How Not to Set Up a Dropshipping Business - 5 Tips
I can talk till I am blue in the face about how to set up a dropshipping business correctly, but I wanted to take a different approach and post about something on the flip side - how "not to" set up a dropshipping business. I can honestly say I have (almost) seen it all when it comes to mistakes that Internet business owners have made when setting up shop.
Here are 5 tips of how "not to" set up a dropshipping business:
1. Have someone tell you what to sell. Believe it or not, people ask me all of the time "what they should sell" on THEIR website! If you do not have the ideas to figure out what you are wanting to sell on your own then you probably should not be setting up an Internet business. If I am passionate about big screen TV's because I am a guy, and I tell a woman to sell big screens, even though she is into handbags it could be a nightmare for her! You have to have some knowledge about the products you are wanting to sell because you are going to be the one writing the content that is going to make people want to buy from you - right? To me it is about as dumb as me asking someone to tell me what my "niche" in life is! Come on!
2. Designing the site before you have a dropshipper. If I had a dollar for every time this happened I would be a rich man from this one single act alone! Please do not spend any time or money on a designer until you know for sure that you have a supplier/dropshipper locked down and ready to work with you. I have seen where people have spent thousands of dollars on a design only to scrap it because they could never find a supplier of the product they were building the website for.
3. Purchasing a domain name and hosting before you have a supplier. one happens so many times it actually pained me to write it just now. If you still are not sure about the dropshippers you are going to be working with, or have established the relationship, you should not spend any money purchasing a domain name, or getting a hosting account. There will be plenty of time for that once you know for sure that you have a supplier that is willing to work with you. Depending on how many years you register your domain name, and what kind of a hosting package you get, this could save you hundreds (if not thousands) of dollars in the long run.
4. Not setting up a corporation or business entity. The worst mistake you can make as a business owner is not protecting yourself. There are many tax benefits to having a corporation set up (besides the protection factor). There are also many companies out there that can help you set up a business corporation, like Legal Zoom, or other sites offering free software to incorporate, or (even others) helping you find the tax papers you are looking for.
5. Selling on eBay before you have established the relationship. Sometimes this can happen because the supplier gives you all of the information on their site including images, descriptions etc. Basically everything you need to get started making money - right? Wrong! People think that they can start selling while establishing the relationship, but are gravely mistaken as to how long that process can actually take. There are several reasons why this is a big no-no, but the most obvious is what is going to happen when the product sells and you are still waiting to hear from the supplier if they will allow you to sell their products? There are also some suppliers that do not allow selling on eBay, and how will you know this if you don't even have the relationship established yet? Sometimes there are products that are on back order (or out of stock) as well, and this is the kind of information you do not receive until you have the relationship established with the supplier.
After putting down these 5 "not to" tips, I have realized this list could be about 50. In my opinion these 5 dropshipping no-no's are the biggest mistakes that I have seen while doing business online. Do your best to not make these mistakes and it will make the whole process of setting up an Internet business that much easier. It will also give you a quicker chance of being profitable.
Matt Siltala owns his own SEO firm, Dream Systems Media, and has been involved in online marketing and ecommerce since 1999. Matt has worked for companies such as www.prosperlearning.us">Prosper Learning, Finicity, and many others. Dream Systems Media specializes in SEO, SMO, www.omniture.com">Web Site Statistics, and Reputation Management.
