Ask me anything about eCommerce (2012)

[wade1mil]

Learning SEO is the best investment you can make if you’re going to be in the e-commerce business. 1000 keywords getting 25 hits each is usually better than five keywords getting 5000 hits each. Keep your PPC ads running as long as they’re profitable. Use eBay/Amazon for marketing. Offer high prices in hopes for brand awareness. Use Google keyword tool to find search volume, then look and see what the websites selling the stuff looks like. Start marketing from day 1. Do some web 2.0 link wheels, forum sigs and blog comments to get it started. The maybe some high PR blog posts or just high PR links, then some .edu.

Buy a domain and start a store, worry about LLC later on. Get a license if a supplier asks you for one. Stay out of saturated markets. First site will cost ~ $1k, $100 each additional. Must have toll-free number (forward to same number), SSL seal and clean looking site. Your domain should have your keyword in it with these specific sites. Make a store with a free BigCommerce 15-day trial and put some products in there if they require to see your store first.

Rather than having a selection of related products, just offer a single product per website. It will allow you to target specific keywords better. Manufacture and import products from Asia. Margins for dropshippers are usually 10% for medium store and 5% for large stores. Charging for shipping typically converts better than free shipping. Roughly 20% of checkouts use PayPal, 80% use credit cards through merchant account. Take your own photos and create your own descriptions for products. If you dropship and warehouse, keep a couple of each item in stock in case they order two products and pay for overnight shipping. Otherwise you may have to pay to ship two packages overnight.

Is that about right? I just wanted to say thank you.

 

[biophase]

Interesting. lets dive into this a little further.

Ok your going direct to china.
Ok and we are selling Ipad cases.

Ok since we are going direct im sure we will be buying in bulk and having it shipped here. Which means Ill need storage. Before I get to ahead of myself. Ill need a business license. Warehouse space which means a year lease. Ill also need a phone number, tax and resale licenses. Contracts and etc.

Now with that done. Ill get my products shipped. And since I doubt ill be able to take orders package and ship $8000 worth of ipad cases alone. So Ill need a staff. Ill also need someone to answer the phones and deal with customer inquires and complaints.

No, Ipad cases are very small. Let's just assume that you are selling $50 Ipad cases that you paid $10 for. $10k of Ipad cases is 200 of them. 200 Ipad cases will fit into 2 boxes and sit in a closet. 10000 cases would barely fill up a large closet. You ship out 9 cases a day from home. One hour tops.

Yes, you will need a phone number and business license. And you will have to answer emails and calls.

Ill need to build a website and do the seo or pay to have it done.

You already have this done, which is why you were already selling $10k of Ipad cases.

If you live in California like me warehouse space is at least 1k or more. Usually more
Hiring American labor, ie. shippers and customer service is going to run another 4k a month full time. Atleast.
Your at about 5k into your profits. After inventory. Paying the light bill and heating and insurance. you dont have much left. Oh and I forgot old uncle Sam.

This is totally unnecessary at this point in your business.

Once again Im sure it can be done and im sure there money in it. but its alot of work.
I was making $700 per month easy with Amazon sitting at home in my PJ's. And its not that easy to get banned unless you do something stupid or illegal. Im actually about to watch a video on someone making 100k per month on amazon. Hopefuly its a good video, or I can at least grab a few tips.

Yes, you can easily make $700 a month doing nothing, but you can easily increase that to $8000 a month doing not much more.


Here is what I mean by going backwards...

Imagine that, eventually your branded China cases become popular and you decide to sell them on Amazon for $40. You ship your inventory over to Amazon FBA. Your product is listed on Amazon at $40 with Free Super Saver shipping. Now you are only making $20 a sale. But Amazon is handling everything for you.

Then some guy comes along and makes an Ipad cases affiliate website and has your product on his site. Every he sells one for you, he makes $2.40, you make $20. He's doing the work of SEO and website handling for your product.

See how that is forward moving?

Or, what if you decide to wholesale your cases to others? You call up other Ipad case ecommerce stores that run on dropshipping and offer to dropship for them. They sell your cases and you ship them out for them.

People don't generally go the opposite direction.

By moving forward, you are giving yourself more avenues of income. In this scenario you have your original affiliate URL, converted into a store making sales, you have your Amazon store making sales, you have other ipad case stores making sales for you and you have other ipad affiliate websites making sales for you.

