! $12 for a $5 accessory? Don’t think so.

So what do you do? Are you going to deprive your customers of the “accessories” that go along with your general product line, and possible lose that customer’s attention for good?

Not your first choice, is it?

There’s a way around this problem for many types of products.

Suppose your site sells those cool Velcro-type dart boards that parents love to give their kids, because Velcro tips won’t put holes in the walls, or in the other kids either, for that matter. The dart boards come with a supply of plastic darts.

However, we’re talking about KIDS here. Plastic darts break. They disappear. They go running off down the road taped to the tail of the neighbor’s cat. Someday, little Johnny is going to want to play darts with a Dart Set that has no darts. There will be crying involved; I have three kids and a grandson, and I know that sound.

Some parents will think ahead and buy some extra darts from you when they order the Set in the first place. Most will not.

Ok, someone comes back to your site and wants to order another set of three plastic Velcro darts. You sell them for $5. The shipping cost is $7.

$12 for three plastic Velcro-tipped darts? Guess what…Johnny’s Mom or Dad is going to decide to spend some time convincing Johnny that the Dart Set was never any fun anyway. It won’t be easy, and Mom or Dad will probably blame YOU for that, whether they should or not. :o)

So what can you do about that?

It’s very simple.

You can "group" those little accessory packages of darts, and sell them as "sets".

For example, group FOUR of those $5 packages of darts together as a single product on your site, and call it a “Complete 4-player Dart Set” (each player uses three darts while playing, so 4 sets covers 4 players.) That way, you have something you can charge $20 for (or a little less, since you’re moving them in bulk), and the $7 shipping charge suddenly doesn’t seem like so much to little Johnny’s Mom or Dad.

Think about how happy THEY’LL be with the idea too…EXTRA sets of darts for the NEXT time Johnny’s darts skip off into the Twilight Zone of Lost Toys!

Stretching it a bit? Sure I am! It’s a story, for the sake of illustration, but there’s a solid truth at the core:

When you sell products that require accessories from time to time, you should also be able to supply the accessories in a manner that will be comfortable for the customer.

Think about this too: the products don’t HAVE to be accessories. This works for ANY individual products that just happen to be very low priced to begin with. Be creative!

Grouping products into “Sets” can’t be done with every product, but you should be able to think of a way to do it for most!

Chris Malta

WorldWide Brands, Inc.

Visit http://www.youcandropship.com for more information.

Far too many people make the mistake of trying to sell only products that they like on their web sites.

Others make the mistake of trying to sell only the coolest and flashiest things they can find.

The whole point of starting an Ecommerce web site is to make money. That’s something you must not lose sight of (no pun intended!).

Our business is to show people where they can find products to sell without investing a single penny in inventory. The approach is called drop shipping. This is where a wholesale distributor will ship a single item directly to your customer from their warehouse, AFTER your customer pays you for it. It’s the perfect way to start in Internet business on a shoestring budget.

The Directory we publish covers three quarters of a million products, from over two thousand well-known brand names, available from more than a hundred REAL wholesalers who will drop ship.

So why does everyone who uses our Directory try to sell electronics?

Ok, I guess I did the same thing. When I opened my first Internet store, I plastered the walls of that place with things that I though were cool. Stereo equipment, DVD players, Computer components. The shinier the better. I had the latest technology up there. Some of the items cost thousands of dollars.

I think that in the back of my mind, I knew that I wasn’t going to sell much of it, but it LOOKED really cool. I could show it to my friends and say, “Check it out…that’s MY store!” They were all suitably impressed, and I could walk around feeling like I was pretty slick. Whenever any of them asked me how much money I was making, I cleverly changed the subject.

The truth was that no one was buying much. Come to think of it, none of my friends bought anything, either. That should have told me something right there.

Look, electronics are a fine product to sell on the Internet. I only use them as an example because it’s a situation I can relate to. The problem is not the product; it’s the COMPETITION.

Most of the people I’ve seen start an Internet store want to know what the hottest sellers are on the ‘Net, so they can sell those products too. They’re missing the point, as I did. If you only sell the hottest sellers, you dilute your available customer base, because everyone else is trying to sell the hottest sellers, too! You also run into those bricks-and-mortar popular-item superstores that have millions of dollars to purchase tons of inventory at rock-bottom prices.

