Ecommerce Merchants: So You’re Thinking About Drop Shipping?

One of the most common questions I hear from new online sellers, or those considering online selling, is, “Should I use a drop shipper?”

Most experienced ecommerce merchants will immediately say, “No!” Others will say “It depends…”

Depends on what?

Really, it does depend – on what you mean by “drop shipper.”  Wikipedia defines drop shipping as: “Drop shipping is a supply chain management technique in which the retailer does not keep goods in stock, but instead transfers customer orders and shipment details to either the manufacturer or a wholesaler, who then ships the goods directly to the customer.”

Hey, if you have a manufacturer that is dependable, willing, and has the processes in place to drop ship for you, then you’re on the right track.

But if you are thinking about paying money and signing up for a “drop shipping service” than you’re on the wrong track.

This post is going to concentrate on the latter, because that is what most people are referring to when they ask the question, “Should I use a drop shipper?”

There are many pitfalls to using a drop shipper, especially one that advertises heavily and requires a fee to subscribe to their service. For instance:

You think you’re the only online seller who’s heard of this company? Of course not.

More than likely whichever online marketplace you are considering selling on is flooded with products from this heavily advertised drop shipper.  Because these drop shipper’s items are everywhere, it forces the prices down and you will be lucky to make any profit at all.

You have no control over how your customers’ orders are shipped, or how quickly they are shipped.

This can adversely affect your feedback on whichever marketplace you are selling. Even if you choose to only sell on your own website, slow shipping, and poor packaging, can ruin your reputation and lose you customers.

Out of stock items.

There is nothing that makes a customer angrier than ordering an item and receiving an email a few days later that their item is out of stock.  You have no control over your stock when using a drop shipper. Something that is in stock on Monday may very well be out of stock on Saturday when your customer purchases it from you. This is the quickest way to earn negative feedback on both Amazon and eBay.

If you’re considering selling on either Amazon or eBay, negative feedback can quickly ruin your business, so you want to have as much control over your customer service and merchandise as possible.

The best way to do this is to stock your own products. There’s nothing wrong with starting small, testing the market on a few products, and building from there. That is how most successful ecommerce merchants started.

Once you get a feel for your market, and have established suppliers, you may find a supplier or manufacturer who is willing to drop ship for you.

That is the type of drop shipping to consider, if you consider it at all.

Image: Louis Vest, Creative Commons

Guest post by Cynthia Lizana, immediate past president of the IMA. Cynthia is the President of TexCynGoods, Inc., which specializes in selling women’s wallets, handbags and related items online.

Top 6 Reasons for E-Commerce Merchandise Returns

Written by Pat

It’s a cost of doing business and a headache for a lot of online sellers: accepting merchandise returns.

There are valid reasons that we get returned merchandise from our online customers, but there are some times that costly returns can be avoided or prevented.

According to a recent Distribution Center Operations Report from The Supply Chain Consortium and Reverse Logistics: Returns, Refunds and Recalls Hot Topic Report, the top six reasons for customer returns were:

1. The customer ordered incorrect product or size
2. The customer decided the product was not needed or wanted
3. No reason for return given
4. The product did not match the description on the Website or in the catalog
5. The product did not fit the customer’s expectations
6. The company shipped the incorrect product or size

e-commerce shoppers

So, as an e-commerce company, how can you stem the tide of product returns?

At first glance, it would seem that the merchant might be responsible for only #6:

The company shipped the incorrect product or size

This, of course, is generally a clerical error that might be avoided with improved systems and procedures and employee training.

However, there are quite a few steps an e-commerce seller can take to prevent returns based on some of the other reasons that were cited.

How about these reasons?

1. The customer ordered incorrect product or size

4. The product did not match the description on the Website or in the catalog

The number one reason is incorrect product or size and the fourth most popular reason is that the description was not accurate. How can you as an online seller prevent this?

Ask yourself:
How clear and accurate is my description?
How many pictures do I have for each product?
Do the pictures show the product from various angles?
Do the pictures show relative size with a ruler or other measurement of scale?
For clothing items, are there sizing charts available?
Do I link to the sizing charts from the respective product page?
Do I provide measurements?

Another way to avoid having customer returns is to allow customers to leave product reviews.

