Anyone Using Dropshippers?

I'm looking for a way to boost my margins.

[pdivi]

I'm looking for ways to bulk out my product offerings with more than just affiliate links. I was thinking about dropshippers -- outfits that ship directly to a customer then bill your account for the wholesale price.

I am finding a ton of cross-product dropshippers (most of them marketing to ebay resellers), but most require "membership" before giving out wholesale price info. Are these outfits really selling at wholesale prices? Any experiences?

...and if you can recommend a good one, let me know. My category is Lawn & Garden.

[streetshirts]

Many companies will offer this service to you, if you approach them with a serious offer. We have had luck dealing with small independent manufacturers in this regard.

In general you need to bear in mind a few points:
What is their guaranteed dispatch time?
Will they brand the receipts etc for you, or use your paper etc?
Who is responsible for customer service, support, and aftersales?
What happens with returns?
Where does the money flow? Another way of thinking about this is: Who is responsible for chargebacks?
Is their offering good enough for you to put your name to?
What are their stock levels like? Can they cope with demand: You also need to make sure you aren't the last in a chain of drop-shippers.

I hope these points help. I'm sure others will add many more to this list.

[pdivi]

streetshirts,

Thanks for the helpful post! I was thinking of approaching some of the smaller mfgs. to work out direct dropship arrangements. I'm glad to hear these arrangements can work. I'll use your checklist of concerns.

I'm still wondering whether to use the big dropship middlemen. Ever use one?

[streetshirts]

Never used a middle-man, but in general the further you are in the industry value chain from the manufacturer the more expensive the product.

We have tended to find smaller people to work with as the standard of service is good (if you choose carefully.) I personally like a contact at the drop-shipping company with decision-making power to talk to. That way, problems can be delt with quickly.

I don't know whether the prices that the big people offer are very good, presumably they will depend on volume, and so you may not be able to compete on price. You will need to investigate this yourself in the areas you are interested in. If the service is the same too (as you and your competitors use the same drop-shipper) then it may prove difficult to compete.

That is why we source our drop-shipped products from smaller companies who can either offer us a better price, much better service, or a unique product.

The relationship then works well for both parties

[cfx211]

A few things to keep in mind when looking for drop shippers. Make sure you understand all of the fees involved and get them spelt out clear as day before starting. Some dropshippers will try to tack on things in addition to their per order fee.

Keep an eye on shipping costs. Everyone marks up shipping a little, a markup of a lot can hurt your sales. You should know how much it costs to ship the most popular items you expect to sell.

If the dropshipper has a retail outfit themselves, make sure that they do not give their orders preferential treatment over yours. In our space, we know the big dropshipper/turnkey provider gives their orders preferential treatment and it has upset a lot of their clients.

Finally realize that a lot of dropshippers are still in the fax age, and that there is a lot more manual/CS work involved in this than you think.

[watercrazed]

I have used all three, affil, small manufacturers and third party or large distributors, I also buy wholesale and ship. Moving from affil website to dropshipping is a major committment. Involves alot more customer interaction. With an Affilate site, an 800 number no way, a dropship site no way without a phone contact. Margins vary greatly, Some distributors have margins no better than affiliates. But you can always markup over standard internet price reducing sales but maintaining your margin. Remember, There is a lot more work in dropshipping.

You get all of the phone calls - Product questions ordering problems, ect..
You deal with all of the shipping screwups on the frontline and have to resolve them through a third party.
You deal with the charge backs and other finance issues.
You have to phyiscally place the order, unless you can develop some pretty fancy scripts that interact with your shopping cart,
You have to have a shopping cart and probably a merchant account ect..

But that said, I would not do it any other way I no longer do any affiliate sales.

I recommend buying something from someone using a dropship you are serious about before putting them on your site, and check out the shipping packaging invoicing ect..

BTW all of the companys requiring membership are not dropshipers, they are selling contact information to dropshippers. some of the really large dropshippers will have a setup fee, maybe a monthly maintaince fee providing you with a feed of thousands of products.

Good luck and have some fun