If your website falls off the face of the earth, you aren't dead in the water.

 

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[biophase]

How do i find a good niche?

thanks

That's the million dollar question in this business. However, you can do well with niches that don't fit all the criteria. I understand that this is the fast lane forum and that everyone wants to hit a homerun. But, if you want to hit a homerun on your first at bat, you need to take swings elsewhere. Find a niche that may work for you and try it. You can't keep sitting on the bench reading about how to swing a bat and expect to set up and knock it out of the park.

Once you start doing, you will find other ideas very fast. You will see holes in markets and gaps in pricing. You won't see these things unless you starting doing.

 

[biophase]

Hey everyone, I've been getting alot of PMs lately about my ecommerce stores so I thought I'd just start a thread where you can post questions abouy anything ecommerce (suppliers, platforms, credit card processors, SEO, dropshipping, etc...) and I will try to answer them here.

 

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[biophase]

Second question I have for you is.. A lot of people see you as a great role-model, but how do you feel about your success rate so far. Do you feel that you are successful or are you still hungry for more.

You wrote on your blog that you sometimes lack motivation. Do you still enjoy it?

What would you consider to be the pro´s and con´s of your current business and life-style.

I do feel successful at this. But I also felt successful when the stores were making not as much money and I had alot of free time. To be honest, I was never really hungry for the money. I just ran my business treating customers right and making good decisions. I never had the pressure to increase sales because I had no expenses.

I started in 2007. Looking back, if I really pushed hard in 2007-2010, I probably should be at a few million a year in revenue. I could have been the next Wayfair. But I chose to have fun and go on vacations all the time.

Funny thing is the part I actually enjoy in this business is putting the product in the box, taping it up and slapping the Fedex label on it. I still go in on Sunday nights and pack boxes if I get bored. I like the aspect of concluding an order, serving the customer and making the money on each particular sale.

The pro's are making more money doing it with a warehouse and having employees do some of the work.

The con's are more time working because you have to manage people, inventory and cashflow, and there is alot more paperwork.

The pro's outweigh the cons. Because if your store is making say $30k a year and you are doing one hour of work a day, you have plenty of time but not enough money to be free.

You go to the warehousing model and now you are doing say $100k a year, but you need to go into the office. You still have an additional $70k to spend on vacations and since you are your own boss, you can take as many vacation days as you want. So you work just a little harder, but then get to enjoy life more.

 

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[biophase]

No, honestly, I don't know where to start. I want to just do it! I want to get into the fast lane!
Can you recommend a book? What do you think of Steve Chou's ebook? It costs $500.

Hi Susan,

Ok, this is going to sound harsh and please don't take it personally because maybe people ask me if I can recommend a book on ecommerce to them. But if after you read this thread you feel that you need an additional book then maybe business is not for you. Requesting a book is basically asking... I need all the information put into one place and ordered so I can follow it step by step. All this info scattered everywhere isn't helping me because I only absorb bits of info and can't put it together myself.

To me, this means a couple things:

1) You are too lazy to organize the information yourself. Print it out and put it in your own chapters and order. This is how bloggers who post all their content for free still sell a shitload of books. People are lazy or unorganized.

2) You cannot organize your thoughts after getting all this information. If this is the case, business will be difficult for you because it is chaotic at times. Things happen everywhere and you will need to sift through everything and resolve it.

3) You are still afraid to start and need another source to validate the information that you already know. But ask yourself, if this is the case, will one more book actually do it for you? What if the book is different than this thread, now what?

You can find all the steps that Steve Chou did on his blog. But he know's that if he put's it in order and slaps a table of contents on it, he can charge $500. You are paying for only that. If that is fine with you and you feel you need it, then go ahead and pay $500.

You don't need to know everything before jumping in. If you jump in and spend $500 and mess up, you'll be at the same place as if you spent $500 on the ebook... But you will be alot smarter.

 

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[biophase]

But do you seriously think that you will get a buyer?

BTW, I make this statement no to be a dick, but to show you how many of you think when it comes to business. You take the best case scenarios and turn them into a bad thing.


What if I throw up a website and I get a buyer without having a supplier yet? Seriously is this a problem? If this happens, you are one lucky person and your business is off to a great start.


