Hi, my name is Natalie and I live in Tasmania/Australia. I am very new to Salehoo. I have been wanting to have my own home based business for years and am finally taking some small steps towards that. I have viewed some suppliers which I have saved to 'my favourite suppliers'. I want to sell a bit of everything, obviously things that ARE in high demand and I would like to be able to make enough money to give up my house keeping job and just work from home.
I have been doing some reading and was wondering if any of you busy people would mind explaining to me what dropshipping, liquidation and closeout is? What is VAT? Do I need an ABN #?
I am very new and have never done this before so forgive me if I ask HEAPS of questions initially. I really want to do this, start up money is low at the moment but my want is HUGE!! Please help.
Kind Regards
Nat
Hi Nat,
Ok, Lets firstly deal with drop shipping;
It's a process whereby you advertise a product for sale at X dollars, when it sells (if it sells), you receive the money, remove your margin and forward what amounts to the wholesale (buying) price to the supplier, along with the customers shipping details.
The supplier upon receiving your order, and payment, then ships direct to your customer completing the transaction.
Main benefit to you, minimum cash outlay
Several bad points, but I would highlight two, the fact that you are not in control of the transaction, yet if something goes pear shaped, then you are the one left holding the baby!
The other negative is the price, with most drop shipping products offering very little or no return at all. In fact it is quite possible to lose money when selling drop shipping through sites such as ebay, especially if you are paying for listing fees week after week in search of a sale.
Search the forum some and you will find plenty of feed back and opinions on drop shipping, good and bad, so you will be able to form your own opinion.
The terms liquidation, closeouts, salvage and alike, refer to companies in the US (mostly) that deal in this type of merchandise.
Large and small retailers in the US dispose of unwanted stock through this avenue. Things like customer returns, slow moving stock, old stock, damaged stock etc.
It's sold of to liquidators at an inexpensive price to clear valuable shelf space, and then these liquidators on sell to the public in various size loads, from carton sizes through to truck loads. The bigger the load, the cheaper the items, the bigger the margin...at least that's the theory.
Take a look at Link hidden: Login to view, that will tell you a little more on the subject, however accessing the US market from Oz is a very difficult, and an expensive process, so you may decide that its not that relevant to you.
VAT is a European based tax system, UK. It's essentially like out GST, except far more of a rip off : ) It won't concern you, however an ABN might, depending on what products, and from where you source them.
ABN stands for Australian Business Number, and one can be freely obtained through the ATO (Australian Tax Office) if required.
You don't need one to sell on ebay, but some wholesalers, in fact most genuine wholesalers will require one to do business with you.
It's proof that you are a legit trading entity, and can be used to source all products at wholesale prices.
If you do obtain an ABN, then it's smart to run everything as a business, because the TAX department will start asking questions if they don't see any evidence of you using the number, and that can see an audit carried out very quickly!
Just a quick point about trying to sell popular items, don't assume that is the best way to go. Read the forum, you will see lots of varying opinions. Mine is that it is the wrong way to go in most cases, because popular items are saturated on ebay, and every second member is looking to sell the same top 5 items.
You will struggle to even find a legit supplier that can supply you a price that will come close to making you money on ebay.
Keep an open mind about products, sometimes it's the products that are not in the top ten that sellers make most on, because the market is not over supplied and low competition means better chances of sales.
Again, check out the forum, plenty of opinions on that subject, as well as most others.
Good luck with it.