Is Dropshipping Still a Viable Business Opportunity?
The eBay & Amazon Seller's News ~ February 21, 2017 ~ Volume 18, Issue No. 3
Tips, Tools, News and Resources for eBay, Amazon and Independent Online Sellers
ASD is just a few weeks away. I just got an email from the organizers of the ASD Wholesale Trade Show. They still have some good deals on Hotels for the show. Check this link to find out what is available and to make reservations.
Please Note - This is my last notice: If you are interested in buying The Complete Amazon Marketing System , at the current price, please do it now, because we are having a substantial price increase on March 1st of this year.
Please don't write me after March 1st. and ask for the old price -Sorry, but I cannot make any exceptions. It's just not fair to charge some folks the old amount, while others are paying full price.
Effective March 8, 2017, the Condition Note attribute will be disabled for all new products on Amazon. If you do have products listed as new with condition notes, the condition notes will be removed from the All Offers Page. You can still continue to use the Condition Note attribute for all other product conditions.
Our Restricted products and brands list has been updated.
Interested in Private Labeling? My friend, Jim Cockrum has come out with a great course that shows how to do private labeling without all the normal costs and hassle. Click here for more info.
I have told you (my readers) about Refunds Manager before. Refunds Manager is a service that insures you receive Amazon refunds for your lost or missing items,warehouse damaged goods, incorrect orders, and inaccurate fees.
Just this month, Refunds Manager found me $975.38 in refunds (from the previous month) that I knew nothing about. Yes, I could have tracked them myself, but that is really detailed and time consuming work, that frankly I just don't have time for. So what do they charge for this?
Unlike most services, Refunds Manager does not have monthly fees -instead, they charge a percentage (25%) of what they recover. That may sound like a lot -but once your monthly sales are ruining over $15,000 per month, try doing it yourself. You will soon see the benefit of having someone else do this for you. Also, when I used to do it myself, I missed a lot of things that easily added up to the 25% I pay refunds manager every month.
Here are some of the cases Refunds Manager tracks for you:
Give Refunds Manager a try -you won't be dissapointed.
Here is an excellent Free blog post from Karon Thackson at Marketing Words - 5 eBay Listing Tips for Creating Compelling Bullet Points.
Another free article I have updated is Five Business Tips to Improve Your Sales on Amazon .
Here is a free article about Amazon's rapid sales growth
If you are going to ASD - you might look into the Prosper Show (No relation to the Money-lending company). This year's show is held in conjunction with ASD, so attendees can visit both events.
THE PROSPER SHOW for Amazon Sellers is ideal for intermediate and advanced Amazon online sellers seeking to learn from former Amazon business leaders & industry veterans, to network with one another and to dig into advanced topics through workshops. The exhibitors and sponsors of this event include many of the leading solution providers supporting marketplace sellers today.
Some of the speakers are former Amazon employees.
I have negotiated a $100 off discount for my readers to the PROSPER Show for established Amazon Sellers, at the Las Vegas Convention Center March 22-23, 2017.
Please click on this link to get your tickets. This discount is available until March 15, 2017.
The 2017 keynote speaker of the PROSPER Show will be Rick Cesari, the marketing mastermind behind GoPro Camera, OxiClean, The George Foreman Grill, Sonicare, Juiceman, Rug Doctor, and Clarisonic.
Mr. Cesari will talk about what it takes to build a successful brand from end to end. Over 25 sessions covering timely topics relevant to resellers and brands selling on Amazon today, including:
If you sell in the Home & Garden category — or sell kitchenware — or gourmet foods, then you might want to check out the Chicago Home & Housewares Show at the McCormick Center in Chicago. The International Home + Housewares Show features more than 2,200 exhibitors from 6 continents and more than 62,000 attendees from over 125 countries. The Show brings buyers and sellers together to create the home + housewares industry's key marketplace!
Go here for more information or to register. Unfortunately this show is the same time as ASD — so it would be difficult to attend both.
