Journal Post #2 – Brokers, Manufacturers and Wholesalers – Oh, My!

This week in B 250 we focused our attention on how to sale items online.  We started by looking at overseas brokers and US based wholesalers.  The idea of using an overseas broker worries me as my parents had a bad experience with them in the past.  The product had to be ordered in extreme bulk and took forever and a day to arrive.  They had to delay or not take multiple appointments (they were running children’s parties) because the broker took 3-4 months to get the product into their hands.  The business did not take off as well as they wanted and they ended up with a garage full of children’s party junk that they eventually got rid of at pennies on the dollar.  If they had chosen to utilize a wholesaler in the US they could have minimized the inventory they had to carry and focused on putting on the parties (which is what my mom wanted to do in the first place.)

The next unit looked at affiliate vs. drop shipping.  Both options have their ups and downs for me.  The strengths of the affiliate model seem to be the weakness of drop shipping and the strengths of drop shipping are the weakness of affiliate.  The affiliate model allows the website to focus on content and traffic.  It allows the company to start up with minimal work up front and looks like a great option for those looking to get their feet wet with minimal risk. The drop ship model allows my website to offer the product to the customer without me having to worry about inventory, procurement or shipping.  It lets me manage the customer relationship and control my margin on the things I sell.

For the company idea that I am working on, I can immediately use the affiliate model.  Drop shipping is an option but in the beginning I really want to focus on content and traffic and the affiliate model allows me to avoid the order process for now.  If the site takes off, like I think it might, we can certainly add drop shipping or direct sales via local inventory from wholesale, broker or manufacturer later.

I really appreciated the message boards this week as there were many differing viewpoints with ideas that I hadn’t considered.