Find Wholesale and Drop Shipping Products
Find the best product sourcing for home business available online
First let me start off informing you about what wholesale product sourcing methods and drop shipping product sourcing methods are. A lot of companies starting up have these a little confused. You will also want to read my affiliate product sourcing as well.
Wholesale product sourcing is basically a full time job, not a lot of people like to use this method of product sourcing although wholesale products have a higher profit margin, it is a lot of work. Basically how a wholesale business website operates is you first find a wholesale product source, then you have to purchase the wholesale products you want to sell online on your website ahead of time. You will also have to find a place to store all of these wholesale products, whether you store them in your home, basement, or storage shed. Next, you place these products on your website using your website shopping cart. You will setup pricing, images, descriptions, shipping cost, and tax information for each product. Now you have your website running with keyword rich content and some wholesale products. Time to advertise you wholesale website using various advertising methods. Now when you start getting sales on your wholesale products, you will receive an invoice from your website's shopping cart. It is now time to go hunt for the wholesale products that just sold on your wholesale business website and ship the products to your customer.
Drop shipping product sourcing for home business is similar to wholesale product sourcing but with drop shipping products you do not have to purchase your products up front or even store the products, infact, you never see the product! The profit margin in drop shipping is slightly lower than wholesale product sourcing as the drop shipper is doing all the work for you. The products should not be much more than wholesale though! If companies claim to be a drop shipper, but you are finding the products pricing cheaper or about the same on other websites like ebay, than most likely this is just a cheap retail store claiming to be a drop shipper. Wholesale prices are usually 2.5X below retail, most retail stores mark their prices 2.5X the cost of wholesale prices. Drop shipping prices are normally slightly higher than this. So if you go to a local store that sells this product and it sells for $250.00 the price of this item wholesale should be around $100.00 and the drop shipping should just be slightly higher, maybe around $125.00 - $150.00 then you can sell this item on your website for say $200.00 so you are a little below retail prices for this item. With drop shipping you will want more than one drop shipper ready on standby in case you sell an item and your drop shipper happens to be out of stock. Basically how drop shipping works you setup your business website's content, setup your drop shipping shopping cart on your website, and when a purchase is made you will recieve an invoice from your website's shopping cart. You collect the $200.00 and then send then invoice to your drop shipper which will then charge you the $125.00 - $150.00 for this item and then ship it to your customer with your invoice including in the package so your customer will not see you went through a drop shipper or see how much you paid for this item. You still handle customer support here as well, so if your drop shipper doesn't ship on time, ships a broken item, or whatever the case may be, you are still liable for this and need to handle it.
You handle customer support for the wholesale products or drop shipping products you sell, so if an item is broken, late shipping, not what the customer wanted, or anything else you have to handle this. Also each product you sell you will need to keep tracking information for tax purposes. If the products sold in another state other than the state your company resides in you do not need to charge sales tax on that product, but check your state's tax laws to make sure as I don't know every state's tax laws. The only time you charge for sales tax in online sales is if the sale is made to someone in your own state. Some states may vary, call them up and ask them, they will be more than willing to help you. You may even visit your state's website on the internet and see if they have the information there. You will also probably need a retail business license, I think all states require this. You will also want to register your business as a c.corp, s.corp, sole proprietor, or llc/ltd. This will usually cost $125 for business classification registration, free EIN/FEIN Federal Employer identification Number, and $35 for a retail business license, at least that is what it costs currently in Ohio, which it used to be $50 for the LLC and the rest was the same pricing.
Next check out my information on affiliate product sourcing before making your desision as affiliate marketing is different from these 2 product sourcing methods.
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