Product Sourcing Ideas – Dropshipping

When you are beginning your ecommerce business, one of the first hurdles is deciding on what you will sell.

There are a variety of places and means to source product – you need to decide which one will work best for you and your business. Today’s blog post will address a low cost way to enter the market: dropshipping

Sometimes this is the easiest and lowest risk way of getting into an ecommerce business. Simply put, drop shipping is the process of listing merchandise for sale that is owned and warehoused by a third party. Once you sell the merchandise, you notify the drop-shipper who will ship out the product to your customer for you. Sounds easy, right? The secret here is finding a RELIABLE and TRUSTWORTHY source with a product line that is IN DEMAND.

Most legitimate drop shippers will not require a minimum purchase or charge a monthly fee, but there are exceptions to even that rule. Do your homework – research potential drop shippers by entering the dropshipper’s name into a search engine and add the words “complaints” “sucks” “reviews”. Also research what the fees are and figure out if there is a market for their products and what the going rate is. Take a look at private web sites, ebay and Amazon to start. Figure out if it is worth it to sell their products after you factor in the fees that each marketplace charges, the fees from the dropshipper and the cost of the merchandise.

Next up: distributors

IMA Member Spotlight: The Gentle Bath & Company

Brenda Collins owns The Gentle Bath & Company, and is a textbook case study in branding and marketing an e-commerce business. We sat down and talked with her.

How and why did you start selling online?

Before launching my business, I was an RN. I suffered an injury which forced me to “retire” from nursing, so to amuse myself, I sold items from around my house on eBay. That, coupled with the computer and marketing skills I’d learned in Hospital Education, and the design skills I developed through scrap booking when my son was born, set the stage for my launching an e-business.

Initially I opened an eBay store in the Bath/Spa category in March 2007 – and began to sell items within an hour! I chose that segment because I had a very hard time finding quality items when redecorating my own master bath. I ordered a set of Bamboo Blend bath towels on a whim; I ended up loving them so much they became the foundation of my store. I started out with less than 20 items, gradually adding to them (now I carry around 250 items). After the first year, which was full of growing pains, I launched my own website, and sales soon surpassed those of my eBay store. I closed the eBay store in 2009 at the end of last year and am concentrating on my own website now.

Tell us about your company.

The Gentle Bath & Company offers luxury bath items at affordable prices. Our tagline, “Transform your bath into an oasis”,  says it all. We carry a variety of bath-related items from luxury towels to bath caddies to Lady Primrose Bath and Body. We aim to provide our customer with an exceptional internet buying experience.

What were some of your biggest mistakes? How did you overcome them?

I’ve had some white elephant products in my inventory; it’s been hard to pinpoint exactly why they don’t sell. I’ve found that sticking with more “known” brands helps with search and sales. I have a clearance category and put some of the items in that, which I’ve been able to return other items to the manufacturere even though I had to pay a restocking fee.

What do you know now that you wish you’d known when first starting your business?

Where do I begin?! Probably the biggest thing would be building a website sooner than I did. Starting a store on eBay is a great way to begin with a limited investment, but now there are so many quick and easy website options that I think I could have opened a website sooner than I did.

Another would be how much time a good shipping program can save you. When I implemented my shipping system (Shipworks) with a dedicated thermal label printer, I cut my package processing time by 200% or MORE!

“It is vital when choosing your shopping cart that you investigate the shipping processes available for the cart.”

What three things would you tell aspiring entrepreneurs?

a. Research research research – your products, your choice of carts and your choice of payments, everything about your business should be researched and then chosen based on what is the best fit.

b. Always try to exceed your customers’ expectations; they will remember you for it and refer their friends and family to you if they trust you will treat them right.

c. Join groups such as IMA and the Internet Retailer Association. You can learn so much from others who’ve been there longer than you, and get feedback and information about many cutting-edge practices in the field of Internet sales.

What has been your greatest business success?

I think the “branding” and “packaging” that I’ve built is what I am known for.  In addition to my products it is my packaging that stands out from many other Internet companies.  I have often talked to customers about their orders, and apart from my products it’s the packaging that they remember and is what stands out when they think about their order.  It is this attention to detail that often leads a customer to refer their friends and family to my store.

What are your goals for your company?

My goals are always changing as my business evolves.  My long-term goal for my company is to maintain profitability as I focus on my website for my sole source of income.  My short-term goals for 2010 are to:

  • change my merchant account from PayPal to one that is more economical,
  • choose and implement an email marketing  program, and
  • take advantage of my new WordPress blog theme and implement all the Google advertising opportunities that are built into the themes framework.

What are some of your favorite business resources?

1. IMA – they have so much to offer on their website in addition to one of the most helpful member forums available for the Internet retailer.

2. Facebook Fan Pages – one of the best free advertising you can get for your business.  I also think their paid ads have some of the best returns for the money.  You can build your fan base and then have a captive audience to communicate with directly regarding all facets of your business. In fact, I find the Facebook interface to be one of the most powerful and easiest to use of all the social networks out there.

3. SCORE – Service Corps of Retired Executives will provide a small business counselor free of charge.  I have met with mine a few times and that’s been very helpful for me.  Their website is also loaded with resources for the small business owner.

Finally: why did you join IMA and has it been worth it?

YES YES YES!!  I was looking for a group that both understood eBay but also focused on business outside of eBay. I found all of that and more in the IMA.  In fact, the member forum is the most helpful forum that I  belong to.  They’ve also started offering more education and that has been very helpful as well.  For the small internet business owner there is no better group to belong to than the IMA!

