In order to do your profit margin research, you will need to have the wholesale prices from your dropship or wholesale suppliers. If you already have these prices, then this will simply be a refresher course. Many times suppliers will simply tell you that you can work with their products online, but they do not offer the wholesale prices to you immediately.
At this time you should contact every potential supplier that meets the niche research criteria & get a wholesale price list from each of them. This will allow you to compare retail prices online with competitors to determine what will give you the best profits! As well determine what is needed for their best prices. This may require an upfront order. Some suppliers will allow you to get their best prices if you place an order of the discount amount, but do not receive the order. So if they will give a deeper discount for $500, then you can get that same discount many times if you pay $500 up front & then have them ship out the products when they are needed.
Get your wholesale price list and the requirements for the best discounts before you move to Dropship Profit Margin Research - Part 2
Wednesday, January 20, 2010
Tuesday, January 19, 2010
Are your items desired? Research the Niche!
Once you find your suppliers, you will need to see if there products are wanted online. The number of searches each month is a product/niche is the demand. Though demand alone will not make money online. The supply will be the number of web pages that compete for the phrases used to describe the niche. As a result you will want to do some niche market research to be certain that your potential niches can be effectively marketed online.
A__Use www.freekeyworddiscoverytool.com & do a search for a keyword on a physical product.
B__ Use www.Google.com to determine the competition
C__Find between 5-10 potential niches
I recognize there are other methods to do niche research & other tools can be used. In my experience other tools are more seasonal & specific to individual search engines. These tools tend to be the best for the beginning dropshipper.
I am in the process of writing an eBook with step by step lessons to help the most inexperienced computer users & potential business owners learn how to do all the things that are required to get their online business up & ready for marketing within5-15 business days. Though this step is pretty basic. Make sure you use the exact same search phrase in the Free Keyword Discovery Tool as you do with Google.
Niche Market Research
Be sure there is enough Demand vs Competition to make your site profitable (You may want to find the supplier first)A__Use www.freekeyworddiscoverytool.com & do a search for a keyword on a physical product.
Make sure the keyword phrase for the product has at least 1,000 searches on this site, meaning 1000 searches per month.
B__ Use www.Google.com to determine the competition
Make sure the results in Google are below 5,000,000
C__Find between 5-10 potential niches
I recognize there are other methods to do niche research & other tools can be used. In my experience other tools are more seasonal & specific to individual search engines. These tools tend to be the best for the beginning dropshipper.
I am in the process of writing an eBook with step by step lessons to help the most inexperienced computer users & potential business owners learn how to do all the things that are required to get their online business up & ready for marketing within5-15 business days. Though this step is pretty basic. Make sure you use the exact same search phrase in the Free Keyword Discovery Tool as you do with Google.
Monday, January 18, 2010
How to Find Dropship Suppliers
How to Find Suppliers
There are many ways to locate suppliers. We will cover each of them in this lesson.
There are many ways to locate suppliers. We will cover each of them in this lesson.
- Trade & Consumer Shows related to niches you want to build sites around.
- Yellow Pages & Commerce Directories will have contact information for businesses.
- Dropship Directories are a great resource for finding online suppliers
- Suppliers on the Web can be found with good research
- Trade & Consumer Shows are a great resource when you can find the ones related to your industry. Some great resources to look at:
http://www.biztradeshows.com/ (be sure to check shows by industry), http://www.conventions.net/
http://directory.tradeshowweek.com/directory/index.asp
These should all help you find a trade show for your industry if one exists.
The drawback on this method is that you will need to attend a trade show to make contact with suppliers.
The best benefit is that you have direct contact with manufacturers of various products.
- Using a phone book or http://www.yellowpages.com/ will help you find local suppliers that may produce, or wholesale your products. Many of the companies close to you may sell their products at a wholesale price to you, so your business can sell them for a retail profit online.
The drawback here will be a potential limited supply depending on your geographical location (where you live).
The benefits are that many local small manufacturers are generally looking to get their products on the market. This is a great resource to find local suppliers.
- Dropship directories are like a phone book for dropshippers. They are a website that has found many dropshippers, and offer dropship supplier contact information to you. The ones we currently suggest are due to great customer service, and good supplier lists. Know that most Dropship Directories will charge a fee to use their service. In my opinion it is well worth the cost if you have the ability to utilize them. This is by far the best method for your first online retail website.
- As well you can simply search (or query a search engine) for a dropshipper. This can take a great deal of time and for many niches and many times it just is not worth the hassle for your first website. I highly reccomend if you choose to search for a supplier (or dropshipper) online, you spend less than 24 hours doing it. This will help you move forward quickly.
- Hint- The best search engine I have found if you decide to take this route is www.dropshipquery.com
Sunday, January 17, 2010
Do you have a source of products?
