How To Sell Your Products While Having Zero Inventory Costs
Posted on
In my previous ‘Build Something Challenge’ article How To Choose What Good Products To Sell we went step-by-step in how I began my process of discovering if a product is a good fit for selling on eCommerce or not. If you haven’t read that article yet, I would highly recommend taking some time to read it and then come back here.
…so now I am assuming you have a product or two that you have in mind that you think fit pretty well in the criteria that we covered in the previous article.
Great!
So what’s next?
Now is the time to get into the nitty gritty, it’s time to attack the whole “e” in eCommerce.
We all know that selling online is eCommerce, but what you may not know is that there are tons of different avenues and techniques in which you can sell your product online without having to ship the products from your garage.
—
From dropshipping, white-labeling, warehousing, sourcing, etc… there are many different ways to skin the cat so to speak. However, as promised I will go in-depth as to what I am doing instead of teaching a full plethora of options that will leave you confused on how to go about this whole eCommerce challenge.
First, for my eCommerce ‘Build Something Challenge’ project I have a few personal parameters that I am trying to stick to:
- Don’t personally warehouse or ship my products (unless for test runs)
- Have zero inventory costs
- Invest no more than $500.00 to launch the company
- Generate $150K Gross Revenue in Year 1
- Focus on 2-3 marketing channels
- Get the shop up and running and make first sale in 60 days (I have another business, if I didn’t this could be as little as a week)
So I put super super tight parameters on this project but personally it is because I have to. At this point in my life, investing a lot of capital in an eCommerce company just doesn’t make sense from a risk standpoint. I don’t have thousands of dollars lying around to invest in large manufacturing runs of hundreds of my product, and I hate debt (because I have never had debt) so using my credit card isn’t a way out. These constraints mean I must hack another way around getting sales and getting the store together.
It’s so cool to have zero inventory costs
My #1 & #2 criteria go together quite well.
As briefly mentioned above, there is a concept in the eCommerce world called “dropshipping” which allows you to have practically no inventory costs.
Dropshipping is an extremely interesting concept that limits your downside risk of starting a business to essentially zero, while still providing the unlimited or (almost) unlimited upside that us business nerds crave.
So how does it work?
Well, since I am just some Joe Shmo who has little investment but a whole lot of drive when it comes to marketing, I can essentially sell other brand’s products. Unlike affiliate sales, you are typically responsible for customer service, making the transactions on your website, and all of the marketing efforts.
The advantages of dropshipping are great. You never have to house the products that you sell and instead send your dropshipper the sales typically in email and they fulfill the orders and ship the products on your behalf from their warehouse.
Sounds a bit too good to be true, right? Well, there are a few draw backs. For one, dropshipping is notorious for yielding super thin profit margins. Anywhere from 5-25% isn’t a surprise when working in the dropshipping model. Another disadvantage that the dropshipping model provides is the lack of being able to create a super strong brand. It is possible to create a brand around the industry you are selling in, but as for the product your pretty much out of luck.
Let’s talk about white-labeling products
Another eCommerce strategy is called white-labeling. White-labeling is the act of taking a product that you want to sell and putting your very own brand on it. It’s all yours, and white-labeling is an incredible way to limit your costs while still retaining your own brand.
It will depend on what type of product you are selling and who your provider is, but white-labeling and dropshipping can sometimes go hand in hand. (hint: it is for my product)
You may think this is crazy to put your label and brand on another provider’s products, but in all reality some of the biggest brands in the world do this and you just have never noticed!
—
Now that we have those terms defined it will be much easier to explain my process for my ‘Build Something Challenge’ eCommerce store.
—
I’m all about branding so…
Obviously, my obsession with building brands is almost if not stronger than my passion for aviation. That’s why I own a growing branding and marketing agency called Wilbur. So, it’s pretty inevitable to say that just dropshipping other company’s products wasn’t necessarily in the cards for me.
However, I didn’t want to get in the same trap that I got in with my previous eComm ventures where I would be left with much more inventory than I could sell in my basement. Just not cool.
So I want to build a brand, I want zero inventory, and I have little money to make this happen.
I quickly realized that the white-labeling dropshipping model is exactly what I need starting out. The downside to this is that when you have to create the stickers and other branding assets for the products it will begin to eat into your already slim margins that dropshipping provides.
:/ Oh well, there’s no point if I can’t build a brand.
—
So now I am at a point where I have my products in mind, I have my eCommerce strategy in mind, and now it is time to figure out how to make it a reality.
