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dwdws dwdws is offline
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Join Date: Jan 2006
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Wholesale delivering to order?

Hello

Last few days I've been learning about Private Labels, Drop Shipping, Wholesale...

The reason being, I wanted to learn about the options available for trading without needing to house and store stock. I also want to learn about the conditions surrounding the idea that when a customer places an order for a pair of shoes, for example, via eBay or an e-Commerce store, then that order is forwarded to the manufacturer(?) or Wholesaler(?) who then ship the item to the customer. These are my questions having considered what I have learnt so far.

(?) means: unsure.

I hope someone here might consider my questions please:

1). Following from the above, in all cases it is possible to form an agreement with any manufacturer/wholesaler whereby any order received are forwarded to either, who then deliver the item. And is it the case that this can be done via such conditions as Private/White Labelling?

2). Is it the case that only some manufacturing/Wholesale sectors supply on demand on a per-order basis, and also deliver items to the customer?

This does sound like a lot to ask for...

3). If any of the above conditions are true, then is it likely that the retailer would in fact earn a percentage of the sale once the manufacturer/wholesaler has supplied to demand and delivered the item to the customer?

Any insight would be much appreciated. I hope my questions are clear!

Kind regards

Last edited by dwdws; 05-05-2012 at 10:54 PM. Reason: typo
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missfituk's Avatar missfituk missfituk is offline
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Join Date: Jan 1970
Location: Lancaster, UK
Posts: 550
The way it works with most drop shippers is you will list the product, say the RRP is £35.00 for example. You will take the order and the payment, then usually log into the wholesaler/manufacturers client control panel and order that item, for a lower price, say £16.00 and then they will dispatch it to the customer.

There are various potential hazards though:

1) If there is limited stock, it may be that you take an order then go to your supplier and it has sold out of that colour/size/product and then you have to go back to your customer and refund etc. Sometimes more hassle than its worth for the margin you get.

2) Exhange/refund issues - you are a go between, the contract of sale is with you, so you have to sort out any sizing/quality/returns issues, refund your customer then get your money back off the supplier. Again, can be more hassle than its worth.

3) You are reliant on your supplier shipping in a timely manner. It is beyond your control if they dont bother sending it for 3 weeks. Youre the one getting ear ache off the customer.

4) The margins are often too poor to make it worthwhile unless the value is quite high. A normal wholesale margin in clothing would be about 2.3-2.5, but because you are ordering on a drop ship basis, it'll be more like 2.1 plus a p&p fee. So if the item sells at £35.00 RRP and you were buying stock normally, you'd be paying about £14+vat with free p&p, but if youre buying dropship they will charge you more like £17+ vat + P&P - this could amount to £25 to make a £35 sale, then you have your card processing fee to take out, and the trouble of overseeing the sale.

5) Usually, the products that are available on a drop ship basis are utter sh!te, I am familiar with quite a few lingerie drop shippers who contact me all the time asking me to list their products at the Big Bra Bar and when I've looked at the catalogue they look like something off a Saturday market stall. Not something Id be willing to sell to my customers!

Hope this helps.
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dwdws dwdws is offline
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Join Date: Jan 2006
Posts: 3
Hello missfituk.

Thanks for your reply, and very refreshing to have a sensible reply. So thanks for taking the time to explain, much appreciated.

Certainly I'm not interested in DSh as such, but the question was a really a spin-off from researching eBay and it occurred to me that some sellers were selling hundreds of identical electronic devices - apparently they do this through some form of drop shipping agreement. Finally I found that eBay (as a one & only outlet) is not a particularly effective way to trade online - my opinion here informed by all of the negative press surrounding issues relating to the Buyer Protection service. Anyway that is a different issue I suppose.

If I can return briefly back to the process by which an e-Commerce businesses source their products, please.

It seems to me the process is supply is:

Manufacturer (exclusive contract or 'generic' product branding) --> Supplier/Wholesaler --> Retailer

I believe that a retailer can form an agreement directly with the manufacturer for supply.

I also believe that a manufacturer / Supplier Wholesaler can distribute for the retailer on a deliver-according-to-demand basis. For example: when a customer makes an order for an item, then the retailer passes on this order to the Manufacturer OR Supplier AND/OR Wholesaler - who then dispatch the item direct to the customer, or to the retailer...

This sounds like Drop Shipping... but I think there are other more reliable supply-chain & distribution methods.

Are the above presumptions correct?

Actually, what I'm trying to understand is: what are the standard and conventional processes by which retailers operate in order to meet demand whether through holding their own stock or through a kind of 'deliver-according-to-demand' agreement with either manufactures or wholesalers.

I am a web developer and I have 10 years experience as such and now I want to move into e-Commerce, but I need learn afresh the fundamentals. Perhaps a trip to a local business centre will help.

Regards
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dwdws dwdws is offline
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Join Date: Jan 2006
Posts: 3
PS:

This answers some of my questions:

Quote:
Internet fulfillment is typically the process of contracting with one company to complete multiple supply chain functions. These companies can keep warehouse inventory, take customer orders, and ship the items to individuals and businesses. These companies may also offer customer service or technical support functions, which alleviates manufacturing and production companies from creating departments for these functions. Fulfillment companies help shorten the supply chain and can reduce business costs since one company is responsible for multiple middleman functions. Manufacturing and production companies can also use business contracts to ensure they receive a specific level of service at fixed rates.
In terms of claryfing terms:

  • Supply focuses on the raw materials supplied to manufacturing, including how, when, and from what location.
  • Manufacturing focuses on converting these raw materials into finished products.
  • Distribution focuses on ensuring these products reach the consumers through an organized network of distributors, warehouses, and retailers.

Last edited by dwdws; 09-05-2012 at 08:28 PM. Reason: Update info
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