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How Do They Do It?

Discussion in 'Planning Your Business' started by FreelancingQueen, Feb 12, 2016.

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  1. FreelancingQueen

    FreelancingQueen Entrepreneur

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    Something I have always been interested in is buying items at wholesale prices, selling them at affordable prices on eBay and Amazon and then having the sold items dropshipped to customers. I have seen so many people who have sold on these sites for years and I always wondered how they did it. How do you know which items or products are going to be good sellers and how do you get started at this?
     

  2. T J Tutor

    T J Tutor Entrepreneur

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    There is a good guide on Shopify for Newbies to get a good understanding how to get started.

    There are a ton of ways to get started. Researching products is definitely an important step. You need to be sure of quality of product, strength and reliability of the supplier, and a strong budget.

    I recommend looking into the product verticals of interest to you and start researching sellers on eBay and read reviews about the products and the sellers. This can give you an idea about a product's market.
     
    FreelancingQueen likes this.
  3. CoolSpot

    CoolSpot Entrepreneur

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    You will have some issues doing this with ebay, learnt from personal experience sadly.
    1. In paypals terms and conditions they forbid the pre selling of items ( essentially what you will be doing if you are drop shipping, unless you are buying in bulk and then using a 3rd party distribution company). This is one of the many reasons I was given for paypal closing my account and withholding all the funds in it. They will find out you are drop shipping, due to the long postage times.

    2. The second issue is, many of the suppliers that you will be drop shipping for already sell their products on ebay at the same price they will sell to you. (makes no difference to them, as at the end of the day they are packaging and shipping the item anyway.

    My advice:

    If you want to run a drop ship site, ebay is a short term solution, your account will get banned at some point, so you need to make sure you have your fail safe in place (your own ecommerce site with a separate payment gateway (ie/ not paypal)). A good drop shipper will for a small fee, place in with each order, your custom invoice and any marketing materials that you want to send out.

    Tip #1:

    Make sure you order at least 1(3-5 would be even better) of every product you want to sell to check the quality and if required authenticity of your items. Once you have verified that you are happy with the items, list them as ex display (as you have opened them and used them).

    Tip #2:

    To get ebay sales to your ecommerce site, include a flyer or business card with every order, remember that people always love a deal so something along the lines of 10% off a first purchase is good, but even better would be to have the reward after joining your sites newsletter, this will then give you the chance to market to the customers you have already converted, over and over again.

    Finding good products, there is only 1 way to do it. Research ebay and find what is selling well already and then dive in and see how it goes, the beauty of drop shipping is it allows you to test markets with very little risk. If you have an aged ebay account, with higher selling limits, test 5-10 different products you think will sell well, once those listings end, look at what sold, what didnt, try refining the ads for the ones that did and replace the ones that didnt sell with other products.
     
    Last edited: Feb 15, 2016
  4. eProject

    eProject Entrepreneur

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    You can sell most products on ebay including the ones you think that you will never get buyers. The mistakes many people do is to wait for search engines to suggest their products to buyers who might be searching for the same products. Remember that you can turn your online traffic into potential customers. Originality of your products can affect your sales. Never try to sell counterfeit goods at a cheaper price. Most people will buy original products at a much higher price. Consider inviting almost everybody, don't depend on your online traffic. You can invite your family members or friends to buy your products.
     
    FreelancingQueen likes this.
  5. setupdisc

    setupdisc Moderator Entrepreneur

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    You would always want to research the products you're selling and know what the sales numbers are for them quarterly or annually. Of course, staying ahead of any changes of the market and demographics makes sense too, because you don't want to be stuck with a large quantity of a product that has to be a reduced sale or worse, won't sell at all if the bottom falls out for some reason. The drop-shipping restriction seems to me like ebay is shooting themselves in the foot with being overly controling, but there are other online storefront and bidding places you can try out instead. One of those is a place called ebid. They don't have the same marketshare as ebay does, but they don't seem to be as strict either.

    One thing I have noticed lately is that a lot of the sellers on Ebay are from China, where most of the manufacturing for products half of Europe and nearly all of American purchases come from. It would be relatively easy and cheap for someone in that part of Asia to obtain and sell directly, and Ebay isn't going to penalize them on the shipping time if it takes forever to be shipped to the US, UK, Canada, or anywhere else.

