Hi, it's Neil Waterhouse.
Over the last 12 months we have seen a lot
of people and businesses move from the traditional importing model to the Dropship model due
to the latest advancements in technology.
One thing that's held a lot of people back
from building online businesses in the past
has been the initial start-up costs.
Most traditional full-time online businesses like importing require the owners to invest
large amounts of cash to pre-purchase upfront inventory.
Now with the Dropship model there is no pre-purchasing upfront inventory
so you can offer literally
thousands of products to your customers without needing to pre-purchase any of them.
All you need to start up a full time dropship business from scratch is a computer,
access to the internet and less than $100 bucks.
That's it.
Not only is it the home business owners building dropship businesses
but many traditional bricks and mortar businesses
like Kmart, Toys R Us, Panasonic, Dell, General Electric, Staples,
The Iconic and literally thousands of others
are also adding drop shipping to increase
the amount of products they can offer to their customers.
And again they can do this without needing to pre-purchase any inventory upfront
or warehouse the products
which of course is great for their cash flow.
They also don't need to have staff in place to ship the products
as you know with the dropship model,
suppliers do all the shipping and the returns for them.
One of the great things about drop shipping is
all the shipping and returns are done by the suppliers which means
a dropshipping business can be run from anywhere in the world.
It is also much easier to scale up a dropship business
than a traditional importing business
as you don't need to pre-purchase anything upfront.
You don't need a warehouse, and you don't even need any local staff.
Just so we're on the same page,
the term 'drop shipping' means passing all orders direct to your suppliers.
So your supplier ships your orders direct to your customers.
The great thing with this strategy is you can have one or more virtual assistants
working for you in say the Philippines
and they process all your orders
for you and then your suppliers
do all the hard work of boxing up the orders and shipping them to your customers.
This of course frees up your time to do more constructive things like building your business.
As a KPI (key performance indicator) you should always be spending 10% of your profits on
outsourced virtual assistants as your virtual assistants become the engine that powers your
business and just as importantly, your virtual assistants grow your business for you.
It's all about leveraging your time but that's for another video.
Another word by the way for drop shipping in the industry is 'virtual inventory'.
It's called virtual inventory as you don't keep the stock on hand but instead
use your supplier's inventory.
One of the reasons there has been the big movement to drop shipping in the last 12 months is
in the past one of the biggest dangers with drop shipping was
overselling inventory.
And this of course was caused by suppliers running out of stock.
Thankfully though technology has rapidly moved forward
we can now purchase from just suppliers who have websites
which show when items run out of stock.
You can then use virtual assistants or software
to continually check your suppliers websites
to make sure the items are still in stock.
And if they run out, the VA or software can automatically make your listings on say eBay
go to zero.
This has been a complete game changer for drop shipping.
Now, just on suppliers most people when they start drop shipping want to purchase from
wholesalers and distributors but the reality is most wholesalers and distributors do not
want to ship one item to 1 of your customers.
A true wholesaler or distributor wants to
ship 50 100 or 1000 pieces at a time, not one piece to 1 of your customers.
For this reason, over 90% of online dropship sellers just use online retailers.
You can use any online retailer which meets the following four criteria.
But...... its up to you what criteria is suitable for your business.
As the host and founder of the four largest eBay and Amazon Meetup groups in Australia
with thousands of members, I get to see inside many drop shipping businesses and the majority
of the most successful ones also use the same criteria.
The first criteria for suppliers is they must be located in the country you are building the business.
For instance, if your building a dropship business in say Australia,
your suppliers must be also located in Australia.
If the business you are building is in the US,
your suppliers must also be located in the USA.
Yes I know there is a lot of information out there saying to purchase from places like
China and AliExpress etc but personally,
I find that way too high a risk but of course
the decision is up and every business owner.
This is just our criteria and everybody has
their own risk profile, their own choice basically.
The reason I find drop shipping from places
like China way too risky for me is if the items arrive late, customers can get annoyed
and can leave negative feedback and defects.
Bottom line is if a customer purchases anitem from you,
they expect to get it in a reasonable time.
If it is coming International
from say China and there is a delay in customs on either end
or a holiday in China, volcanic ash or any other reason,
customers get annoyed and they can of course leave defects and negative feedback.
The second criteria for suppliers is they must have a dynamic website
which shows whether or not items are in stock.
The third criteria is the supplier must do what we call 'electronic invoicing'
and that is they email you the invoice
and don't put the invoice in the box.
Obviously if you sold an item for say $500 and the customer receives
the item and it has an invoice in the box for say $300, the customer gets upset, because
they see you made a $200 profit and they obviously are going to get upset.
And the fourth and last criteria
is the supplier must dispatch the item within two business days.
That's all for this week,
If you would like to know more about how to build a full time drop shipping business,
click the link below
and download the free guide The 16 Secrets to Drop Shipping Success.
If you found this video helpful, please click on the like button below and leave me a comment.
Until next week, list more, sell more, this is Neil Waterhouse