Selling Online: Where to start for beginners?

gina_salehoo

Are you struggling with where to start? Should you dropship or buy wholesale? Should you sell on sites like eBay or set up your own store? Can you get refunds if it all goes belly up?

This thread will answer some common questions. :)

Question 1: What should I sell to begin with?

If you have no experience at all thus far, try selling some items you no longer need from around the house first. The risk is extremely low and you'll get a taste for the overall process.

You can make some cash, and maybe even find a great product along the way that sells well. If that happens, when you do start selling on a bigger scale, you have an idea of something you could source.

Question 2: Where should I source new products from?

You've got 4 main supply options to consider:

- Wholesale

- Dropshipping

- Surplus (liquidation)

- Second hand

(You can Link hidden: Login to view.)

Each have their own benefits and disadvantages, you really should research all 4 of those to see what platform best suits. Once again: If you don't feel ready for these options, you can always start off by listing some things from around the house that you have no further use for.

There are more Link hidden: Login to view, with information like the Link hidden: Login to view, and Link hidden: Login to view, so feel free to browse around there for more information.

Question 3: Should I sell the most "hot selling" items? Or is that too competitive?

It's natural to want to sell the most sought after items on eBay, but it's not always a good option for sellers to try. The problem you have is, all the hottest selling products are always the most competitive to try and sell. Big sellers buy large volumes of stock and then sell at prices you just can't match, especially if you're dropshipping.

If you're dropshipping or buying smaller volumes of stock wholesale, you might do better to avoid the most popular selling items, in favour of some items that sell a bit slower but have much less competition. The strategy that many use is to find products that fit into this type of category or niche market if you like, and then replicate that.

There's more information on "niche market" type selling in this thread: "Link hidden: Login to view".

One option is to Link hidden: Login to view to find products that are selling well, but don't have too much competition. Of course, there's more than just sell rate and competition to finding a good product, but the video there will help you with the kinds of things to consider when looking at what to sell.

Question 4: Where to start selling? Sites like eBay or my own online store?

It's not usually a good idea to start with an online store. Ultimately, an independent web store is where you need to be aiming, but you need to have some experience behind you and the cashflow to market it or it's just a waste of time.

So for starters, try selling on sites like eBay, and keep it simple and low cost to kick it off. When you're getting the hang of it, try expanding what you sell. Then, when you're moving stock well and you've got a real feel for selling online, consider starting your own online store.

Question 5: What will I do if a customer wants a refund on a wholesale or dropship item?

If you're dealing in new products then refunds are something you'll probably have to have a system for as customers expect some sort of guarantees on new products.

If you are dropshipping, then you need to be aware of your suppliers requirements and you simply have to parrot that. If you are wholesaling, then you will have to again, be aware of the manufacturer's warranty terms and formulate a policy around those.

A final note:

It can be very daunting to know exactly when and where to jump in. Focus on keeping it simple and low cost to kick it off. Keep the risk to a minimum, especially if cashflow is a BIG issue. The term "learning to crawl before you can walk" in this type of business is absolutely true.

Remember you can always post questions in the forums when you need help along the way.

lovingthesun

Hey Gina

Nice post thanks.

I am new to online selling (well at least I am trying to be). It seems like the closer I get to placing an inventory order or getting things organised that I just keep getting shot down with more fees, more things I have to do and things that I simply cannot do. It's becoming exhausting and disheartening and I have not even started yet.

Bit of background for everyone. I am in Australia and have always wanted to own my own business online and make a killing doing it. I figured that in the beginging the best way for me to learn about selling online, learn about dealing with customers, learn about suppliers/manufacturers, importing, customs and many more would be to begin selling via an existing online hub such as Ebay or Amazon. I did extensive research on both and found Feebay just wasn't for me. Too hard, too expensive and they constantly change fees and rules. Amazon seemed to be a better option for what I wanted to achieve. FBA (Fufillment by Amazon) offers a great automation service which allows me to store my inventory in the U.S warehouses, picks, packs, ships and even handles customer service for me. With a full time job and being a university student, I certainly dont have spare time to be packing and sending products myself at the moment.