My friend who was looking for a house in the $700k range wanted to lowball 3 houses at $500k. He couldn't decide which one to lowball. I told him to do all 3. His response was, what if all 3 take my offer?

What kind of a question is that?

What are the chances that all 3 or even 2 or better yet even 1 take your offer? Wouldn't you be estatic if only 1 did?

He then said, but I don't have the earnest money for all 3 offers. Again, you write 3 checks for $5k or whatever and have $8k in the bank. If on the .1 % chance that 2 offers are selected, you cancel one ASAP before they deposit the check.

The train of thought is just unbelievable to me how people worry about things that have such a small chance in success of happening and in the event that they do happen it would be great for you.

I see this happen so much... people talking about not wanting to pay too much in taxes even before their business makes a penny, etc...

 

[Vigilante]

My daughter built a BC site yesterday. Took her 4 hours and it is BEAUTIFUL. Unbelievable. Looks like she has been in the game for years. She's 20 and well on her way to beating the slow lane. She has it in her blood.

 

[Whole Paradigm]

i am thinking about starting a drop shipping online store but am perplexed on what niche to go for. I read some people say to go for things you are interested in but some people say stay away from interests.

I looked into a aftermarket performance part store but there are already so many of those. cars are my bread and butter so I would have an easier time trying to sell them but then again with all the competition it would be harder.

So what is the best niche for me to go after? im not looking to make huge amounts of money with it.

How do i find a good niche?

thanks

I initially went for a "one-stop-shop" approach attempting to carry everything under the sun related to my niche. Until biophase, other forum members, and books on the subject said that was a bad idea. All the fees and costs associated with running an Ecommerce business compared to making a few dollars profit on a bunch of items is nowhere near worth the hassle, time, work, etc. and isn't going to make you much money. SO, last weekend I stepped back and attempted to find ONE product to sell with no more than 8-10 MAX accessories that go along with it; of course with a much higher profit margin compared to my items prior...

And so that's exactly what I found... I found a niche product that gives me $184 profit per each sold... A drop shipper... Found and bought the domain name WITH the product name in it... A PPC price of only .70 a click at an estimated 14.74 clicks with my decided daily amount to spend..And a competition rating of medium...

I found it by thinking about the way I felt the world was going and what would be useful in the future. Took a few hours of brainstorming and finally stumbled upon the idea and ultimately the product that I finally decided to stick with. A plus is that the drop shipper allowed me to utilize every piece of information on their product to copy to my website including an enormous blog. So I'm an overnight expert on a product that I had no idea of days before.

So basically, I listened to what bio and the others told me, then took initiative. I had to actually brainstorm and exercise some due diligence and the right product for me came.

Hopefully, now my chances of success are much higher.

Thanks biophase and everyone for the feedback and help. If you have any other suggestions I'm all ears.


All the best,

Cory

 

[biophase]

I opened a BigCommerce account because Biophase recommended it. Started with the 15 day free trial and have never even seen BC and I has a custom store full of items in 4 hours. It cost me nothing.

This is the way to do it. Even if Wade's store gets no sales forever, he is well ahead of everyone else. I will bet that he knows way more now than he did a few weeks ago. I will bet that there is no fear in opening a store anymore. In fact, now comes the hardest part... getting traffic.

 

[BeingChewsie]

Ok, this is going to sound harsh and please don't take it personally because maybe people ask me if I can recommend a book on ecommerce to them. But if after you read this thread you feel that you need an additional book then maybe business is not for you.

It is not harsh it is true. Those were very similar words said to my spouse and myself in a phone call back in early 2009 from a very successful multimillionaire from this forum. In a nut shell he said: If you can't synthesize the information provided to you here, if you can't be bothered to train your "identify needs/opportunities" muscle, if you can't stand to take any risk and if you are focused on "not losing any money" or only on "making money", if you want step by step directions handed to you....forget it. You are either too lazy or just don't really want it bad enough to go learn and nobody here can fix that problem. I think I cried for 2 days...and then I set out to fix the problem. It was necessary tough love.

This thread alone is 25 pages long, add in the passive income thread, and the overseas package thread and how you source product thread and seriously, there is your book. Step-by-step directions are contained in those threads, it couldn't be any more laid out if you guys opened the store for them, ordered the products, and even shipped them. Sometimes people need to hear that there is no easy "1-2-3"...that only works with jello.

