June 2009
Table of Contents
We want to know what you want to know! Email education@doba.com with your suggestions of what you want to see in future issues of the Doba eNewsletter.
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Featured Article: Drop Shipping Costs Explained |
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Internet Retailers Show 2009: Come See Doba! |
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Marketplace Spotlight: 'Tis the Season 2009 |
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Member Q&A: Considering Listing Duration, Day, and Time on eBay |
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Supplier Information: New Suppliers and Products from the Doba Product Catalog |
Featured Article: Drop Shipping Costs Explained
By Megan Calton, Doba Intern
Welcome to the June newsletter. This is Megan speaking, a summer intern you haven’t heard of…yet. I’ve learned a lot about Doba the last few months, so I wanted to share and clarify some points that were important to me as a newcomer to Doba.
This article is about the perceived cost of drop shipping. Drop shipping is a less stressful, more efficient method of handling retail sales. You save time and money by letting someone else handle inventory, pick and pack, and then ship. However, this drop shipping business model includes some costs that can be surprising to newcomers. In addition to the actual cost of the merchandise, there are drop ship fees, shipping costs, and merchant fees. This article is a head-first jump into an explanation of those drop shipping costs - where they come from and, of course, why they exist.
Let’s pause here to clearly state that Doba doesn’t make any money on the costs we’re about to discuss. We don’t take a percentage off the top of the item costs, drop ship fees, shipping costs, or merchant fees. Don’t get me wrong, we’re definitely not a charity organization, but the only place where Doba makes money is on subscription fees. That way we can stay true to our mission to provide you, the little guy, with the technology and pricing you need to compete with bigger ecommerce players.
Individual Item Cost
As you search through Doba’s online catalog, one of the first things you’ll notice is the item price. Doba leverages the buying power of all of its users to negotiate the greatest possible discount with each individual supplier. This discount will vary from supplier to supplier and from one industry to another. We have a team at Doba whose entire job is to constantly look for deals and negotiate new prices with our suppliers to get you the lowest pricing available.
(Quick side note: Please remember that certain expensive brand-name items, like iPod or XBOX, were never meant for the dropshipping channel. The companies that produce these products, like Apple and Sony, enjoy such extremely high customer loyalty that they don’t have to mark down their products for other suppliers. Thus, suppliers are buying the item from the manufacturer at almost the retail price already, making it difficult for them to give Doba a price that is significantly lower than retail. You’re right, it can be tough to make a profit by dropshipping high-end, brand name items you see at Doba. This is why we place such a strong emphasis on savvy product research. To be successful in dropshipping, you need a niche set of products that you can market and sell at a profit. Find out more about product research in our education center.)
Drop Ship Fee
After “item price” in Doba’s catalog, you will notice that every item has a drop ship fee listed on the product page. Because you are working with Doba, that drop ship fee has been negotiated down, and sometimes even cut completely with certain items or suppliers. However, if there is a fee listed, recognize that this fee is minimal, usually sitting at only a couple dollars, and every penny of it goes directly to the supplier. Doba doesn’t make any money at all on drop ship fees.
Now, why is there a fee at all? A drop ship fee is a handling fee charged per shipped order. Any online retail transaction requires a few tasks: someone has to process the order, find the product or item in the warehouse, correctly pack and label the item, and then ship it. Using a drop shipper allows you as a seller to avoid these tasks, but someone still has to do them. The supplier charges a drop ship fee to account for the cost of doing these tasks. This fee is applied per order for items from a particular supplier, regardless of the number of products you are ordering from that supplier. Keep in mind that there will be a different drop ship fee for each supplier you work with. If you wish, you can choose to pass on this fee to your customer - this is the “handling” part of shipping and handling.
Shipping Costs
Obviously, sending something in the mail isn’t free: it just plain costs money to ship a package. Shipping costs vary according to package size and weight. Some suppliers have special provisions or instructions for their products (consider that it is quite tricky to mail a bike in a box). Doba’s “shipping estimate” tool on the product page tries to account for size, weight, and intended location to give you an accurate view of what you should charge your customers for shipping.
