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What to Know about
Drop Shipping Directories
A drop shipper is a manufacturer or authorized wholesale distributor who ships your single item orders directly to your customers. If you don’t plan on carrying inventory or setting up a warehouse for your retail business, then drop shipping could be a key part of your business.
What has changed in the drop shipping industry over the years? Quite a bit. At the top of the list is the continued growth of e-commerce. With e-commerce, you put product pictures on your site at retail and wait for an order. Once you receive an order, you e-mail or call the drop ship supplier with the customer’s order information and they ship the product directly to your customer.
Drop shippers have become much more sensitive to the pros and cons of the online marketplace. In turn, their drop shipping policies have changed, as well as their overall business risks. Now, more than ever, there is an extreme focus on preserving product value, profit margin, and the risks associated with having a drop shipping service.
Let’s take a look at what this means to a drop shipping directory. The following are a handful of key parameters you should take into account when considering a drop shipping directory:
1. Balance
You want to find a directory rich in many different categories of products, rather than the quantity of products available. Many of the directories try to advertise how many products are available in their directory (i.e. 2,000,000 products). Why is the number of categories important? A directory will not serve you well if it has hundreds of thousands of products, and none of them are in your product interest category. A directory with a good balance has focused on their categories of products rather than the quantity. This gives you a better chance of finding something for your line of business.
2. Uniqueness
You will want a directory with uniqueness amongst its drop shippers. The drop shippers should offer a wide array of unique products that are not necessarily mass marketed. Why? Web sites offering unique and unusual products often do well versus sites trying to sell big brand name products that you can find at a mega retailer such as Wal-Mart. A directory offering a bunch of big brand name product drop shippers could land you in the highly competitive commodity market against the mega retailers.
3. Selection
A directory with a good selection of drop ship categories is important. The number of drop shippers or the number of products a directory carries should not be the goal. The goal and question should be, "Do they have a drop shipper that would fit my line of business?"
4. Search Method
The directory must explain the methods they use to find drop shippers. Be careful of directories that do not publish their search methods. If they do not explain their search methods, they may not have a solid search methodology. The directory could be full of a bunch of middlemen. At that point, the directory would be worthless to you.
Directories using search methods such as trade show searches and foreign government agency searches are preferred over directories only focused on Internet searches. Why? Not all drop shippers and importers have a Web presence. A directory based on a bunch of Web searches could be missing some of the best hard-to-find drop shippers.
5. Sample
A sample of the directory should be made available to give you an idea of format and information provided. The actual names of the drop shippers will not be given in a sample, but you will get an understanding of the type of information provided.
6. Price
Price is about the perceived value of a product. As the saying goes, "Good things aren't cheap, and cheap things aren't always good." This mantra is being challenged as China and the rest of the global market continues to drive prices down on quality products. Are there good quality things coming from overseas? Are these things low in price? You know the answer.
In the past, most legitimate directories on the Web used to sell between the $60 and $100 price mark without any markdown...not anymore. What has changed? The number of affordable choices you now have. Why pay $70 for a lifetime membership, when you only need the directory for the first year to get you started? Some legitimate directories have been able to aggressively reduce their staffing and operational overhead costs, and now offer a shorter term membership for under $20.
7. Education
The company selling the directory should have a web site fairly resourceful with FAQ's and articles written by its own research staff or owner. Topics should include drop shipping, e-commerce, importing, and general FAQ's about drop shipping. Watch out for directory sites only containing FAQ's about their directory and not drop shipping.
8. Custom Search
If you are running a larger corporate venture, you might want to ask them about doing custom searches. The legitimate product sourcing companies, and drop shipping directories offer such a service. A custom supplier search can sometimes be done under certain conditions with the directory's parent company based on an established billable rate.
9. Toll Free Number
n the early days of drop shipping directories, this used to be an important feature for two reasons: 1) To distinguish a scam directory from a real one. If they have a toll free number, they must be a real service, right? Not anymore. For under $10 a month anyone can have a toll free number that feeds into a live answering service, or voice mail, with a canned professional greeting and message. 2) To handle inquiries. In order to offer lower directory membership fees, many legitimate directories have now been able to create FAQ pages and 24 hour response e-mail services to handle the most common questions and issues.
A call center used to be a great idea, but remember, that expense has been buried in the price of the directory you are purchasing -- sometimes 15 to 20 percent of the membership price. Ouch! So, do you want to be paying out the bucks for a company's toll free service if your question can be answered for free in a FAQ page or e-mail message? You be the judge.
10. Customer Service
Here is something to consider, if the directory company is spending money on people sitting around the office and answering phones, or conducting online media talk shows, you are paying for it in the price of their directory membership. Is this what you want your membership fee going towards? Obviously not.
So, here is what should be expected in today's drop ship directory market: Any online business that cares about its customers should have a web site section dedicated to customer service -- a company that offers a drop ship directory is no exception. At a minimum it should have a means of handling inquiries such as e-mail and a postal mailing address.
11. Guarante
A guarantee is always important to have with a directory. Be sure to examine the guarantee policy for a reasonable claim.
With these eleven parameters, you should now have enough knowledge to get started in the right direction for evaluating a drop ship directory. In addition, hopefully this has given some food for thought in terms of considering a drop ship directory for your online business. HBM
Brad Beiermann Ph.D. is President of Hienote Inc. Dr. Beiermann is one of the leading experts in business technology and e-commerce. Hienote Inc. specializes in product sourcing, exhibition marketing, and helping small businesses locate wholesale drop shipping companies. You can visit their site at http://www.hienotedirectory.com. Get a FREE copy of the exciting e-book that is taking the Internet world by storm, "Starting Your Online Retail Niche With Drop Shipping." Just go here: http://www.hienotedirectory.com/drop_shipping_ebook.htm to grab your copy today...it's FREE!
Previously published in the February 2007 issue of HOME BUSINESS® Magazine, an international publication for the growing and dynamic home-based market. Available on newsstands, in bookstores and chain stores, and via subscriptions ($15.00 for 1 year, six issues). Visit www.homebusinessmag.com
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