People buy all kinds of products. They don’t have to be cool or shiny. They just have to be things that people will buy.

Here’s an important ingredient for success on the ‘Net: sell those products that people use, but don’t stumble over every time they open a web browser.

When we build an Internet store, we do a little research first. Since we build stores in Yahoo Shopping (http://store.yahoo.com), we do our research in Yahoo Shopping. We know that at least 90% of our traffic is going to come from the millions of people who surf through there with their purses and wallets flapping in the breeze. So when we consider a new product line, we start a search.

If we were considering selling DVD players, for example, we would do a search on the term “DVD Player” in Yahoo Shopping. As of the date of this article, such a search turns up 7,813 DVD Players available from 496 stores.

Do we want to become store number 497, add 20 or 30 products to the nearly 8,000 that are already available, and hope we sell something?

I think not.

Since we use our own Directory exclusively as a source of product suppliers who drop ship, we go back to the Directory and look around at some of the available product types. We notice that one of the wholesalers we list carries a complete line of Fiskars brand Yard and Garden tools. Will people buy these products? Hmmm…people HAVE been known to work on their yards and gardens, when they’re not playing with their electronics. Fiskars is a well-known brand name, so our customers would feel comfortable with it. It happens to be late spring, so it’s reasonable to assume that people will be buying garden tools for some time still this year.

So let’s check out the competition.

We want to know how many other people are selling Fiskars products in Yahoo Shopping. So we search on “Fiskars”. Only 54 stores selling Fiskars products right now! That’s considerably better than 497 stores selling the electronics we were considering.

Are these store devoted to selling ONLY Fiskars products? Wow…not a single one! All the top search returns are stores selling general merchandise.

When we build a store, we like to specialize in one product line. There are many benefits to this; chiefly the fact that customers feel more comfortable in a store that does one thing, and does it well. It’s also much easier to rank a single product line in the major search engines than it is to rank a general store with lots of unrelated products.

Ok, we have a product line that we feel will sell, and the competition in the Fiskars brand name itself is minimal and unfocused.

However, when people search for garden tools, they’re going to use search words like “Trowel”, and “Pruning”. They’re not going to search on the term “Fiskars” very often, unless they’re looking for scissors. So, we go back to the Yahoo Shopping search engine.

We search on “Gardening Tools”, and we find 113 stores carrying 324 products. Still not much competition. Even better, NONE of these stores are focused on just gardening tools. They are gift stores, general merchandise stores, etc., who just happen to have the word “Gardening” somewhere in their product description. We know that we can put the word “Gardening” in our very product names themselves (ex.- “Gardening Trowel, Steel, 9 Inch”), and we will show up right at the TOP of a search on the word “Gardening”.

We search on the word “Pruning”, and find 81 stores carrying 418 products. Still not a problem, since the top returns are BOOKS on pruning, and the rest are more unfocused sites.

After a little more searching, we’re convinced that we’ve found a product line that will sell well for the rest of the Spring and Summer. Since it only costs us $100 a month to open another small Yahoo Store, we more than happy to do it. In the Fall, sales will slack off, but we have other stores that are geared toward Fall and Winter merchandise. They are also small and focused, and no matter how many Yahoo Stores we open, we know that each one of them will easily cover it’s $100 a month cost, and turn a profit of some kind all year ‘round.

Of course, now that I’ve opened my mouth and told everyone about Fiskars, we’re going to have to scrap that idea and go back to the drawing board! That’s OK, though…we have nearly half a million others to choose from.

(NOTE: The numbers mentioned regarding search results were at the time of the writing of this article, and will have changed. The point remains the same!)

Chris Malta

WorldWide Brands, Inc.

Visit http://www.youcandropship.com for more information.

Some people think that working with a real wholesale supplier means that they will magically be able to sell products for less than anybody else on the planet, for ever and ever. They’ll be the only one who ever gets such good prices, and they’ll earn millions because no competition can touch them. They’re retire happily in a couple of months, and buy a big house in Beverly Hills, complete with a butler, a private chef, and a little satin doggie bed in every room for the casual use of the family Basset Hound, Duke.

