Shopster's Dropshippers, eCommerce, and Selling Online Blog

Understanding Profit Margin

A lot of people have planned to venture into online sales, but only a few have successfully done it. Despite what many may think, selling online profitably is not just about building an online store.  Cost and markup are two of the most important concepts you need to learn before you sell online.

There are several types of costs associated with a business, some of the most common ones for retail include: cost of goods, CAPEX and OPEX.

Cost of goods is a common accounting term that covers all expenses related to the acquisition of the products you intend to sell online. If the goods are specifically manufactured for your company, it will include the cost of raw materials, labor and shipping from supplier. Here, product sourcing becomes a crucial management decision. Find the lowest possible cost of goods for the specific product you want to sell by shopping for a good source. You can get in touch with a whitebox supplier, you can have it made for you or you can choose dropshipping as an option.  All these options have their pros and their cons. For instance,  for dropshipping, it means being able to run your business without the need for storage, shipping and handling facilities. Some say this is a risky supply management technique, but the trick for successful use of dropshipping is to find a reliable supplier.

Opex or operating expenditure, are on-going costs generated by running a business or a system. These include electricity, rent, manpower.  Meanwhile, CAPEX or capital expenditure, refers to cost incurred for fixed assets. This can include purchase of equipment, licenses, buildings and property. Combined, the CAPEX and the OPEX are referred to as overhead cost.

The failure point in most businesses that sell products online is that they only look at the increasing revenues – or the total earnings out of the sales – without considering the cost it entails. Increasing revenue is not an indicator of an online store’s success.

Profit, on the other hand, is a different story. Profit margin or gross profit margin, is the ratio of the revenue to the gross profit. The margin reflects the difference between the revenue and the costs. In retail, we have what is known as the markup. The retailer bases this on a percentage of the cost to calculate the sales price that would earn the best margin. Essentially, markup and margin are two related terms calculated in different ways.  As an example, if the product you sell online costs  $5, with 100% markup, the selling price becomes $10. This means, that you get a 50% margin on the revenue.

Understanding your online store’s profit margin will help you determine how successful your business really is. It measures how much out of every dollar sold, you actually get to keep.

Power Merchant Tips: Selling Jewelry Online

Planning to set up your own online jewelry store? In the past, buyers were very wary of purchasing high-ticket items online, including jewelry. But some merchants have successfully broken that barrier of fear and have been in business for years. Trust is indeed a major issue any seller has to overcome.

Here are some simple tips you can follow to establish your credibility as a seller and start your own online jewelry retail business:

1. Start small – test your market with items that are in the lower price range. Silver and crystals (ie Swarovski jewelry) are good test items for an online jewelry store. Some first-time sellers prefer to start off in the lower-price niche markets such as body jewelry (tongue rings, belly rings, etc). Ceramic and wooden accessories are also relatively risk-free and are easier to sell to the younger market.
2.  Pictures paint a thousand words – When it comes to jewelry and online sales, nothing beats the power of photos.  Your customers won’t be able to see the actual products. Descriptions of how it looks just won’t cut it. The solution: post images of your product. Make sure they are clear, so adjust the lighting before taking product shots. You should also consider taking pictures from different angles. If you have pictures of the piece worn by a model, that would be a nice addition to the product’s gallery.
3. Be very detail-oriented – This applies to product descriptions. Indicate the right size and color of the piece. If it has precious stones add the cut and clarity in the product description. Special care instructions also need to be included in your product page.
4. Certifications – If the jewelry you want to sell online is made of precious stones or metals, it would be ideal to get those professionally assessed and certified. It adds to that much-coveted trust factor.
5. Be clear about your policies – Your customers need to know what they can do if they are not 100% satisfied with the purchase, so this should be reflected in your return policies. They also need to be made aware that their purchases are safe. You can communicate this through your shipping policy. Be detailed about how the item will be packaged to ensure protection. If insurance is included in the shipping, please indicate the maximum amount for coverage and if this will entail cost to the buyer.

As a parting tip, a well-presented product means nothing if you do not deliver on your promise. This applies to both the quality of the product you advertised and the actual buying experience. Fulfill the order in the terms you’ve outlined. Such that, if you say they can expect delivery of the item in 3 days, make sure you have the manpower, process and supplies to do so. Remember, this is a business that thrives on customer trust and loyalty.

5 Tips to Increase Online Sales

Online retail store owners achieve success mainly due to their product offerings. With that, most sellers believe that what works offline (in the brick and mortar stores) also work when they build an online store. But the truth is far from it. The internet offers retailers much more in terms of potential profit, simply because overhead cost is less. But to really use the internet to your advantage, here are some tips to help you out:

