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.
Wednesday, January 13, 2010
How You Initially Get Started
Have you ever decided to stay up extremely late watching television? Did you happen so see some crazy predator, or a loopy online millionaire promoting some rich club if you only paid $35-$100? Did you notice that you were made to believe that you could make it all work if you only invested in their low initial fee?
This is the bait & hook in the industry. Many people will become frustrated that they are not making good money, or that they cannot understand the materials within the package you purchase. In the end you will be called by some kid who is getting paid to remind you that you are not making any money with this new online system. You should then be asked about your dreams & why you want to make this work. We will discuss a sales process later, as it will be helpful for your own business.
Once you have discussed your dreams with this great sales rep, you will then be told about a program with experts who can teach you at an accelerated rate. They are correct, you can see much better success with mentors in any endeavor. Though as stated in earlier posts, you will want to have frequent contact to make your dropship website work.
In the next post we will discuss the circumstances of the sale process & how to protect yourself in the next post.
This is the bait & hook in the industry. Many people will become frustrated that they are not making good money, or that they cannot understand the materials within the package you purchase. In the end you will be called by some kid who is getting paid to remind you that you are not making any money with this new online system. You should then be asked about your dreams & why you want to make this work. We will discuss a sales process later, as it will be helpful for your own business.
Once you have discussed your dreams with this great sales rep, you will then be told about a program with experts who can teach you at an accelerated rate. They are correct, you can see much better success with mentors in any endeavor. Though as stated in earlier posts, you will want to have frequent contact to make your dropship website work.
In the next post we will discuss the circumstances of the sale process & how to protect yourself in the next post.
Tuesday, January 12, 2010
Who I am & How I know these things
I have worked as a business mentor for over 5 years. I am keeping the coaching centers I have worked for anonymous to prevent slander & since the problems generally are in the system, not with any specific group. I have worked online for about 5 years. I began working as student of an affiliate program that asked me for an initial $1k investment. Then I was called for another $10k. This of course was after I was told all I needed to do was follow the online system that was sold to me for the initial $1k.
I was promised that if I didn't make double my money back in 60 days, that I would get a full refund. If you have ever been sold business coaching, you have likely heard that as well. Like many I gave it all I had for 10 days, then the newness wore off. Most people loose steam without good step by step guides & daily contact made to a mentor. After those first 10 days I lost the desire to try & figure out the poorly detailed system they had me following. The idea was to place multiple ads up on Craigslist & hope that you could get $1000-$5000 per day from the leads you would generate.
The biggest problem with the system converting readers of the ads. was the lack of support in writing good adcopy. As well we had no way to track the metrics (we will go over this definition in another post), so no idea how many people were actually interested enough in the titles to read our ads. After my 60 days I never heard from the group again & was never able to get my money back. They looked convincing with a football player promoting their product. At the time I simply thought I was ripped off. Though it was a very good lesson, I learned to be more determined to succeed.
I looked online for ways to make money without spending a dime. I found many ways to do it, but they all require a great deal of effort to get enough traffic to help. I eventually began to work for a few call centers. Only one of which actually required their coaches to do what they taught. The rest were meant to keep you motivated while they worked through it themselves.
In the end I have found that students need to have the resolve to build their own business. As well daily communication is required. You don't need to be with a mentor in person every day, or even on the phones to be successful. If you work with a mentor for 30-60 every week on the phones, & work on a live chat support program for 1-3 hours every day, assuming you have a good set of curriculum, you should have no excuse to not have a website up & ready to begin marketing within 5-15 business days (that is 1-3 weeks).
No matter what program you are working with to get your site up & working, you need daily support if you want to meet the goals a sales rep will imply. You will also need a good road map, or a good set of guidelines to follow.
I have also learned that no one set of rules work online to get your site going & making money. Though principles of business will always apply & frequent communication will help you keep your site up to par.
I was promised that if I didn't make double my money back in 60 days, that I would get a full refund. If you have ever been sold business coaching, you have likely heard that as well. Like many I gave it all I had for 10 days, then the newness wore off. Most people loose steam without good step by step guides & daily contact made to a mentor. After those first 10 days I lost the desire to try & figure out the poorly detailed system they had me following. The idea was to place multiple ads up on Craigslist & hope that you could get $1000-$5000 per day from the leads you would generate.
The biggest problem with the system converting readers of the ads. was the lack of support in writing good adcopy. As well we had no way to track the metrics (we will go over this definition in another post), so no idea how many people were actually interested enough in the titles to read our ads. After my 60 days I never heard from the group again & was never able to get my money back. They looked convincing with a football player promoting their product. At the time I simply thought I was ripped off. Though it was a very good lesson, I learned to be more determined to succeed.
I looked online for ways to make money without spending a dime. I found many ways to do it, but they all require a great deal of effort to get enough traffic to help. I eventually began to work for a few call centers. Only one of which actually required their coaches to do what they taught. The rest were meant to keep you motivated while they worked through it themselves.
In the end I have found that students need to have the resolve to build their own business. As well daily communication is required. You don't need to be with a mentor in person every day, or even on the phones to be successful. If you work with a mentor for 30-60 every week on the phones, & work on a live chat support program for 1-3 hours every day, assuming you have a good set of curriculum, you should have no excuse to not have a website up & ready to begin marketing within 5-15 business days (that is 1-3 weeks).
No matter what program you are working with to get your site up & working, you need daily support if you want to meet the goals a sales rep will imply. You will also need a good road map, or a good set of guidelines to follow.
I have also learned that no one set of rules work online to get your site going & making money. Though principles of business will always apply & frequent communication will help you keep your site up to par.
Monday, January 11, 2010
What the Sales Reps Don't Tell You
I debated between unethical sales procedures & an about me post as the first one. I think is is always prudent to address the issues before you speak about yourself. Dropshipping is nothing more or less than running a retail store online with very little overhead. Though very few sales reps will every bring this up. There are a number of reasons behind this & they will be addressed in another post.
Let's talk about the things the sales rep doesn't tell you when you decide to start you online dropshipping website:
Let's talk about the things the sales rep doesn't tell you when you decide to start you online dropshipping website:
- Many times you are not told the specific price of a hosting fee unless you ask. This will be an operating cost (that term will be discussed in another post.
- You are often told you can make money without paying anything else. Again this is true, but you will take between 6-18 months of constant marketing to get enough traffic to see results large enough to cover the payments of your initial investments (again we will discuss how to determine the best monetary investments to get your site making sales quickly in later posts).
- It will take time to change your habits & be able to make enough to pay off your debt. You may have be told that it is easy to make $10k in 3-12 months & that you may make it too. (Notice how no actual promise is made in that statement. Many people take this as a promise to get their money back within 3-12 months, the FTC does not allow a sale to be made with any promise regarding ROI. As such you will always have a 3rd party verification company record your stating that you were not promised any time frame you would make your money back, or any specific amount).
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