Then they find that they may actually have to compete with companies who have more buying power and get better price breaks, and suddenly the honeymoon is over. They run around screaming that the supplier is not a real wholesaler, and is cheating them. The sky is falling, and it’s time to get Duke to the storm cellar because all their dreams are being blown away by bad, BAD people who claimed to be wholesalers, and really are NOT!

The truth is that they’ve simply been confronted with a perfectly normal aspect of retail sales that they had not anticipated, and need to be educated about.

Even when using genuine wholesale distributors, you're going to find some stores selling products at a "retail" price that is lower than your distributors’ "wholesale" price. There are VERY good reasons why you'll see this happen, and it's extremely important to understand why it happens and what to do about it in order to sell successfully on the Internet or anywhere else.

As I said, it happens for a variety of reasons; the most common of which is that the retailer with the "lower than wholesale" price is a large retail operation that bought THOUSANDS of the product at a dirt-cheap quantity price break, and also qualified for huge manufacturer's wholesaler rebates. You can't compete against that with a home business; no one can.

The term "wholesale" is relative, no matter who your distributor is or how you find them. What you're getting as a small business is a supplier's genuine "first level" wholesale price.

For example, one factory-direct supplier we work with has an initial wholesale price for 1 to 36 dart boards. Then the second price level is reached, and there's a lower price for 36 to 72 boards, for example, then a lower price for the next higher quantity level, etc. When dealing with single item orders in your home business, you are obviously going to be getting the "first level" wholesale price.

Again, wholesale is a relative term. Yes, genuine wholesalers DO sell at significant discounts below Manufacturer's Suggested Retail Price. However, you have to watch what you sell. Electronics, for example, are a very tough market, because EVERYBODY is trying to sell electronics on the 'Net right now. All these people are so busy trying to undercut each other that they have driven the "market price" of these items down so low as to make it very difficult to make a profit, even at wholesale.

For example, if the Manufacturer's Suggested Retail Price (MSRP) for a VCR is $149, and it is available at "wholesale" for $69.00, that's a 54% discount off MSRP. That's a pretty good profit, right? However, with everybody getting roughly the same price break, there are a lot of people out there who are ruining the market for everyone else by selling that product for, say, $79, thinking they will undercut everyone else and make money by selling volume. Pretty soon, everyone else sees this, and tries the same thing. Eventually, the Internet "market price" for this VCR BECOMES $79, and everyone is flooding the market with it at that price. That's only a 13% percent profit margin, and that product is no longer worth the effort for anybody.

So, even though the product IS available initially at a great wholesale price, its market value is ruined by those who (wrongly) assume that the only way to sell is to have the absolute lowest price anywhere.

Sales is much more of an art than that. If selling something were simply a matter of the absolute lowest prices, Wal-Mart would be the only store on the face of the Earth.

Without going into too much detail, sales is a mixture of choosing the right product, or combination of products, for your web site. It's presenting a clean, attractive, focused site. It's giving the customer some little value-added bonus at your site. It's providing the absolute best customer service that you can. All these things help a customer to trust you, and when they trust you they are willing to spend a little more to buy from you.

One of our retail sites is www.ElectronicDartShop.com. We sell Arachnid Electronic Dart Boards there. We sell ONLY those products on that site; just 14 of them. Our site is clean and attractive. We have a page listing all the rules for all the dart games that can be played on those boards. We pay very careful attention to customer service. And guess what? We are NOT the lowest priced store for those dart boards, by any means. Yet we are one of the highest-volume Internet dealers of the products around, according to the factory. Why? Our customers trust us, and are willing to pay a little more because they feel they will get more value from us than they will from some guy who just throws up a cheap-looking site full of all kinds of unrelated products and only pays attention to price-cutting.