Next I took some steps to get myself a little business going. I registered an Australian business name, created a business logo via Fivver, created an Amazon Seller's account and filled in the US tax forms and began doing product research. It took me some time to find a product and when I found the one I wanted to test (pretty high demand but low competition - a new product), I found it difficult to find a supplier or manufacturer that would give me the time of day. It seemed no supplier in the world had my product of choice which is hard to believe. So I went back to square one and began researching other products. This takes A LOT of time and I dont cut corners. I make long lists and then I make shorts lists again and again. I narrow it down to 2-3 products and plan to order a first small order of 100 units to test if they will sell as well as I think they should be. This is also a good way to test the supplier.

I have contacted over 30-40 companies via Salehoo and contacted that number again through AliBaba. How many got back to me? Three. How many had the product I was after? One. The unit price was quite high due to my order request of 100 being below the magic '3000' number which is ridiculously huge when first starting out. I allowed for Express delivery fees, company verification fees (optional), order inspection fee (optional), import fees, customs brokers, Amazon FBA fees, inventory and refunds. I worked out that if I was lucky enough to be correct in choosing a great product so that all sold for the general price as currently being sold for on Amazon, I would make $3500 for 100 products. The cost of my inventory is $1400, delivery is $420, company verification and order inspection (to avoid being scammed) is $600, FBA fees are $750. So far I would have spent $3150 just getting my product to Amazon and having them sell. I forgot to add in importing fess and Customs broker fees so maybe add another $250 (possibly more)..?

$3150 + $250 = $3400 I will spend on getting the product from China to America, storing it and having it sent to the customer. By current selling patterns for same product on Amazon I will hopefully profit $3400. Which leaves me with an ACTUAL profit after fees of $100. And that's if I haven't forgotten any fees, do not get any refund requests, or have underestimated on the cost of something above.

Now I am fine with not making any money in the beginning. In fact if I break even and do not lose any extra ill be pretty happy just to gain the experience. But when I have negotiated with my one supplier for days with language barriers about, price, delivery, color, style, packaging ect ect. It really annoys me that when I try to create a shipping order through Amazon to give a supplier a delivery address, that I am told I am unable to continue as I do not have my own barcodes. Are they kidding me? I tried to obtain these from the supplier but they do not do this. I am not interested in paying yet more money to get some barcoding company in China to go to supplier's address and put 100 barcodes on my products. The other option Amazon says? Put the barcodes on myself. Um ok, ill just ship my goods here from China, barcode them and then ship them back to U.S and hope it all goes smoothly. Or, maybe I could order barcodes and ship them to supplier and ask them to do it for another fee which they may not even do.

Even if I opt for Amazon's Labeling Service, to qualify I need individual scannable barcodes on every product or I risk having my shipment sit in Amazon's warehouse collecting dust and costing me money for storage.

Im so frustrated. I cannot place an order now as I do not have barcodes. Am contemplating giving up on Amazon as I just cant seem to meet their requirements and when I need help, the Seller Central location is very confusing and bombarding with information aimed at pros who already know what they are doing and are making good money. There is no detailed support just the same bland rules and requirements for all.

Maybe this is for the best. Maybe Amazon isn't for me and this is all just a sign to back off now and use it as a learning curve for my next venture. Certainly not giving up altogether. I just need to find a new route to my online beginning and ultimate online success.

Anyone else had issues with trying to sell on Amazon? How did you overcome them, did you overcome them?

Would love to hear.

Cheers

Simone

fudjj

Hi Simone,

I can understand your methodology behind the plan completely, but you're always going to struggle to make any margin at all with that type of plan, as you've accurately identified.

Your problems start right at the supplier and the unit order size. Yes, taking a much smaller quantity as a test batch up front can save you from wasting a much larger amount of cash if the product or supplier turns out to be unreliable, but it restricts your buying power (your price per unit). So straight away, you're behind any competitor who is buying in a much larger volume and securing a better per unit price.

Then you have freight to the US adding expense, where as another supplier may well be using a Chinese fulfillment distribution centre and mailing orders internationally direct from China. So now you're two steps behind a potential competitor on cost.

