Opportunity or Not? Being the Dropshipper

[exclusives88]

Two weeks ago, I launched a product on Amazon. Each product is 9 lbs that is 9 inch x 5 inch x 5 inch so it is on the heavy side. My cost to me is $5.50 if I purchased 6000 pcs.

I was contacted by company that does roughly 70 units a day for this product. They do not hold the inventory but drop ships. Their current supplier can not handle the volume which is why he is reaching out to me. They want to purchase from me for $17 shipped to the consumer which is how much they current pay their supplier.

I thought it would be a great opportunity if I made the cost work . However, after going through how much it will cost to ship, I do not think I can get my total cost low enough.

When I go on UPS or Fedex website, it will cost around $24 to ship. Is a bulk shipping discount enough to make this deal work out? or is that $17 number they gave me a BS number for them to get a lower and unreasonable low cost?

 

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[blackbrich]

Can't hurt to call UPS and Fedex and see what they say for 2100 packages a month for those specific dimensions.

 

[RedKiteKid]

I think if you have to caveat an opportunuty with something along the lines of "if I can squeeze the postal costs down a dollar or two then this makes sense" then it probably doesnt make sense.

Surely his supply conundrum proves the value of your product and you should be able to build your own sales on Amazon if you can build those first few sales and reviews.

Two weeks ago, I launched a product on Amazon. Each product is 9 lbs that is 9 inch x 5 inch x 5 inch so it is on the heavy side. My cost to me is $5.50 if I purchased 6000 pcs.

I was contacted by company that does roughly 70 units a day for this product. They do not hold the inventory but drop ships. Their current supplier can not handle the volume which is why he is reaching out to me. They want to purchase from me for $17 shipped to the consumer which is how much they current pay their supplier.

I thought it would be a great opportunity if I made the cost work . However, after going through how much it will cost to ship, I do not think I can get my total cost low enough.

When I go on UPS or Fedex website, it will cost around $24 to ship. Is a bulk shipping discount enough to make this deal work out? or is that $17 number they gave me a BS number for them to get a lower and unreasonable low cost?

 

[biophase]

What is the retail cost?

If they can't keep up at $17, they will pay you more so that they won't lose sales.

Or ask them if you can use their shipping account to ship and charge them $14.

How much work do you want to do to make $350/day? That's 70 orders at $5/profit. I'm guessing that is about 1.5 hours of work.

 

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[exclusives88]

What is the retail cost?

If they can't keep up at $17, they will pay you more so that they won't lose sales.

Or ask them if you can use their shipping account to ship and charge them $14.

How much work do you want to do to make $350/day? That's 70 orders at $5/profit. I'm guessing that is about 1.5 hours of work.

Their current supplier can not handle the volume (70 pcs a day) so they are looking for a new US supplier. They leverage their old supplier for everything (including shipping).

I am currently selling the products on Amazon so I see 2 opportunity here : Selling them the 70 pcs a day at $3 - $5 profit each, and also getting my cost very low that I can take advantage of selling on Amazon and my own website. In addition, I can see expanding to different variations (different product uses) to be very easy especially when I will be shipping a full container.

Currently, my negotiable rates is $11.93 to ship to California from East Coast (worse case). My cost of each product will be $5.80 (to my door). So my total cost (including shipping) is $17.73. However, I am meeting with a UPS local rep in an hour to get the negotiable rates lower. Will keep you guys updated...

I think I can make it work if I can bring shipping cost down to $8. I will also ask the guy to increase to $18-20 each.