Drop Shipping

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ChevronX

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#101244 27-Apr-2012 14:38

Good afternoon fellow Geekzone members, was wondering what you guys thought of Drop-Shipping. Have an idea of creating an online computer business by use of drop shipping from certain NZ suppliers, anyone have any Pros and Cons and thoughts on doing it on an already cutthroat business.

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sidefx

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#616069 27-Apr-2012 15:04

oblig: "In the pipe, 5 by 5" :P

As a consumer I must say that I've heard bad things about drop shipping, but I suspect it's the old story of people only making a noise when something goes wrong. MAke sure you have reliable suppliers I guess?

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Handsomedan

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#616073 27-Apr-2012 15:09

The only issue I'd have as a consumer is if you were drop shipping from overseas and you had no guarantee of the goods being delivered.

It's about building trust with your customer base and making sure you always honour your obligations - otherwise it makes perfect sense to drop ship. After all, it saves you pre-buying stock and also means you don;t have to pay for storage of the said stock.

Just be wary of the ultimaate supplier of the goods - do your due diligence.

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mrdrifter

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#616110 27-Apr-2012 16:13

A number of the online stores in NZ such as Ascent already use this approach. I have ordered a number of components over the years and they often ship from a supplier different to the business I purchased from.

Edit: Spelling

nickb800

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#616111 27-Apr-2012 16:22

Further to mrdrifter's comment:

I thought that most computer parts suppliers on pricespy/priceme (dragonpc, notebookcity, dodgybastards, ascent, etc) all dropshipped most of their products (many of which drop shipped from Ingram micro?).

So I dont see a problem with drop shipping (obviously from suppliers in NZ for NZ customers - internationally it becomes a different issue), but since most other companies do it, like you said, its a cut throat business, why enter it? I would have thought it would only be profitable if you could bundle it with another service (e.g. highly knowledgeable online chat), such that you would not be competing purely on price. Just my 2cents.

wasabi2k

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#616115 27-Apr-2012 16:25

What would make you different in any way from the 5 billion other stores out there?

Drop shipping is fantastic in theory (no warehousing etc) but you are entirely reliant on your suppliers. One bad supplier delaying sends and you are stuffed reputation wise. And believe me a customer does not give a stuff that it isn't your fault something isn't there. If I order it for Tuesday delivery it better be there Tuesday or you won't be getting repeat business.

PC gear is typically ridiculously low margin these days and it is normally pretty easy to find a store selling at or damn near trade/supplier prices.

It's typically a race to the bottom price wise and you end up spending your days chasing suppliers, couriers and dealing with customers for very little return.

Good luck Have Fun!

ChevronX

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Ultimate Geek

#616118 27-Apr-2012 16:28

wasabi2k: What would make you different in any way from the 5 billion other stores out there?

Drop shipping is fantastic in theory (no warehousing etc) but you are entirely reliant on your suppliers. One bad supplier delaying sends and you are stuffed reputation wise. And believe me a customer does not give a stuff that it isn't your fault something isn't there. If I order it for Tuesday delivery it better be there Tuesday or you won't be getting repeat business.

PC gear is typically ridiculously low margin these days and it is normally pretty easy to find a store selling at or damn near trade/supplier prices.

It's typically a race to the bottom price wise and you end up spending your days chasing suppliers, couriers and dealing with customers for very little return.

Good luck Have Fun!

There is that!

Cheers everyone for your thoughts. Read abit more and the only way I'd be making money would be (most likely) in a few years if/when orders reached substantial numbers instead of a dwindling 1-2 items per week/month.

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Kyanar

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#616424 28-Apr-2012 09:01

The main problem is that at such an early stage in your business, you don't have access to the largest suppliers, and have to buy from middle suppliers partway down the supply chain - which eats into your margin. Ingram Micro will only entertain your business if you can promise $10,000 per month (per year? I forget which) and I can't even find out how you can buy from Morningstar (it's like Fight Club I guess). This leaves you going to second tier trade suppliers like Ascent and Acquire- but their prices are higher.

ChevronX

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#616577 28-Apr-2012 15:20

I have pretty much given up on this idea, hence being able to supply parts with another service, such as computer repair on itself is really the only way to utilise this method vs the larger companies.

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mattwnz

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#616600 28-Apr-2012 15:59

ChevronX: Good afternoon fellow Geekzone members, was wondering what you guys thought of Drop-Shipping. Have an idea of creating an online computer business by use of drop shipping from certain NZ suppliers, anyone have any Pros and Cons and thoughts on doing it on an already cutthroat business.

Just remember you have to build in margins for support, returns, and refunds. If it is already cut throat, then that is tough, but then you should look at adding value somewhere, so you aren't like all the others. Some add value in providing better support than others.
Ideas/pipe dreams are all very well, but making it happen and making it successful is where all the work is.