The next step will be to either do niche market research, or to find suppliers of products that may do well online. Either way you don't want to spend more than 48 hours on either of these steps. In the end, it is always a good idea to use the services of others if you don't already have a good contact with a supplier of a product that has a high demand with low competition online (this will be reviewed in the next post).
- Contact Multiple Suppliers to determine if they will supply your business with products.
Do not spend more than 2 business days trying to find suppliers or you may waste months trying to sell in a niche that just doesn't have suppliers - Be sure to give the supplier all the information they require to work with your business
- Obtain their wholesale price list as son as they will give it to you.
Saturday, January 16, 2010
Where To Begin - Make The Government Happy
Every online education center that teaches dropshipping should help you get your barrings. So if you don't know how to use a computer, or anything about retail sales. You should get acquainted with each. The law of supply & demand will apply to your business, learn to do online queries (another term we will go over later) & how to find solutions when various problems arise.
We will offer some blog posts about using a computer, but in this post we will focus on setting up your own business tax number. As most people are aware, you can't do almost any business transaction unless the government get's their influence (sometimes called fingers) into personal finances. In many states it is much worse for businesses.
Many onlipne businesses will not need to pay taxes when they run a dropship website. This is due to the fact that there is no way to represent tax payers outside of your state lines. So no taxes are charged. There are some states that do not charge tax on sales, but your would need to have a representative (called a Registered Agent) in that state to collect your mail & file any paperwork that was needed. This can be costly depending on what group you decide to use. Usually there will be monthly fees.
Every company that you work with will eventually tell you to work with a tax professional. If you are called by a tax representative, you will want to get 2-3 other quotes about setting up a business from a local CPA or a local legal representative. In fact it will do you good to remember that every time you are approached about some companies services, you should shop around. See what is out there for similar prices or just compare the quality. Some groups will give you a great price, but terrible service. If you appreciate very little support for a cheap price, then they are all around out there. If you really need a hands on approach from a company offering services to your new company you will want to pay more & expect more. We will cover this in other posts.
There are many people who just do not have enough startup capital to use a tax professional immediately. So they choose to head directly to the IRS themselves www.irs.gov & do a search for an "EIN Application" When you fill out the online EIN Application, this gives you a Tax ID number within 10-15 minutes that most dropshippers will work with. Though this will not track your state taxes, nor will it hel with asset protection. All taxes & liabilities will flow through to the individual. So if you choose to go to the IRS yourself, you will want to contact a tax professional as soon as it is financially possible.
We will offer some blog posts about using a computer, but in this post we will focus on setting up your own business tax number. As most people are aware, you can't do almost any business transaction unless the government get's their influence (sometimes called fingers) into personal finances. In many states it is much worse for businesses.
Many onlipne businesses will not need to pay taxes when they run a dropship website. This is due to the fact that there is no way to represent tax payers outside of your state lines. So no taxes are charged. There are some states that do not charge tax on sales, but your would need to have a representative (called a Registered Agent) in that state to collect your mail & file any paperwork that was needed. This can be costly depending on what group you decide to use. Usually there will be monthly fees.
Every company that you work with will eventually tell you to work with a tax professional. If you are called by a tax representative, you will want to get 2-3 other quotes about setting up a business from a local CPA or a local legal representative. In fact it will do you good to remember that every time you are approached about some companies services, you should shop around. See what is out there for similar prices or just compare the quality. Some groups will give you a great price, but terrible service. If you appreciate very little support for a cheap price, then they are all around out there. If you really need a hands on approach from a company offering services to your new company you will want to pay more & expect more. We will cover this in other posts.
There are many people who just do not have enough startup capital to use a tax professional immediately. So they choose to head directly to the IRS themselves www.irs.gov & do a search for an "EIN Application" When you fill out the online EIN Application, this gives you a Tax ID number within 10-15 minutes that most dropshippers will work with. Though this will not track your state taxes, nor will it hel with asset protection. All taxes & liabilities will flow through to the individual. So if you choose to go to the IRS yourself, you will want to contact a tax professional as soon as it is financially possible.
Friday, January 15, 2010
Getting a Smart Start
When you decide to run a business, you need to be aware of the reason that a business exists. The primary reason for a business to exist, is to make money (this is especially important to the government, hence charity organizations exist). If you don't have enough start up capital & operating capital, you will not be able to make your investment work.
This calculation assumes nothing changes in your monthly expenses or income. Very rarely will things remain the same for a full year. A baby could be born, your car could break down, you could loose your job, a medical expense could come up, etc... Just be prepared & you will be fine.
There is a fairly simple formula to decide how much you will need to make your business work.
Now lets talk worst case scenario where you give up half way through (or even 90% of the way through). You have kept $150 extra every month that you can now pay down your credit card bill faster.
I now want to approach the subject of savings. If you have $5,000 or $10,000 in savings, you will not have increased monthly expenses if you decide to invest part or all of your savings. You will not need to count this into added monthly expenses. This will simply be an investment due to good planning in your past.
