In this article we are going to discuss one essential step to successful online trading.
In the past you are likely to have purchased goods by mail order or on deferred delivery. This is when a retailer shows you their product range on a catalogue or in their showroom, accepts your order, takes your payment, and then delivers the order after xx days / weeks:
- The retailer holds enough stock to showcase it (sometimes only the pictures of the stock if selling through catalogue only), and then;
- Asks the manufacturer / distributor to (manufacture if necessary and) dispatch the order to the buyer as soon as possible.
You may feel more comfortable if we called this method of retailing dropshipping; dropshipping is just a new word, the concept has existed for a long time and remains more or less the same today.
This form of distribution was started in the USA, and was conceived much earlier than the World Wide Web. The idea was to allow retailers to trade with wholesalers and manufacturers located in far away states. A retailer would first sell the item and then pass the order(s) to the distributor to be shipped; goods could then be delivered directly to the buyer, only when required, and only once already sold. This setup was initially popular with bulky items and, as catalogue shopping grew in popularity, it was extended to smaller items.
With the advent of the Internet, some retailers realised they could use the web as a global mail order catalogue to exploit its far reaching powers and cost effectiveness. Retailers like Amazon started precisely this way, by using dropshipping. By using products which don’t need face to face inspection by the buyer (in the case of Amazon, books), Amazon exploited the power of the Internet to become its biggest retailer.
Since then, many more businesses have started selling online; simultaneously the number of buyers has increased tenfold. However, while transactions are now being completed through a new channel, the fundamental rules of retailing have not changed. On the web every level of the supply chain is still duly represented, from the high end retailer, to the main stream retailer, to the retailer and market trader selling on eBay, to the manfuacturers and wholesalers coming online in increasing numbers. Yes the Internet has shortened the supply chain by removing many middle men, and you will experience more competition at each level as a result. However it has also substantially decreased promotional and administrative costs. If you are serious, and you select your position carefully, you can make bucket loads and more.
Therefore, if you are planning to start trading online, the first question you should ask is ”At which level of the supply chain do I want to position my business?”, which is the same question you would ask if you were planning to start trading offline.
Do you want to fight to the cent and penny on eBay for mainstream products that sell fast (if you have the right price)? If so, do you have the financial strength to meet the minimum order requirements of the big distributors offering mainstream products at competitive prices?
Do you prefer to buy surplus and liquidation to obtain cheaper wholesale prices? If so, can you handle the variation in the type of stocks that become available, and in some cases sifting through ungraded stocks to ensure sellability?
Or would you rather create your own product idea and manufacture it, to distinguish yourself in the marketplace with a unique proposition and a strong marketing effort to allow your idea to pick up? If so, do you have the investment required to manufacture your own product line? The budget required for this option may be lower than you think; if you develop a mainstream product, but with the specifications sought by the market at the time of selling, you can make some seriously high profits. You would then keep on renewing your product offerings by listening to the market demand and by developing new and unique products (the minimum order requirements of manufacturers are not as high as you may fear, even for custom products).
If you want to use dropshipping instead, do you have access to a wide range of verified dropshippers that offer a broad range of products and that allow you to vary your offerings regularly? Are you choosing products suitable to the level of competition in your market? If you want manufacturers and wholesalers to dropship for you, can you guarantee them the volume they require to setup such an arrangement? Manufacturers and large distributors can dropship for you, but they need you to prove to them you can generate volume, and that managing your dropship account will have a good return for the manufacturer / distributor as well. If you can guarantee the volume they require, how can you prove it to them in advance?
Would you rather distinguish yourself as a trendy upmarket supplier, with your own website and a well thought out marketing plan? Is dropshipping suitable in this case (a good example of a market where dropshipping could work well is custom-made expensive furniture delivered directly from the manufacturer)? Do you need a showroom to maximise sales? (by the way, did you know retailers like MFI work using dropshipping? Surprising right? Can you undercut them?).
The choice is yours to make. As with any business, if you deal in branded products, the brand will sell itself and do a great deal of the work for you, however you will be competing with many more retailers, therefore price will be a big factor (especially on the Internet, where comparisons are quickly made). If you develop your own product(s), you must have a strong marketing plan in place (one way to reduce your costs of market research is to know what buyers are searching for on the Internet), and identify the unique selling points (USPs) of each product you distribute. This option offers lower sales volumes but higher margins; statistics show that, for small businesses, the higher margin for unique in-demand products will always outweigh volume in the long run.
