• Insights into Drop Shipping for Ecommerce Companies

    by
    Avid
    Published on July 14th, 2010 03:51 AM  Number of Views: 362  
    1 Comment Comments
    I think the first major trend in the marketplace (which I am sure many of you have seen) has been the progressive reluctance on the part of suppliers to develop new vendor relationships with ecommerce companies. In fact some companies have categorically issued moratoriums on new ecommerce accounts. (Some may consider these trends disturbing but I perceive it as an advantage in controlling markets and industrys from online clutter- more about that in a moment.) Indeed, much of the value of some ecommerce companies can be found in the depth and scope of its established vendor accounts. Internet stores that may have been grandfathered in as legacy resellers are in a good position to take advantage of an industry outside of the strategic competitive advantages inherent within their search engine rankings and retail management. It is my prediction, that in the next few years new start ups will be boxed out of the drop shipping arena unless they can offer vendors new market share or expand the size of their customer base. This comes largely from natural traffic. Also, companies that are entrenched with vendors as legacy accounts will be a part of a finite or limited group of online resellers. Consumers performing brand or product title searches will drive their own traffic to this limited coterie of stores.

    One great way to develop a compelling value proposition for vendors is to demonstrate new sales and exposure through search engine placements. Therefore with the firms I’ve been involved with, rankings are really the cornerstone of any web development project. If you are in a top placement for a major key term vendors in that industry will actually start courting you. Even with the toughest vendors, persuading them to make an exemption to an internet moratorium can be made e.g. if one is selling “ice augurs” online and one ranks in the top results for that terms than any vendor interested in gaining that brand exposure and eyeballs would want to have their items represented on your site.

    In making acquisitions one thing to keep an eye on is the nature of those existing accounts. While some sellers cannot guarantee that all accounts will transfer to new owners as part of any due diligence process it can be helpful to get more detailed information on the vendors and the total number of products. Also are new items being introduced soon? What new vendors exist out their carrying comparable items? Etc.
    This article was originally published in forum thread: Insights into Drop Shipping for Ecommerce Companies started by Avid View original post
    Categories:
    1. Running Website Businesses,
    2. Search Engine Optimization,
    3. Affiliate Programs
    Comments 1 Comment
    1. Rover's Avatar
      Rover - July 15th, 2010, 06:48 PM
      There is definite trend for manufacturers to prevent people from selling online. The manufacturer is often worried about their brand name and also alienating brick and mortar shops.

      It is true, what Avid says, about getting a ranking. That will certainly help you get drop shippers. However, if you want to work with top brands they are also looking for product mix. If you already are working with top brands on your site, then other brands may want to be included. If you have nothing to offer, no top brand will deal with you. So, how do you get the first major brands to go with you?

      What a lot of SEO people do is to build fake stores. This is definitely shady, but really works. If said brand sees a nice looking store carrying lots of other brands that are a good mix, they will often go for it. The SEO will then simply say that the products are out of stock. Then, after the site has a few real brands going, then the real store is created.