New Services From Solid Cactus

You wouldn’t know it from reading me, but there are multiple platforms in which to open your online store.  I’ve never been afraid to mention that I use Solid Cactus for much of my design, call center services, and more.

Well, until now, Solid Cactus has focused on Yahoo store design, but have recently expanded.  Now you can take advantage of their extensive experience in store design to build or improve your eBay Pro Store, Amazon Webstore, or Yahoo store.

I personally have used so many services from Solid Cactus, I can’t count.  So I can tell you from experience, if you need any help with building or improving your store, marketing, customer service, and more, I know you’ll be pleased by checking out Solid Cactus.  Give them a call and see what they can do for you at 1-866-943-7513.

Drop Ship Digest Is Coming Back….

After a long absence, Drop Ship Digest is coming back. Stay tuned for a story that every new entrepreneur needs to be aware of. It really happened to me, and could to you.

Why do suppliers need a SSN or EIN?

Time for some more Business 101. When you set up a new account with a supplier they should ask for your SSN (if you are a sole proprietor) or your business’ Employers Identification Number (EIN). An EIN is basically your business’ social security number. If they don’t ask for one of these, beware, it could be a red flag that something isn’t right.

Here’s what’s going on. In this country (USA) sales tax must be collected on every consumer sale. Yes, I said consumer sale. The end user, or the person buying the item for their personal use, must pay sales tax. However all the sales in between do not need to be taxed (i.e. selling the item from the manufacturer to distributor, distributor to retailer). Follow me so far?

The IRS requires all of us to track these sales so they can make sure the correct tax is being collected and paid. So, when your supplier sells you an item, they report to the IRS that the item was sold to another business for the purpose of resale. This tells the IRS that a sale was made, but it wasn’t to a consumer. The burden to collect and pay the tax on the item now comes to you, the retailer. Suppliers (or manufactures, or distributors) use your SSN or EIN to prove that they sold the item to a legitimate business and the IRS needs to look to you for the tax. Got it?

Any New Business Takes Time

I’ve decided that my absolute favorite thing is to respond to comments or questions on the site. Here’s one I got a few weeks back:

Any success stories to share? I’m not sure if it’s worth it to quit my job to start a webstore solely dependant on drop ship wholesaler. I’m a breadwinner for my family, and no income for a few months would be too disastrous – Bizman.

Whoa Bizman. Slow down. As a husband, father, and breadwinner, your comment scared me. Always use extreme caution when quitting your job to start a business. Unless you have a ton of capital or financing, it will usually always be awhile before making any money, especially enough to support a family.

I’m not sure why you’d want to do this anyway. One of the biggest advantages of a drop ship business is the fact that it is relatively easy to set up, and can certainly be run in your spare time on the weekends and in the evenings. I assume that you are fed up with your job, and that’s why you have considered this drastic move. Rather than jumping in with both feet, I encourage you to take it slow. Get started, and let your business grow before quitting your day job.

Remember, drop shipping is very competitive. The goods are easily obtained, so the margins are typically much less than traditional retail. While I’m sure it’s happened here and there, the chances of starting a drop ship business today, and making a sustainable income within a few months is slim.

What is MAAP?

Many suppliers will mention MAAP when setting up an account. They may even ask you to sign an agreement stating that you’ll abide by their MAAP policies. Well, what the heck is MAAP and why is it important to me?

What is MAAP?

MAAP stands for (I believe) Minimum Allowed Advertised Price. Basically they are saying that you can not openly advertise the price of an item lower than the MAAP requirement. Suppliers and manufacturers use this in an attempt to protect their products from discounting which aims to protect their brand’s reputation. They don’t want retailers selling their products for dirt cheap because that will eventually cheapen the brand and make it harder for anyone to make any margin on the products.

Why As A Drop Shipper Should I Care?

Because if a supplier has a MAAP requirement, and you are found violating it, you run the risk of loosing the privilege of selling the item, or in extreme cases, risk a lawsuit.

Is it legal?

In a word, yes. Keep in mind that a supplier can not tell you what you must sell an item for. That is called price fixing, and it is 100% illegal. But there is a big difference between price fixing and MAAP. Price fixing dictates sales price (again, illegal), MAAP dictates advertised price. You can still sell the item for whatever you want; you just can’t openly advertise it for less than MAAP.

