Copyright 2006 Brad Beiermann Ph.D.
By Brad Beiermann Ph.D., Hienote Inc.
When I originally wrote this article a few years ago, it was titled “Eleven Things You Must Know About A Drop Shipping Directory And It’s Company”, and the drop shipping market was different than it is today. What has changed? Quite a bit. At the top of the list would be the continued growth of e-commerce, outsourced manufacturing, eBay, and the friendly neighborhood Wal-Mart. Drop shippers have become much more sensitive to the pros and cons of the online marketplace. In turn, their drop shipping policies have changed as well as their overall business risks. Now, more than ever, there is an extreme focus on preserving product value, profit margin, and the risks associated with having a drop shipping service. What does this mean to a drop shipping directory? Let’s take a look… As I mention at my speaking engagements, there are a handful key parameters you should take into account when considering a drop ship directory:
1. Balance – You want to find a directory rich in many different categories of products rather than the quantity of products available. Many of the directories try to advertise how many products are available in their directory (i.e. 2,000,000 products). Why is the number of categories important? A directory will not serve you well if it has hundreds of thousands of products, and none of them are in your product interest category. A directory with a good balance has focused on their categories of drop shipper products rather than the quantity. This gives you a better chance of finding something for your line of business.
2. Uniqueness – You will want a directory with uniqueness amongst its drop shippers. The drop shippers should offer a wide array of unique products that are not necessarily mass marketed. Why? Web sites offering unique and unusual products often do well on the Web versus sites trying to sell big brand name products that you can find with a mega retailer such as Wal-Mart. A directory offering a bunch of big brand name product drop shippers could land you in the highly competitive commodity market against the mega retailers.
3. Selection – A directory with a good selection of drop ship categories is important. The number of drop shippers or the number of products a directory carries should not be the goal. The goal and question should be, “Do they have a drop shipper that would fit my line of business?” A common mistake for many folks is getting fixated on the quantity of products a directory might offer with its drop shippers. The question they start to ask is, “A directory with over 2,000,000 products ought to have something for me to sell.” Wrong! Be sure to remember the first parameter we mentioned. Balance.
4. Search Method – The directory must explain the methods they use to find drop shippers. Be careful of directories that do not publish their search methods. If they do not explain their search methods, they may not have a solid search methodology. The directory could be full of a bunch of middlemen. At that point, the directory would be worthless to you. Directories using search methods such as trade show searches and foreign government agency searches are preferred over directories only focused on Internet searches. Why? Not all drop shippers and importers have a Web presence. A directory based on a bunch of Web searches could be missing some of the best hard-to-find drop shippers.
5. Sample – A sample of the directory should be made available to give an idea of format and information provided. The actual names of the drop shippers will not be given in a sample, but you will get an understanding of the type of information provided.
6. Price – Price is about the perceived value of a product. As the saying goes, “Good things aren’t cheap, and cheap things aren’t always good.” This mantra is being challenged as China and the rest of the global market continues to drive prices down on quality products. Are there good quality things coming from overseas? Are these things low in price? You know the answer. In the past, most legitimate directories on the Web used to sell between the $60 and $100 price mark without any markdown…not anymore. What has changed? The number of affordable choices you now have. Why pay $70 for a lifetime membership, when you only need the directory for the first year to get you started? Some legitimate directories have been able to aggressively reduce their staffing and operational overhead costs, and now offer a shorter term membership for under $20.
7. Education – The Company selling the directory should have a website fairly resourceful with FAQ’s and articles written by its own research staff or owner. Topics should include drop shipping, ecommerce, importing and general FAQ’s about drop shipping. Watch out for directory sites only containing FAQ’s about their directory and not drop shipping.
8. Custom Search – If you are running a larger corporate venture, you might want to ask them about doing custom searches. The legitimate product sourcing companies, and drop shipping directories offer such a service. A custom supplier search can sometimes be done under certain conditions with the directory’s parent company based on an established billable rate.
9. Toll Free Number – In the early days of drop shipping directories, this used to be an important feature for two things: 1) To distinguish a scam directory from a real one. If they have a toll free number, they must be a real service, right? Not anymore. Over the past several years, toll free number service providers have popped up virtually everywhere. For under $10 a month anyone can have a toll free number that feeds into a live answering service, or voice mail, with a canned professional greeting and message. Is this a bad thing? No, not necessarily…and that’s the point, a toll free number does not mean it’s a credible company. 2) To handle inquiries. In order to offer lower directory membership fees, many legitimate directories have now been able to create FAQ pages and 24 hour response email services to handle the most common questions and issues. A call center used to be a great idea, but remember, that expense has been buried in the price of the directory you are purchasing…sometimes 15 to 20% of the membership price. Ouch! So, do you want to be paying out the bucks for a company’s toll free service if your question can be answered for free in a FAQ page or email message? You be the judge.
10. Customer Service – Here is something to consider, if the directory company is spending their money for people to sit around the office and answer phones, or conduct online media talk shows…you are paying for it in the price of their directory membership. Is this what you want your membership fee going towards? Obviously not. So, here is what should be expected in today’s drop ship directory market…Any online business that cares about its customers should have a section dedicated to customer service. A company that offers a drop ship directory is no exception. It should have a section of its site dedicated to customer service. At a minimum it should have a means of handling inquiries such as email and a postal mailing address. Most of the real research firms are always on the road at trade shows and product supplier facilities. In today’s global market, they keep their office overhead low to maintain an affordable directory membership. That’s simply the global market.
11. Guarantee – A guarantee is always important to have with a directory. Be sure to examine the guarantee policy for a reasonable claim.
With these eleven parameters you should now have enough knowledge to get you started in the right direction for evaluating a drop ship directory. In addition, hopefully this has given some food for thought in terms of considering a drop ship directory for your online business.