Besides providing descriptive language that will help the search engines better index your products, reviews left by past customers can help shoppers make the best decision based on their experience. Who better to know that a pair of shoes runs small and to order a half-size up? Or that the orange shown in the picture is just a little bit brighter than the actual color of the purse?

As an e-commerce website, we will always be susceptible to returns, but it is possible to greatly improve your company’s return rate by improvements to your site and product descriptions. These changes will not only lower your merchandise return rate, but provide a boost to your customer satisfaction rate as well.

IMA Conference: Need a Reason To Register?

Here is a preview of just one session from the 2010 IMA Conference….

rick wilson

Have you ever shopped on a website and couldn’t find the checkout link? Have you wanted to add another product and couldn’t figure out how to do it? Were you required to fill out a lengthy registration form that seemed to never end? And then you finally got to the end only to find out that the products were out of stock? Does this describe YOUR checkout process?

Customers want to buy your products and they want the process to be quick and easy without any hassles. Rick Wilson, MIVA Merchant will be presenting “Top 10 Tips for Designing a Great Checkout Process” at the Internet Merchants Association Conference in Las Vegas, March 2-3, 2010. This is just one topic that you don’t want to miss!

Sign up today at the discounted Early Bird rates, but hurry – this offer ends Sunday, January 17th.

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

Business Conference – How Do You Continue Your Education

written by Cathy, Visibility Unlimited

We all think we are the best person to grow our business. The best person for SEO, the best web designer, the best IT person, the best at everything we do. But the problem is that your competitors think the same. The e-commerce industry moves so fast that it is actually impossible to keep up with all the trends and changes. You need help; we all need help to stay ahead of our competitors.

I have taken my education very seriously the last few years and to be honest, the improvement in my bottom line is the proof that it was well worth it. I have gone to business seminars, web design conferences, SEO conferences and many marketing seminars and to me, the cost of being away from my business and the conference expenses were worth every penny. A conference can cost up to thousands of dollars and when you spend this kind of money, it is important to make sure that this investment is going to help your business grow.

One of my favorite conferences that I look forward to every year is the one from the Internet Merchants Association (IMA) which will be held in Las Vegas, March 2-3,2010. It is presented in conjunction with the ASD/AMD Sourcing Show where IMA offers free business seminars to the attendees. This year on the 1st & 2nd of March, IMA will present titles that include “The ABCs of Web Design”, “Big Ideas for Small Businesses” and “Get Found in Search Engines: SEO 101″ to just name a few.

Rick Wilson, Vice President of MIVA Merchant will present an important topic at the IMA Conference, “Top 10 Tips for Designing a Great Checkout Process.” I look forward to hearing what expert Rick has to say about the checkout process. The checkout process for your customers is so important and if your customers “don’t get it” then you can be out of business quickly.

While I love to blog, I am not consistent with the “other” social media stuff. I really do understand it but there has to be a way to make it more financially viable for my business. “Nine Ways to Make Your E-Commerce Site More Social” will help me pull it all together and complete my 2010 plan for my business. Another title that I am looking forward to attending at the IMA Conference in March is “How 21st Century PR Can Build Your Brand”.

I hope you can attend the IMA Conference, March 2-3 in Las Vegas. If you do attend, track me down and I will be happy to buy you a few drinks in the IMA Networking Suite.

Online Retailers: FTC Is Watching Your Endorsements

written by Cathy, SnorkelingOnline

SEO is always on my mind. Ok, call me a dork… but organic search is very important to my ecommerce business. And with SEO, blogging is up on my “to do” list. Now who doesn’t like blogging? You can tell the world what your personal opinion is. And this can include product endorsements.

As President of Internet Merchants Association, I am going to tell online retailers, that ASD/AMD is the best & largest sourcing show in the world. Their next show is February 28-March 3, 2010 in Las Vegas. You can find almost anything you are looking for, to sell online.

Now, what is wrong with that statement? I am endorsing ASD/AMD. And the Federal Trade Commission recently says that I need to disclose to the consumer that Internet Merchants Association accepts money or free products from ASD/AMD (actually we trade services) for a review on their product/services. The FTC is taking a closer look at how we (bloggers) are promoting ecommerce merchants.

So to all the bloggers, becareful… state your relationship & payments accepted or you could get in legal trouble which could include a fine of up to $11,000.