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.

Have you ever wondered why so many people want to dropship laptops, computer components and other consumer electronics?  Perhaps you are one of these electronics eCommerce businesspeople.  With all of the interest in dropshipping laptops and other computer-related products online, we want to take a moment to ponder the potential profitability of such ventures.

It’s not that there is no opportunity in dropshipping laptops, if this were the case, Dropshipping Wholesalers wouldn’t waste their time recruiting dropship business owners to move these products.  It just feels like the intensity of the competition in this market has been dialed up a notch and there is little opportunity for new dropshippers to move computers and consumers electronics at a profit.

Have you ever wondered why all of the laptop product listings on eBay for a particular model look exactly the same?  This is because these dropshippers all belong to dropshipping directory programs which offer push-to-auction or push-to-cart solutions for these products.  These dropshippers are all working off the exact same palette of potential products.  Such programs have saturated the market with an abundance of dropshippers and reduced margins all the way around.  Sure, the sector as a whole has prospered, but laptop dropshippers have to move large volumes of product to realize a decent profit.

It’s not a total doom-and-gloom story, though; there is opportunity for those willing to invest in research and preparation.  If you are interested in dropshipping laptops and consumer products, we suggest you check out Doba, Simplx and DropshipDesign, which offer different catalogs of branded dropship products in the electronics industry.  Research historical auction data with Terapeak.  This will give you a leg-up in competing against the big guys.  You don’t need to offer the computer model that everyone else is offering.  See what customers are searching for, what they’ve been willing to pay and what’s available.  There is opportunity in this sector, you just have to be patient and do your research.

Dear Dropship Advisor,

My husband and I planned to start an eCommerce business that dropships products for babies and toddlers, but we are wondering how do you know what products sell the best online?

Thanks!

-eCommerce Enthusiastic

Dear eCommerce Enthusiastic,

This is a very important question for you to be asking with regard to your dropship business.  Many eCommerce entrepreneurs fall in love with the ‘idea’ of eCommerce – for its flexible work schedule or its promise of ‘overnight Internet millions’ (a fable)..others simply have a passion for a particular product and decide to dropship it.  Not too many dropshippers consider the viability of the product(s) they want to dropship.

There are many, actually, of a particular industry or product choice that will affect a dropshipping business’ potential profitability:

• Is this a branded product, a commodity or a uniquely new idea?
• Is it being searched for online?
• Are customers willing to buy it online?
• Are companies successfully retailing/dropshipping the product online right now?
• How competitive is the market for your potential customers?
• What is the average profit margin for a dropshipper of this product?

You’ll want to spend some time finding the answers to these questions and more in order to determine the viability of your dropship business idea.

What Products Sell Well Online?

One of the great things about the Internet (for marketers, at least) is its ability to track and store data.  You’ll want to analyze search metrics and sales data in order to determine if a particular product you’re hoping to dropship is likely to work well for your business.

Here are some of the most helpful resources available to you on the Web:

• Search Metrics:  See what keywords/keyphrases searchers are using related to your chosen products and how often by visiting the Google External Search Tool.  See how web traffic for searches related to your products has changed over time with Google Trends.
• Sales Data:  It’ll require a small financial investment, but it is well worth it.  Terapeak, an eBay company, tracks sales data across eBay’s entire network of used and new products.  The data is considered to be a good cross-section of overall eCommerce activity by the foremost eCommerce experts.  It’s a must-have for eBay sellers.  The data is quite amazing and the search feature is robust.  You can view data such as sales price, % of listings sold, % auction/% buy-it-now, avg # bids and much, much more – by item or by category.

We hope this points you in the right direction – at least to start with..

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!

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

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.

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.

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!