The Internet is loaded with so-called "suppliers". Everyone who has a couple of wooden birdhouses or glass figurines to sell wants you to think they are a real, live wholesale supplier. They use phrases like "Your Wholesale Source", "Direct To You", and "This is YOUR road to Internet Riches!"
They use words like "Ultimate", "Central", "Connection", and "Millennium". They give themselves clever names that sound similar to popular, well-known companies like eBay, Yahoo and others. They are nothing like the companies they try to sound like. They make outrageous claims that they have tens of millions of products you can sell. That's not true.
If you let them huff and puff at you, they'll blow your house down.
I often am not sure whether I should be amused or horrified at some of the tricks that these people are using to take your money.
When you open an Internet Store or sell through eBay Auctions, you obviously need products to sell. We've been talking about Product Sourcing in the last couple of Chapters.
The most critical thing to remember about Product Sourcing is that you NEED to be as close to the manufacturer of your products as possible. The more "middlemen" you have to go through, the more fingers are dipping into your profit potential. The Internet is FULL of middlemen, and they've all got their sights set on YOU!
Here are some of the things you should watch out for, in both Drop Shipping and Bulk Wholesaling:
ALWAYS REMEMBER THIS ONE THING, NO MATTER WHAT:
In order to earn the most possible profits on the products you sell online, you must work directly with genuine wholesalers. Anyone who gets in between you and a real, factory-authorized Wholesaler for ANY reason is simply turning your order around to someone else, and taking a profit from it. That profit should be yours, not theirs!
PERSONAL INFO RIP-OFFS DISGUISED AS WHOLESALE DIRECTORIES
There is a truly alarming trend recently that has to do with ripping off your personal information and selling it to others. There are now several so-called "wholesale directory" web sites on the Internet that look and sound very convincing, and sell you access to their sites at very low monthly costs. We at Worldwide Brands know that it's impossible to maintain quality directories of that kind of information and sell it so cheaply. We've been doing this since 1999, and there are certain costs that you just can't get away from if you want to provide real, constantly updated Wholesale Supplier information. So, we looked into what these cheap directories were REALLY doing, and we found out. We were truly disgusted when we got our answers.
These online directories are nothing more than fronts for a much larger marketing machine that's dedicated to separating YOU from your MONEY. The actual wholesale information is largely outdated junk and links to fake wholesalers. All they are really interested in is gathering your personal information, so they can sell it to any Internet Marketer who will pay a couple of bucks for it. That's one way they make money.
Broker Networks that you'll see advertising as Drop Shippers and Bulk Wholesalers are not illegal, and are not scams, but in our educated opinion they are not what they want you to think they are.
Broker Networks can best be described as something similar to the Multi-level Marketing business model. In order to use this "Network", and take advantage of the "millions of products" they claim you can have drop shipped, you must first BUY thousands of dollars’ worth of products yourself (many times from large retail stores). Then you BECOME a "Broker" yourself, trying to sell those products to other "Brokers" within the "Network". You and those other "Brokers" in the "Network" (people just like you) actually become the "wholesale suppliers" these sites want you to think you're signing up with.
Many times operations like these will not even complete your "application" unless you can prove that you have several thousand dollars to use in order to start buying products, so you can become a "Broker". Be VERY careful with your credit card information, and ask a LOT of questions!
Not what you expected from the advertising on their front page is it? If you're okay with that kind of business model, fine. Again, it's not illegal, or a scam. Just remember that this is NOT direct wholesale supply in any traditional fashion whatsoever.
There are some Broker Networks that claim to be wholesale suppliers of tens of millions of products. To the best of our knowledge, there is no single wholesale supplier anywhere on the planet that is anywhere near that large.
There are some Broker Networks that claim to be wholesalers of a huge variety of Brand Name products. They are simply passing your orders on to the real sellers (other "Brokers" just like you, and even retailers, in some cases!) of those Brand Names, and taking part of your profits.
These companies also sell your Personal Information to dozens of other Internet Marketers, and make money that way.
If you want the best possible profit margins, the transactions you make when you buy products to sell online should be between you and a Factory Authorized Wholesale Supplier ONLY.
The late night "Home Internet Business in a Box" TV Infomercial.
The ones that show you "Amazing Systems" that will make you "Thousands of Dollars a Week", with little effort on your part. They offer you "Easy, Step-by-Step Instructions". They want to sell you "Interactive CD ROMS that Teach You ECommerce in No Time". They offer to reveal "Amazing Secrets of the Pros" that will make you rich. They promise "Instant Web Sites"" and "Access to Thousands of Products That You Can Sell right Now!" They show you beautiful people lounging around pools, swimming in crystal-clear Caribbean waters, and sitting under palm trees while their "Businesses" magically make them all the money it takes to afford those things.
C'mon, folks! You and I both know better!
