Preparing for first venture into online sales

Okay, let me see if I have this straight.

Making money through online sales without significant capital is primarily accomplished by being a middle man between the manufacturer and the buyer. The closer to the manufacturer you can get your items, the higher your profit margins will be.

The significant barrier to entry is finding a reliable source for your products. This is so difficult, in fact, that there are many businesses that try to sell distributor, wholesaler, and dropshipper sources. Many of these information businesses are scams and provide little or no useful inforrmation in the end.

When you find a potential source, you won't know, positively, how reliable they are, or even if their products are original and not fakes, until you start risking capital or your reputation and conducting business with them. Again, many supposed suppliers are scam operations with no intention of establishing a business relationship with you.

Even having found a source that can provide you with product and is ostensibly reliable, you're almost certainly dealing with another middleman yourself, and don't know how close to the manufacturer you are in the chain.

In summary, to get started, I should:

1. Find a potential product source. Potential sources include: DHGate, eBay lots, others? Any recommendations?

2. Vet the source (i.e. research them): visit them if you can, call all their publicly listed numbers, ask for references of other clients that you can contact, check out their reputations. Any other suggestions?

3. Place a very small order if you're buying inventory, or place a few dropship orders if your source dropships.

4. If things work out, continue to do business, slowly increasing volume of sales as you go.

Any gaps in my understanding that you can fill it?

Chris

Vetting the sources is the most important part. Create relationships with as many people in the organization as you can. Before you send a single dollar to them in any capacity, negotiate and create a contract that gives you some rights as a purchaser. Accommodating a visit to their offices should be no problem for any legitimate operation and is highly advised if you plan on doing any sort of volume. $250 in airfare and motel costs could save you thousands down the line.

One of the most common consumer scams these days is the chargeback on bulk orders. Find out how they deal with these chargebacks as 9/10 times your merchant account/processing company will side with the consumer, even if the goods have been delivered. This is only going to become worse as the economy continues to dwindle.

Ask lots of questions about their corporate structure and do due diligence. Find out how they handle orders and what their general pipeline is. See if they can provide images and sales copy. I could go on and on and on ...

Very sagely advice, oldenstylehats. Many important points you bring up. I'm compiling lists of "to-dos" before I jump into bed with a source.

Now let me ask you, with distributors or wholesalers like this, you're going to have to buy some inventory instead of forward orders to them, right?

In other words, buy a small quantity, repackage them, and then list them for sale?

As opposed to: list the item for sale, and when it sells, buy the item from the source with my own money, and have the source ship the item to the customer's address?