I have often written about Joelister as a way to list your products in Amazon FBA on eBay. Well - now there is another player in town.
The company is called Zonguru. But, Zonguru does a lot more than Joelister. Here are just a few of the services they provide:
Zonguru not only lists, tracks and fulfills your items on eBay, it provides other valuable services as well. Personally I think the Keyword Optimizer and Keyword Tracker are worth the entire cost of the system. Give Zonguru a try.
Website Magazine in conjunction with Alvera has come out with a free guide to Sales Tax changes and updates for 2017. Click here to get your free download.
Lets get started with this month’s articles:
I am sure that most folks know what dropshipping is, but just in case -here is a simple description:
Dropshipping is a program where you list an item on Amazon, eBay or your website, that you do not own. These items (products) have not been purchased yet -and are not in your possession.
When the product sells, you order it from the supplier who then "dropships" it directly to your customer and you pay the dropshipper his wholesale price.
You receive the "retail price" (what you sold it for plus shipping) from the customer -but pay the dropshipper his wholesale price. Notice that I said his wholesale price, not the wholesale price. It's expensive to drop ship and dropshippers cannot make any money selling at the price you would get if you ordered the same items in quantity
Sound great; right? With drop shipping, it looks like you can make money without investing money up front for inventory. But, like many things in life, the Devil is in the details.
I am not going to mention the big drop-shipping companies by name. I did that once, and one of them threatened to sue me if I didn't remove my post.
My lawyer said I would have won the lawsuit, as my post was factual and mostly my opinion. The problem was it costs almost $50,000 to defend a lawsuit even if you are successful. So I caved in and removed the post.
If you want to know the type of drop shippers I am talking about, just is Google "drop shipping for eBay" and all the big players will come up. You will see lots of famous brand logos, and tons of popular brands. (When you see that - it is a signal to run away).
There are several issues with these general drop-shippers.
To start with, most of them do not own any inventory. They are what the industry calls "virtual dropshippers." When you place an order, they then place an order with their supplier. Since they are buying at slightly more than the actual wholesale cost, they often charge more for wholesale, and have to add something for themselves.
This can be a small markup or a handling fee. A few of them I have dealt with also mark up the shipping. Since they are big UPS shippers they get pretty good discounts on shipping, but they rarely pass that on to you. So it may cost them $7.25 to ship something to your customer, but they charge you $9.95.
Once you get into the details and add everything up, there isn't much room to make money.
I signed up with one of these companies and learned that the other sellers on eBay were actually the same, or lower, than the drop shipper was charging as their supposed "wholesale" price.
The next issue is timing. Both eBay and Amazon encourage you to ship within one business day and you have to enter the tracking info into their system to prove you did that. eBay and Amazon both require you to do that for 90% of your shipments if you want to keep your top rated seller status on eBay -or meet your account metrics on Amazon.
Most of the drop shippers I have dealt with take two or three days to ship and get me tracking info. The reason for this is because they don't stock the product, and must buy it first.
Another huge issue is counterfeit goods. When you read the fine print in most dropship agreements (That you must accept before buying), it states that they take no responsibility for the legitimacy of a product.
I found one large dropshipper from Canada that was selling all types of fakes. This was causing eBay and Amazon sellers to lose their accounts permanently.
If you see a drop ship company advertising famous brand names such as Channel, Rolex, Gucci, Apple and so on, I suggest you run the other way because these type of companies do not deal with virtual dropship suppliers. Either they are buying them from an authorized retailer who discounts -or they are selling knockoffs. In the first instance -you can't make any money, and in the second -you can lose your account permanently.
Then there is the issue of running out of stock. This is another big issue. If you are listing drop shipped products on eBay or Amazon, you have to check the quantity on hand every day, or you run the risk of the drop shipper running out and you have to cancel the order. Do that a few times on eBay or Amazon and they will suspend or cancel your account.
So what type of dropshipper does work?