    I'm selling something on Ebay right this moment, but not anything like this. Just 1 item, but one that did merit further research. What I saw is that Ebay seems to care very little about the small business man or woman who sells from America, but very much about all of the larger foreign companies that they can make a fortune off of with seller fees. Those larger companies can usually write off one, two, or two hundred smaller losses on taxes or write them as a business expense or other kind of necessary loss. Most of the smaller businesses on Ebay in America don't have the liberty to do that as much or at all. So despite the unfair business practices going on there and the DOJ not really caring too much either to stop it, that is yet another way that they are able to do it.

    If you're a Fortune 500 or Fortune 1000 company, they're going to treat you well just like they do the Chinese corporations that expect to sell everything to the American and European markets by majority. If you're a small business owner in America, they're going to penalize you as much as they can get away with to "make room" for the larger corporations and sellers to sell their wares to everyone else.

    That may seem a little discouraging, but there's a light at the end of the tunnel to where people are forming alternative buy and sell markets everywhere as an alternative to Ebay, and although they are small and distributed right now, in time they will consolidate them and Ebay will not be able to do this anymore to people. They don't seem to value the small sellers, but what they don't realize is that those sellers are also buyers, and without them, ebay collapses and ends up a sea of desperate Chinese companies that have no one left to sell their stuff to.

    Like Coolspot said, I wouldn't chance or risk losing an account over drop-shipping. One alternative you have is to use that account for small, tangible sales to minimize loss...but then market your drop-shipping company service to winning buyers and as a signature at the end of a response whenever people ask you questions on a bid, a buy-it-now product, or some other item you have for sale if you're running a storefront there.

    Where there's a will, there's a way.
     
    FreelancingQueen likes this.
  6. pwarbi

    pwarbi Entrepreneur

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    While I've no experience in this sort of business myself, I know a couple of people that do, and the first thing is that you have to have an eye for a bargain, and maybe more importantly, know where the market is heading.

    Reading what's going to be the next big thing, and the next trend is key to getting and keeping one step ahead of the others. After all, there's no point in buying loads of shorts in autumn, for example is there...
     
    FreelancingQueen likes this.
  7. mooray

    mooray Entrepreneur

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    Good advice. What about starting your own e-commerce website where you sell your won specific niche products instead of relying on Amazon or E-bay. Whether you like it or not, there will come a time down the road when they will cause you a great inconvenience. I don't like E-bay because they are connected with Paypal and if Paypal freezes my account, I will so damned!!! My brother got banned off PayPal for life like 5 years ago and up to date we share the same account. I can't risk get banned off PayPal.
     
    FreelancingQueen likes this.
  8. CoolSpot

    CoolSpot Entrepreneur

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    When you rely solely on your own E-commerce site, it's the marketing that's going to put all the costs up, ebay is great for getting those first initial sales, you can then drive those customers away from ebay (and amazon if you are using it) with things like first order discounts, while I agree ebay and paypal are an absolute nightmare to work with, you cant deny that it is also a low cost marketing platform (so low cost it should be paying for it's self) for getting highly targeted traffic onto your site. I would recommend looking at ebay and amazon as nothing more than a test bed for testing product viability and a marketing platform for engaging with new potential customers for your own site. With the aim being to convert as many of your ebay and/or amazon customers to customers of your site before the account gets frozen or suspended.

    With ebay, it's almost a guarantee that at some point your account is going to get frozen and even permanently suspended. All it takes is enough complaints from other sellers to get your account suspended. I would recommend setting up a payment system other than paypal on your own e-commerce site (as once your ebay account starts getting frozen, so does paypal). In the first few months though, ebay will provide you with customers you can refer to your site, so I would say it is worth it.

    Also I dont think it has been mentioned but in an aim to stop drop shipping, paypal will now hold funds of all purchases for up to 21 days (although I think this is only applying to new accounts), so you will need to have a float of to the value of around 1 - 1.5 month's worth of stock. If you have to have a float of 1 months stock the only real benefit of drop shipping becomes that if the market for a product suddenly takes a dive then you are not holding product that you can no longer sell. When you drop ship you are going to pay more per item, so you could actually reduce the amount needed to start by buying in bulk. However as always, bigger profit demands bigger risk.
     
