Many auction sellers are surprised to find out they can sell merchandise they don’t own, may never see and best of all, definitely don’t have to ship. There are many companies who will drop ship items for you.
What exactly is “drop ship”?It is a sales strategy used by many businesses, especially small companies. These are often the companies who can’t afford ads on the Super Bowl or infomercials that run several times a day. They don’t have a large sales staff and they can’t afford large spreads in national magazines. Therefore, they will sell merchandise at reduced prices to small buyers like us. We act as their unofficial sales people.
It’s a win-win situation. The company sells more merchandise than they could ordinarily sell. Your Net auction business wins because…1) You don’t have any financial investment in the goods you are selling. If the merchandise sells on the auction you receive payment from your buyer and send part of the money to the company. Most of them will mail to your customer with your mailing label on the box. If the merchandise doesn’t sell, you have not risked your money and have no capital tied up in merchandise.
2) You do not need to bother with the shipping and handling of these items. You are free to pursue your real love -- finding exciting and salable goods.
3) Many of these companies have professionally created catalogs and/or pictures that you can use on your auction site. The quality may exceed that which you can achieve with your own camera or scanner.
4) There are no goods to store. This can be a huge advantage. My dining room often looks like a warehouse, piled high with merchandise and tape, labels, bubble wrap, etc. Entrepreneurs who have had cases of products from MLM companies stacked in the garage will be especially appreciative of this bonus!
5) This works best with higher-priced items. If you are going to sell 50 widgets at $2 each, you are either going to have to take possession of them and mail them yourself, or you are going to have to pay a gruesomely expensive shipping charge to your supplier.
There are ways to create your own sources. All it takes is know-how and some effort… • Use catalogs -- This is the very best way to find companies willing to drop ship for you. Get on the mailing lists of every catalog you can find in your chosen niche! Do this even if you aren’t interested in drop shipping because it will help keep you informed about your merchandise.
There are some fine catalog directories. Your local library may have one or more of them, or you can buy them yourself. While some are expensive, others are relatively modest in cost. Here are some of the best...
Catalog Age, PO Box 4949, Stamford, CT, 06907, 203-358-9900The Catalog of Catalogs, Woodbine House, 6510 Bells Mille Road, Bethesda, MD, 20852, 800-843-7323
The Directory of Mail Order Catalogs, Grey House Publishing, PO Box 1866, Lakeville, Ct, 06069, 800-562-2139
National Directory of Catalogs, Oxbridge Communications, 150 Fifth Avenue, #303, New York, NY, 10011, 212-741-0231
Catalogue of Canadian Catalogues, Alpel Publishing, PO Box 203, Chambly, Quebec, J3L 4B3, 514-658-6205
Another way to find catalogs is to read magazines in your field of interest. There will be all kinds of merchandise and catalogs advertised in their pages.
Not only will the catalogs give you ideas about product and what is hot but you can often find bargains. Many catalogs have occasional “clearance” issues that can be immensely profitable. There is no risk with these kinds of items because you have them sold before your order them from the company.
2) Create your own sources -- This is a very lucrative technique! Almost no one realizes that it is possible to create your own sources of merchandise. Go on a…
… source-hunting safari! Just because a company doesn’t advertise that they drop ship doesn’t mean they won’t do it. The worst they can do is say no, in which case you are no worse off than you were before. Perhaps a company has just never thought about it!
Begin prowling the large chain stores, looking for items that are intriguing. When you find them, check the packaging and investigate the manufacturer. A MicroSoft or Procter and Gamble product? Put it back on the shelf and keep looking. Huge companies like that aren’t going to make a deal with an individual auction seller. But when you find something that says, “Bob’s Garage” in Tickfaw, Louisiana, make a note of the address. This may be the exact item you are looking for because Bob may be very willing to drop ship this item for you.
The margin of profit that a manufacturer receives from a chain store is very slight. During a discussion with a WalMart employee, I was astonished to discover that on a $3.99 item, the manufacturer made less than 40 cents. You might be able to offer Bob much more than he would make selling to the chains. Even if you can’t do that, you represent extra business. Why would he turn you down? You might be able to make quite a deal, especially if you are going to do a Dutch auction.
I got this idea when I read an article in one of my favorite newsletters which described a gentleman who found an intriguing device in the automotive section at WalMart. It was a small tool that sharpened windshield-wiper blades so that they lasted longer.
He bought the item in the store for a few dollars. Then he contacted the company who agreed to sell them to him at half-price and drop ship them as well.
This smart man sent out a few press releases and managed to get a small write-up in “Popular Mechanics” magazine. He immediately made $7,000+ in profit on this small item, and orders trickled in for quite some time afterwards.
If I had known him personally, I would have suggested that he use this valuable publicity to create a sensation on all of the Internet auction sites. His headline could have included, “As seen in Popular Mechanics...”. This crosspromotion would have added greatly to his bottom line.