It's extremely tempting to buy into the fantasy that there are "Secret Formulas", "Hidden Methods of the Pros", and "Businesses in a Box" that will make us rich with very little effort.
Common Sense tells us it's NOT TRUE. That it never has been true. In our minds, we all know this. However, in our hearts, we long for it to be so. That's what the disreputable among these people prey on...our hearts and our dreams.
We at Worldwide Brands know these people. We've been in this business a long time. We're very good at it, and very highly regarded on the Internet.
Different infomercial people have approached us over the years, wanting us to endorse them and let them include our information and our Directory in their half-hour trips to Fantasyland. We've had multiple conference calls with the owners of many of these companies. We've had conference calls with the people who handle their advertising, and produce their infomercials. We have turned them down, every time.
We will not allow our name and our reputation to be ruined by being associated with people who claim that getting 'rich' on the Internet is easy. Don't let your chance at a real business be ruined by them.
We know the 'get rich quick' Infomercials. We actually do stay up late at night and watch them. In our experienced opinion, they are selling a white-washed fantasy that has little to do with the real business world.
They start out by telling you that their "Amazing System" costs only a small amount of money. Then, when they have you hooked, they tell you that you need to spend hundreds more on an "Upgrade". Then they tell you that you need to spend hundreds more on "Advertising and Email Campaigns". Eventually, they'll end up telling you bit by bit that you need to invest thousands of dollars with them if you want to be successful. We have heard from a tremendous number of people who have lost a lot of money to these operations. Don't let them fool you!
"WE WILL DROP SHIP THOUSANDS OF PRODUCTS FOR YOU!"
Ever seen a claim like this on the Internet? There are literally THOUSANDS of so-called "drop shippers" out there who are acting as MIDDLEMEN for ONE REAL Drop Shipping Supplier. All of those thousands of so-called drop shippers lead back to the same supplier.
There is a big supplier of imported off-brand merchandise that does drop ship directly from their warehouse. They sell some decent products; I actually worked with them a few years ago. You won't find any well-known brand names there. Their line consists of several thousand widely varying gift-type products. Again, you won't recognize any of the brand names...it's all no-name, imported merchandise, probably mostly from China and the Pacific Rim. We'll call this company "XYZ Wholesalers", for the purpose of this discussion. That's not their real name, of course.
You can sign up with "XYZ Wholesalers" directly and sell their merchandise on your web site. They do charge an "account setup fee". I worked with them few years ago, as I said. However, I no longer work with them. I found the products difficult to sell, for one very good reason. As I said above, they have been around for DECADES, and have signed up TENS OF THOUSANDS of people, who are all trying to sell this exact same merchandise on the Internet, as well as through Catalog Sales, Home Parties, etc. That kind of competition, plus the fact that there are so many more people (millions of people!) already trying to sell giftware in general on the 'Net, made it impossible for me to make any real money.
Now, here's the problem: along comes Joe Reseller. He signs up with "XYZ Wholesalers" as a retailer, and has the right to sell their products on the Internet. Then he goes out on the Internet and claims that HE ACTUALLY IS XYZ Wholesalers! He tells you to sign up with his web site. He'll drop ship all those products to your customers and make you rich. What he's really doing is sitting in his bedroom in front of his computer, re-sending your orders to the REAL "XYZ Wholesalers", and making a profit from you that you should not have to pay. He's set himself up as a "middleman", and is trying to fool you.
DROP SHIPPING AGENTS
As we warn throughout our site, there is one constant thing in Internet Drop Shipping that you need to watch out for. Over and over again, you are going to see companies who do their best to make you think they are real wholesale drop shippers, when they are NOT.
Drop Shipping 'Agents' are a particularly interesting issue. You see, they DO provide
access to one, two, or maybe a few REAL drop shippers. However, they are
STILL a MIDDLEMAN.
There are two problems with using Drop Shipping 'Agents'.
1. They ARE middlemen. They charge you recurring monthly and/or annual fees that you should not have to pay in order to access the real drop shippers they provide access to. You should never pay a recurring fee for the 'privilege' of placing orders with a real drop shipper!
2. You'll find the competition impossible to deal with. Most of these 'Agents' only give you access to one drop shipper. Even those 'Agents' who give you access to several drop shippers (and charge you more for it!) are doing something that can bury your business before it gets started. They are causing intense competition! They are going to advertise their service all over the Internet. Thousands or even tens of thousands of people will pay for it. Guess what happens then? YOU and all of those thousands of others are all trying to use the SAME small handful of Drop Shippers! The competition becomes way too intense, and you'll never sell anything!
Let's take a step back and go over the whole issue.