There are a few manufacturing companies in the US and Canada (and the UK) that actually have products in stock that they drop ship. As long as you are dealing directly with a manufacturer or distributor that actually stocks the products in their warehouse, this can work if they can ship and provide tracking quickly.
And since you are buying from the true wholesale source the price will be better than you get from the virtual dropshippers. But even these sources can run out, so you need to be able to check quantity on hand in real time and immediately cancel your listing if they run out of stock.
What kind of products are best for drop shipping? Think about it: Why would a manufacturer that typically sells small, low-cost items in case lots want to go to the trouble to drop ship their products? Most of them will not.
However, products that are large and heavy, or products that have a lot of different models, lend themselves to dropshipping. One of the products we sell is a line of steel firepits that weigh close to 50 pounds and there are over 50 different models. It would be impractical for any of their resellers (including stores) to stock the entire product line, so they will drop ship for their resellers.
Most retailers would find it difficult to carry the complete line, so the company drop ships for us and many of their retailers. Our relationship with them has been so successful, we are now their exclusive seller on eBay. And this company gives us tracking the same day we order. So this works well.
Traditional drop shipping is not quite dead -but I would say its on life support. You can make it work if you can find the right supplier and work out the kinks. But, forget these guys who claim to have thousands of products, and who have systems (or pre-made websites) to auto-list the items on eBay or on the website they give (or sell) you. Most (if not all) are a total waste of time and money (and many of them are outright scams).
For one thing -if Google sees lots of websites with the same products -all on the same server -they will relegate your website to the sandbox. Whether you dropship or sell wholesale goods, if you want to set up a website -then set up your own eCommerce website.
I am sure I will get a few emails from folks who are, or have been, successfully drop shipping. Good for you -but you are an exception. I talk to a lot of my readers and I can tell you that over 90% have lost time and money trying to dropship. Again, just my opinion - there could be one big drop shipper out there that actually works. But, it might be easier to find an elephant with two trunks.
Besides, both eBay and Amazon are discouraging drop shipping as a business strategy on their sites.
I was trying to create a shipment to FBA that included a product I have been selling on Amazon via FBA for the past 3 years. When I tried to add the product to the shipment, I got a notice that the item was “Restricted,” and had to be removed from the shipment.
Here is what the notice looked like in my shipment flow:
This category of product has not been an issue with Amazon in the past -and I am authorized by the manufacturer to sell it. Also, the product is popular and fast-selling. So what was the problem?
According to Amazon, this product has a very high return rate -and several complaints from customers that "it doesn't fit."
The product is a very popular, and fast-selling, accessory, for the iconic Colt 1911 (and clones) handgun. The problem is: The 1911 pistol comes in two sizes (I know a lot of you are not into guns -but keep reading, because this could happen with any product category).
The 1911 comes in a standard size, and a Compact size known as the "Officers model." I sell this particular accessory in both sizes -but I have received email from plenty of customers who admit they did not read the description closely, and ordered the wrong model. I suspect that is what is causing the high return rate.
When this happened, I opened a support ticket with Amazon. It took a few weeks to get an answer -but it finally came. Here is what they told me:
Although both sizes have the same issue -Amazon only restricted the Compact size -and not the full size model which I am still selling via FBA. I have no idea why -but I suspect the next time I try and send the Full size, the same thing will happen.
In any event -if you have a product with a similar issue where buyers could be confused by the size or model -then be sure and point that out in the first bullet point.
(NOTE: This is the kind of information I cover in The Complete Amazon Marketing System which will go up in price on March 1st. Get your copy today.)
What exactly is a sales rank on Amazon?
Amazon calculates the sales rank of a product based on the all-time sales of a Product (by ASIN) where recent sales are weighted more than older sales. So Amazon looks at the historical sales rank in a category but they also adjust it for recent sales activity (So if you suddenly have a lot of sales, you will see your sales rank increase significantly).
I don't have any statistics on this, and Amazon will not discuss sales rank, but I can tell you that recency of sales, counts for more than historical ranking.