Sue

 

[Dan Da Man]

there is a big learning curve a broad skill set required. The market is very competitive in terms of quantity and quality... a person who can barely jailbreak their iphone will get eaten alive by the sharks. That same person is better off taking a different path in business.

Are you speaking out of your a$$? Do you even know what you are talking about? Seriously, you shouldn't chime in unless you actually know what your talking about.

Yes, it is competitive. Yes, there are companies doing it but very badly. And no you don't have to be able to jailbreak phones, this is idiotic.

I can't create a website. I cannot even host a website. I don't really write good copy and I sure have no idea how to crack an iphone.

But, I know a hell of a lot about SEO. I can rank for almost any term and get traffic to any site. I can also find someone to do every single thing that I cannot do and do it ten times better then I would ever do.

My first site I sold for 15k without knowing how to crack an iphone. Are the sharks letting me slide for now?

If you can't do SEO or drive traffic by other means, then you are going to have a hard time. Being technically inclined does not matter at all. I don't know where you and other people think that you have to be some skilled programmer to run an e-commerce store.

I can get an epic site created with 50 products done in two weeks. Then automate all my SEO for under a few hundred bucks for the entire site for the whole year. Too bad I can't program or jailbreak an iphone.

Honestly, you haven't done it so don't act like you have.

There is a learning curve just like anything in life but if you want to do it, then do it. I couldn't even use a computer two years ago. But now I have over 6 e commerce stores and I create at least 2 a month.

Anyone can open up a store. The primary focus will be getting traffic and learning how to do it yourself. Don't outsource it because anyone who REALLY knows how to rank is either doing it for themselves (I won't ever do SEO for others) or charge an arm or a leg.

If you want to start en e-commerce store you need to:

1. Learn SEO - Not this whitehat BS.
2. Learn to ditch and throw away sites - Some sites just won't make you money. Some products will not sell. Learn to move on and ditch sites.
3. Find others who can do things you cannot do - Find good people from Elance. Trial and error here but you must have a good team of people to do things you cannot.
4. Create sites as cheap as possible - I have my sites copied over each time. Makes it very simple and can easily copy the template then change out logos, products, etc..
5. Finding products that sell - This is the hardest part as not ever product will sell but most likely you can make a few sales even in a shitty niche. Doesn't take too many sales to cut even.

Cost to make a site - $250
Cost of SEO on the site - $50. (I found the people to create these customer programs. No manual link building bs and no Senuke crap)
Time Spent On Building Site - 1-2 Weeks
Total Time On SEO - 10 hours overall for a 6 month period.

This coming from a guy who had no computer experience, no business experience and only the ability to learn and improve. Oh and learning to move fast. Failing is not failing unless you give up. But get good at moving on when things don't work. My first site did well, the second did well, but the next 3 I did were shit lol.

But you learn and get better each time. I guess you don't jailbreak an iphone on the first try

 

[Pixpax]

Dear Biophase: you are not harsh at all, I do appreciate your honesty. You are right, I am lazy and at times, I think I am incompetent. My ex-neighbor is 10 years ahead of me in terms of having passive income. They had e-commerce business before e-commerce was popular, and now they are top eBay seller making millions. They brand their own stuff and have a showroom. They were reluctant to answer my question when I asked about their business, and I don't blame them. Well, you know why they are my ex-neighbor... because now they can afford to buy a mansion up in the hill, driving BMWs and who knows what else they have since they are now the top 1% and we are not

You are right that I am having trouble organize my thoughts. My mind is wandering here and there. Should I sell on eBay, my own store, dropship?
What to do? I want someone to just tell me what to do and I will do it. I am selling some baby items on eBay and not making much at all. I imported them from China.

I signed up for resellers program for several large companies, and I found out I can buy the same thing from Alibaba for 10% of what they are selling to me as a reseller. The one from Alibaba will be without their branding, and I feel like I am buying a fake and thus feel uncomfortable doing that.

Thanks to everyone on this forum for being so open and truthful about their successes, I am so grateful. I will go back and re-read all the pages.

Also, sorry for the bad English and poor grammar. I am a US citizen but was born and raised in a third world country.