How to find a dropshipper that white-labels
Finding a dropshipper is already a tedious task in itself, but finding one that will white-label their product is even tougher. Again, like I mentioned earlier, it really depends on the industry and the product. For me, my product is a consumable and a very bountiful type of product which makes it much easier to find these unicorn dropshippers that white-label. But on the flip side that also means that more people are in my industry.
Pluses and minuses… no business is perfect.
So how do you do this?
Well the quickest way to get to the source of your industry for dropshipping could be to use an already created database like World Wide Brands where they give you access to a database of vetted dropshippers in all industries. I have never used this service nor did I end up using this service for this project but I know that people have and that it is the industry leading database. It does cost money, but if you want to get answers quickly and start making phone calls… this may be the route for you.
So how did I find my distributor. Well, actually I used a few techniques!
I first did a search on Google
When I began my journey in figuring out who can be a good source for my products, it ended up resulting in me first just doing a Google search for distributors that offered this.
Let’s say your industry is golf products, and perhaps more specifically “golf balls”. I would do a search for “golf ball dropshipper”, “golf ball dropshipping”, “golf equipment dropshipping” “golf equipment white-labeling” etc…
When you do these searches don’t get discouraged if you don’t find any companies on the first or even the third or fourth page of Google. It’s pretty typical that a lot of these manufacturers are pretty behind the times when it comes to SEO and website optimization. Why should they, after all they are focused on creating the products. So be patient.
If you look hard enough you should end up finding some manufacturers. This is where I highly highly recommend documenting all of them in one document. For me, I typically use a very simple spreadsheet setup to keep track of all the manufacturers.
You can easily set this up, or skip the time and download my free dropshipping manufacturer spreadsheet!
What if you can’t find anyone on Google?
Okay so this could be a very awkward reality. Like I said, for me it wasn’t nearly as hard as I imagine it could be for you to find at least one manufacturer. The next thing I would do if I couldn’t find any possible dropshippers on Google would be to start looking at the products you own in the industry you chose and call up some of the lower known brands. You never know, they could either offer dropshipping white-labeling or they may help you out in directing you to the right place. For me, I did this and called up the company I enjoyed the most. They had never done dropshipping before but after our discussion they began exploring it and offered to test it out with us if we wanted to go with them!
NOTE: The phone is your best friend in this whole process. Whether you have one or a hundred different options for dropshippers. The only way you will hear back from some of these companies is if you just give them no out to ignore you. Find their phone number on their website and give them a call. Be confident and ask the right questions. Also note, that some dropshippers and manufacturers will not work with companies that are not legally set up with an EIN tax number. So you may want to get some legal entity set up. (but I’m no lawyer so you do whatever you want).
Still no luck? Okay, well now is the time to purchase that World Wide Brands database like I had mentioned. Might as well, or if you aren’t keen to investing the money then try a different niche product idea.
—
So we just covered a ton of information on how you don’t need to have any inventory costs to start an eCommerce business in a passion or hobby industry of yours. I’m in my twentys, so I never had to experience starting a business where internet wasn’t a thing. But still, it’s crazy to think how you can quite literally start a business with so little risk to begin with as opposed to the older days when you needed a business loan and a storefront to even begin your business.
This dropshipping and white-labeling model is fantastic for those who hate taking on debt and hate having that looming responsibility hanging over them until they repay their loan back. For my eCommerce business this is exactly how it will be structured in the beginning and then I will utilize the profits that we make to then perhaps invest in our own products down the line.
So dropshipping in some way shape or form will always be a part of our business model but as I will explain later, there are ways to dropship your very own products. Like Shipwire or Fullfilled by Amazon. But I am not at that point yet, so why would I write about that?
Okay so I have a list of possible manufacturers…. now what?
This is the exciting part! You have a list and now it is time to pick what product manufacturer you like best. Unlike dropshipping, when you brand your own products you want to make sure they are quality! Duh.
So request samples from manufacturers. Depending on what your product is and how expensive it is you can sometimes get samples for free. Plus, getting sample products will allow you to then do product photography down the road.
Be sure at this stage to also ask manufacturers for their pricing sheets and shipping rates for the products and any other valuable information you may need to know from them about how their dropshipping program works. You may want to ensure that they don’t have any membership fees or inventory costs associated with being a dropshipper for their products. They are usually very happy to provide you any information like this.
—
It’s time to TAKE ACTION! At this point, back when I was soaking in all the information I could on eCommerce stuff I would begin loving learning more than doing. So that is why I want to remind you to stop worrying about doing everything perfectly and instead take the next week to actually take action on all of this information covered in these last two articles.
Let me know if you have any troubles or questions by commenting below and I will be happy to answer anything! 🙂
Good luck friends!