Finding a Dropshipping Supplier
A number of different strategies may work for you, and some are more effective than others. The methods below are listed in order of effectiveness and preference, with my favorite methods listed first:
Contact the Manufacturer
This is my favorite way to easily locate legitimate wholesale suppliers. If you know the product(s) you want to sell, call the manufacturer and ask for a list of its wholesale distributors. You can then contact these wholesalers to see if they drop ship and inquire about setting up an account
Since most wholesalers carry products from a variety of manufacturers, this strategy will allow you to quickly source a selection of products within the niche you're exploring. After making a couple of calls to the leading manufacturers in a niche, you'll quickly be able to identify the leading wholesalers in that market.
Pro's & Con's of Dropshipping
Using a certified wholesaler that dropships, is a low-cost solution for people who work from home, don't have money to spend on inventory and want to sell products online. dropshipping does work and it works very well but you have to be careful with a few things.
First, you can't just sell any product you want and expect to be able to compete with drop shippers. When you dropship a product, you are buying and selling one thing at a time. That means your wholesale price is for one product when you have it shipped.
Wholesalers always provide discounts to retailers when they purchase in bulk. That means your wholesale price for one product (drop-shipped) can be higher than a competitor who is buying in volume from the wholesaler which means they can sell that product much cheaper than you can, and in some cases, even cheaper than your wholesale cost!
So how do you make drop shipping work?
You must be able to pick the right products to sell and the right types of products to dropship. You can't assume that just because you might think a product is a ‘good idea to sell' that you should jump in and start selling that product.
You have to find the products you can have drop-shipped that you can compete within the current online market. Doing a bit of market research before you start the selling process is critically important for you to emerge as a successful Shopify dropshipper.
The Pros of dropshipping:
– You don't have to buy or store inventory
– Very low startup cost
– Easily add or change your product offerings
The Cons of dropshipping:
– Not all wholesalers offer dropshipping
– Wholesale cost is based on one product only
– Must spend time researching to pick the right product(s) to sell
Finding Good Dropshippers
It's difficult to find certified dropshipping companies and it’s almost impossible to do an internet search for “dropshipper” without running into hundreds of scammers and middlemen.
Most of the results you'll find online are companies claiming to be dropshippers but they are nowhere near the quality and pricing you get from working with genuine dropshippers. It’s important to be patient when searching for a drop ship company.
Certified dropshippers don’t charge setup fees or monthly fees. So while doing your search, if you stumble upon a company claiming to be a “dropshipper” or having drop ship websites and they ask for a setup fee, monthly fee, or annual fee, that’s an immediate red signal.
Dropshipping can be confusing, especially when dealing with scammers, so here is a list of 10 tips for finding a wholesale distributor.
1. Understand Your Industry's Distribution Channels
There are many ways a product can go from manufacturer to retailer. Not all wholesalers serve the same market. Understanding your industry's distribution channels, and knowing where you fit in the supply chain can help you find the right wholesale supplier for your retail or online business. The different types of wholesalers include:
- Manufacturer: For some products, you can buy directly from the manufacturer. This is basically what a “boutique” store does — buys from small (sometimes one person) manufacturers.
- Importer/Exclusive Distributor: In some industries, a company might have the sole rights to import and distribute a product in a certain country. Some may sell directly to retailers, but more often, they set up or sell to smaller local wholesalers.
- Wholesaler/Regional Distributor: There is usually regional drop shipping wholesalers who take delivery of boxcar-sized lots, break them down and sell truckload boxes of products to local wholesalers.
- Jobbers, “wagon peddlers”: These individuals make daily deliveries to local grocers and retail brick-and-mortar stores.
Each product industry has its own unique distribution channels. Some retailers will move enough volume to bypass jobbers, or maybe in a smaller industry, importers sell directly to retailers.
When you first start, you'll be buying from the smaller wholesalers at higher prices. As your volume increases, you'll be able to get better pricing and/or move up the supply ladder to a bigger wholesaler.
2. Try the Manufacturer First
You might as well start at the source. If you're selling branded items, go directly to the manufacturer of the product. They might sell to you depending on their minimum order requirements.
If you're too small for them or they only sell through established distribution channels, ask them for a list of distributors you can contact. By starting at the source (the manufacturer), you can either get the lowest prices or at least get a list of the most reputable distributors to kick off your search.
The fewer people you have to go through, the lower your cost will be, allowing you to be more competitive in the marketplace.
3. Have a Productive First Contact With a drop shipping supplier
Take the list of wholesale distributors you got from the manufacturer, and start contacting each one. What you're looking for are minimum order requirements and their wholesale unit prices.
To get the best responses, be honest about what you're looking for (don't try to sound “bigger” than you are), keep your emails short and to the point, and be friendly. You may also consider picking up the phone to make initial outreach calls or to follow up with the people you've sent your introductory emails to as well.