I can somewhat sympathise, however I've always been a doer - and looked for opportunities when other people look for safety or an instruction manual.

There is no instruction manual to make a success of business, if there was, capitalism wouldnt work - everyone on your street would read it and they can't all drive BMWs and live in a mansion. The whole system works because they arent able to do that.


I'll give you an awesome tip, that may not be of much use to you as you may not be able to implement it or have the ability to understand it. But I make a lot of money by looking at (small) successful online businesses that are making money in the USA and then replicate them in my own country.

People are ultimately the same, Europeans and Americans are extremely similar really, so if a business works in the US. Copy it in your own market. You are in the US so do the reverse.

Billions have been made by doing this. For example Studiviz.de was setup in Germany before Facebook became global, they saw it working in the states - realised they could do it in Germany and have no competition. They sold it for 100 million Euros.

Zipcar in the states was copied by Streetcar in London when there was no local similar business, they saw it working over there, why not do it here? They sold for £40 million.

Vue Cinemas was setup when the founder looked at the cinema per square mile figure of the USA, compared it to the UK and saw that there was a really low density of cinemas in the UK. Its now a 100 million pound+ company.

Ive done this on a smaller scale and it works, its the closest you will get to a "blueprint" for success.

 

[Amail]

What to do? I want someone to just tell me what to do and I will do it.

This mentality is your first problem. :eusa_naughty:
You will never build on what you know if you do only what someone tells you. You are at the mercy of their judgement.

Never the less, I'm going to tell you what to do in a minute.

You bought baby items from China and are trying to sell on eBay. That's a lot farther than most people ever get, so be encouraged. Now, build on your experience. What lessons have you learned? What's holding you back now? You're "not making much". Is that because you aren't selling much? Figure out how to increase sales. Are you not making enough profit on each sale? Figure out how to cut your costs on your next purchase. Did you enter a really competitive arena? Look for something you can compete in. If selling these baby items is not panning out you always have the option to dump them and do something else.

This is the part where I tell you what to do: Fall in love with figuring this stuff out.

This part, right here, is what you need to embrace. The more familiar you get with every aspect of this, the more valuable you will be to yourself. Focus on one thing and learn it inside and out. It doesn't really matter what that thing is, whether selling on eBay, opening an ecommerce store, dropshipping, affiliate marketing, real estate flipping, forex trading, or any of a thousand different options. Get fluent - become an expert. Be comfortable advising people how to do it. You've got a great foundation with buying abroad and selling on eBay, so I'd continue on that path. When you've mastered that, add to your skillset. Learn all about selling on Amazon, or an ecommerce store. After that, learn how to negotiate more favorable terms from your suppliers.

Build your business skillset and you can write your own ticket. You are teaching yourself how to build a money machine. Once you're good at it, you can build as many as you want. It will come.

 

[biophase]

If you had a $1,000/Month Internet Marketing Budget, what do you think the best/most sensible/easiest to execute/most profitable strategy would be?

This includes: buying new domains, all SEO, link-building, outsourcing, etc. EVERYTHING.

Assume that you are starting from Square 1 and have no software, existing sites, etc.

How would you go about building your business, expanding it and monetizing it? What kid of sites would you start? What software is essential? How would you begin earning money?

Please be as detailed as possible.

Thanks!!!

This is almost a how would you make money with $1000 question? Which in all honesty is the worse question that you could ask someone if you are looking for advice, because what I would do right now is very different than anything that I've posted in this thread. Basically I've been there and done that and it's time to expand further. My skill set and experience is very different than yours. If you ask MJ or Vigilante or anyone else this question their answers would be totally different. I don't mean to be harsh, but if you are reaching out to others for advice in the future, this type of question will mostly likely never get you a response. If I got an email like this I'd just hit delete, vs. specific questions.

So I'm assuming that you would ask about how I would spend $1000 in ecommerce and I have identified a niche to get into.

I would buy the domain, sign up for bigcommerce, buy their SSL cert, sign up with their credit card processor, get an LLC, open a business bank account and paypal. I would use a bigcommerce template and modify it a little. Then I would hire someone to do the SEO and maybe begin a small PPC campaign. I would set up accounts on youtube and twitter, facebook pages and add content to them. I would setup ebay accounts and amazon stores and begin selling on there.

I don't even think this would all cost more than $1000.