The smaller the number -the higher the sales rank
For example, a sales rank of 5000 is far better than a sales rank of 500,000.
One of my better selling products had a sales rank of around 7,000 in Sporting Goods back in October. But sales of this item jumped during the holiday selling season. This recency of sales increased my sales rank to around 3,000 which is in the top 0.1% of all the items in the Sports & Outdoors category.
However, by late February, the sales rank had fallen back to the 7,000 range due to sales of that item slowing down after Christmas. But 7,000 is still in the top ½ of 1% in that category
I know that most of you know where to find the sales rank of a product, but for those of you who are entirely new, here is a screenshot to help you.
This is the sales rank for Hot & Spicy Peanuts.
The Product Details section is usually located just after the product description.
As you can see, there are actually three sales ranks shown:
When you look at this, you may see a different sales rank. That is normal as sales of this and other products take place.
I almost never bother with the last two (unless that sales rank is under 5). I am mostly interested in the sales rank in the overall category - #74,286 in Grocery & Gourmet Food.
Once you have the sales rank for the product you are interested in, the next thing you want to do is find out the percentage level of your item in the category. Here is how you do that. First you bring up the category and type a left and right bracket into the search bar. See screenshot below:
Now hit the search icon and look in the top upper left of the page and you will see this.
Look at the text that says 1-24 of 436,487 results. That tells you how many items are in a category. In this case it is 436,487 items listed that are active (in stock - ready to sell). Note - that there may be more items with listings that are not coming up, because sellers did not restock after the last sale. In fact -when I did this search during the Christmas selling season -the total number of active listings in this category was just under 1 million.
Let's get back to calculating percentage. If there are 436,487 items listed, and your item's sales rank is 74,286 just divide the total number of items into your sales rank and you will get the percentage (74,286÷436,487 = 17%). This means that of all the items listed in Grocery & Gourmet food, this item is in the top 17% of all the active listings in this category.
Just as an aside, I want to show you the total listings for some of the popular categories
This is to give you some idea of the smaller categories (Patio, Lawn & Garden, Grocery & Gourmet food and Baby) and some of the larger ones (Electronics, Clothing and Books).
Now what good is knowing the percentage? Think about it -if a product was in the top 1% of a category -that means it is a really fast seller. Depending on the category, sales of an item in the top 1% could be between 25 and 100 items per day! On the product I mentioned earlier in Sports & Outdoors that had a sales rank of around 3000 (Top 1% in Sports and Outdoors), that translated to about 30 to 40 units per day.
The product I listed above -the Hot & Spicy Peanuts ASIN - B005IQ3E68, has a sales rank in the top 17% of the category. Normally, I would not stock a product with a sales rank of less than 10% but this one is an exception. (BTW -The Hot & Spicy Peanuts at 17%, sells one unit about every two or three days).
Why do I stock this at such a poor percentage? For one thing, I sell several types of peanuts and customers often buy a variety, so it makes sense to sell a wide range of products.
Another reason I don't honestly understand is, peanuts are seasonal. I have seen the sales rank for this product go as high as the top 5% and as low as 20%. I have no idea why -but I am plotting the seasonable information, so I would only stock a large amount of these at the best time of year.
The last reason is my profit. Although I only sell one unit every 2 or 3 days -this item is marked up about 3.25X
When I am looking for new products to sell, I look to see what the current sales rank is for the same (if it's already listed) or a similar type of product (if it's not listed).
Here is a good example. I had a source for a top quality Immersion (stick) Blender that was a minor name brand, but not yet listed or sold on Amazon. The first thing I did was look up the sales rank of similar popular models. These were the ranks in in Home & Kitchen:
Those are all excellent sales ranks. This led me to believe that although my product would be a new listing -that the type of product was in demand, and my product should also achieve a good sales rank once it had been on Amazon a while. And, I was right!
