Searching for Dropshippers Online

Searching for Dropshippers Online

Conducting primary research to locate Dropshipping Wholesalers can be an arduous task.  A large majority of pages contained in major search engines are spam; you will find it very difficult to find manufacturers, wholesalers and distributors who offer legitimate dropshipping business opportunities on your own.

In an age of instant and global information, it is hard for many to understand why this is the case.  Wouldn’t it be great if it were easy to search, compare and contact dropshipping wholesalers?

Finding Dropshipping Wholesalers:  The Problem

The main reason that dropshipping wholesalers do not reach out (via organic search optimization) to dropshipping business owners is that they do not have the time and resources to field inquiries from the literally thousands of individuals who are interested in dropshipping their products.  Consider Apple.  If they opened themselves up to dropshipping inquiries online, they would literally be flooded with those wishing to dropship Ipods and other Apple products.

Not only would it be an impossible nightmare for Apple or other product manufacturers to deal with all of these would-be business partners, but they would need a method to determine which of these entrepreneurs represent legitimate business owners.

Wholesalers cannot risk supply chain disruptions or withstand the branding fallout of distribution problems within their networks.  In order to dropship the best products online, you’ll need to pre-qualify yourself somehow.

Dropshipping Directories

The best and most efficient method to find good Dropship Product Wholesalers is to join a membership program, such as Worldwide Brands, Salehoo, Doba or DropshipDesign.  Yes, such programs have ‘admission requirements’ and aren’t free, but they will save you a great deal of time and money – and introduce you to a good number of potential business opportunities.

In addition, consider the economies of scale that you leverage by joining one of these programs.  With most major dropship membership programs, you’ll benefit from over a decade of product research.  These companies are obligated to present you with viable dropshipping opportunities.

How Much Should I Pay for a Dropship Business?

How Much Should I Pay for a Dropship Business?

The process of valuing a dropship business is not all that different from the process of valuing any other business.  In simple terms, a dropship business today would be worth the present value of its future cash flows.

In order to obtain this figure, you would need to estimate future income that the dropship business would generate and discount them by the expected rate of inflation that you anticipate affecting the money (compounded appropriately for future years).

Why Would Someone Sell a Dropship Business?

My mother warned me to be cautious about people selling used things.  She would often buy them herself, but not after engaging in fierce devaluing/negotiation tactics.  She told me that there was always a reason that someone was selling something.  She’s right – there is a reason.  No one ever sells anything out of the goodness of his/her heart – that we would call charitable giving.

It is good to try to ascertain – either through overt or covert methods – the reason for the sale of a dropship business.  Perhaps the project has become too much for the proprietor (who doesn’t know as much as you do about dropshipping)..perhaps he/she took a full-time position..perhaps the website generates consistently low levels of traffic (an obvious red flag)..perhaps the site’s traffic cannot be monetized.

Valuing a Dropship Business

• First of all, you should ask for financial documents, including a profit and loss statement – also called an Income Statement.  This is a financial statement which indicates the revenue, expenses and net income (or loss) that an organization reported for a given period of time.  Get income statements (either in tax return or audited format, if you can – to ensure some level of third-party validation) from the last three years, if available and use these to predict future income and expenses.
• Make sure you verify the Domain Owner, Domain Age, its Traffic Rank, Traffic Characteristics in order to validate the seller’s claims about the domain’s value.

After you have gathered the inputs and calculated a number that you feel like is justified in paying for the website, keep it private!  Start (anchor) yourself lower, and begin negotiating.  Best of luck!

Can’t I Just Buy A Dropship Website?

The recent words of one of our readers echoed the sentiment of many:

Dear Dropship Advisor,

The more I learn about the nature of a dropshipping business, the more I am daunted by the process.  I want to start a baby products store.  Can I just buy an existing ecommerce website with existing dropshipping wholesalers?

-ECommerce Exhausted

Dear ECommerce Exhausted,

This is certainly a valid question and one that has a lot of merit as dropshipping grows and matures.  Just as with any other type of business, you can either build a dropship business from the ground up or you can purchase an existing business from someone who is getting rid of one.

There is a growing market for the sale of dropship websites and other e-business on sites such as Flippa, WebsiteBroker.com.  There are many other marketplaces for dropship websites online, but these are some of the more prominent ones.

Also, check Craigslist, Backpage, Kijiji and other directories for eCommerce and dropshipping-related business advertisements.  These websites get quite a bit of traffic from web-savvy entrepreneurs (like yourself..).