 

[Vigilante]

I want someone to just tell me what to do and I will do it.

Here's what you should do. Get a job. You need someone to tell you what to do.

There's no answer to the questions you have posed. If you can't do it yourself, you will never be successful.

Not everyone is meant for this. Get a job, work your way up through a company, and make money the old fashioned way.

Seriously. Not everyone is an entrepreneur.

 

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[biophase]

How important is specialization?
For example from what I can see, the thing you do is.. if your market are tennis players, you would open up a store for rackets, a store for shoes, a store for the tennis balls, etc.
What is the benefit of doing this vs having a one-stop-shop for all things related tennis?

When you specialize in a niche it is easier to get traffic to your site. It is easier to rank for specific niche terms. This is where your domain name should have your keyword in it. Also, it makes you focus on one product. It's much easier to research those keywords and focus SEO on a small set of keywords than to try to rank for everything tennis.

 

[biophase]

Hi Biophase,
Thanks for helping us out.
Here is my dilemma. I found a product with roughly 50% margin and which sells for around 30 $. The keyword research in Adwords says 670,000 global searches and 110,000 US searches. How does that sound? How would I estimate how many sales I could make? I don't have a site up yet, so I would like to get a feel if this is the right product before I get into Google analytics and PPC campaigns.
Cheers,
Mike

Hi Mike,

I don't use too many statistics, but an easy way would be 110,000 monthly searches, assume that #1 spot gets 40% of the traffic so you would get 44,000 hits. Assume a conversion rate of 1% and you'd get 440 sales a month. With a $15 profit, you'd make about $6,600 a month.

This could be your expected #1 ranking profit starting point and you can adjust your numbers from there.

 

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[biophase]

Biophase,

I have a quick question...when you talk about the size of stores...small, medium, large...what do you use to determine where they fall? Is there a range you'd use. I'm not sure if I am asking the right question...so let me ask this would a store that sells 2000 items a day be considered small, medium or large in the e-commerce world or does it depend on some other factors besides how much product they move?

Sue

Hi Sue,

I'm not sure where I talked about store sizes so I don't have the context around what I meant. A store that sells 2000 items a day would be huge. We have talking high eight figure profits!

I would say that 1-3 sales a day is a part time salary replacement store, or good extra income.
4-10 sales a day, I'd say that it's a pretty good store and a full time job replacer for many.
10+ sales a day is probably a $100k+ salary store.
This is all assuming profits per sales range from $20-$40.

 

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[biophase]

Knowing what you know now, how would you start off if you were just starting out today if someone wants to be where you are at in 2-5 years from now?

What do YOU see as the basic steps to starting a successful ecommerce store?

I am looking for the fundamental steps from your perspective so I can do more learning/research about the process.

Any recommendation on books, courses to get started to learn the basics? There is just too much stuff out there that you don’t know where to even start.

Did you ever publish that ebook on Ecommerce you were writing? Any chance I can pay you for a copy?

A million thanks in advance.

Honestly, it's alot harder to start once you have the knowledge of what not to do. I'm sure you've heard it many times how people make a ton of mistakes in their business. That's when you just do things and see what happens. As you learn what not to do, it begins to limit your options. For example, when I started I did not do much market research. But now that I know how to do it, it sometimes kills many ideas I have.

If you decide to sell tape measures online and find out that only 500 people a day are searching for it, you many shelve that idea. But who knows if 500 people a day would have made you a decent store? Also, searching SEO competition will also discourage you if you see the top 5 sites being monster sites. But you never know if you could have pushed them down.

There are so many little details in researching markets that sometimes I just ignore them and put up the store. For me, it's a small investment of time and money and I get real world data instead of what if's.

I never made that ebook, but there is a blog and course that would probably be the same as my ebook if I ever wrote one.

Starting An Online Business When Your Wife Wants To Stay At Home With The Kids | MyWifeQuitHerJob.com

I've read his stuff and it's pretty good. In fact, his story is exactly like mine but he is probably a year behind me. I'm sure he will be moving to an office soon for his business.

 

[biophase]

need no details, just general info. can you talk about the size of your business, revenue, employees, growth?

Also, can you talk about your margins, and how they change as you go from dropshipping to warehousing to manufacturer? My knowledge is that manufacturing and warehousing will leave you with the best margins and highest risk, while on the other end of the spectrum, dropshipping provides the worst margins and least risk.

