In every business, the bottom line is profit. Every businessman wants to reduce costs to increase net revenue. This is particularly challenging for sellers in online auctions where the product prices vary depending on the bids of potential customers. Thus, it is ever more crucial for online auctioneers to reduce their overhead as well as their variable costs.
Major costs for the usual sales businesses come from inventory, storage and delivery of items for sale. With drop shipping, however, these costs are drastically reduced because the seller no longer has to build inventory, will not have any items to store and can outsource the packaging and shipping of products sold. Inventory and storage are transferred to the wholesaler, who, in turn, considers these sunk costs since it is already part of his overhead costs, while the packaging and sipping costs are paid in advance by the buyer. There is practically no cash out required from the retailer, whose profit is guaranteed.
Of course, for such an operation to be viable, the seller requires immediate access to an extensive directory of reliable dropship companies who offer real wholesale prices. A number of wholesale dropshipping directories can already be accessed online for a fee. However, most directories, including SaleHoo, which is one of the most preferred directories, combine true wholesale companies with regular suppliers. The challenge for online auctioneers is to be able to distinguish one from the other. Below are three things that could help sellers do this.
1. Master your market or niche. It is necessary to keep abreast of prevailing retail and market prices so that once a potential supplier makes an offer, it is easy to know if the price is too high. Prior to negotiations, the retail seller must already have an idea of how much the item is supposed to be. If this is not possible beforehand, the retailer can verify local prevailing wholesale prices with other suppliers in the area.
2. Keep an eye out for forum clues. Online forums within specific industries are sure to cough up names of potential wholesalers along with a rant or a rave from a client. Pay attention and keep notes to be guided on which so-called wholesalers are actually just middlemen.
3. Invest in membership to a reputable wholesale drop shippers directory. The directory is the key tool and portal for accessing potential suppliers. Auctioneers and sellers should not scrimp on this but be willing to spend a bit more for reliable and up to date listings.