Merchant Fees
Business owners have to set up merchant accounts with credit card companies to enable customers to pay with credit or debit cards, so Merchant Fees are the cost of accepting credit cards. Basically, all of the major credit card companies (Visa, Mastercard, etc.) charge a company a percentage of every payment they process with one of their cards. This is a normal business transaction that applies to all businesses that accept cards as payment. If you choose to pay on credit or debit with Doba, part of the total cost you see is already allocated to pay for merchant fees.
At Doba, we give you the chance to avoid those merchant fees with a PrePay option. You can pay money into your account ahead of time and then use that money to pay for orders as you make them. This prevents us from having to pay the 2-3% to the credit card people, a savings which we immediately give back to you by lowering our prices that same 2-3%. A simple change in your settings preferences allows you to select Doba Prepay as your default billing choice. Once you’ve changed this preference, logged out, and then logged back in, all prices will display at the slightly lower Prepay cost. It’s a simple and quick change that can allow you to save 2-3% on every order you place with Doba.
How to Approach the Fees
The most important thing to understand as you see these fees is how they fit into your business model. There are costs associated with the dropshipping model, but hopefully this article has helped you understand why those costs exist and how, if you plan for them, you can grow a profitable long-term business based on dropshipping. Overall, dropshipping with Doba can be an extremely cost-effective use of your time and energy, allowing you to avoid the busy work of inventory management, packing, and shipping in favor of using your talents to market effectively and make more sales.
About the Author:
Megan Calton, "Official Summer Intern," is a part of the Doba Marketing Team. She is about to graduate from BYU in Communications with an emphasis in Advertising. With a love of marketing, advertising, public relations and social media, she is thriving on this chance to learn in real world business.
Internet Retailers Show 2009: Come See Doba!
The Internet Retailers Conference & Exhibition is not only the world's largest e-retailing conference; it is one of America's fastest growing conferences. This year's show, June 15th - 18th, will feature some 350 industry-leading companies as exhibitors in addition to more than 5,000 attendees.
So if you are planning on being in Boston for the show, please stop by Doba's booth #324 and say,"Hello!"
Partner Highlight
ProStores, an eBay company, enables small- and medium-sized businesses to sell products and services online through a completely customizable virtual storefront at their own internet domain, accelerating the growth and profitability of their overall business and extending their brand online. Use Doba's Push to MarketPlace tool to push Doba products directly in to your ProStores webstore. Free one month trial!
Marketplace Spotlight: 'Tis the Season 2009
By Jeff Knight, Vice President of Marketplace - Doba
We are 6 months into 2009 and yesterday while I look out my window on a sunny, Utah spring day – my thoughts turn towards the upcoming Christmas season. While it may seem in the distant future, the start of the Christmas season will start in a mere 3-4 months. The decisions and plans you make in the next few weeks will determine whether 2009 was successful for you. A successful fourth quarter can leave you resources, traffic, cash flow etc to gain the momentum needed to grow. In contrast, a poorly planned fourth quarter can leave you and your business deflated and flat – and a year away from the next Christmas season.
I am not saying that you should ignore the seasonality or merchandising opportunities of the next few months. ‘Back to school’ is one example that presents a tremendous seasonal opportunity for certain categories. However, that said, I will say that everything from choosing technology providers to understanding the basics of SEO should be geared towards the single goal of converting sales in Q4. A successful Christmas retail season will provide you with the breathing room you need to expand sales year around.
In the next month, as a retailer, you should be able to verbalize your sourcing and merchandising strategies. Have you picked your preferred suppliers (or types of suppliers) that you will use? What products/brands/lines will you carry? Being realistic, who are some of your competitors and what advantages/disadvantages do you have over them? Remember there is no need to reinvent the wheel, most successful strategies are merely optimizations of existing business plans. Do you use 100% drop shipping or do you have a mixed model? If you have a mixed model, drop-shipping strategies can range from generating traffic to being residual income by adding breadth to your product selection. If you are 100% drop-ship, you should have specific goals for quality (cancellations, back orders, accurate data, etc) and fulfillment times in mind when selecting suppliers.