Brenda, thanks so much for taking the time to chat with us. Best wishes in 2010 and beyond for The Gentle Bath & Company!

Edited by Shonali

Advertising – Outside the Box

There are many ways to advertise a website. The traditional ways are to buy Google Adwords, participate in a link exchange, submit your site to all the search engines, etc. These are all good ways to advertise; however, why not think outside the box?

We sell swimsuits. We have been brainstorming ways to get the product to the people. Here are some things we have done recently: We had some bling, bling shirts made advertising the site which we give to our favorite people. We bought some tank tops and had this fantastic gal decorate them with rhinestones. We wear them to events where there are sure to be people who will ask about the site.

[Read more…]

Marketing to Buyers

In February 2007, IMA held its first conference in conjunction with the AMD/ASD tradeshow in Las Vegas.  As part of IMA’s conference, speakers from Amazon, eBay, Google, Marketworks, PayPal, and several other ecommerce companies spoke on a variety of topics.  Here is a recap of the salient points from the Marketing to Buyers seminar given by Paul Lundy of Marketworks

I.          Pillars of Marketing

 1.            Positioning 

Well-positioned businesses communicate distinct, meaningful differences to their desired buyers

            Well-positioned companies have focused positions that draw in a lot of potential buyers, but the actual # of buyers/users is far broader than the company’s positioning

            What is your area of expertise?

            What are you willing to sacrifice?

            What distinguishes you from your competitors?

            What type of consumer do you want the most?

Are your desired customers loyal to a particular brand?  If so, how can you capitalize on that brand loyalty?

Are your desired customers loyal to you as a seller?  If so, why?  If not, how can you increase that loyalty?

What % of your buyers are repeat customers?  How can you increase that %?

Companies That Excel at Positioning

1.            Apple- Fun, innovative technology that works

2.            McDonalds- Fun, reasonably priced fast food for kids

3.            Michelin- Families seeking peace of mind and safety

 2.            Branding 

Collection of emotional and functional attributes that strongly influence a buyer’s decision to purchase.  Perceived by the only legitimate judges (customers).

Consistent branding increases your likelihood of success

Does your business have a clear, distinct image and message?  If not, why not?  If so, can you expand or improve this message?

Buyer Contact Points- Email, feedback, price, store, template, packaging, Me page, customer service, promotions, payment options, website, packing slip, freebies, etc.

Companies That Excel at Branding

1.            Amex- Used by the most prestigious cardholders

2.            Crest- Cavity-concerned parents and their children

3.            FedEx- When it absolutely, positively has to be there overnight

4.            Michelin- Safety of your baby is more important than bargain tires

 3.            Targeting 

Who is your desired customer?

What are the buying habits/focus of your target market?  e.g., Are your customers more concerned about customer service, item selection, price, etc.?

How can you expand your market share?

II.        3 Bins of Information Used by Buyers

 1.         User Imagery 

      What types of customers do you associate with your product?

Can your average desired buyer user the product?

How can and does your business stand out from your competitors?

 2.            Context 

            Where do your business and products fit in the marketplace?

            How do competitors and potential buyers think of your business and products?

 3.            Product Information 

            What are the features and benefits of your products?

            Examples of Businesses

1.                  Marlboro (51% Market share)

Core User- Rugged, macho, independent men

Context- Badge of freedom and Great American West

Product- Full-flavored cigarette, flip top red box

Reality- Marlboro’s products are aimed at a small % of cigarette smokers, but its distinctive marketing has helped it capture the bulk of buyers

2.                  Michelin

Core User- Families

Context- Premium tires

Product- Greater peace of mind

3.                  Other Examples

Dove

Grey Poupon

McDonalds

 III.       Tips for Businesses

     

1.            Communicate a distinct benefit to your current and potential buyers

2.         Focus and sacrifice- Do not try to be everything to everyone

3.            Develop expertise and find your niche

4.         Decide whether you are going to be a generalist (e.g., Walmart- No real niche, competes on price) or specialist (e.g., In-N-Out- Only a few different hamburger choices, but their product is superb)

5.         Most businesses compete based on price- find something else to compete on (customer service, product line, outstanding branding, etc.).  Ex. Walmart v. Target- same basic element (low-price), but entirely different customers.

6.            Examine your competitors (those bigger than you, on the same level, those smaller than you, those that succeeded, those that failed, etc.) and non-competitors (those that succeeded, those that failed, etc.)

7.         Find ways to scale your business, but keep your eye on the bigger picture

8.         Find repeatables that complement your business

9.         Good design, positioning, and branding increases your credibility with current and potential buyers.  Look and feel and design is the #1 reason buyers purchase from a particular company/way to increase your credibility.

IV.            Understand Your Buyers

1.         What differentiates repeat buyers from one-time buyers or infrequent buyers?

2.         Why do customers purchase from you instead of your competition (price, products, customer service, freebies, branding, shopping experience, etc.)?

3.         How do you position your business as compared to your competitors?

4.         Do you differentiate your branding by channel/venue (ex. eBay v. Amazon)?  If so, how and why?

V.            Positioning Statement

 1.            Elements of Positioning Statement 

Especially for ___________ (brand lover)

            We are the ________ (frame of reference)

            That ___________ (point of difference)

            Because ________ (support)

 2.            Sample Positioning Statement: Yukon Sports 

            Especially for people who love the outdoors.  We are the online destination for high quality, high performance outdoor gear that enables you to feel more confident and perform at the highest level because we sell only the best brands and highest rated outdoor equipment.