The way around it

Ever go to an online store and it says “call for pricing”? Or something like: “the price is so low we can’t show you. Add it to your cart for the price (you can always remove it later)”? Well those stores are going around the MAAP requirements on those products. They are not advertising the price, but will tell you if you ask, either by calling in or adding it to your cart (considered intent to buy). The call in method is relatively simple to implement if you have a call center or some kind if customer service. The add to cart method is a little more difficult and would take some extra coding or software to work on most store platforms.

Conclusion

My feeling is that MAAP is very confusing to the consumer. Most don’t even know what it is. So sites that use one of the above methods probably lose some trust. It’s hard enough to get customers to buy, but when you add an extra step, many will just go somewhere else. In practice, I generally just put the actual price I’m offering. If it happens to be too low, I just move the price up to MAAP and move on. Consumers like to know their price up front, and any time it seems to be hidden, you’ll lose more than not.

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?

Is Worldwide Brands Worth It?

I got a nice comment from Jeanette on my post:How do I find real drop shippers. In case you didn’t get a chance to see it, here’s what she said:

Thank you for starting this blog! It’s an excellent resource for people just starting out in drop-shipping (like me).

I have to question, though, your bit of advice about Worldwide Brands. I’ve heard that there’s a glut of retailers on there, so you end up paying $300 to sell products that MANY someone else’s are already selling. It could end up being a good chunk of change right out the window.

Also, you may want to disclose that you’re earning affiliate income from promoting Worldwide, as well. Your affiliate code is attached to the link. Darren Rowse at ProBlogger suggests sites and services all the time, but is sure to disclose that he profits from any memberships purchased from click-throughs. It’s just an idea, if you want to keep up the integrity of the site.

Other than that, good luck, and thank you!

Thanks for the complement, Jeanette.  Let me see what I can do.

Is Worldwide Brands over used?

I can see where you are coming from with your concern about there being a glut of people using World Wide Brands. I think one thing that doesn’t get mentioned a lot is the incredible diversity of the suppliers that you will find.  It’s a matter of finding your nitch and using the suppliers that fall into it.  So, if you are wanting to sell electronics, sure, there will be tons of people to compete with.  But if you want to drop ship adhesives and sealants or automotive detail chemicals, you will find a supplier at World Wide Brands and you probably won’t have too many competitors with the same product.

Product selection is only half of the battle

Just because you have similar products to other stores doesn’t mean you can’t be successful.  Think about it this way: how many stores can you think of that sell Sony products?  Let’s see: Target, Wal-mart, Kmart, Best Buy, Circuit City, and probably thousands more.  How about when you see a commercial on TV and it says “available at these fine retailers”.  There are several stores listed.  The point here is that you don’t have to be the only store in the world selling Sony in order to be successful with Sony.  Each of the stores I’ve listed has their own customers, their own way of doing business, and their own advertising and selling strategy.  Who cares if other people are selling the same items from the same suppliers as you!  To be successful, you need to find your own way of doing business.

Worldwide Brands is worth it

It is my humble opinion that World Wide Brands IS worth the $300 price tag.  Yes, I personally use it.  Yes, it really was my first business purchase when I started my company.  And no, I don’t think I would have found all of the suppliers that I have without it.

Affiliate Links

I have great respect for Darren Rowse and have read his blog for several years now.  And yes, I do use some affiliate links.  I provide full disclosure on my about me page.  Blogging does take time and money so if I can make a little here and there, great!  If someone happens to click from my blog over to World Wide Brands and make a purchase, I would get a commission.  However, that has happened a grand total of zero times, so I don’t even know what I would get. 

Regardless of any of this, this blog is entirely my opinion.  It’s entirely authentic, and I will not take any funds from anyone who requires me to write positively about them.  If you want to pay me to look over a something and blog about it, fine.  But I might hate it, and if I do, that’s what I’ll write. .

I hope this clears the air and I hope some questions have been answered.

Always feel free to drop me an email with questions or comments.

Are you ready for Cyber Monday?

Huh? In the world of retail, we all wait with baited breath for Thanksgiving. All of the work we’ve done all year long is hopefully about to pay off, big time. Many retailers don’t even enter the black for the year until the day after Thanksgiving (hence, Black Friday).

For us online drop shippers, we’ve actually got a few more days to wait. A few years ago, the industry coined a new phrase, Cyber Monday. This is the day that online retailers begin to reap the rewards. Why? Because people shop from work! In fact, so many American workers shop from their desk on Monday that we needed a new phrase.