4. Try Searching for drop shipping wholesalers on Google
As mentioned above, you can start your preliminary research with some basic Google search terms. As you get deeper into your research, you'll probably get more specific about the products you're seeking.
Conduct Google searches for the words “wholesale” or “distributor,” plus some keywords from your products or niche. Try product names, model numbers and brand names. Go through each result and look for the “wholesale account” link or an email address or phone number where you can get more information.
In the rare case that the information is difficult to find or not readily available, you could do a WHOIS search to find the website's contact information.
5. Look for Wholesale Lots on eBay
If all else fails, some retailers or small wholesalers will sell bulk quantities of your product on eBay. Since eBay mainly targets retail consumers, the wholesale options you'll find here are usually only suitable for very low volume retailers.
But if you're just starting out, eBay might be the easy start you need to dip your toes into ecommerce and start shipping your product.
6. Check Major B2B Marketplaces
Start at Alibaba which is the biggest of all the B2B marketplace of manufacturers, importers and wholesale distributors. Other B2B marketplaces include Global Sources (USA), Buyer Zone (USA), EC21 (Korea), EC Plaza (Korea) and Busy Trade (Hong Kong).
7. Join Industry Groups, Forums, and Other Professional Networks
Other retailers are not eager to share supplier information with competitors, so it'll take some networking to find the best possible wholesale suppliers for your small business.
Start building relationships with industry insiders, and eventually, you'll be one of those insiders. Participate in online forums, build your LinkedIn profile and start building connections, subscribe to industry newsletters, and generally build your professional network.
8. Subscribe to All of Your Industry's Trade Publications
Get every magazine or newsletter that targets retailers in your industry. Every advertiser in the magazine will be a product manufacturer or distributor looking to reach out to you.
You should have a few dozen options from the ads in the back of the magazine. Also, subscribe to all of the online newsletters, blogs, and other sources of information available to you.
9. Attend a Trade Show
Attending trade shows is one of the most powerful ways to build and grow your business. These events are for retailers just like you. When you can talk face-to-face with manufacturers and wholesale distributors, it avoids all the noise of inaccurate information that can plague the web.
The largest directory of trade shows is at tsnn.com. You can search for a trade show by industry, date, city, state or country and/or event name.
10. Don't Be Afraid to Make a Mistake
Your first wholesale supplier may not be your lifelong vendor. Creating your perfect supply chain is an evolution involving a lot of trial and error. Remember, all you need from your first supplier is a product that you can ship at a profit.
It may not be the best wholesale price for you, but don't sweat that in the beginning. Your first goal is to get your product shipped. Then you can improve your bottom-line by trying other wholesale suppliers.
How to Spot Fake Dropshipping Wholesalers
Depending on where you're searching, you'll likely come across a large number of “fake” wholesalers. Unfortunately, legitimate wholesalers are harder to find and tend to not have a strong online presence.
This results in the non-genuine wholesalers – usually just middlemen – appearing more frequently in your searches, so you'll want to be cautious.
There are some things to look out for that will help you discern whether a wholesale supplier is legitimate.
They want ongoing fees – Real wholesalers don't charge their customers a monthly fee for the privilege of doing business and ordering from them. If a supplier asks for a monthly membership or service fee, it's likely that they’re not legitimate.
It's important to differentiate between suppliers and supplier directories. Supplier directories (which we'll discuss shortly) are directories of wholesale suppliers organized by product types or market and screened to ensure the suppliers are legitimate.
Most directories will charge a fee – either one time or ongoing – but this necessarily doesn’t mean that the directory is illegitimate.
They sell to the public – To get genuine wholesale pricing, you'll need to apply for a wholesale account, prove you're a legitimate business and be approved before placing your first order.
Any wholesale supplier that offers products to the general public at “wholesale prices” is just a retailer offering items at inflated prices. But here are some legitimate drop shipping fees you’ll likely encounter:
Per-Order Fees – Many drop shippers will charge a per-order dropshipping fee that can range from $2 to $5 or more, depending on the size and complexity of the items being shipped. This is standard in the industry, as the costs of packing and shipping individual orders are much higher than shipping a bulk order.
Minimum Order Sizes – Some wholesalers will have a minimum initial order size which is the lowest amount you have to purchase your first order. They do this in order to filter out window-shopping merchants that will waste their time with questions and small orders but won't translate into meaningful sales.
If you're dropshipping, this could cause some complications. For example, what do you do if a supplier has a $500 minimum order, but your average order size is around $100? You don't want to pre-order $500 of product just for the privilege of opening a dropshipping account.
In this situation, it's best to offer to pre-pay the supplier $500 to build credit with them to apply against your drop shipping orders. This allows you to meet the supplier's minimum purchase requirement (as you're committing to buy at least $500 in a product) without having to place a single large order without any corresponding customer orders.
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