Once you set up a dropshipping business, you can be set for years to come, with minimal work on your part. Plus, with some careful investment, you can expand indefinitely. You won’t be the next Amazon, but you can be a pretty big name retailer, and all you need to do is find the right products to connect with the right audience.
Of course, it’s that setup cost that really requires some careful attention. If you get a bad product, you’ve wasted your time and possibly your money. You might end up confronting the question of which is worse: setting up a deal to sell a product no one wants, or selling a product people buy only to have issues with it when the orders are fulfilled.
In order to help you choose good products, I’ve put together a list of questions you can ask, either asking the wholesaler directly or asking yourself about the products and the audience.
The first question is the most important one of all, for the simple reason that the whole plan falls through if they answer no. Dropshipping is making a partnership, and some businesses simply don’t want to deal with that kind of hassle. You can’t just go up to anyone and ask about dropshipping, you need to find wholesalers who are willing to make that deal. After all, for the wholesaler, the deal with you means a lot more work. They have to do the order processing, the fulfillment, and sometimes the customer service. All you’re doing, basically, is glorified advertising.
There are also some wholesalers who will do dropshipping, but only if you can guarantee a certain level of product sold on a monthly basis. The idea is that they only want to work with people who are effective and making both companies money. If you’re just getting started or if you aren’t likely to surpass more than a few units sold per week, you probably won’t be able to cut a deal with these wholesalers.
This will inform you whether or not the product is worth carrying. When you’re researching a product, you want to see what the market looks like. If you’re going to be selling on Amazon, and everyone selling the product on Amazon right now is selling it for $15, you don’t want to find out the wholesaler is selling it to you for $16. You want to know what the cost is so you know how much potential profit you can make per-unit, and you can have some leeway to undercut the current market so you get sales and positioning in storefronts like Amazon and eBay.
This, and other related questions, will play off the previous one. If the wholesaler has additional fees relating to buying their products, you need to know about it.
You don’t want to be surprised when you purchase a unit at $12 and find they added a $4 fee on top. That’s the kind of thing that eats up a lot of your potential profits very quickly.
I mentioned this before, but some larger wholesalers are only going to do business with companies that can sell a lot. You don’t want to get two hours into discussions only to find out that they will only sell products in bulk orders of 5,000 or more. That might work when dealing with B2B products, but the usual Amazon dropship B2C niches don’t support it.
This is also a huge concern if you’re trying to go the retailer route rather than the dropshipper route. Minimum order quantities mean larger bulk expenses, storage space requirements, and more costs.
You want to know this information for a few reasons. Firstly, the postal service is generally pretty good these days, so if the product is taking 5+ weeks to arrive, that’s a pretty good sign that it’s being shipped from somewhere it shouldn’t be.
Sometimes “wholesalers” will actually be their own level of dropshippers for Chinese wholesalers, so you’re getting the product thirdhand and it has to pass through customs. This can eat up a lot of time. You also want to make sure you’re not over-promising shipping speed on your website when you can’t guarantee delivery.
Generally you’re going to be selling your dropshipping products either through your own website or through a marketplace like Amazon or eBay. You need to figure out how incoming orders can be processed and sent on to the wholesaler for fulfillment. Do they have an API you can link into? Do you need to email in orders? Do they have a fax set up for the purpose? Make sure it’s something you can do conveniently and quickly, and preferably automatically. You might need to find and pay a developer to get all of that set up properly for you, but it makes life about a thousand times easier once you do.
EDI is the Electronic Data Interchange format. It’s a system set up so businesses can communicate with one another on common ground. Think of it like global commerce, how many transactions are made in English even if neither party speaks English primarily. It’s a language everyone involved can understand, except in this case the people are actually inventory and order management systems.
The important part about EDI is making sure you have up to date information about what the wholesaler is doing. This helps avoid issues where the wholesaler runs out of their product and needs to make more, but you’re still collecting orders on your site. EDI integration allows those products to be dynamically marked unavailable on your site.
These days, tracking is basically required for shipping a package that contains a product. It’s done so close to automatically that it’s a surprise when someone orders an item and there’s no tracking. If the wholesaler does not do tracking on their shipping, you’re going to have to field a ton of customer service queries asking about it, and since you’re trying to pretend to be the company fulfilling the order, you can’t just pawn it off on the supplier.
In some cases, you might not care about branding with your dropshipping. In others, it might be vitally important. Branding is what sets you apart as a storefront online, these days. If you want to get ahead and carry a variety of products, or even become a household name for people looking to get products in your niche, you need strong branding. Part of strong branding, then, is getting the wholesaler to insert your branding in the packages they ship out on your behalf.
Branding can be anything from logos printed on the shipping label or shipping container, to a small postcard insert with a greeting and a logo inside the box. Make sure you provide something the wholesaler can easily use, otherwise they aren’t going to do it.
This, again, will impact several elements of your dropshipping. Primarily it impacts shipping itself, in both the cost and the speed of delivery. However, you also have to worry about things like import taxes, tariffs, and customs if your products are being shipped from outside of the country.
This is one thing that comes up a lot with Chinese wholesalers, and it can be pretty devastating to have an entire batch of orders stuck in customs.
Often, wholesalers in the USA have suppliers and factories making the products in other countries. It might mean that your products are coming from Canada, or it might mean Mexico, or it might mean China. You want to know where the products are coming from, so you can have an idea as to their quality and the sorts of regional issues that might come up. The last thing you need is to get caught up in a lead paint scandal. It’s pretty unlikely that you’re going to go out of your way to test for things like choking hazards or lead paint, so you need to make sure your wholesaler is doing their due diligence.
Before you agree to a deal and start selling a product through your site and your branding, you need to make sure it’s something of sufficiently high quality that you wouldn’t want to deny you sold it. Ask for or purchase a sample, and make sure it’s solidly constructed, works as intended, and isn’t fragile.
While you’re at it, ask the wholesaler if the sample is different from the product they ship to other people; it’s possible that they have a set of higher quality samples they send out, while keeping cheaper versions behind to send out to customers.
This is an interesting question because it tells you something about the quality level and focus of the company you’re working with. If they sell a dozen different variations of the same kind of baby toy, you can assume that they’ve taken precautions and made sure their toy meets safety standards. If they make baby toys, vacuums, bicycles, car parts, software, and curtains, you have a generalist on your hands who may themselves just be a dropshipper specializing in being a middleman.
This one is more for your own research than a question to ask the wholesaler, since they’re probably not going to give you a complete list of the companies they work with. What you want to do is look around for anyone else selling the same product. These are going to be your competitors, so you should pay attention to them. Try to figure out how well they’re doing, how many products they sell, their pricing, their deals, and so forth. You want products where you can compete, which might not be possible depending who you’re going up against.
You know how every so often a new version of the iPhone comes out? Does the product you’re selling iterate or improve over time? Do new versions come out, do software updates come out, or does the customer have to buy a new iteration? This can help tell you if a niche is going to be full of repeat customers or if it’s going to be fine for a while and fade over time. You also can use this knowledge to help determine whether or not the product will receive support. If there’s a common issue with the plastic shell cracking on a product, will the wholesaler replace the item with a fixed version?
Some products in some niches require certification to sell. You’re not responsible for the certification as a dropshipper, but you do want to make sure the people who are responsible for it are keeping on top of it. You don’t want to sell a skin cream or a medical supplement that isn’t approved for human use. You don’t want to sell a medical device that your clients discover they can’t use because it hasn’t been approved. These sorts of issues can put a serious damper on your ability to sell such a product.
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