The options available are only limited to your creativity and your desire to succeed. There are many sectors on the Internet that have not been covered, or that have not been covered as they should. Now is the time to choose your position in the marketplace, plan your business, start unfolding your strategy, and take the bull by its horns.
How To Deal With Time Wasters for Online Business Owners
Business owners often fall prey to some of these common time wasters.
Online business owners can be especially susceptible to the Internet-inspired time traps.
Email – personal email
Everyone gets personal email just like they get letters in the mail at their homes. Hopefully you don’t bring your personal mail to your workspace and open it. Do the same with personal email. Open and respond to social emails off the clock.
Email again – taming the monster
Email is obviously a great invention but along with all of the advantages come some issues which need to be handled. For example, if you stop and read emails as they arrive, you
1) interrupt your concentration,
2) can drift off your focus,
3) make those ‘important’ new emails the basis for indulging in procrastination.
Chase this tiger back into the cage! Check your email first thing in the morning then at reasonable intervals during the day, scheduled in so as not to interrupt productive work time. If you are worried about missing important information, you can set up other systems, such as ‘phone me or page me if you need my attention quickly’. However, you should also think about how many of the emails you have received in the past month were so urgent that they couldn’t have waited until a scheduled email period.
Lack of prioritising
You probably have a to-do list that helps you organise your day. If you are like many people, you feel great when you cross things off the list so you frequently tackle the smaller jobs because it gives you a sense of satisfaction. Unfortunately, those small jobs are frequently much lower priority and sometimes even get managed without your attention (the theory of benign neglect!). Even though you are ‘doing something’ you may be wasting your time on non-priority items instead of tackling the more important to-dos on your list. Take the time to prioritise your list into:
A list – Must happen today
B list – Must happen this week
C list – Must get scheduled in
Of course, if you never schedule in C list items, they may eventually become A list items when they can no longer be put off. It’s often useful to spend some part of each day, on a scheduled basis, attending to C list items.
Is there anyone that doesn’t procrastinate at least sometimes? Probably not. But, the better you can manage that very human tendency, the less time you’ll waste. We’ve all done it – you have to make an important but difficult phonecall. Amazingly enough, you realise that you should really clean off your desk first so your papers are in better order for the call and you should really freshen your coffee because the call may take a while and you should really call home about that other matter first so you don’t forget and so on and so on … procrastination!
There are two good ways to get a handle on procrastination.
- When you find yourself vacillating between tasks, ask yourself what is the best use of my time right now? Then do it.
- We often procrastinate because the task in front of us is large or complicated or distasteful. Try breaking down those tasks into smaller parts – it’s easier to consider taking a small step in the right direction (plus you can check it off your list!) and often, once you are involved, you find the initiative to continue.
Search engine addiction
Search engines are wonderful tools for obtaining information quickly, gathering many points of view and evaluating products, services, etc. However, you can easily enough be sucked into the black hole of limitless searching, needing to pursue 50 citations, 100, 150 citations when you really covered the bases with the first 20, if you are honest with yourself about it.
When you are researching on the Net, continually ask yourself if you are finding new and valuable information or re-hashes of information you have already found. And, ask how much more information you really need and whether or not additional information could be valuable enough to be worth the time cost of searching for it.
Forums and Networking Sites
Yes, these sites may be very helpful for information exchange and marketing but they can easily become one more way to kill time instead of managing your business. Place a time limit on your networking.
Are you ready to even admit to this one? Okay, so you are probably not spending the whole day gaming or at least you won’t be for long because your business will come to a grinding halt. But, are you heading to a game site to take a break or relax over a lunch at your desk? Well, that may be okay as long as your break remains within the boundaries of break or lunchtime. How often does that 20 minute break become a 45 minute gaming session? Your time is too valuable and your business success depends on your attention and energy.
Did you find yourself in any of these descriptions? It’s painful to admit but your business will work better if you can find ways to avoid some of these time wasters.
Are You Ignoring The Profit Potential Through Affiliate Marketing?
Retailers and Wholesalers Can Both Benefit
The concept behind affiliate marketing is fairly simple – you use your website to advertise products from other sites that are related in some way to your business. When a visitor to your site clicks on one of those advertisements and goes to another site you earn money. If they buy something there, you earn even more.
Before committing to an affiliate program, you’ll need to consider the following:
- Do you want to be associated with the product in terms of overall image, its fit with your company and the reputation of the company selling it? If you’re advertising a product or service on your site and it will compromise your standing as a reliable, honest company, you’ll want to think twice about including it on your site.