In fact, a few days ago, I went online and bought a couple of SmartMedia memory cards for my digital camera. I could have gotten them for a very cheap price that I found on the 'Net, but I chose to pay $5 more each for them because the cut-rate site looked cheesy, and I was not sure I could trust them. I was more than happy to pay the extra ten bucks total when I found the same products at a higher priced site. The site was well-built, easy to navigate, and went out of it's way to explain it's customer service policies to me. I'd rather spend an extra ten bucks and be confident that the cards would show up at my door than lose thirty bucks plus shipping to a site I didn't feel I could trust.

As a small business owner, you should remember to choose comparison areas very carefully. Too many people simply go to the big search engines and look for the absolute lowest price on earth, and then give up on selling that item if they can't beat it. That's the wrong approach, as I've mentioned above. You need to be comparing prices against sites that will be seen in the same places that your site will be seen, and even if your prices are higher, you can bring in sales by building a clean, focused site. Alternatively, you can simply sell the models that others are NOT selling. After you begin to earn some profit, you can then start to buy and stock the better sellers in quantity, lowering your price, if you really want to.

Even then, you're going to run into stores that stock a lot of merchandise, and are getting price breaks on greater quantities. This allows them to sell at a lower price.

Go around them. Sell models that they don't, from the same brand names. You don’t have to purposely go head-to-head with the big superstores. They don’t carry every product ever made on earth. Sell something in the same general brand and product lines that they DON’T have the shelf space for!

Besides the reasons mentioned above, there are also too many people who buy entire pallet loads of last year's closeouts, liquidations, and refurbished goods, and claim that they are NEW. They get that junk at "rock bottom" prices, and of course, sell them dirt-cheap, fooling the customer (and other Internet retailers) into thinking that they have the corner on the best wholesale prices around, when they DON'T.

The important thing is to work effectively within the framework of available products and prices, and work around those who have millions of dollars available to stock inventory. That's what THEY did in order to EARN those millions in the first place. You can do it too. I know it's frustrating to be just starting out, and thinking that you can't succeed because of competition from large stores. That's just not true. We're succeeding at it, and so are thousands of others. You just have to be willing to be flexible, and to make serious decisions for the good of your business. You may have to give up selling certain products that you personally like, in order to make money on other products whether you like them or not. You’re in business to make money, not to satisfy your personal taste.

One thing I tell people all the time is that it’s very important to “jump through the hoops” and form a LEGAL business. It’s the right thing to do, and it’s the ONLY way to work with GENUINE wholesale suppliers.

However, anyone in business will tell you that the hoops never end; not for home businesses, and not for big businesses either. Even the big guys spend much of their time "hoop-jumping" in order to be successful.

Imagine how the purchasing agents at CompUSA feel when they spend a million dollars on 19" monitors so they can sell them for $329, and a week later, they find that Best Buy spent three million buying up the same monitor at a better price break, and is now advertising them for $298. Suddenly CompUSA can't compete.

Should they throw a tantrum, and berate the wholesaler for simply performing the normal function of a wholesaler?

Of course not. They can simply stop advertising that monitor by itself, and bundle it with an entire computer system that has it's own serious price breaks, and move the monitors that way. Adapt and improvise.

There are no magic bullets, even though there are plenty of people who will tell you that there ARE. Don’t believe them! When you’re in business you will always have to compete. It's all part of sales, on the Internet or anywhere else.

Chris Malta

WorldWide Brands, Inc.

Visit http://www.youcandropship.com for more information.

Are you an Ecommerce business owner, or do you just seem to be one? There is a difference, and that difference will hurt your business.

When you sell products on the Internet, just like anyplace else, you need to be buying those products from a direct wholesale source. Either the factory itself, or a factory authorized distributor. If you’re not, you’re paying middleman markups that chip away at your profits until you’re barely making enough to pay your hosting fees. Sometimes I think that there are more middlemen on the Internet than there are ECommerce sites, and they’re all targeting YOU!

Here’s a scenario:

John Doe wants to open an Internet store, and make lots of money. He can’t believe all the news items about new Internet millionaires. He’s seen pictures of these people in the news and on the ‘Net, and lots of them look like they’re one beer short of a six-pack.