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  9. FreelancingQueen

    FreelancingQueen Entrepreneur

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    This is some great advice! I am not sure yet if I will try it, but it is great to know what to do if I decide to get started. Many of you spoke of eBay, does this mean that trying to sell on Amazon is not a good idea? I personally prefer to buy from Amazon myself, but if I am going to be a seller I want to choose the best route.
     
    setupdisc likes this.
  10. CoolSpot

    CoolSpot Entrepreneur

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    I tried amazon when I got suspended from ebay, and for me it never worked out, 3 months and I never made a single sale. That's not to say it cant be done as obviously people are doing it, but more down to the fact that I never really use amazon so essentially I have to learn an entire new system from the ground up. Amazon will hold all funds from sales for at least 14 days.
    When I finish what I am currently working on, and then finish my book, I do plan on having another play with it, It might just be the products that I had don't sell well on amazon so I will start listing drop ship products to asses the viability of different markets. This is what drop shipping is awesome for, think of it as a way to test the market with low risk until your sure the market is stable and you can move MOQ of product in an acceptable time.

    It's important to keep in mind, the profit you will make with drop shipping is going to be low, on average you will be looking at making around $1-$5 a sale, there are obviously exceptions, such as when you find an awesome product that has a mark up of over 75% for example, but these are hard to find. Also when you are researching items from your competition to check pricing etc that you look at where the item ships from. If someone is selling an item for $5 shipped from the same country as its going to be delivered (eg/ someone in usa buying from a usa seller) you will have to offer a pretty good discount to make them think that it is worth waiting the extra time for the delivery if you are drop shipping direct from china.

    When I was on drop shipping on ebay, I undercut the sellers shipping from the uk by around 40%. This then gives your customer a reason to buy form you rather than getting the item in 2 days. saving $5 on a $100 item probably wont give sufficient incentive, but if your offering a $40 discount suddenly becomes a lot more appealing to wait the extra couple of weeks for delivery. With drop shipping I find it's always about a high volume of orders at a low profit per item. Not to mention that having so many orders, increases your feedback, in turn increasing the amount of orders you get. (only like 5% of people on ebay ever seem to leave feedback for their orders is what I found.)
     
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  11. djentre

    djentre Entrepreneur

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    The way I conduct research is quite simple - Amazon provides a bestseller's list. Also, there are people online who offer monthly lists on what's hot and what's not. So, I use the information I received from both these sources. I have found it prudent to use the Amazon "Fulfilled by Amazon" program because that lets Amazon handle shipping, returns, etc. and allows me to focus on conducting research, buying samples, and listing products. You can list even a single product on Amazon, which is something that comes in handy at times.

    I would recommend NOT to get into consumer electronics type niche, though. Mainly because electronics lose value the moment some other better product comes out on the market - and you can't keep an eye on all the players in the market all the time.
     
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  12. pwarbi

    pwarbi Entrepreneur

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    While eBay does seem to be the most used site when it comes to making money in this line of work, there are other alternatives if for whatever reason eBay isn't working out.

    Amazon as been mentioned, but there's also the more local auction sites also such as Gumtree. At the end of the day they all do the same thing, and if you've got the right items, you can make a profit if you aim those items at the right clients.
     
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  13. setupdisc

    setupdisc Moderator Entrepreneur

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    Amazon is much safer and better now for sellers if you can manage to get the right viewers to your page to buy. Like ebay, its extremely competitive. What puts me off about Amazon is that you have to send your product to them usually to sell. It makes it possible for them to handle the shipping in most cases and get the product to your customer immediately, thus eliminating the angle that many ebayers use to get one over on the seller and steal products from them. Without that loophole there, Amazon is able to handle the shipping and your products and stock for you to where all you have to do is send it to them to be sold and delivered to the customer with a storefront.

    That being said, you have to trust Amazon completely with all of your stock that you're willing to send and have them sell on your behalf through the Amazon stores, which...well, you can do it and there's seldom problems with that, but I find it hard to trust large corporations when there's a potential for forfeiture or loss of the item or items in quantity that are being sold. I prefer to hold on to and handle my own stock whenever there's a storefront (brick and mortar or online), but lately I am finding it rather scary to try and do anything with Ebay the way it's changed since I've been gone. It's probably best to do your own storefront, have your own policies, and do your own brand and advertising, but leverage each of the major companies to draw them in to your own products or services web site(s).
     