- How much might you garner from this particular association? Will it help generate income? How long has the company been in existence and how popular are its products?
- How is the affiliate program structured and run? Do you receive money if someone simply ‘clicks’ on their advertisement and is redirected to their site (pay per click)? How much do you receive if someone buys something? (50% is a good average). Are they able to track consumers who go to their site via your portal, then leave without buying anything and come back later to make a purchase? If they do that, and they should, do you earn money from that sale? Are you paid another fee if someone simply registers with the affiliate partner’s site? Most serious affiliate programs offer these facilities, however it is always important you confirm the above questions are answered positively by the affiliate partner.
Some retailers and wholesalers believe that they’ll get rich by simply pasting an affiliate partner’s icon onto their site. Although it is true that you’ll generate some income this way, you can create a lot more interest in your affiliate partners by taking some time to promote them. After all, the more interest there is in them from your customers, the more money you stand to earn.
Here are a few things that you can do to increase traffic to your affiliate partners, and increase your affiliate earnings without necessarily affecting your sales (in fact there are ways to optimise both):
- Request promotional material from them and incorporate it into their advertisement on your site.
- Be sure that you know and like their product and create a testimonial about it and offer information on the company.
- Create the ‘link’ between your business and your individual affiliates. If you sell shoes and someone is buying hiking boots suggest that they can find ‘quality camping and outdoor equipment’ at your affiliate partner’s site. If someone else is buying a pair of shoes designed for eveningwear, then make the product connection for the customer by noting that they may want to ‘dress up in something new and wonderful’ that can be found at a particular site. In essence, you are creating a call to action for each of your affiliate partners.
- If you’re selling products that are seasonal, then be sure to change your marketing strategy for your affiliates in the same manner that you’ll adjust it for your site. Outdoor recreation in the summer involves different clothing and equipment than outdoor activity in the winter. That means a different sales pitch for you and your affiliates.
- If it makes economic sense, offer an incentive for someone to buy a product from one of your affiliate partners. As an example, offer your customers a 10% discount on your site when they spend £100 or more at an affiliate partner’s site that offers 50% commissions. You’d receive £50 of that sale + £100 from the sale on your site, minus the £10 discount, increasing your profits by £40.
Much of what we have considered pertains to retailers, although the same practices and potential profits apply to wholesalers.
One of the primary selling points for a distributor relates to becoming a one-stop, reliable resource for all or much of what a retailer might need. This can really create large amounts of goodwill and revenue for your wholesale business. Your ability to connect retailers with other services and products that will lessen their workload while providing the goods that they desire can actually become a big selling point. If advertised properly, it can give you a major advantage over other distributors.
Affiliate programs have the potential to generate passive income from a few hundred pounds per month to thousands. Consider carefully what companies you would like to promote and then put some effort into informing your visitors about them. Think of your site as a resource and your affiliates as partners in your venture to serve your constituency.
Are You Missing Out? Online Videos for Retailers
Maximizing Your Web Potential
As the web continues to develop, retailers are constantly trying to adapt technological advances, utilizing the latest methods of capturing and converting new customers. Static text and graphics sites, those without any type of video, still predominate the Internet retailing landscape, which means that sites offering some type of video designed to convert sales are unique enough to garner a potential buyer’s attention.
In the past, video technology often created problems for the buying public. Perhaps an individual’s Internet connection wasn’t fast enough or their computer didn’t have enough memory to accommodate a video. But with advances in digital and DSL technology and the huge increase in memory capabilities for personal computers, this is less of a problem. More consumers are able to access this technology. Additionally, web video technology itself has become more user-friendly, allowing potential buyers to shut off and skip videos easily if they’d rather just shop.
A video can help convert sales in a few ways and the manner in which it works is partly dependent upon the type of video you use. There are many choices but they can all be broken down into three categories.
- Spokesperson: This type of video is the simplest and, yet, it can be highly effective. The Spokesperson video last from 15 to 45 seconds and it is, in essence, a person talking about some aspect of your business. The retailer, an employee or an actor can perform this type of video. The point is usually to make a personal connection with the consumer. The simplicity of this kind of presentation lends itself to creating an intimate link between you and the customer.
- Enhanced Spokesperson: This video utilizes a spokesperson or two and includes additional images and music. They tend to run from 30 seconds to a minute and-a-half. The spokespeople may interact, creating a certain chemistry. Visually, the retailer can introduce certain products, illustrate the effectiveness of their product or services and reinforce their spoken message with visuals. These contain more visual power than the simple spokesperson video, while retaining that personal connection.