1. Offer unique product information. Unlike in real stores, online shoppers won’t be able to touch and feel the products you are selling. They will rely on pictures and the information you provide to help them decide. Manufacturers often provide the basic product descriptions. But you have to remember, these descriptions are also being used by other retailers. If you have the time, create your own descriptions using your familiarity with the product. 
2. Encourage consumer reviews. You can do this by adding a feedback form, an application that allows product star ratings, or simply by putting up a page that highlights customer testimonials. Aside from adding content to your website, this can also increase your conversions. Today’s consumers usually look for reviews first before they make any purchase decision. Keep it honest and real to establish credibility.
3. Don’t discount the power of search engine optimization. Add the right keywords and build links to your site to improve your visibility in search engines like Google, Yahoo and Bing. Doing so can increase the number of visitors to your online store. The more visitors to your site, the higher the potential for sales.
4. Cross-sell and upsell. Improve your product page such that it features related products you sell online. This can reduce the bounce rate and exit rate of your site. During the shopping stage, if your potential buyer realizes that the product they are currently looking at is not the one he or she wants to buy right away, then at least offer other options.
5. After-sales service and customer support matter.   Improving your online store is only the first step to increasing sales. The real reason people would come back and want to buy from your site is how you treat your customers. Be transparent about your policies (delivery, return, etc), any guarantees and all fees. Have staff on-hand to answer calls and to help resolve issues.

Increasing your online sales is about bringing in quality visitors to your site, encouraging them to purchase and ensuring they have a good buying experience. Hopefully, they’ll put a good word out about your site and become loyal customers.

Tips for Holding a Spring Sale

Sales and bargains can help draw in a lot of visitors to your online store. If you’re tired of the usual sales based on holidays, then how about setting up one for a season? Try putting together your first Spring Sale for a change.

 Here are some tips for your online store’s Spring Sale:

1. Spring starts between February and April. So prepare at least a month before this period.
2. Consider selling items with a Spring  or Summer theme.These have a better chance of selling out quick as they are for immediate need and can be used right away.
3. Create banners for your website’s home page or find other ways to highlight your potential top selling items. If your sale is going to last long, change your highlighted items weekly to keep it fresh.
4. Notify people about the event ahead of time. If you have a loyal customer base, start communicating with them via emails – don’t spam them though.
5. Separate the items that are on sale from those that are priced at the regular rate. Just like in a brick-and-mortar store, you can add tags to your sale items. Keep the virtual “tags” consistent. You can even color code based the percentage of the discount. (ie Red tags for 50% or more, orange tags for 30% off, green tags for 20%, etc.)
6. Refine your pricing strategy. For consumers, a sale is about getting the best price for a product.  For retailers, you can use a sale to rid yourself of extra inventory. You can also move items that are in regular stock faster. To do this efficiently and effectively, make sure you set your inventory’s price point just enough that you still make profit on top of the cost of the goods.
7. Keep proper inventory of what was sold and at what price. Proper records can help you plot out your marketing events for the future. It can help you keep track of your most effective sales.

Good luck with your sale! Don't forget to stock up on inventory for your online store from Shopster.com

Online Sales: Finding Your Platform

The most basic thing anyone planning to enter online retail can ask is this: where do I sell my products? In most cases, entrepreneurs exploring this arena for the first time already know what product they want to sell online. What sets them back from implementing their business case full force is the knowing which selling platform to use.

In this post, we’re discussing the different selling platforms available online. We’re also providing you with the top players in each category.

1. Auctions: Ever heard of eBay? I bet you have. It is one of the most recognizable brands today. eBay is a selling site that lets buyers bid for the item they want. The seller can determine the start price of the bidding, the number of days the item is live and can even add a “Buy Now” option. 
2. Classified Ads Sites: Craigslist is the prime example for this. Before the peak of the internet, selling items via classified ads was the best way to do it without incurring a lot of overhead cost. Today, online classified sites are still very much alive. They not only offer the same cheap/free listing advantage as their traditional counterpart, they also have a wider and more global reach now. 
3. Social Network Sites: Multiply is user-friendly social networking site that can easily be transformed into a site that sells products online. It has a blog module, an area for photos and pages that can be customized for practically anything. People using this site for sales often take advantage of the photo album functionality. They use it such that one album is one product category. We’ve also seen some people use Facebook to sell stuff online. They usually create pages, add fans then use the photo section for product display. Social network sites are the easiest to break into when selling online because you already have existing contacts you can trust – your online friends.
4. Membership Sales Sites and Shopping Communities: Amazon, Kaboodle and Overstock are examples of shopping and sales sites that allow individuals to become members and build out their own channels. Then, there are also selling sites catering to niche markets, such as Etsy.com, which is a network for handmade items.  
5. CMS Plugins and Templates: A Content Management System, like Joomla, has available plugins and templates that easily renders the site into a eCommerce platform. This is something you can do yourself with a little bit of html knowledge and good graphic layout skills. Other CMS to check out include WordPress, Drupal and Mambo.  
6. Custom-built Online Store: Your final option is to build an online store and customize it for your needs. This may entail cost, especially if you want to host it in your own domain name (www.YourDomainNameHere.com). You can contract a web designer to do this for you and pay him or her maintenance for future updates. Some companies will offer a free web store as part of a package for their other services.

Selling online line can be a productive and financially beneficial endeavor, if you know how to do it correctly. Watch out for more tips on selling online, setting up your virtual store front and marketing your own brand here at ShopTalk.

