I am assuming a lot of people would know about drop shipping but I only recently discovered this process while doing some research.
Basically, it involves taking orders from customers, then sending these to your suppliers and asking them to send it directly to your customers. Apart from the obvious advantage of saving cost in logistics, there is a real benefit of no inventory management. Plus no real cash required to get started, since you only order from supplier when you have orders from customers.
The disadvantages are off course longer delivery timeframes, no control over quality and unforseen situations.
But advantages still outweigh the disadvantages. There is a company by the name of oo.com.au which sells everything from electronics to furniture and home decor to garden supplies. Almost like a combination of JB HI-Fi and Bunnings Warehouse but much cheaper. This company was started around early 2000’s and they only had an online store to order from (which they still do).
Its now such a big company grown on the basis of drop shipping. Same is true for majority of the ebay stores which don’t stock anything. They order from suppliers as needed.
Its a safe idea but the real trick is to know what product to order. There are already 100’s if not 1000’s of people selling so many different products the same way. Finding the right one, therefore is the key.
It has been few days without a single post but the last week seems to have run away too fast. I tried to help my potential customers by offering a much lower price than my competitors, but the suppliers have crippled my approach.
After speaking with the suppliers, I realised that price can’t be low, unless off course I run the business as a non-profit, which I can’t afford at the moment.
The only way to get the price down is if I buy the machinery outright. But apart from the fact that it’s too expensive, it’s a specialty item that not many people require. So, it will be hard to resell it in the future (that is if let’s say my business goes to hell and I need to sell off assets). It will be very hard to even accomodate the massive thing, let alone the overheads related with it.
So, after days of turmoil, research and negotiation, it hit me that there are too many big players in the market who are bulk ordering to keep young businesses (like mine) out of business.
These big businesses started off by outsourcing operations to China. They then kept losing money for a while since it costs a lot if you only order 2-3 products a week from suppliers. But big companies could afford to lose money. Once they got their customer base, it was like Christmas since they bulk offered and saved tonnes of money.
So now suppliers only want to deal with people who are going to bulk order and everyone else they charge a price that is mind numbing.
But it was a business lesson well learnt. Do not try to enter a market that is under domination by massive companies, unless you can substantially provide a better featured product. Competing only on price is going to put you in the category of the 99% start-ups that fail.
However, this only means that I will have to make a slight change of direction towards another industry. It is absolutely fascinating how many times we start over again, if we really want to achieve something.
Recently, I have been trying to order machinery for my project from China. It has been a good lesson on how to negotiate and how to choose the best out of many good ones.
However, how to keep the final price lower than competitors is the main pressing concern at the moment. I thought I wasn’t going to buy the machinery at all but instead outsource the operations to suppliers in China and ask them to send out the finished products to the customers. This would have kept the price low.
But there are two problems;
(1) I realized that I had to be careful to not give out personal addresses of clients to suppliers in another country. That information is confidential. But without sharing this information, the supplier would again have to send the product to me and then I would send it to the customer. The two time transport cost puts my price the same as my competitors. I guess they are already doing what I am thinking of doing.
(2) And if I do buy the machinery and lets say the business goes down the drains in the next 6-8 months, what would I do with the machinery itself. I tried to find places where I could sell such machines, but didn’t find anything except for recycling places. They won’t give me much money if anything at all for a specialty bulky machine costing around USD7000.
Its ethics versus my whole first business!
One of my friends is very adamant about this and a firm believer that cash or lack thereof is the primary reason for the failure of any business. Therefore, he never started a business since he never had “enough” funds.
Scott Gerber is a serial entrepreneur and the author of the book “Never get a real job”. He mentions in his book about “these” kind of people who always have a reason for not getting started. Sometimes,
(1) They don’t have time
(2) Most of the other times they are out of money and
(3) Their idea already exists/not innovative enough
Although, I have to agree that I work part-time so I get enough time to work towards my business, but I only work part –time since I have a business to think about. Time is money and the good thing is you will always find it if you really want to do something.
As far as Cash goes, I have to admit that I needed some sort of money in the bank before I started thinking about my own buisness. I worked seven days a week for three months to arrange it. But not surprisingly, in terms of my friend, I still don’t have enough to make it work. So, I intend to make up for the lack of cash with something far more superior, something that weighs 1.5kg and sits in between my two ears.
Simon Sinek is a famous guy. If you don’t know about him, look him up, I bet you will like him. He says if you are “really” passionate about an idea that already exists, you will find a way to make it better. Read the last line again because it is gold.
Tenacity, courage and little bit of luck is all that is required to not only get a business up and running but to keep it that way in the future to come.
I just found out that there are more mobile phones in Australia than there are people. To be precise there are 6million more phones in Australia than there are people.
On a global basis, there are more mobile phones in the world now (6 billion) than there are toothbrushes (4 billion). This goes to show the rate at which the mobile phone industry is increasing.
With this increase two industries have come up very quickly as well;
(1) Phone accessories and
(2) Apps industry.
But one part of the phone accessories is flourishing the most at the moment – mobile phones cases. Apart from the boring and singular colour cases, there are customised cases available now. You can have your own preferred picture, background, colour or any other creative slogan that you might have in mind.
But the problem is the very high price, the average being $ 45 per case plus postage. There are companies that provide cheaper option but the delivery time frames are 2-3 weeks and the range of the phones is very limited.
So even though people like the idea, it’s just too expensive due to the developing market. However, as the competition heats up the prices will tumble in the near future, so keep your eyes open!!!!!!