It took me about 3 weeks to get my first sale and another week to get my second. But, at the end of 10 weeks, my product had a sales rank near 15,000.
OK - that is nowhere near the other stick blenders I researched, but 15,000 is still in the top ½ of 1% in the Home and Kitchen category. That translated to an average of 3 sales a day. Since this was a $159 item, that was $477 a day for just one product.
Many sellers think, that when they see a poor sales rank, they should automatically move on to a new product. That would be a mistake.
If I am interested in a product -and similar products have a poor sales rank, the first thing I do is look at the listings. Do they have good images? Are the bullets and description well written? Are the similar items in FBA or merchant fulfilled? I have found that changing any of these factors can often improve a sales rank overnight.
Of course a good sales rank is a plus. But, I have found that in many cases, the sales rank does not matter at all. One of the things I do is create new products and listings (Many of them are private label). When I launch these items, the sales rank is zero -there is no sales rank because there have not been any sales. Yet I start getting sales on most products (but I do have the occasional dud).
How do I do this? A lot of sellers use two popular techniques to get early sales. They lower the price so low they are practically giving it away. The other technique they use is buying Amazon Ads. I have tried both of these and, maybe I wasn't doing them right -but they never seemed to work for me.
I put my effort into creating good images that show the product in a static version for the main image, and secondary images that show the product being used. The other thing I do is use my keyword tool - Merchantwords to find the best keywords to work into my title and the keyword field. I have heard that other people struggle with this - but it always works for me.
As I mentioned above, I do get the occasional dud -but when that happens, I just move on to the next product. I must be doing something right because my success rate with new products is about 90%. I can live with that.
This is a guest article by Liz (Downing) Fickenscher at eComEngine the company that supplies my FeedbackFive service. That is the service I use to increase my feedback and product reviews.
Seller feedback and product reviews can be confusing for both Amazon merchants and customers. As a seller on the Amazon marketplace, you know that both feedback and reviews are important for your eCommerce business, but what should you focus on first? How can you clearly communicate the difference to your customers, to avoid receiving seller feedback as a product review and vice versa?
In this article, we'll outline the difference between reviews and feedback and explore effective ways to solicit both for your business.
What's the Difference Between Seller Feedback and Product Reviews?
It's very easy for Amazon buyers to confuse seller feedback and product reviews since both are defined by star ratings from one to five. In fact, as an Amazon seller, you've probably received a product review as a seller feedback and vice versa. Let's set the record straight, because seller feedback and product reviews are, in fact, very different.
Seller feedback is feedback on the buyer's experience with you as the seller. Was the buyer happy with how the order was packaged? Did the packaging hold up in transit? Did all parts arrive intact? If there was an issue, did you offer to resolve it in a timely fashion?
Product reviews (also called customer reviews) are for the item purchased. Since a single ASIN can be sold by multiple sellers, the product listing is attached to the ASIN, not the seller. Product reviews should only be for the actual item, not for the buyer's experience with customer service, etc.
Understanding Seller Feedback
Customers who are interested in purchasing a product that is sold by multiple sellers often look to price and seller feedback ratings before making their final purchase decisions. Constructive feedback provides merchants with important information that can help them improve their business processes, from professionalism to packaging.
If you receive negative feedback, you can submit a request for Amazon.com, Inc. ("Amazon") to remove it if it falls into one of the following categories:
You can find more details about Amazon's feedback policies here. It's often helpful to include a brief description of the type of feedback you're requesting in your feedback review request. You might create an email that says something like, "Thank you for purchasing <item> from <store name>. Please take a few moments to leave feedback about your experience with this seller."
Understanding Product Reviews
Consumers often look to product reviews to determine an item's quality. These reviews are especially important if you sell a private-label product, since customers are unfamiliar with the brand name and reputation. Product reviews are important when it comes to building your brand's reputation and recognition on the Amazon marketplace.
Product reviews give sellers an opportunity to see how customers are using and reacting to their products. This can help them optimize their listings for better results. It's also valuable market research that can influence future stocking decisions. Product reviews help address this basic question: are customers satisfied with the item you're selling?
