The Wholesale Forums

[system0]

Hi all.

I am a newbie who is doing a lot of research into wholesaling and dropshipping. I've checked out a lot of forums and articles in the last week regarding the subject but I am still wet behind the ears in most aspects of trading so my views and opinions may be naive or at worst, just plain wrong That being said, I'm willing to learn.

The wholesale forums seem very busy and theres clearly a lot of people here who are both knowledgable and successful on the subject so I thought I would give you all a little background info on myself (please skip to the next section if you dont want to fall asleep!).

My name is Kevin Muldoon and I have been self employed via the internet for around 4 years (you can see some of my websites listed on my MOD EDIT). I have been making money and building websites since 2000 though for the first few years I was still working in the finance industry (mostly pensions, investment and mortgages). Although I fell into the finance industry after uni, I have a background in maths and IT.

2-3 years ago I did a lot of research and emailing into doing some wholesaling. I have run a poker community for 4 years and at the time the cheapest clay chip sets were going for around £60. I spoke to a few chinese manufacturers who were going to sell them at around $15 a set however I had to fill a crate. I had just come back from travelling and had a lot of debt so I was reluctant to invest in it at the time because I was still unsure about a lot of things. Of course, looking back I wish I had taken the plunge as prices didnt come down for another 6-9 months after that.

As you can see, my experience in trading is pretty limited. I am hoping that my experience with affiliate marketing and web development in general will give me a head start on other new wholesalers.

Therefore, the following comments from me is from a beginners point of view. As I said, I have did my best to research the subject but I dont have my head in the skies thinking that I know it all, far from it.

Directories

One of the hardest part about wholesaling and dropshipping seems to be finding a good company/supplier. No matter how hard you search for a distrubtor online you always seem to see the directories at the top of the list.

I have no qualms about paying £10 a month, heck I'd be happy to pay $50 a month if the directory had some good suppliers listed. However I have seen a lot of people in this forum (and on dropshipforum) say that these directories are a waste of money.

It seems that
* There are many scam companies in these directories ie. it doesnt seem like the directory owners vet those who are placed in the directory, more emphasis is on quantity rather than quality
* Customer service from these directories appear to be awful at best and most are not even based in the uk
* Product prices don't seem to be updated that much. Quite a lot of prices listed are more expensive wholesale than you can get in the shops just now.

Since I still have a lot to learn though I think I will still benefit from joining a directory. It will give me exposure to some suppliers and will help me learn more about how everything works.

I am thinking about joining Simply Wholesale, they're based in the UK, appear to be run by a respectable owner and I can't find any bad threads about them. Do any members here use them?

Dropshipping

I first came across Dropshipping a few years ago however I didn't really research the subject other than knowing what the term meant.

From what I can tell, there are some good dropshipping companies out there however there are just as many if not more scam artists and companies who who offer poor service.

I think that dropshipping could be a good way to get my nose into this kind of business however the main problem is that good quality service remains out of my control. I can provide fantastic support and great prices to customers but if the dropshipping company runs out of stock im screwed. Also, I have read that a lot of poor dropshipping companies occasionally send inferior products.

One of the biggest problems with dropshipping appears to be finding a good company. Some dropshipping only show their prices to paying memers however the ones which do show prices seem to be expensive ie. their prices are usually the same price or even higher than the prices on ebay or in the shops. The few products that I have found cheaper would only bring in a £1 profit tops (for example, I found babylist hair straighteners which were £5 cheaper than in argos but when you add postage and packaging and ebay/paypal fees your just about breaking even). At that kind of profit level I'd rather flip burgers at mcdonalds haha

The other problem with dropshipping seems to be the monthly fee. If profits are small then a high membership fee would definately reduce your monthly profit.

I am going to continue looking into dropshipping to see if it is an option however I still hate the fact that a dodgy company could leave me looking like im trying to rip someone off. Reputation is very important in trading and I wouldnt want a dropshipping company screwing up any future projects/websites of mine

Wholesalers

As I mentioned before, I think half the battle in this game is finding a good reliable supplier. This is not as easy as it seems. Other traders dont want to share their supplier info and I can understand this 100%. I doubt I would share this information so freely.

This of course leaves the problem of finding a good supplier. I'm looking for reliable suppliers which I can speak to on the phone, which I can contact by email. I have sent about a dozen or so quick enquiry emails to some wholesale suppliers in the last few weeks and not one has replied. It seems a little strange to me that these distributors all have websites which look like they were designed in 1995 and it seems clear that some of these companies dont respond to emails as quickly as they should.

I'm actually quite surprised that no UK wholesales have replied to me as yet but two years ago about 50% of the chinese companies got back to me within days with price lists. I definately think that using a chinese wholesale company is an option, particuarly since I will be cutting out some middle men and increasing my profit.

Overview

I still have a lot to research and a lot to learn so I'm sure I will be on this forum a lot.

I don't expect anyone to walk me through any of this but if anyone could give me any basic tips I would be very grateful. I am starting this business with my friend. He used to work for Reuters and has a lot of experience in business etc so I'll make sure he joins up here too!

Also, I don't profess to be an expert but I have been a domain reseller for 6 years and have my own dedicated server so if anyone has any general website questions I'll do my best to help you and if I can't, I'll do my best to point you in the right direction

Thanks

Kevin

[BillyA]

Welcome to the forum Kevin. Great article!

If you'd like to promote your site, please use your signature only.