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  14. pwarbi

    pwarbi Entrepreneur

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    Basically it's also about how much control you want, and with sites like eBay, you stay in control of everything to do with your business. How much stock you keep, how many and who you sell to, the shipping, it's all set by you so effectively you are your own boss.

    Sites like Amazon for example want you to relinquish some of that control, and they want to manage part of what you sell, so in that respect deciding what sites to use often involves deciding how much of it you want to do on your own.
     
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  15. CoolSpot

    CoolSpot Entrepreneur

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    I looked into FBA but found the UK amazon site almost impossible to work out what would be charged, not sure if it's the same across all of them, but the uk site is so vague in the pricing information I didn't consider it a viable option. That could very well be one of the reasons I didn't make a single sale through amazon. I am reluctant to sign up for anything if I don't fully understand the amount or how the amount is generated to be charged.

    There are some consumer electronics products that can be great, rather than looking for the newest products, look for the things that people still buy for random uses, where the tech is a little older. Mp3 players I found to be great even though everyone has one on their phone. People in the gym for example might not want to carry their phone and be distracted by work calls or run down the battery etc, but still want to be able to play music. Finding specific use cases where current tech is not the ideal is a good way to go if you want to look into consumer electronics, however, with things that are memory based, a lot of what is advertised is "upgraded Firmware" meaning a 32gb usb is actually only 8gb and has been changed to show as a 32gb device when plugged in.
     
  16. setupdisc

    setupdisc Moderator Entrepreneur

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    If someone started illegally selling 8gb usb drives as 32gb drives by hacking the device to display a storage capacity that it was not capable of handling, I'm sure the amount of complaints on that store would be so high that they would be shut down by Amazon or anywhere else they were doing it from before too long.

    The moment you hit the 8GB mark, the drive would report that it was full since there would be no more cells to write to on it.

    The amount of chargebacks would be tremendous. I don't see why anyone would do that unless they were trying to rip people off and hoped they could get away with it before they disappeared online? Doesn't sound like business to me, but like scammers instead.
     
  17. djentre

    djentre Entrepreneur

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    Oh yeah. Amazon is a fair market ecosystem - if you even try to sell something bad, people will pummel your product to the ground with bad reviews.

    Also, you could try contacting the Amazon reps about the UK FBA website. Primarily because its important for them to clarify the structure of the deal.
     
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  18. CoolSpot

    CoolSpot Entrepreneur

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    Yep, I was just mentioning as when you look at buying in these items to sell on, they will be advertised at the higher compacity, you will only find out the real compacity once you have tested them or start receiving complaints. So it's obviously something to be aware of before you go and buy 100 usb flash drives because they were only $30 each for 128gb.
     
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  19. setupdisc

    setupdisc Moderator Entrepreneur

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    I'm glad I waited on buying some of those.

    I remember like 2 or 3 years ago how alibaba, ebay, and amzon got flooded with those, but something just didn't seem right about it being 512GB but the price of a 4gb or 8gb flash drive. I did see a lot of those stores close soon after reading all the comments on them.

    I used to ask myself how they could be that cheap even in bulk and from overseas, but then reading the comments I realized what they were up to. It took me a long time to trust 32 and 64gb drives being sold until I saw them in local stores. I had the receipt ready to return just in case, but it was ok.

    I once bought an item from Best Buy that had a box of baking soda in it instead of a router. I returned to the store to complain and figured I wouldn't get my money back after that happened, but the manager was cool about it and said that I wasn't the first person to tell them they got a box of baking soda or flour instead of the modem or router that was purchased.

    I found out the backstory a while later. It turned out that one of the managers and Loss Prevention caught a guy on the delivery truck switching some of them out during break and taking the devices home in a backpack when they left work. Not sure what happened to him, but he definitely got a pink slip. Can never be too careful these days with the tricks people play.
     
  20. briannagodess

    briannagodess Entrepreneur

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    I think such items like clothes, gadgets, accessories and makeup are easy to sell on e-commerce platforms. Of course, it's better if you will create your own domain for selling these items. If you can find a local supplier of such items at an affordable price, you can reap some good profits from the products.

    To get started, first you would need to decide on which product you want to sell. Once decided, find a supplier with good quality products. Always check first the quality of the products you're going to sell before putting them on the site.

    Then you would have to take their pictures in all angles. Provide a price and a description of the item. Put them on the site and wait for your customers to start pouring in.

    Good luck!
     

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