A real Wholesale Drop Shipper or Bulk Wholesaler ALWAYS owns their OWN warehouse. They have offices in, or attached to that warehouse. It's a physical building, with walls, windows, doors, maybe a few trees outside on the lawn. There is a loading dock, where trucks back up and deliver pallet loads of products. They have people working for them in that warehouse. The people who run their web site peek their heads out of the office doors and say, "Hi, Wanda!" and, "Hey there, Mike!" to actual human beings who work there, receiving inventory from manufacturing plants, packaging orders for Drop Shipping or Bulk Wholesale, putting a new filter in the Coffeemaker, etc.
Drop Shipping "Agents" work very hard to make you think they own their own warehouses. There are some who are very good at that. They tell you that you can access thousands, or even tens of thousands of products from their 'warehouse', or from many of their different 'warehouses' in different locations.
Again, here's the first important part. Drop Shipping "Agents" do NOT own their own warehouses. They are MIDDLEMEN.
No matter how many products or warehouses these people claim to have, they don't have a single one. They're just sitting in a house or a rented office somewhere, thinking up clever web site text and new ways to make you think they are the real thing.
Some of them are even cleverer. There are 'Agents' out there who will actually TELL you that they ARE 'Agents'. They'll tell you that even though they ARE 'Agents', they don't really make any money by acting as a middleman. Some of them want you to believe the do it out of the goodness of their hearts. Others will tell you that they make their money only from your 'Membership Fees'. However they say it, they usually bury this information in their sites, hoping you won't pay attention to it, and they sugarcoat it in such a way that it sounds really good to you if you DO realize what they are up to.
Here's how they operate:
· They go out on the Internet and find one, two, five, ten, or sometimes more real wholesale drop shippers.
· They contact these real drop shippers, and say, "Hey, send us a list of your products and a bunch of pictures, and we'll help you sell them online through OUR order system". Most real wholesalers know better than to deal with something like that. However, there will always be some who will go along.
· They create a web site that makes it look for all the world that they are the Universe's Answer to Drop Ship Warehousing and Wholesaling.
· The small ones simply have one group of products you can order. When you place an order, they will turn around and send that order to the real drop shipper, who will send it to your customer.
· The bigger ones will tell you that they have a whole bunch of "warehouses" all over the place, with clever names. North Warehouse. South Warehouse. East and West Warehouses. Pink Warehouse. Blue Warehouse. Plaid Warehouse. You get the idea, right? They'll tell you that you can order from any one of those "warehouses", for a price. Some of them give you one or two "warehouses" for your initial 'Membership Fee', and then jack up the 'Membership' cost if you want to order from more of their "warehouses". Again, these people don't have any warehouses! Their "warehouses" only exist in cyberspace! They're nothing more than a collection of product images that these middlemen got from a wholesaler. Each one of those "warehouses" is only a collection of product images from a real drop shipper that you should be working with DIRECTLY, instead of paying some 'Agent' a FEE for the privilege. When you place your orders, those orders will simply be turned around by the 'Agent' to the real drop shipper for fulfillment.
· Some of these "Agents' will tell you that it's better to work with them, even though they ARE 'Agents' because they are "centralizing" your ordering and shipping. Believe me, we've been in this business a long time, and we've never seen an ordering or shipping issue that was enough of a problem to justify ordering through middlemen. Not ever.
Is this illegal? No. Is it a Scam? No, not usually. It's just a very poor business idea, in our experienced opinion.
Think about it the second part of the problem again. These people are offering you an indirect (middleman) route to a small handful of drop shippers. They'll promote that same small handful of drop shippers to tens of thousands of people like yourself. Do you really think you'll be able to compete with thousands, or tens of thousands of others, who are all trying to sell the same products from the same small handful of drop shippers? Not a very pleasant thought, is it!
Would you say it's a good business decision to take a middleman route to a very small small number of drop shippers being used by a huge crowd of others?
The answer is obvious, of course.
LIST OF WHOLESALE COMPANIES, ONLY $3!
Ever see an ad like that on an auction site? So have we. We bought one. OK, we KNEW we were getting ripped off, but we just had to see it. A few days after paying our $3.00, we got two Xeroxed pages in the mail containing the most worthless information we've ever seen.
These lists sell for anywhere from $2.50 to $6.00. Why do you think they're so cheap? Because nobody had to put any EFFORT into them! It's easy to hit a search engine, type the word "wholesale", throw the first 20 responses on a piece of paper, and sell it for $3.00.
Will it help you earn money? NO!
98% OF ALL THE DROPSHIP AND WHOLESALER LISTS ON THE INTERNET!
Yes, we bought them too. ALL of them. They call themselves "Ultimate", "Central", "Millennium", "Connection", "Global", "Super", and "Incredible" lists and sites of drop shippers. Again, we knew we were being ripped off.
The overwhelming majority of these printed lists and online sites claiming to contain Drop Shippers and Bulk Wholesalers have been circulating the same, tired old listings of cheap import companies and off-brand, cottage industry products around and around for years.