[NorthyImports]

Welcome to the site had a look at your homepage looks great.
You will find lots of info here on the subjects you out lined once again welcome

[system0]

Originally Posted by BillyA

Welcome to the forum Kevin. Great article!

If you'd like to promote your site, please use your signature only.

Sorry Billy. I wasnt trying to promote my site at all

My home page is just a blog and is completely unrelated to this site. Its rarely updated and i just referenced it as it has some more background info on myself and a list of some of my other work etc. I run a few communties myself so would never think of spamming (I know including any link in a first post can leave a bad impression).

[cbeebies]

Good writing.

Personally, I think a wholesaler usually buy directly from the manufacturer in a very large amounts, usually in containers, and store the goods in a large warehouse for sale to retail stores.

What's your view of wholesaling and dropshipping actually is called a small home-owned internet retail business, not a wholesale business.

[system0]

Originally Posted by cbeebies

Good writing.

Personally, I think a wholesaler usually buy directly from the manufacturer in a very large amounts, usually in containers, and store the goods in a large warehouse for sale to retail stores.

What's your view of wholesaling and dropshipping actually is called a small home-owned internet retail business, not a wholesale business.

you are 100% correct. I was writing from a small business point of view.

[Pete]

A couple of quick comments. A correct response would take some time.

True dropshippers, also called "Tier One" dropshippers will always - hold their own inventory, ship one item at a time for you, ship "blind" under your name and not have an extra fee for dropshipping, as that is what they do. (They may have a "small order fee", as do many sources, for low value orders.)

Other so-called "dropshippers" are simply "middlemen" or "order gatherers". They can be scammers and they will often have fees and want you to use their payment processor, etc.

There are several types of "wholesalers". This depends to some degree on the specific products involved.

There are "importers" or "distributors" who in many cases MAY have an exclusive arrangement with the manufacturer to be the sole distributor within a country or region. They may also wholesale to retailers, but often they will develop a series of "wholesalers" in different sections of their assigned territory. The wholesalers may then supply retailers and "wagon peddlars" or "jobbers" who are smaller wholesalers who will often sell direct from their trucks to small retailers.

You've seen wagon jobbers making deliveries to the local c-stores and groceries. There aren't many making deliveries to jewelry stores. It just depends on the industry.

So, making any kind of flat statement on the subject is always spreading mis-information. Every product type has it's own distribution channel, and there are always exceptions since humans are involved. Things can always slip out the back door, a distributor may sell direct to a retailer (referred to as "house account") that buys in enough volume to bypass a wholesaler. Etc.

The thing is that with few exceptions there are no laws in this area. So, anything can happen.
.

[system0]

Very good reply pete. I appreciate the info

[SGFB]

Hi system0, that was a very good insight of what you feel about directories, dropshipping and wholesale. Just like to add on and comment on some of them, if you do not mind

Directories - I don't think there are no such think as a dirctory anymore, well at least not good ones. Most of the directories are so recycled that they qualifies as junk. Sams in the directories are not uncommon as a lot of these directpries are basically operated and publish by scammers them self or at least partially sponsored by scammers. Sorry that I cannot help you on commenting on Simply Warehouse, haven't use them before

Dropshippers - The good ones are usually more expensive in their charges (that might make you less competative) and the cheap ones are somehow less reliable in terms of quality control and services (bad response, screwed up shipping time etc). Monthly fees or so call subscriptions for dropshipping companies are inevitable, they cannot afford to have 1-time-paying members that are inactive in selling but still benefit from the info that the dropshipping companies provide. Don't forget that a they will have to spend money updating their product lines. By paying subscription, they can easily qualify you as a serious buyer, thus filtering off those that are just paying once to gather cost related information. You will have to do your maths... the quantityxprofit vs subscription before you jump into anything. By te way, there are dropshipping companies that waive the monthly subscription after you have puchase a certain amount for that month, you might have to search harder.

Wholesale - usually relates to terms like big quantities, logistics headaches and tight cash flow. Most of the wholesalers have fewer varieties in stock but demands a higher quantiy or MOQ when you place order. The chinese companies usually reply to your enquiries pretty fast, demand payment faster as well... but they somehow lose momentum after your payment is made, or worse still... just disappear! You are only half right about cutting the middle men... middlemen in UK, yes.. but in the end, you will probably end up working with a chinese middlemen. Not that it is bad, it is just that they have much lesser liabilities i.e. much lesser to lose compared to you. Do consider carefully and when you decide to work with the chinese... verify, validate and do everything within your means to secure your investments.

I have to say that I do not have a quick solution for you... yet, but a lot of business starts with trial and error, you just need to make sure that you minimise cost and maximise knowledge for each trial and control the damages of error (if they are inevitable, and more often than not, they are). If you survive enough triall and errors, you will get NO or LESSER errors for each trial.. and that, will be your very own thoroughly tested solution!

I hope my babbling helped... BOY! I enjoy typing

[bagsobrands]

Hi system0
I'm not sure if it's been covered in any of the replies as i don't have time to read them all thoroughly.
You will also find wholesalers such as the one I work for who buy clearance stock direct from the manufacturer. This is new stock (not graded) that manufactureres have a surplus of for a variety of reasons and need to clear out of their warehouses.
I can only speak from my experience working for a clearance company but it seems that although limited quantities, there is usually a greater variety and as clearance companies usually buy at a good price this is reflected in the sales price.

I'm sure there are many variations on how products get to retailers, the bottom line I suppose is that you can buy decent quality goods from a reliable source and most importantly you make a profit.