So you think you are profitable?
By: Interloper, Inc
According to N.K. Babar, a spokesperson for BloggerKhan, the website for small business tips and techniques, "Ecommerce is booming and is getting the attention of many aspirant entrepreneurs as it rightly should. Many people have heard about Drop Shipping and that seems even more enticing as you setup a website but don't have to stock products. You simply take orders and the drop shipper ships them for you. You can also upload to multiple marketplace like eBay, Amazon and Walmart and that can further spur your sales." "Why then do people lose money? " - Babar asks rhetorically.
"They lose money because the haven't done the math. In many cases, they don't even know they are losing money. They are in fact quite happy as they are making sales and products are getting drop shipped. Somehow their bank account keeps shrinking and by the time they figure out what is happening, it is too late" Babar quips.
"What most newbies do not realize that the drop shipper charges a handling fee. The smaller the order, the bigger the handling fee. What does that mean? That means you think you sold a $20 item for $25 and made a $5 profit. But the drop shipper charges a $7 handling fee on orders less than $100. So you lost $2" Babar adds.
According to Babar, "In addition to your own website, you should sell on marketplaces like Amazon, eBay and Walmart. But understand the costs first. There are monthly subscription fees, product listing fees and then when the merchandise sells, the marketplace deducts their commission which varies from 8% to 20% depending on the category. If you sell an item for $50, you may receive only $40"
He further adds, "then you have to factor in the cost of material required to package the product, then the postage / shipping charge that you pay to USPS, FedEx, UPS etc. Don't come up with a random figure like I'll charge $5 for shipping no matter what the product. What if the product costs $12 to ship? When you add all that up, that $50 sale that you thought you were making a $10 profit on doesn't look so good now."
For additional information and a video on the subject, visit http://bloggerkhan.com/