What is Drop Shipping?
Are you new to ecommerce’s and wondering how you can make money online?
Since I started blogging and podcasting over at usingyourpower.com, online business has fascinated me.
What drop shipping?
The simple answer, you go to a website and you make a purchase. A few days later you receive a package with your goods. The website you purchased from has fulfilled its obligation.
But there is a lot more to drop shipping than that simple sequence.
Where does your product come from? Who are you purchasing from? Does it matter if you received the product as promised?
The truth is more people are starting to drop ship than ever before. Companies like Amazon, eBay, Ali Express, Ali Baba and Shopify are giving you the ability to purchase and sell good. They are also giving you a platform to sell those products.
Why Drop Ship Products?
With the right supplier, you can choose to have your product drop shipped anywhere in the world or you can focus on your local market. The distributor will handle the shipping and handling of the product, on your behalf.
You may have your own reason to start drop shipping. You can start your online business, for a low-cost and there is not much barrier to entry. A full-time or part-time business is a reality for most. There is flexibility and you can choose to work from home or be sitting on a beach.
When you own your own drop shipping business you take advantage of the fact there is little to no manufacturing on your end. There is typically no inventory to purchase and stock.
My Experience with Drop Shipping
When I first came across the concept of drop shipping I was excited. I could go into traditional online business and not have major expense.
If I had known what I know today, I would have not purchased $1,000 of Matcha Tea. I figured I could purchase from Ali Baba. Have the items shipped to my home and then sell the tea using social media and various sales channels.
That was so backwards. I did not know about having a website to sell my product or having a distributor to work with. Dropping shipping was so new to me, that I really did not understand it.
Then I meet Jose Gonzalez. A business owner who had been drop shipping before the idea become main stream.
Meeting Entrepreneur Jose Gonzalez
I meet Jose Gonzalez of Creative Cookware and Creative Coffee when I went to visit my cousins in Montreal, May of 2014. My cousin got a few friends together and we made a night of it.
We went to a local hangout to watch the Montreal Canadians play in the playoffs and to cheer them on. Although the Canadians lost that night, I started a friendship with Jose.
Jose was one of the guys that come out that evening. I was a few drinks in to the game and during our conversation, I asked Jose what he did. He said he had two online businesses. He sold Cookware and Coffee. I made a joke and said, “Oh, you’re a Motherfrother.” He laughed and that’s when we become friends.
Setting up the Interview
In February 2015, my cousin turned 40. I met him and a few of his friends down in Las Vegas. To my surprise everyone my cousin invited was a business owner.
I spent the next few days in a sort of business class setting. I was learning from real business owners, who were doing what it takes to make their businesses succeed.
Jose’s business interested me because as I talked to him I realized that even as he was in Las Vegas his online business was making sales. Even more interesting was that after Vegas he was headed to Florida with his family. Two weeks off work and his online business was making more money than the day before.
Background on Creative Cookware and Creative Coffee
Both websites sell to the North American market. The company started importing high-end products from all over Europe and other parts of the world in the early 1960’s. By the 1990’s, the business extended onto the internet.
Jose mentioned to me that they were one of the first companies to embrace e-commerce’s and opened for business in 1997.
Reviewing both sites I noticed, Creative Cookware and Creative Coffee have the highest quality products at unbeatable prices. They even offer a discount if you find a lower price.
His business distributes most major brand name products, as well as high quality house brands at a great value. They make a commitment to customers and offer the best possible prices, prompt shipping, dependable customer service and a 100% customer satisfaction guarantee.
Did I mention, on the Creative Cookware website, they offer a 90 day return and exchange policy!
Creative Coffee is proudly Canadian and can be viewed in French. Jose believes in targeting his audience, in both of Canada’s official languages.
Interviewing Jose Gonzalez
I set up a phone interview with Jose Gonzalez and we spoke for 45 minutes. In that time, we spoke about his business and what Jose does daily to keep his drop ship business growing.
Jose gave me amazing insight on what it takes to run a successful drop shipping business. The marketing principles do not change because you are online. In fact, much of what we apply to traditional off-line business can be applied online.
Know your target market, this is very important. Online shopping has been growing year over year and Amazon is now the largest retailers who does not manufacture anything!
More people between the ages of 18-35 are accessing the web to make purchases. Fewer people are headed to the malls. You can see for lease signs, where shops existed. Now there are empty retail spaces.
The online model Jose uses for both his businesses is, high volume sales and low prices.
In 2014, Jose had over 2 million in sales. Over the next few years Jose is not looking to grow his business but is looking for ways to better maximize the profits that he is currently making by lowering overhead and tightening up his business processes.
This means doing less work and making more money.
Tips for Success
With 18 years of online experience, Jose shares four tips to keep your business growing and relevant for years to come.
- Reinvent your business to stay relevant. Be competitive in the retail space you have decided to participate.
- If you do not know anything about SEO or do not have time for SEO, hire a Google specialist. Keep your business relevant even as Google continues to change its algorithms periodically.
- Focus on the mobile user. There will be more sales made on mobile in the next 10 years than desktop.
- Check and make sure your Marketing is working. Use Google Adwords and Google Trends. Jose checks his Google analytics twice a day to ensure his money is working for him and not against him.
The Negatives of Drop Shipping
Drop shipping is not all roses. There are downsides that you need to be aware of.
- Due to the fact, there is low barrier to entry, more people enter the market space to sell.
- It can be a full-time job, when you first start looking for the right supplier to fulfil your needs.
- You will need to be the customer service department or you will need to hire a team to take care of the customer service.
- If you do not know what you are doing you can lose money, time and waste a lot of energy.
- There is a lot of competition. If you do not know what you are doing you will be out of business before you get a chance to start.
With the ability to find products and ‘white label’ them, you can create a brand that is unique to you.
Like others you can begin your drop ship business to earn some extra cash. Over time you can start to earn some good income and perhaps replace your full-time job income.
In his podcast, My Wife Quite Her Job, Steve Chou not only talks about how we his wife and he quit their job to pursue their online business but he talks to other successful entrepreneurs who use the power of the internet to do business.
As you start to think about or dive into drop shipping, do your best to find a product that is part of niche market. The less competition the better you have a chance to own that segment.
What one thing did you take from this article and how will you apply that information?
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