I have used this search-and-find method many times...• TV trays and picture frames discovered at “Bed, Bath and Beyond.”
• Garden ornaments discovered at “Home Depot.”
• A wonderful journal with unusual pictures on the cover, discovered at “Borders” bookstore.
• A great money-maker was a galvanized metal outdoor thermometer that sold at “Target” for $14.99. The manufacturer was willing to drop ship it for $6.74. I had three different Dutch auctions with this item. It sold for $9.99, $10.05 and $12.20. I made over $1100.
The most important rule to remember when looking for sources? Be a good detective and…
...keep your eyes open. I went hunting with a friend who is new to the auction game. We went to only two stores and emerged with a list of 61 possibilities! Fellow auction fanatics all discover merchandise by snooping through large stores. Major furniture stores are good sources for finding lamps, baskets and other decorative items.
The key is to look for merchandise that is unusual, unique, different, etc. Remember, someone will buy your item if the price is really outstanding or if it cannot easily be found elsewhere.
Heavier items are a natural for drop shipping because they are such a pain to mail. Everyday, china is successfully sold on auctions. Of course, fancy, expensive and/or rare china sells well but there can be a lot of profit in the ordinary, too. Plates, bowls and mugs can all be found at low prices.
3) Find businesses that don’t know how to market -- There are s-o-o-o many people who create a business without giving a thought to marketing. When the light dawns, and they realize they have no customers, they are merely resentful and annoyed about the whole thing. These kinds of people can be our natural partners to the benefit of us all.
Lucky Jon stumbled across a family with a small, not-very-profitable business making tables that really are works of art. Jon sells this fabulous furniture and the family happily ships to the lucky buyer. The table-makers are thrilled because their business has dramatically increased.
This seller used a tactic that can be quite valuable. Sometimes it is possible to create a contractual relationship with the producer of a great product. You can sign an agreement that will gain you exclusive marketing rights for a product. Usually, these agreements are dependent upon a certain number of sales. They often have a time limit, and/or are renewable for a certain number of years.
Some auction learners wonder why the producer doesn’t do it themselves. Sometimes the producer tries to change his mind once he understands how lucrative it can be. An exclusive marketing rights agreement is a way to protect yourself.
There are some really silly Drop Ship Directories that circulate around the Internet and home business magazines. I have bought several of them and have found them to be quite useless. There are usually a couple of companies that are worthwhile but not many. Develop your own sources!
To truly show the power of this strategy, let’s look at an item I have auctioned repeatedly, the Torso Track and Torso Track II. I located a source for these two exercise machines and got the pictures for my listings right off my supplier’s Web site.
Did I do well? Well, the profit per item isn’t anything fabulous. I made between $20 - $35 per sale. And I sold 10 – 20 of these per month. So my monthly income from this one item was between $200 - $700 per month. Nothing to make anyone rich, right?
But here are the important points...i) I didn’t ship anything! My distributor handled all that for me and I didn’t have to bother with it at all.
ii) The company guaranteed it for 30 days so I didn’t have to concern myself with that part, either.
iii) I risked no money at all, except for the fee that I paid eBay for my listing.
The great part was that most of my customers paid me through PayPal. So when I received their money, I paid my supplier out of the same PayPal account and just kept the extra for myself.
iv) It was so convenient and quick. I ordered my customer’s Torso Track right online. There was an account sheet that was created especially for me, complete with ID and password so that no one else could access it. I then sent an e-mail copy of the order to my customer so that they felt comfortable that they would soon receive their merchandise.
v) There was no extra work to repeat the auction indefinitely. I spent approximately half an hour creating an ad, and I just re-submitted the same ad, again and again.
Do you see the power of locating your own sources? And how did I find my supplier? I just wrote and asked if I could sell their products wholesale. When you find something you want to sell, locate as many sources as you can and write to all of them.
Why write to several? Some will say no, or have a minimum number of orders, or not respond at all. But even if you are turned down, are you any worse off than you were? On the positive flip side, several companies will agree and you want to find the best price that you can.
An insight that needs repeating… I never use a supplier without first buying something myself. You do not want to sell something and then have trouble with your customers because the merchandise doesn’t get shipped!
In this case, my source said I would receive my merchandise in 8 – 10 days. I wrote the order date on my calendar and kept track of the delivery time which was exactly eight days, just like they said.
This chapter basically dealt with auction items of a more general nature. The emphasis was on propelling your auction business forward quickly. Lowerpriced items attract more potential buyers faster. So by using the strategies outlined above, you can easily increase your auction experience and build your business at the same time.
Now it’s time to remove the wide-angle lens and examine other equally profitable directions that your Net auction business could take. We’ll start with a very creative option…