So, this weekend is your last chance to get everything right with your website before Monday. Add any products you’ve been meaning to. Double check prices and promotions. Make sure any of your shopping services are connected and ready to go.

It all boils down to this. Good luck!

How Do I Find “Real” Drop Ship Suppliers?

Finding real, authentic wholesalers that are willing to drop ship orders for you is certainly one of the hardest tasks for your new drop ship business. Do a search online and you’ll get pages after pages of companies offering to drop ship products for you. So how do you find the good ones? Well, there are a couple of ways.

Method 1: You can use the internet search – The problem is which are legit, and which are not? I would be VERY careful before taking any too good to be true program that you found online.

Method 2: You can contact a manufacturer – If you know an exact brand that you want to carry, you can contact the manufacturer directly and inquire as to who might distribute their products.

Method 3: You can attend merchandise shows – These are industry events where manufacturers and distributors showcase their goods. You’ll have to prove that you are in the retail industry to get in as they are generally not open to the public. If you see something you like, inquire with the rep as to whether they have a drop ship program.

IMPORTANT NOTE: I do not recommend methods 1 or 2. 2 is too time consuming; 1 can be questionable. 3 can work, and has worked for me in the past, but can also take a long time and be expensive in travel to the different shows.

Method 4: Buy in to a wholesaler directory – I know, this seems a little scammy too, but I can tell you its not. The first thing I did after incorporating my business was to buy One Source from Worldwide Brands. There is a one time, lifetime fee that I totally feel is worth it. Among many other business services, what’s valuable for us drop shippers is the Drop Ship Directory. This is a comprehensive list of thousands of legitimate manufacturers and distributors of wholesale merchandise that are willing to drop ship your orders. I have found nearly all of my suppliers off of this directory and could not live without it. New suppliers are being added all the time.

I hope that gives you some insight. It’s certainly possible to find suppliers without using a directory, however the time savings is worth every penny. Has anyone used a different, but similar wholesaler directory? Would you recommend it?

Tags: drop ship, business, onesource, worldwide brands, wholesale suppliers

Things To Look For In A Drop Ship Vendor

With all the choices out there of different vendors and manufacturers who are willing to drop ship for you, how do you make the decision of which one(s) to use?

Do they have a product you really want? Especially starting out, make sure that they provide products that you really think you can sell. Do some research online to see where the same or very similar products are being sold. If the vendor’s products seem to be everywhere, and you’ll just be another fish in the pond, maybe you should move on to something else. Also remember, there is a fine line between the things you like, and things that may actually sell. Don’t get stuck with a store full of your favorite things, that no one else is interested in.

Do they seem put together? Do they have a page on their site that gives general information about their drop ship program? Are they able to send you detailed information to permit you to make an educated decision before using their services? If drop shipping seems to be an afterthought for them, and they are not prepared to give you details, then they might not be ready for your relationship. In order to succeed, you will need to depend heavily on your vendors. If they are unable to give you a good feeling in the beginning, chances are they may not be real dependable when the orders start rolling in.

Do they have any weird fees or rules? Make sure you fully understand all of the requirements and fees associated with your new account. It is my opinion that you should never have to pay an upfront fee to use a vendor. You are their customer, and they should be happy to have and help you. While I could be swayed, I’ve yet to see a vendor that requires a setup or maintenance fee to be worth it. They should also not restrict other areas of your business such as selling price (which actually is illegal), what other products you sell, or your terms/conditions. Make sure that you can live with any rules they may have, which shouldn’t be many.

Check out their customer service. While it’s certainly not a requirement, I do prefer to work with companies where I have a specific person to contact with a question or problem. Regular customer service is fine for the everyday questions, but if something really is amiss, I want to have a dependable person that understands my account and is ready to help.

What are they willing to give you to get started? Finally, a good vendor should be prepared to provide you with product information from the start. This should include product details (item numbers, options, price, weight, etc.) and web ready images. If they cannot give you these things, it could be very difficult for you to sell their goods. While this is not an all inclusive list, it is at least a staring point. Remember that as a business owner, you need to make the best decision for the business and keep your personal feelings out of it. Even if you really want to sell a certain manufacturer’s product, if they can’t meet the things we’ve talked about, the relationship may be doomed from the start. What things do you look for in a drop ship vendor?

Tags: drop ship, business, ecommerce, suppliers