All I can say is that it grows every year at a decent rate. I have 2 employees and a small warehouse. I think people get stuck on these numbers and many don't realize that you can run huge businesses yourself, out of your bedroom with no employees. I'm talking about multi-million dollar businesses.

Actually dropshipping has good margins. It's sort of the opposite than you would think. The margin on the actual product goes up, but with the added expenses your business profit margin goes down.

Here's an imaginary store:
Dropshipping you get a 20% margin and virtually no expenses. By warehousing you buy bulk at a discount and get a 33% margin. But now you add rent, utilities, boxes, tape, employees, etc... and you lose a chunk of that margin. You could be back down to 20%. As you grow, you add forklifts, heavy equipment operators, accountants, bookkeepers, HR, etc... and your margins will drop to 10%. I would say that medium online stores have margins of 10%. Large stores are at 5%. Look at Zappos, they run at 1%.

The difference is that in dropshipping your revenue gets stuck at $500k, so you make $100k
Warehousing as a small operations your revenue increases to $1m, so you make $200k (BTW, I have alot of debates with myself on whether this jump is worth it for $100k)
Warehousing as a huge operation your revenues is $10m, so you make $1m.
Zappos $1b, so they make $100m

 

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[biophase]

Strange, I actually enjoy this process too ... signing a book, throwing it in a box, and dropping it off at the post office. While die-hard "Fastlaners" might say "This is a waste of time!!!" I find it enjoyable. I've never had an issue with the *work* of order fulfillment -- curious that you feel the same. I wonder what the psychological reasoning is behind it ... Perhaps it makes us feel more intimate with the customer and the value you are offering?

I think it is more about customer service and completed tasks. When a customer places an order from you, they are expecting a level of service. They expect what they ordered to get shipped to them in a timely manner. Until you ship that order, it's on you and it's a nagging incomplete to do in the back of my head.

Since I was always a project manager, I tend to think of each order is an individual project. It starts when the order comes in and is only completed when the package is picked up by the Fedex guy.

I'm sure part of it is the intimacy also because you do read the names and addresses of the people purchasing from you. Sometimes, people are surprised when they call in and I can remember their location and order just because I happen to have packed their order.

It's such a short project cycle, but it is rewarding because you complete many projects at a time. It's like finishing a huge to do list for the day, the customer is happy and you have made actual money. You can actually count the money in your pocket as you box up a package. I remember thinking, "I'll go pack that box during the next commercial and make $50 in 2 minutes." With that type of thinking, I've never gotten sick of packing boxes. Who wouldn't want to make $1000 an hour in between commercials.

 

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[biophase]

I don't agree... you can be bad at ecomm and great at business.

I disagree with this also. Ecomm is a part of a business. If you are good at business you can figure out ecommerce or any business because... by definition, you are good at it.

If you are good in business, you may find that you personally suck at ecommerce, but just means that you would solve your problem by bringing in someone who is good at what you aren't.

By contrast you can be good at ecommerce but suck at business. This is the space that Dan Dan is talking about. So many sites don't understand business. For example, I see a ton of stores with:

Flashing text
Bad color combos
Banner Ads
Adsense (WTF?)
Music that automatically plays
6 page checkout that requires middle initials and company names
Annoying pop up video people

When you see sites like this that rank on the front page, you know that as a good business person, you can beat them.

 

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[biophase]

Iv been into droppshipping for over 5 years now. But Im moving towards Amazon affiliate program.

No need to find droppshipers
No need to process orders.
No need to deal with customers.
No need for licenses or tax ids etc.
No need to do taxes, get your 1099 and thats it.

yes its less commission,
but I used to make bank with amazon, and with my method Ill be back up there in no time. Just a suggestion. not meaning to highjack, i think its a nice piece to add to this particular discussion actually. Please share your thoughts..

I think that this is going backwards. Yes, you get all the perks you listed, but you don't have control or a brandable business. Do you think you will make more with Amazon affiliate because your product pool is larger? Why do you think you will make more that way.

I think most people going the opposite direction.

For example, let's say I create an affiliate site, Johnscheapipadcases.com. I start it via affiliates and make 6% per sale. I get decent traffic and gross $10k a month, making $600 month.