In the end you should determine how much you can really invest before you loose your shirt in any endeavor you decide to begin.
This calculation assumes nothing changes in your monthly expenses or income. Very rarely will things remain the same for a full year. A baby could be born, your car could break down, you could loose your job, a medical expense could come up, etc... Just be prepared & you will be fine.
There is a fairly simple formula to decide how much you will need to make your business work.
- Determine how much money you have as take home pay = T
- Determine your monthly expenses. Rent/Mortgage, Utilities, Insurance, Food, Other expenses. = E
- Subtract your monthly expenses from your take home pay to get your Monthly Cashflow. From this you will be able to determine the amount you can place into an initial investment & your operating costs. T-E= C
- If C (your monthly cashflow) is not at least $150, you really will have a hard time running an online business.
- If you didn't know, most credit cards have a minimum monthly payment of 4% of the amount spent. So if you invest $5,000 on a credit card, you will need to repay at the rate of $200 until you pay it off. So you will want to take this into account. You will want to subtract $150 from your monthly cashflow, you will be able to determine how much you can initially invest. You will subtract $150 from your monthly cashflow to get your maximum monthly payment for a credit card investment (M) & divide it by 4%, this will give you your Maximum initial investment via your credit card (I). C-150=M. M/0.04=I
- If you don't have enough to pay for your monthly operating costs after crunching these numbers, you should not invest into your own business online at this point. Or you need to plan on paying for hosting fees until you make your dropship site work. There are of course other ways to make money online, but you need to begin a business with eyes wide open
- T=2500
- E=2000
- C=500
- M=350 or 500-150
- I=8750 or 350/0.04
Now lets talk worst case scenario where you give up half way through (or even 90% of the way through). You have kept $150 extra every month that you can now pay down your credit card bill faster.
I now want to approach the subject of savings. If you have $5,000 or $10,000 in savings, you will not have increased monthly expenses if you decide to invest part or all of your savings. You will not need to count this into added monthly expenses. This will simply be an investment due to good planning in your past.
In the end you should determine how much you can really invest before you loose your shirt in any endeavor you decide to begin.
Thursday, January 14, 2010
Reeling The New Business Owner In
This post is all about the sales process. As you are aware most of the sales industry is shady by stereotype. This is due to sales people over promising & under delivering on their products, or simply not explaining how products & services will help their situation.
As a general rule, the person selling you weeks of phone time with mentors to teach you how to make money online will have no idea how the process works. I have found that they almost never understand business principles. They just know their place, & that is to close a sale. The problem with this is that they really have no idea what the curriculum is, nor do they know how people succeed when they do. As a general rule, they will see testimonials from people who have succeeded with the program they make a sale on, though they do not take operating costs into account. Rarely have they heard the term operating costs. They as well have no idea that costs come into play setting up the site regarding graphics & dropship directories.
Of course a business owner can do these themselves, investing time instead of money, but it rarely comes out as professional as someone skilled with proper tools could do it. Again, planning to make your business run will help. You will also need to have operating capital for $50-$200 per month for marketing. If you can initially invest $100 per month, you will be able to see steady progress when you are ready to market your site via PPC (another term explained in another post).
The reality of the situation is that you will learn you need between $100-$300 minimum to make your site work within 1-3 months. If you do not have that kind of operating capital, be sure you are ready for a 6-18 month process & that you can write often. As well you will need to keep up with your new credit card payments (generally at least 4% of your initial investment) & your hosting fee (between $5-$100 per month depending on support, services & overhead).
If you don't take all finances into consideration, you will have problems with cashflow later down the road. We will discuss how to figure this out in a later post.
As a general rule, the person selling you weeks of phone time with mentors to teach you how to make money online will have no idea how the process works. I have found that they almost never understand business principles. They just know their place, & that is to close a sale. The problem with this is that they really have no idea what the curriculum is, nor do they know how people succeed when they do. As a general rule, they will see testimonials from people who have succeeded with the program they make a sale on, though they do not take operating costs into account. Rarely have they heard the term operating costs. They as well have no idea that costs come into play setting up the site regarding graphics & dropship directories.
Of course a business owner can do these themselves, investing time instead of money, but it rarely comes out as professional as someone skilled with proper tools could do it. Again, planning to make your business run will help. You will also need to have operating capital for $50-$200 per month for marketing. If you can initially invest $100 per month, you will be able to see steady progress when you are ready to market your site via PPC (another term explained in another post).
The reality of the situation is that you will learn you need between $100-$300 minimum to make your site work within 1-3 months. If you do not have that kind of operating capital, be sure you are ready for a 6-18 month process & that you can write often. As well you will need to keep up with your new credit card payments (generally at least 4% of your initial investment) & your hosting fee (between $5-$100 per month depending on support, services & overhead).
If you don't take all finances into consideration, you will have problems with cashflow later down the road. We will discuss how to figure this out in a later post.
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