Interesting, no?
Just coming back from a tradeshow, I had some thoughts on what it takes to start up a business and grow a business, looking at it from a pure cash flow basis.
If you are just starting out and do not have a lot of money to spend, you are going to have to resign yourself to carrying items that everyone else carries. Usually from dropshippers. A dropshipper is a company who is willing to ship product for you. They stock, you sell, they ship. The profit margin here is usually low and the costs involved are higher on a per order basis, usually because of shipping fees, handling charges etc. So, you will have a hard time becoming competitive. But; the initial risk is very low.
As you start stocking stuff, costs go up, but profits do as well. Since you buy in quantity, you can get better prices on items, controlling your shipping costs better and maintain a more unique type of product. Less competition always equals better profits.
As you get bigger, you can consider bringing in a container from overseas. You’ll have to buy -a lot- of stuff to do this; but your products are (possibly) even more unique than the previous two options. The downside here is initial investment. It can be very high. I’d have to say (based upon the 2 containers I’ve brought in) about $20,000 each time. Plus it takes more time to get the stuff in stock. But when you do, you usually have plenty to sell. And the profit margins are higher (about 50% higher than stocking product) - but it can put a crimp in your cashflow if you are not careful.
Here’s the quick and dirty rundown of the concepts here:
- Dropshipping: Low Investment, High competition, Low Uniqueness of Product
- Stocking: Medium Investment, Medium Competition, Medium (to High) Uniqueness of Product*
- Importing Direct: Large Investment, Low Competition**, High Uniqueness of Product
* If you are a good buyer and find the right vendors; it is entirely possible to get product that virtually no one else sells online. Thus a “high” uniqueness is very possible.
** Keep in mind that no matter what you sell, if its popular enough the big monsters of competition will always be there (Walmart, Home Depot, Target, etc), but you have less competition from other small to medium businesses. And that is key.
Post Comments Here » 1 Comment so far
Related Posts:
- Good Copywriting and Inventory Turnover
- When Good Vendors Go Bad
- Manufacturer Descriptions and Spam?
- Google Loves Low Quality Sites
- Product Videos Made Simple
1 Comment so far
Trackbacks URI http://www.lorien1973.com/inventory-costs-unique-product/trackback/
Leave a reply
More Related:
Check these Categories below for more on Inventory Costs & Unique Product
Small Business Tips, Running A Business
Previous Post: Mother’s Day Shipping Insanity
Next Post: Tampa: 16th Worst Driving City
Search For More Articles Related to:
Acheter levitra Bon marché on December 20th, 2007
Acheter levitra Bon marché
27c6899db6:26 Pharmacie en ligne http://fr.generics-first-hand.com/