When you find a dropship website that you are interested in learning more about, make sure to ask the seller a lot of questions.  I got a bit exhausted trying to understand why so many people are selling so many ‘profitable, easy-to-maintain’ websites..doesn’t quite add up.

Make sure you get:

-Satisfactory reasons as to why the website is being sold
-The age of the domain
-The existing hosting information
-The shopping cart information
-The nature of dropshipping relationships (including wholesale cost, shipping arrangements, marketing restrictions, etc.)
-Financial statements (profit and loss statements for the lifetime of the business; the past three years if the business has been around for a long time)
-Better Business Bureau information – do a BBB.org check on the domain and ensure that no outstanding grievances have been filed against the company

If the seller has provided this all to your satisfaction, proceed.

Part 2 – Price Negotiations Coming Tomorrow.

-The Dropship Advisor

Fly-by-Night Dropshipping Directories..?

Anyone else curious (yes, we really don’t understand) where Terry Gibbs’ Ultimate eBay Dropship Power Pak went to?  Last we had heard, it was a available on his website and elsewhere around the web for $67.  It seemed to get a lot of traction online, but I’ll have to admit that I have virtually no experience with dropshipping products of this nature.

Now it seems Mr. Gibbs has joined the SaleSooSucks people.  These guys have a conspiracy theorists’ view of SaleHoo.  Wow.

..guess the moral of the story is – do business with those who are most likely to stick around, especially when it comes to dropshipping directories, which must be constantly maintained in order to ensure their accuracy.

Additionally, although we do live in a world that seems to be *disconnected* by the web, consider how much more *connected* it has made us in many ways.  Inquire as to who a potential vendor of yours may or should be collaborating with.

Chinavasion Achieves Top Dropshipping Honors

In response to those of you (ok, us) who believe that dropshipping from the Far East is difficult – or impossible, Chinavasion announced today that it has achieved a never-before-thought-possible milestone in the realm of international dropshipping.

The company now dropships, on average, over 80% of its wholesale electronics order – many to US eBay customers – in the same business day.  The company further asserts that most dropship orders arrive to their final destination within four to five business days.

Is this the start of a truly global dropshipping retail marketplace?  We’ll see, but things certainly seem headed in that direction.

***

Those of you interested in dropshipping electronics may be interested to note that Chinavasion does not appear to have relationships with any brand name electronics manufacturers – like Apple, Sony, Toshiba, HP, Acer, etc. – these are generic electronics products.  Finding a market for unbranded electronics online could be a challenging one, but it presents an opportunity for someone with the right vision.

If you are looking to dropship brand name electronics, try DropshipDesign or Simplx – or browse through The Dropship Advisor’s list of Dropshipping Wholesalers.

Dropshipping Scams – How Do You Know?

We recently received this question from a user at TheDropshipAdvisor.com and wanted to share this user’s experience with our community:

Are there dropshippers who dropship brand-name products?  I’ve been scammed by some users on Alibaba and Global Sources from China who claimed to dropship Apple iPods, Sony VAIO laptops, and other products.  How can I tell?  Where do I look?

Thanks.

-Dropship Disappointed, NY, NY

Dear Dropship Disappointed,

You’re not the first one to fall for one of these Dropshipping Scams and you certainly won’t be the last.  Dropshipping is a popular online business these days and many entrepreneurs are interested in dropshipping products like the ones you mention.

Our advice (which hopefully won’t disappoint you) is pretty simple:  if it seems too good to be true, it probably is.  Use good judgment and the following rules that we’ve found to be helpful when determing what is and what isn’t a dropshipping scam:

• Manufacturers of electronics, such as Apple, Sony, Toshiba..etc, etc. and other brand names don’t generally have dropshipping programs.  How would they manage them?  These companies disperse their products through carefully-organized distribution networks.  If you are interested in dropshipping name-brand products, we recommend checking out a company such as Simplx.  You are unlikely to find attractive margins (if any), but companies such as Simplx have economies of scale that you, as an individual dropshipper don’t have.
• There are ways to determine the authenticity of products before you receive them (or at least to try).  With regard to Apple and other electronics, ask the wholesaler, manufacturer or distributor to provide you with the serial numbers of some of the products that you will receive.  Verify them with the company’s online warranty checker – or call them directly.
• If this recent experience has rendered you a bit gun-shy (and we wouldn’t blame you), try joining one of the many Dropshipping Wholesalers, such as Worldwide Brands, Salehoo or Doba.  These lists are purified — that is, they are limited to those (domestic) companies that have legitimate dropshipping offers.

We hope this helps..best of luck!