Unclear on the concept behind online drop shipping

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fuzzy_corleone

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Hello,

I'm a relatively new internet marketer (started last year) and only have experience in offline marketing. However, recently I've became interested in amazon's associates program and researched (from keyword research to reading success stories) as much as I can about it. Although I haven't tried my hand at affiliate marketing yet I'm a bit discouraged by Amazon's 4% commissions (I do realize that there is some potential for sales to compound but that still isn't appealing to me).

Just recently my ex-girlfriend from India (she lives in Ft. Lauderdale now) introduced me to drop shipping. She told me how she earned on average $4-8,000/month. I believe she would wholesale purchase from a supplier and list the price 5-10% higher on amazon or something (she was vague and didn't explain it clearly).

A. Is dropshipping essentially 'enhanced affiliate marketing'? Where I make a website, list the products, forward all of the customer orders to the supplier (they would then ship directly to the customer), and finally, collect a commision (30-50% perhaps)?

or

B. Does it involve wholesaling purchasing from the supplier?

I really hope it's 'A' since it would be a whole lot easier and there wouldn't be any upfront cost (except for domain purchase and monthly web hosting). The only problem I see associated with this system is dealing with customers. But then can I just hire a virtual assistant to handle customer service or forward customer calls to the supplier?

P.S.: From my understanding this sounds way better than affiliate marketing.
 
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To my understanding, dropshipping involves running an online store selling goods, lets say wisgets for this post and selling them. You handle the marketing of the widgets along with the payment processing for the widgets. The customers only interact with your storefront. You however do now posess the widgets. You pass on the payment minus whatever markup you put on it to the manufacturer who handles the shipping of the widgets to the customers.

Its a really streamlined process. You could sell on ebay or setup a niche store at your own domain.
 
Baadier said:
To my understanding, dropshipping involves running an online store selling goods, lets say wisgets for this post and selling them. You handle the marketing of the widgets along with the payment processing for the widgets. The customers only interact with your storefront. You however do now posess the widgets. You pass on the payment minus whatever markup you put on it to the manufacturer who handles the shipping of the widgets to the customers.

Its a really streamlined process. You could sell on ebay or setup a niche store at your own domain.
Click to expand...

Thank you for the reply.

By 'makeup' do you mean the amount I added to the price? Like if I'm selling a $50 but the listing price (on my storefront) is $55 then the makekup would be $5?

What if me and the supplier came to a contractual agreement that I get 30% commissions ($50 * .30 = $15). Do I earn $15 + the makeup per widget sold?
 
i think you can forget 50% markups though..try more like 10% -15%.
 
So I guess by makeup you mean commissions. Same thing but different terminology.
 
Makeup was actually a typo, I meant to type markup which is whatever extra you charge on top of the base price.
 
You build a store.

Customer buys from you.

You send order to your dropshipper.

They send the order to your customer with either your details or blind packaging.

In some ways, this can be better than affiliate marketing, depending on your goals and how you run it.

Keep in mind that while your markup may be 10-15%, you still have to pay credit card processing fees (2-3%), plus hosting, ssl certs etc etc etc.

If you sell on a platform such as amazon, you immediately lose 8-12% to Amazon. In return, you get their marketing platform, reputation and credit card processing.

When dropshipping, the burden of customer service is also in your lap.

All factors to keep in mind.
 
genosse said:
You build a store.

Customer buys from you.

You send order to your dropshipper.

They send the order to your customer with either your details or blind packaging.

In some ways, this can be better than affiliate marketing, depending on your goals and how you run it.

Keep in mind that while your markup may be 10-15%, you still have to pay credit card processing fees (2-3%), plus hosting, ssl certs etc etc etc.

If you sell on a platform such as amazon, you immediately lose 8-12% to Amazon. In return, you get their marketing platform, reputation and credit card processing.

When dropshipping, the burden of customer service is also in your lap.

All factors to keep in mind.
Click to expand...

It seems that using Amazon as your selling platform would be a whole lot easier than having your own website. Isn't it against Amazon's ToS to do this though?
 
Not at all. You just sign up with an Amazon merchant account. Then you can add items to your store front, and hope that you have good enough pricing to win the buy box.

Code: 
http://www.amazonservices.com/content/sell-on-amazon.htm?ld=AZFSSOA#!how-it-works

fuzzy_corleone said:
It seems that using Amazon as your selling platform would be a whole lot easier than having your own website. Isn't it against Amazon's ToS to do this though?
Click to expand...
 
genosse said:
Not at all. You just sign up with an Amazon merchant account. Then you can add items to your store front, and hope that you have good enough pricing to win the buy box.

Code: 
http://www.amazonservices.com/content/sell-on-amazon.htm?ld=AZFSSOA#!how-it-works
Click to expand...

Thanks for replying.

1) Do you have any personal experience with selling on amazon using this method (http://www.blackhatworld.com/blackh...azon-dropshipping-without-any-investment.html) ?

2) Do you know of a good supplier?
 
genosse said:
1) I don't have any with that method

2) Check out the list of dropship hookups in the dropship section. What type of products?
Click to expand...

1) Well not that specific method but dropshipping with amazon (or ebay) in general.

2) I was thinking of selling kitchen appliances.
 
Gotcha.

1) Yes, mostly from the distributors end of things.

Shouldn't be too hard to find a good distributor for kitchen appliances. I can't think of any of the major players off the top of my head, but there's good demand there. A lot of the wholesalers in other niches have been branching out into that category as well.

fuzzy_corleone said:
1) Well not that specific method but dropshipping with amazon (or ebay) in general.

2) I was thinking of selling kitchen appliances.
Click to expand...
 
I know you hate these responses, but Google "toaster drop shippers", "kitchen appliance drop shippers", etc. The drop-shipping process is really easy and very on-point with what the above comments have said, just each company does it in their own unique way so it is best to get very specific details from each possible supplier. I currently drop-ship for a company that offers home and garden supplies. I handle all the payment processing, customer service (India call center), and all that. I use Magento and have a dumbed down access portal for my drop shipper. When each order is placed, it is routed to their center for processing. Once processed and shipped, some guy log in, hits a checkbox, and the customer is made aware. All very simple stuff, but some suppliers even make it easier (they cover all the payment processing and stuff like that).
 
JM100988 said:
I know you hate these responses, but Google "toaster drop shippers", "kitchen appliance drop shippers", etc. The drop-shipping process is really easy and very on-point with what the above comments have said, just each company does it in their own unique way so it is best to get very specific details from each possible supplier. I currently drop-ship for a company that offers home and garden supplies. I handle all the payment processing, customer service (India call center), and all that. I use Magento and have a dumbed down access portal for my drop shipper. When each order is placed, it is routed to their center for processing. Once processed and shipped, some guy log in, hits a checkbox, and the customer is made aware. All very simple stuff, but some suppliers even make it easier (they cover all the payment processing and stuff like that).
Click to expand...

Thanks for the reply.

My plan is to drop ship on Amazon. The fees are lower than ebay and there's no startup cost. Eventually I'll have my own site but that requires buying a domain, paying for web hosting, paying a programmer to make a custom shopping cart, paying for seo, and absorbing the cost of credit card processing.

The only thing I need to do now is register a business (I guess an LLC). But I'm researching that now because I don't want to make a mistake. I've learned that all real distributors will only deal with you if you have a registered business. "Wholesalers" like "dhgate" and "worldwide brands" or whatever they're called are middlemen
 
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