When sending a product review request, be sure to specify that you are asking for a review of the item, not the buying experience.
What's Most Important for Your Business?
Should you focus on requesting seller feedback or product reviews? It really depends on your business model and how long your company has been selling on the Amazon marketplace. Generally speaking, it often makes sense to build up positive feedback ratings first to set your business up for success.
If you have lots of positive seller feedback and receive a couple of negative feedbacks, it will make much less of an impact on your business than it would if you only had a few positive feedback ratings. This is also true of product reviews, although as noted above they are even more important if you are selling private-label or lesser known products.
Overall, the most important thing you can do is provide a quality customer service experience for your buyers from the moment they start browsing to the day the product arrives on their doorsteps. Begin by writing a descriptive product listing that accurately describes the item. Be sure to include detailed photos and consider including photos illustrating the product in use. Make sure that your items are packaged properly to prevent breakage and other issues related to shipping. If you are notified of a problem after the item arrives, take immediate action to correct the issue for your buyer.
Stay in the Game
The Amazon marketplace is a competitive environment, so it's important to pay close attention to seller feedback and product reviews. Negative feedback and poor product reviews could cause you to lose sales. An automated feedback management tool like FeedbackFive from eComEngine can help you manage your negative and neutral feedback, automatically solicit seller feedback and product reviews, establish your brand and much more.
Boulder Works, Inc. offers a unique collection of home decor and handcrafted gifts made with natural stone, slate and organic patina metal. They are hand etched with designs including western, wildlife, Southwest, nature, cabin and Zen.
The Maui Soap Co. sells a line of Hawaiian body care products that are crafted with nourishing tropical oils and true Hawaiian aromas. They sell a full line of bath and body care products.
Wikki Stix is a One-of-a-Kind Creatable original waxed yarn creativity toy - made in the USA! Not only are Wikki Stix a wonderful creative activity toy…they are also a "Really Cool Tool for Teaching School."
Perfume Provider of America is located in Orlando, but they distribute brand name perfumes and cosmetics nationwide. Click on the About Me Page to contact them for wholesale information.
DS Secret sells a very clever line of hair care products for women. I have not seen their products on eBay or Amazon. I think their Hot Brush could be a big seller.
Highland Wood Crafters products include trivets, cutting boards, clocks and many other decorative gifts with vivid reproductions of many top selling artists from around the country.
Deco Breeze sells a collection of designer portable fans that offer a broad range of styles. Styles range from taller floor standing models to tabletop and desktop sizes.
Helping Hand Partners sells travel products and jewelry. They work with social enterprises and fair trade artisans all over the world to help to provide a path out of poverty for at risk populations. Click on the link on the website that says Retailers to get wholesale information.
Mer-Sea & Co . artisan soy wax candles are hand-poured in the USA using fresh fragrances and packaged in locally-sewn canvas bags. Their palette is sea-salt bleached hues of white, grey, and blue mixed with little flashes of silver.
Dona Bella Shreds are fashion accessories designed and handmade in America, utilizing upcycled textile remnants into unique, one-of-a-kind creations.
Cala Home offers table mat and coaster gift sets, wood trays, glass counter savers, paper placemats, ceramic mugs, chiseled edge stone coasters and anti-fatigue floor mats.
Southern Buoys sells a line of clothing and accessories celebrate the comfort and ease of southern coastal and lake life.
Poppin Paper sells a line of pop up cards that bring paper to life one card at a time.
Alchemy Forever is a Swiss company that sells a line of Health & Beauty Products. The website is retail, but use the Contact Us form to ask for wholesale information.
That’s it for now. See you again in a couple of weeks.
P.S. If you missed the last issue, click here to read it.
© 1999- Harry McGrath, Inc., DBA Skip McGrath, Auction Seller's Resource and Vision-One Marketing. All Rights Reserved.
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