They claim to contain "hundreds", or "thousands" of companies who will drop ship for you. Some of them contain hundreds of listings, but that's easy. Either reprint the same old listings you've been printing for 20 years (whether they're still in business or not!), or just go to a search engine, type in "wholesale" and copy the first 500 responses you get. Then slap them in a rag-print magazine or throw them on a web page and call it a "Directory". Same result.
Lists and "directories" such as this sell for anywhere from $7 to about $30. One of the newer ones has the nerve to charge you $59 and change for a very small amount of useless information! They've rarely ever changed; even if they contained any worthwhile information, they would be outdated very quickly. Some of them are online or downloadable, but contain the same tired old junk and dozens of middlemen that the print directories do. Again, we've bought copies of EVERY SINGLE ONE, and continue to do so and never found ANY of them to be worth anything.
SUPER DROP SHIP AND WHOLESALER INFORMATION CD!
You've probably seen these on auction sites as well as web sites. Tell you what; we'll make this one short and sweet. Read the warning above this one, dump all THAT junk on a CD, and sell it for six bucks. Same thing.
COMPLETE INTERNET STORE WITH PRODUCTS!
Have you ever come across an "Internet Business Opportunity" like this: (?)
· They'll create a storefront for you!
· They'll provide you with THOUSANDS of products that they'll drop ship for your store, and allow you to sell only their products!
· They'll provide you with Merchant Services so you can accept credit cards without having to open a bank account!
· All for a ONE TIME PRICE of just $50!
Wow, does that just seem too good to be true?? That's because it IS too good to be true. Oh, sure, they'll do what they say. It's a legal business. But tell me this...just how much money do you think you'll make?
Think about it for a minute. THEY establish accounts with wholesalers. THEY mark those wholesale prices WAY up. They force you to buy products only from them. Then they get YOU to put in all the time and effort to SELL those products to people, at a VERY slim profit margin for YOU.
Congratulations! You've just become a commissioned salesman for someone else's business!
Um, not quite what you had in mind was it?
FOR A MERE $150, AND $49 A MONTH;
Run across one of these yet? A company who claims to be a "drop ship distributor" or a Bulk Wholesaler, but has a "setup" or "membership" fee?
Let me say this very clearly:
A REAL WHOLESALER DOES NOT CHARGE YOU A FEE just to set up a wholesale account!
ANY company that wants you to BUY YOUR STORE'S PRODUCTS FROM THEM, and wants you to pay an "account setup fee", should be AVOIDED at ALL COST! Almost without exception, these companies are middlemen. You will never make any real money with them. They take your "account setup" fee, and that's all they really wanted in the first place. Good luck trying to get a refund!
There are actually people out there who GUARANTEE that you will be one of the "few" who succeed in your Online Business if you use their drop shipper or wholesaler information.
That is ridiculous. NO ONE can guarantee anyone's success at ANY EBiz. People who tell you this are some of the worst people to get tangled up with online, since if they're willing to so boldly state such an obvious lie, they're willing to do anything to cheat you.
Any time you see ANYONE who Guarantees your Success, you've found a bold-face liar who is simply out to take your money.
Run the other way immediately!
WOLVES IN SUPPLIERS' CLOTHING!
These places spend a great deal of effort trying to convince you that they're real suppliers. We spend a lot of time sorting these profiteers OUT of OUR lists of Directory candidates. Here's how they operate:
· They put up a site that contains all kinds of unrelated product lines, and tell you they'll Drop Ship for your Internet business.
· They may charge a small "account setup fee".
· You sign up with them, thinking that they are an actual wholesale supplier, and you place their products for sale on your site.
· Your customer orders a product from you, and you send the order to this fake "drop shipper" (middleman).
· The middleman, in turn, places the order with the REAL drop ship supplier, and has it sent to your customer.
· You end up paying a lot more than you should for the product, because the fake "drop shipper" is marking up the price to YOU.
· You lose profits that should be yours.
FREE DROP SHIPPING AND WHOLESALE INFORMATION SITES
Sounds pretty good, don’t it? FREE sites giving you the names of all the drop shippers and bulk wholesalers you'll ever need! Ok, let's back up and think about that for a minute. Free? Hmm. Remember the Number One Rule? If it sounds too good to be true, it IS too good to be true.
Yes, we've checked these people out, too. Again, just take all the junk information I talked about above, and slap it on a free web site.
Why do they do it? Simple. They hope they'll get enough people coming to their web sites so that they can charge OTHER companies for advertising space. While you're out there chasing your tail and wasting your time with useless information, they're making money by selling ads to someone else. How nice for them! Doesn't do anything for YOU, though. In fact, it hurts you. Wasted time equals lost profits.
Many of these people are very clever. Their sites look legitimate and they
present themselves well. All they really are is just
another middleman that is sponging off of your hard work. All they will do is waste your time.