“If they can do it, so can I!” he thinks, and starts to search around the ‘Net for information on starting a business. He finds boatloads of hosting companies willing to put his site out there for just a few dollars a month. He finds that many of them offer free shopping carts, so that he can take his customers’ orders. He finds services that let him accept credit card payments without even applying for a merchant account.

Only one thing left…what to sell?

John looks around the Internet for product distributors. He comes across a wholesaler of name brand products that he knows are very popular. He contacts them, and they say, “Certainly! We will “drop ship” products directly to your customer for you, one at a time, at wholesale. All you need to do is fill out some paperwork about your business, and supply us with your Tax ID number.”

“Paperwork?” thinks John. “Tax ID number?” Yechh! That sounds like work. Worse, it sounds like LEGAL work. That’s a scary thing to most people, and John is one of them!

A little more searching, and John finds a web site called “Stuff R Us”. Stuff R Us is screaming at him: “Thousands of wholesale products you can sell on your website! NO investment for inventory! We send each item right to your customer! No shipping, no handling products, no minimums! Sign up with us and we handle everything! This is your road to Internet Riches!”

Well, that’s the road John was looking for, by golly, so he happily sends his name and address to Stuff R Us along with his sign-up fee. Suddenly he can put all kinds of products on his web site, and all he has to do is email his orders to Stuff R Us, and they handle the rest. No paperwork, no hassles.

John is creating a new Internet millionaire, all right. No doubt about it. Unfortunately, it’s not him. It’s Stuff R Us.

Stuff R Us is a middleman. They sit between John and the REAL wholesaler. Every time John places an order with Stuff R Us, they turn around and place that same order with the REAL wholesaler, who sends it to John’s customer. John never knows this is happening.

Stuff R Us is marking up the real wholesale price to John. John will piddle along selling the same over-marketed imports as thousands of other Stuff R Us clients, at over-inflated wholesale prices.

Stuff R Us thinks this is great, and they’re laughing all the way to the bank.

So, where did John go wrong? What did he do to unwittingly get stuck in ECommerce’s biggest trap, the “middleman rut”?

It’s simple. He took the easy way out when searching for a supplier. Stuff R Us said, “we’ll handle everything”, and John said, “Hmmm, that sounds easy!” So, instead of bothering to do some simple legal paperwork for his business, John let Stuff R Us cheat him out of most of his profit, because it was easy.

Please remember the following two statements:

1.) You MUST work with REAL wholesale suppliers to be truly successful in ECommerce.

2.) You cannot buy from a REAL wholesale supplier if you are not a LEGAL business.

Let me repeat that last one, for those who may have their Real Jukebox software turned up too loud:

YOU CANNOT BUY FROM A REAL WHOLESALE DISTRIBUTOR IF YOU ARE NOT A LEGAL BUSINESS!

ANYONE who allows you to purchase wholesale products for resale without legal business paperwork is NOT a real wholesaler, and is taking profit that should be yours.

In our business, we publish a very thorough directory that helps people like John find and contact real wholesalers that will drop ship products to his customers. Every once in a while, we get a request for a refund on our directory from someone who says, “I don’t have to go through all this legal stuff to use the distributors in your Directory. I can just go to Stuff R Us and do it the easy way!”

I have no doubt that Stuff R Us finds this absolutely hilarious.

Getting legal is not that hard. Don’t listen to the people who tell you that you don’t have to do it. Here are the basics (in the US):

1.) File a DBA (Doing Business under an Assumed name), or a Corporation. You can do it yourself for surprisingly little. As far as I know, all states in the US have web sites where you can read instructions and print the forms. We did it for $80 here in Florida.

2.) If required in your state, file for a local business license. Here, we paid $35 for this. Many states do not even require it.

3.) Contact your State IRS office (NOT Federal!) and file for a “Sales and Use Tax ID” or “Resale Certificate.” This is what a real wholesaler needs to see in order to do business with you. They use it to justify the fact that they are not charging you sales tax on the products you purchase and resell to your customers. Here in Florida, we got this for $5, and it took about 15 minutes.

Getting legal is not hard, and the benefits are tremendous. Don’t make money for a middleman…make it for yourself!

Chris Malta

WorldWide Brands, Inc.

Visit http://www.youcandropship.com for more information.