- Commercial: This type of video can use actors, various scenes and settings and/or animation. They can be 30 seconds to three minutes long and are often very creative and evocative; although they can also communicate facts about your products or services. They are similar to the type of commercial you’ll see broadcast on television and are more expensive than the other two. This type of video is often used to create a powerful image of your company and for branding purposes. It’s usually meant to be powerful and impressive and because it utilizes the high end of ‘high-tech’ can be less personal.
What type of video will best serve your site? The fact is you don’t have to do a full-blown commercial to be effective. In fact, many consumers simply skip the big-budget video to get to the product. Ask yourself this – ‘As a shopper, when buying something online do I want to be entertained by the site or do I want to trust the person from whom I’m buying and their product?’ Trust, dependability, quality and service are all important concepts and realities when it comes to selling your product and to converting one-time buyers into return customers.
A well-produced, well-written and well-acted spokesperson video can be extremely affective in:
- Making a personal connection with each customer.
- Creating a lasting, positive image for your business.
- Reinforcing important consumer motivators such as trust, dependability and service.
- Actively capturing someone’s attention as you inform him or her about your products.
- Enabling you to define your company in a memorable manner.
Prices for a video web presence vary considerably, depending upon the length of the video and the complexity of the production process. Before deciding on a production company be sure to conduct some research. Check out each company’s videos, ask questions about their process, costs and timeline and contact references. You’ll also want to make sure that your site can support the video technology you want to use. You’ll need to discuss the technical support requirements with both the video producer and company that maintains your site. Throughout the production process, you should have full approval of each element, including the script, music, actors, video quality, style and final cut.
Remember, whether this is a simple video with a spokesman standing in front of a white screen or a high-end commercial using various types of technology, live action and animation, it will create a lasting image of your business in the eyes and ears of every potential customer. For this reason, it must be a quality product reflecting the quality of your company.
The Paperless Office – Electronic Invoicing
A Paperless Office Means More Efficiency
You may still be using paper invoices and doing so for various reasons. Perhaps you’re unsure of the viability of electronic invoicing? Or maybe you don’t trust cyberspace? It may be that you’re intimidated by the changeover or feel that it will take too much time and effort? The fact is paperless invoicing is easy, convenient and inexpensive. However of the 18 billion invoices generated each year in Europe most are submitted on paper.
One problem for EU member nations has been incorporating Value Added Tax (VAT) rates into an e-invoice that crosses national borders. If you’re trading within the UK, this is not a problem, but when conducting business outside native environments, electronic invoices can be problematic. Over the past few years, after the EU issued the ‘E-Invoice Directive’ (known as Directive 2001/115/EC) in January 2004, member nations have worked to alleviate this problem.
However, with legislation varying from country to country there are still difficulties in making e-invoices VAT compliant. All invoices must be VAT compliant as per the laws of the land of supply. Despite these challenges on the import/export front, you can still readily cut down on paperwork by submitting e-invoices within the UK.
With electronic invoices, it’s estimated that a company can save 80% of the cost associated with paper billing. Additionally, those companies purchasing products are able to save money by paying via the net, eliminating late fees and saving money on postage, stationery and envelopes. Labor costs are lessened on both sides of the exchange.
One problem you may face has to do with a lack of standardization in this process, whether dealing within the UK or outside of its boundaries. There are numerous paradigms that are available to businesses, including those that start with the purchaser and those that are initiated by the supplier. In order to use an e-invoice system, you’ll need to determine what type structure best meets your billing needs.
Whether your operation is small, medium or large, there will be a period of training and adjustment. No matter how simple the system, you’ll find that employees will be confused at times. This is especially true if your former system has been used for a long period of time. Also, even in this cyber-age, many of us find solace in having paper, something tactile, in our hands.
Whatever electronic invoicing method or service you elect to utilize, make sure that there is a sound system of back-ups in place. The fear that information might be lost is perhaps one of the biggest reasons for people clinging to the paper invoice. However, paper can be lost too, and unlike electronically generated bills once misplaced or thrown out, they are difficult to recreate. Paper invoices also take up a lot of room that can be used for office, storage or sales space.
The results include virtually effortless billing, payments that are timely, and an invoicing process that is easy to track. Save yourself time, effort and money and re-invest all three to expand your business.