Power Merchant Tips: Selling Books Online

Starting an online store today can be as easy as one-two-three. As a case in point, Shopster can help you set up your virtual storefront in just thirty minutes.  However, it is essential for you to remember that making money via an online store is not that simple.

So today, we’ve decided to star t our Power Merchant Tips series. We will tackle tips for selling specific products online at least once a month to help you get started on the right foot. After all, the key to successful selling online is finding the right niche for you.

Online bookstores are among the most popular niches to target for your first store. It has a wide market base and the level of entry is not that difficult. Of course, you have your usual competitions: Amazon and local bookstores with online presences. But people are always out to find the best deal online, so online booksellers still have a fighting chance in the market.

When starting your own online store for books, here are some tips you can follow:

1. Do proper categorization.  Start with the major categories, these can include the following: biography, business books, cook books, education, award winners, fiction, health, history, comics and graphic novels, Children’s books, magazines, technology, language, reference, music, religion, travel, science, sports and more.
2. Make sure all your books are tagged properly, this should include the title, the author, the date of publication, the publisher, the ISBN and a short description of the book.
3. Photos make a difference. Of course everyone knows that books are bought for their content, but give your sales a little push by making sure all your inventory have pictures of the book’s cover.
4. Add a book review section. Today’s savvy shoppers always look for reviews for any item they purchase and book’s are no exception. A book review section encourages visitor interaction and adds valuable content to your website.
5. Make book suggestions by posting your top sellers list as well as those known in the industry like the New York Times Best Sellers List. Display inventory that you have for items in the best sellers lists to take advantage of the particular item’s popularity.
6. Add a section featuring your newest products. This is a good technique to keep your return visitors interested. These are the people who may already be familiar with your site but have come back to it to check if you have anything fresh to offer.
7. Make sure popular items are always in stock. Even if you are working with dropship suppliers, order your items ahead of time before they run out.
8. Consider adding special services like a book buy back program. This a is useful tactic for reselling used books. If you notice that school books or text books are a taking up a huge chunk of your sales, you may be able to capitalize on this some more by offering to buy back old books from your customers at a fraction of their cost.
9. Add deals and promos.  Book buyers are always on the hunt for best prices, if you can offer this, the next best thing is offering bundle promos.  Put together your own set and price it for less than individual books.  Also works well for book series, for instance, you can sell all 7 Harry Potter books for a set price.
10.  Cross promote your items.  A subtle way of hinting more sales is to add a related items functionality to your product section. If your potential buyer is looking at a particular book, your product page can also suggest books by the same author or those that deal with a similar topic. Use encouraging words like: “You may also want to look at…” as the header of your related items feature.

There you have it, ten great tips to help you start your very own online bookstore.

Happy Selling!

Why Dropshipping Works

Business owners who aren’t familiar with drop shipping are missing out big time. Basically, this is a supply chain management technique that allows retailers to focus on more important aspects of their business.

If you’re thinking about building an online store an selling products online but don’t have the capital to start big, then consider this your best option.  First off, you don’t have to purchase any inventory upfront.  This also means saving a huge amount on the cost of storage. Second, it removes the hassles of shipping and handling from your end.

Dropshipping entails selling goods on behalf of a supplier. All the backend work involved in order fulfillment are handled by the said dropship supplier – this includes filling the order and shipping it out to the customer.

The trick to making money via a dropship business is finding a supplier with good pricing. Remember, dropship suppliers are not necessarily wholesalers. While there are those that offer items in bulk, some dropshippers are willing to supply to sellers looking for only a small amount of items.  You can make profit off the dropshipped items with the difference between the supplier’s price and yours – this is called the profit margin.

Essentially, dropshipping is a good way to enter the retail business because it removes overhead cost while still offering you profit.  Here’s a tip: choose items that are popular among young, internet savvy buyers. Plus points if the product is difficult to find in local stores. 

One of the most successful dropship items last year was the Nintendo WII.  Stocks were depleted in most local stores and the market – the younger audience – had no qualms about making purchases online. This combination made the Nintendo WII a huge seller in the dropship world.

So, whether you’re starting your own online store or using popular sales channels like eBay or Multiply, dropshipping can work for you.

Valentine’s Day Gifts: A Potential Big Seller

As the season of love rolls in, it would be a great idea for online sellers to jump in the everything-red-and-roses bandwagon by adding products that are just right for Valentine’s season.  Beef up your online store’s inventory by adding dropship items such as sweets, flowers and gift items for both men and women.

Cupcakes, chocolates and candy hearts are big seller in February.  You can also target high-ticket and bulk buyers with pre-packaged gift and food baskets. These are ideal for companies looking for corporate giveaways.

If you’re planning to make more money out of Valentine gifts, don’t forget the classic dropship ebay item:  flowers. Yes, business can definitely bloom this month (pun intended) with our collection of bouquets and flower arrangements that are ready for you to sell.  

Don’t forget to stock up on gifts like perfume, bath sets and lingerie for women.  Gifts for men like watches, shirts, ties should also be visible in your inventory.

The key to successfully using seasonal sales to your advantage is positioning.  Try a different tactic, such as highlighting the new products in your advertisements. You can also make a “gift ideas” section in your online store.

Happy selling!