How Can Others Sell Cheaper Than Me?

This is a question that drop ship retailers pose all the time.  “My supplier said I should charge full MSRP for my items.  But I see people all over the place selling for much less than me.  Why?”

Do They Stock?

Well the most obvious answer is they could be stocking the product.  While drop shipping may be our preferred method of product fulfillment, we all know that better prices can be obtained by buying in bulk and stocking the product yourself.  Remember however that stocking isn’t the be-all end-all solution.  Stocking brings on a whole new list of challenges, such as storage, paying someone to pick and pack, and property taxes.

Low Overhead

Your competitor could also have much lower overhead.  Does their website look like they made it for free?  Do they only have an email address for contact (i.e. no customer service toll free number?).  All of these are ways to keep a businesses expenses down, so he can afford to sell cheaper than you.  But, doesn’t that kind of give you an idea of how well they treat their customers?

Are They A Start-up?

They may be the new kid on the block.  Arguably, when a business just starts out, price is all they’ve got.  They’ve got no track record, no online reviews, and no loyal customers.  Once a company has been around a little while, and some of these things are in place, they should be able to raise prices and take advantage of their hard work.

Different Strategies

They may just have a different scheme than you.  Their overhead is low, they’ve got no additional mouths to feed, and they’re able to get free rent in their mother’s basement.  For whatever reason, they’re comfortable with 10% margins, rather than 30%.  Maybe they use those drop ship products as loss leaders, and really make some hefty margins on other items on their site.  It’s easy for us to think that every other retailer out there is in the same boat that we are, but that often is not the case.

Be Careful

With all that being said, you’ve got to be careful and find a happy medium.  Don’t price yourself out of the market.  There are plenty of things you can do to justify your prices, but being too high can make all of that a moot point.

Conclusion

The pricing game can be evil, cut-throat and dirty.  Nobody wins when a pricing war is fought.  While the lowest price can be a way to get quick sales, it generally isn’t a great long-term strategy.  There has got to be other reasons people buy from you, whether it’ a superior customer experience, excellent customer service, or unique product selection.  Without any of these other things, pricing wears out fast.

More Thoughts About Content

As I stated the other day, it’s great when your supplier gives you descriptions of their products to use on your site.  Beyond the duplicate content issues we discussed, there are a few more things to think about regarding your drop ship store.

Edit The Descriptions

Even though those descriptions are given to you to be convenient, you still need to read through them.  I have found numerous errors throughout ones I’ve been given.  I have one supplier who puts “checkout our entire line of wholesale merchandise” at the end of every product description.  Obviously not a statement I want on my retail store.  If I hadn’t read through the descriptions, I may never have known.  Other things I’ve seen are broken and incorrect html tags (why were they even there in the first place), and completely incorrect statements (a monogrammed item stating that it can be engraved with two lines of 20 characters).

Proofread The Descriptions

Sometimes these descriptions are poorly written.  Incomplete sentences, incorrect punctuation, and poor adjectives affect your credibility.  Remember, it doesn’t make any difference who actually wrote the content, if it’s on your site, it reflects on you.

Well What If I’m A Terrible Writer?

Ideally, you’ll be able to make revisions yourself.  Especially in the beginning, the more you can do yourself, the better (and cheaper).  However, if you truly are the worst writer in the world you may want to hire a copywriter.  I’ve personally used guru.com to find professionals willing to rewrite product descriptions.  Now I consider myself a decent writer, but just don’t have the time, patience, or creativity to write hundreds of product descriptions.  I’ve used a copywriter who would edit and rewrite product descriptions for around $1 each.  Totally worth it for me.

Conclusion

Remember, every part of your store is a reflection of you.  The more professional you can look the more sales you can get.  Well written and unique product descriptions are an integral part your image.

Beware Duplicate Content

One of the things that a good drop ship supplier should provide are product descriptions of their items.  Which is great.  Frankly a supplier who isn’t giving out product descriptions is risking some low sales.  Why?  Because it takes me some time to get new products up on my site.  Sometimes, a long time.  That’s a lot of information to organize, upload, etc.  And for me, thinking of clever product descriptions for each item is the most time consuming.  If I’ve got to write them all from scratch, well I just might pass.

Be careful what you use

It’s not all smooth sailing, however.  The problem with these descriptions are that they are offered to everyone.  So any number of sites could have exactly the same descriptions.  Which leads to duplicate content.  A web search for duplicate content will bring up all kinds of information.  But basically, search engines give weight to original content.  So, whenever more than one page on the internet has the same content (product description in our case) you run a serious risk of that page being ignored by the search engine results.  Of course, it’s tough to sell an item if the search engines don’t show it.

What’s a happy balance?

Personally I do use supplier descriptions, particularly at first.  When I add a new product line, it is important to me to get the product up and live on the store as quickly as possible.  As I said before, writing unique descriptions just takes too long.

However, I do go back later and make revisions where it make sense.  I won’t necessarily edit all of them, but popular and good selling items I will.  Writing original content is a great project for when sales are slow.

Return Policys and Drop Shipping

Many drop ship retailers really fret over return policies.  Do I allow returns or not?  How long should I allow them?  What do I do with returns?  Will my supplier take the item back?

You should accept returns

My feeling is that everyone who wants to be serious about selling online needs to accept returns.  Your ability to sell is severely hindered if you refuse.  It makes your customers leery and many will simply go elsewhere.  It’s all about building customer trust.  There are a few notable exceptions of course.  Anything personal (underwear, bathing suits, health/beauty products) or personalized (engraved or embroidered goods) should be exceptions.

While the standard is different across industries, most stores should average 30 days.  Some will be longer, and some, most notably electronics, may be shorter.

Will my supplier take it back

A good general answer is no.  At least not for free.  We’ve talked before about the business model of a wholesaler, and returns are not usually part of it.  Some may accept returns if you pay a re-stocking fee.

When faced with a request for return, it’s up to you to weigh your options; pay the re-stocking fee, or take it in yourself.  Also, if you have delivered the product as promised, without any damages or mistakes, the customer should pay the return shipping themselves.

What do I do with returned product

The idea of returning something that you don’t stock in the first place is a major obstacle to business.  You do have a couple options though.  If the item is in good shape, hang on to it and you may sell it soon.  Just ship it yourself instead of ordering from your supplier.  This is also a great place to use eBay, just list it as a returned product.  You’ll probably lose a little money on it, but it should be better than having the restocking fee or being stuck with it altogether.  Finally, you can always use it for giveaways or prizes in the future.

Lets hear some ideas.  How do you handle returns in your business?

Well Then Whose Department Is It?

Ever go to a department store and try to find help?  You walk around for ever and can never find the right person.  How frustrating is it to find someone to help, only to be told, “Sorry, that’s not my department”?  If you are in the business of selling things, isn’t customer service everyone’s department?  It sure should be.

In the drop ship world, you, the retailer needs to take full responsibility for all customer service issues, good or bad.  Blaming problems on your drop ship supplier is the equivalent to saying “it’s not my department”.  Your customer doesn’t care.  They placed an order with you, and it is your responsibility to deliver.  Apologize for the problem, and tell your customer that you are going to do everything you can to fix it, and then work with your supplier to do so.  It doesn’t really matter whose fault it is, because in the eyes of the customer, you, the retailer, is the only one that matters.