There are private brands and these are the type of company that we want to sell for because they do not sell directly to the public. They only work with retailers like us. Their job themselves is not to sell to the public. Their job is to sell to retailers and their job is to build their brand up to increase their brands value. So how do they do that?
Minimum Advertised Price
They enforce price controls and the most common example of this is MAP. MAP stands for minimum advertised price. If the supplier enforces a MAP policy it means you cannot advertise one of their products lower than that price that they give you. This does not just go for you, it goes for everyone of their retailers so this is a great way to increase profit margins because no one is going to selling the same item for less than you. What you don’t want to sell for are these middlemen suppliers. What they do is basically just advertise that they drop ship that’s how people find them.
They send you a price list and then you can make up your own price basically and sell at whatever price you want which sounds great but it’s not. It’s an easy way to lose a lot of money because your competitors can be selling at a 5% profit margins just to increase their sales and all that does is saturate a market and make it worth it so you definitely want to stay away from these type of middle men suppliers.
So How Does Drop Shipping Work?
To start you get approved with a drop ship supplier. This supplier has at least one warehouse located somewhere in your country. In my case that’s the states that’s where I’m and that’s where I do business and that’s where they keep their inventory. Once you get approved for an account you get a price list from the drop ship supplier. You can then upload their products onto your website and start bringing in sales. When a customer buys from you on your website you then buy from your drop ship supplier. You basically collect money at retail what the customer pays you and you pay wholesale your price to the supplier the supplier ships the item directly to your customer and everybody’s happy. It’s a win-win situation.