The usual next step is to go dropship and say you increase your margins to 25%. Now you are making $2500 a month.

The usual next step is to go direct to China and increase your margins to 80%. Now you are making $8000 a month.

 

[MJ DeMarco]

Funny thing is the part I actually enjoy in this business is putting the product in the box, taping it up and slapping the Fedex label on it. I still go in on Sunday nights and pack boxes if I get bored. I like the aspect of concluding an order, serving the customer and making the money on each particular sale.

Strange, I actually enjoy this process too ... signing a book, throwing it in a box, and dropping it off at the post office. While die-hard "Fastlaners" might say "This is a waste of time!!!" I find it enjoyable. I've never had an issue with the *work* of order fulfillment -- curious that you feel the same. I wonder what the psychological reasoning is behind it ... Perhaps it makes us feel more intimate with the customer and the value you are offering?

 

[biophase]

Biophase

What do you think of hosting an "Ecommerce Field Trip"? The idea is a group of us would hold each others' hands and follow you as you shepherd us thru the steps to open our own ecommerce store.

I imagine the steps would be:
1- Choose a niche
2- Select product you want to sell
3- Establish your domain
4- Build the website
5- Optimize your SEO

At the end of the process, you can look back marvel at the progress your students have made. Plus, it really helps get people off their duffs and do something

I have no interest in creating a course or anything like that. I already am helping a bunch of people.

Over the years, many on the forums and my blogs have asked for help. I don't mind answering questions at all, but I can quickly tell who will do stuff and who won't.

The people who need step by step guides usually don't do shit. I mean if I tell you step one is to find a niche and you'll get step two in two weeks. What do you do if you find a niche on day 1? Do you wait two weeks for step 2 or do you move forward. You can ask me what the next step is before two weeks. But most would probably wait.

I have a friend that wanted to start a store for over a year. We have a niche already so I give him one task. Find 5 domain names and call me with me. He calls me 5 days later with one domain. I tell him why it is not a good one and give him more guidelines to help him choose better ones. To this day he hasn't called me back with his next 5. He will never get a store up.

I think that if you need a course or a step by step guide to get off your duffs then you will have a tough time in business in general.

Look at the guy in this thread below. He says it took him 18 months to breakeven. It's not easy to do and you have to be persistent.

I make over $100k per month running Drop-Ship product websites (proof inside).. AMAA : IAmA

 

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[biophase]

Thought this might help you guys out also. :smug2:

How to make your shopping cart suck less - The Oatmeal

 

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[biophase]

So far this is an idea I've only had for 3 days now, so I haven't contacted anyone yet, I just got a one month package from volusion to check everything out and see how these types of websites work. I'm totally new to this kind of stuff, so buying wholesale is even new to me.

The reason I asked you is because you are going on this path of questions of what ifs that could be useless and time wasting. If you call the manufacturer and they say, sure we will dropship for you, then all your energy in this path is wasted. Don't do this to yourself. Ask the question first, then if they shoot you down, revisit this path.

 

[mywifequit]

Hi Everyone,

My name is Steve and I run a blog at MyWifeQuitHerJob.com, an online store and an ecommerce course. I've noticed in my logs that I've been getting some traffic from this forum so I thought that I'd just pop and say hello.

In any case, this place seems like it's right up my alley. And I believe that I've exchanged a few emails with Biophase as well. Awesome thread!

 

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[biophase]

You are totally right! I guess it depends on what your strategy is. For me, I rely basically on SEO. Why? Because I can rank a site with almost no cost and little time and I can get a lot of traffic doing it. Yes, it is risky but that is why I am creating new stores every month and soon hopefully every week.

Dan,

I would take a step back and rethink this strategy. If I were doing this plan, I would create generic stores and once I found good profitable ones, immediately create another store in the niche with a brandable name. Then run both stores and eventually leverage the keyword domain store into the branded one.

There's a reason why the big players, hayneedle, wayfair, have gone from a ton of small stores to one giant store. You also see a bunch of people on flippa selling stores saying that they have too many and are focusing on a couple. Multiple tiny stores is much more work than a few good stores.

Trust me on this. I downsized to a few stores and things are much easier. In the beginning I thought, 10 stores making $1k/mo would have been easy. But 2 stores making $5k/mo is waaaay better.

 

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