You can keep following this down the line and seeing how a potential competitor will have the possibility to undercut you all the way down the line from this point, so straight away, your methodology while cautious, leaves you wide open to competition taking you down quite easily and the one thing you have to remember about e-commerce. If you leave a weakness to be exploited, someone will most definitely find that weakness and exploit it!

Reading through your post, it seems that you are more focused on getting some e-commerce experience rather that focused on profit. I hope that's right, because I think that's a really smart plan when just starting out. E-commerce isn't a fast running freeway where you have an unrestricted lane of your own so you can jump on the go fast pedal in your Ferrari and speed toward richville, it's a 5pm road block in the middle of Tokyo where you are all jammed up looking for the smallest gap to squeeze your 30 tonne truck into, so you can get moving in the vain hope that you might get home some time this week!

Being patient is a HUGE step to ultimate success in this business. Too many get to eager and take it far too lightly and end up steering off into a ditch because they've swallowed a load of garbage from someone telling them how quickly they can get rich doing it. Yes, lots of things go into being successful, but one of the most underated, but important aspects of it is BRAIN POWER.

Take your foot off the pedal, put the car in neutral and engage brain before trying to drive any where in this game.

If I'm correct in my assessment and you are more focused on just getting started, then I think dropshipping would be a far better option to get that experience. I would suggest taking another look at eBay. Yes, no seller likes eBay or their fees, but buyers and that's key with any sales avenue.

Dropshipping won't give riches, but it will give you experience and allow you to build up a customer base, especially if you're prepared to sell at cost and make no money at all. Now you're already ahead of most of your competitors because they are only interested in making profit, so they are sitting ducks for you to undercut.

Some time down the road when you are confident in moving forward, then look at wholesale. At that point you may well already have a decent client base that you can direct market to through your own website because you had taken the time and effort to build your business from the ground up.

Here's a little business strategy for you to use, it's called the SWOT test. Do this every month when just starting out, then as you get more experienced, every 3 moths, every 6 moths and then maybe every 12 months just to refresh and make sure you're not getting lazy and missing any tricks. The better you get at doing the following, the better your chances are of staying in and succeeding at any business.

S - identify your own Strengths and build on them

W - Identify your own Weaknesses and counter them

O - identify Opportunities and exploit them

T - identify your Threats and protect yourself against them

lovingthesun

Hey Mark

Your so right. I am definetly taking some risks and leaving myself open to be taken Advantage of by competitors. On the other hand, I don't have 10k upfront to buy 500 pieces let alone 3000 pieces. No supplier or manufacturer would even get back to me, so I guess I'm wondering how can I negotiate better prices on larger orders when I'm being ignored? I took your advice and contacted IMAX who offer great services. However they won't source suppliers for anyone unless the 5000 minimum unit requirement is met which is absolutely too big for my first ever online go.

Just wonder if I'm better off scrapping Amazon and slowly but surely focus more time, energy, research and money on creating my own Econnerce store., Amazon will be a learning curve for me to gain experience for sure but I would like to be profiting by the second or 3rd time I place an order and put these profits back into the business.

Thanks for your insights.

fudjj

Hi Simone,

Sorry, I think you may have only gotten to read half the post initially as the entire post didn't load for some reason. I've uploaded the entire post now and I think it actually covers the above and suggest a direction for you to consider.

lovingthesun

Hey Mark

I am familiar with SWOT. Learnt it through some business electives. Perhaps I should have majored in business :).

Your advice is duly noted and I will review my initial plan and everything else. Being open to change and opportunity whilst being mindful of risk are some of my key values. When fixated on a goal however it can be easy to lose sight of them at times.

Thanks for your help as always. I've got some thinking to do.

Cheers

Simone

fudjj

No problems Simone,

It can seem like a long haul at times, but one foot in front of the other is the best way to get you there :)

If you have the time to get out and about on a weekend, I would even suggest taking 50 bucks and maybe hitting a few garage sales. If you can spot a good deal and are good at talking one as well, you would be surprised at how much you can turn that 50 into at the retail end. ..... not only that, it gets you out of the house for a few hours as well :)

SaleHoo Directory

SaleHoo Dropship

SaleHoo Educate

SaleHoo Market Insights NEW