While obviously you always want to select products with great margins – don’t overlook the less obvious opportunities. Many new resellers set unrealistic margin goals when selecting products they are going to sell. Remember to always look at both the potential margin dollars and the percentage. For ease, many retailers automatically eliminate a product based off a lower percentage – but they miss the point. At the end of the day, the goal is generate dollars not percentages. One of my first bosses was found of the phrase, ‘My bank only takes dollars not percentages.’ That said, many of your costs are percentage based and so you also must be mindful of margin percentage (e.g. eBay listing fee, PayPal transaction charge, etc). The point is don’t shy away from a product just because it doesn’t have 40% margin. Which would you choose: making 20% on a $200 item or 50% on a $20 product?
As far as goals and resources, a retailer should know the exact costs of their operations and how much margin is required to maintain and grow the business. One of the largest issues I have seen with new retailers is when they drastically underestimate the financial and resource costs of drop shipping. Traditionally, a brick and mortar retail would have to lease a building, order products and market their store. Strangely they had an advantage in one way - they understood exactly where they sat financially with their store. I would propose that while your catalog is virtual – that you should approach the cost analysis in much the same way. When you are working on margin requirements – you should still consider the costs of shipping, the real estate (website, auctions, etc), the services required (marketing, logistics, taxes, etc) and your time. While you may be a long way from paying yourself a handsome salary – you still need to make sure that your goals, expectations and pain threshold are all realistic numbers.
As mentioned briefly above, now is the time to experiment with marketing strategies for customer acquisition (get the eyeballs to your products) and conversion (get them to buy your product). It doesn’t matter whether you have a website or sell on eBay – you still need to have an acquisition strategy and you will have costs associated with that strategy. Whether through affiliate networks, SEO, or a viral/social network strategy – the goal should be to not only get people viewing your items now but be able to somewhat lock down your costs and conversion strategies for when it counts. Not all strategies will work, and you will spend money without results but as long as you gain some insight on why it didn’t work it should be worth it. Google has wonderful free analytics you can use and match up your advertising to website traffic.
Finally, I want to take a moment to talk about Doba’s ongoing operations to help you with your Christmas plans. With a strong technical platform behind us – we have now turned the bulk of our attention of efforts to helping make you more successful. We currently (and have for 2009) operate at a 95% fulfillment rate and ship packages on an average of 2.5 calendar days. While this far from perfect, my team is fully engaged on continuing to increase these numbers over the next months. Next, we have expanded our team to include one of the most very best, experienced, connected closeout and opportunity merchandisers in the country. Vard is a great addition to the Doba team and I am incredibly excited about how his sourcing expertise will help each of you.
Happy Holidays!
About the Author:
As the Vice President of Marketplace, Jeff Knight is responsible for all aspects of the merchandising strategy, supplier acquisition, and vertical category management and fulfillment operations of Doba's marketplace. Prior to Doba, Jeff was Director of Merchandising for Overstock.com where he developed the growth and management of the Computer and Home Office category. Jeff's background includes merchandising and technology leadership roles at DealDeal.com and BCI International. He earned Bachelor and Masters of Arts degrees in Communication from the University of Wyoming.
Partner Highlight
3XP Websolutions
3XP Web Solutions gives you everything you need to start an online business in one complete and easy system, including a web store and a merchant account so you can accept credit cards. Best of all it is seamlessly integrated with the Doba product catalog! Also included are traffic analysis tools, search engine submission, domain name registration, multi-tiered affiliate program, and more. Click here to view 3XP's special offer for Doba members!
Member Q&A: Considering Listing Duration, Day, and Time on eBay
By Kay Russon - Doba
Many times we hear the comment, “I have listed some items on eBay and have not gotten any hits on my items, why?” To answer this, we usually ask the question, “When was it listed?” You may be asking yourself, why does that make a difference? In this article we will discuss the effects that the listing time has on your sales.
Understanding eBay's Auction System
First, you must understand the way the auction system works on eBay. All auctions on eBay are listed by date and time. For example, if you are listing a camera for a 7 day listing, your listing will enter at the bottom of all other camera listings and will work its way to the top of the listings as the end of the auction approaches. Shoppers can choose from a drop down box (on the right side of the search results page) how to view their search, but by default, eBay will list them according to the "Best Match." Most people who search for items on eBay will look two different ways, " Time: newly listed" and " Time: ending soonest." Meaning, those that were most recently listed and those listings that are about to en d... As a general behavior, most people will look through the first 3-4 pages of listings. If they don’t find what they are looking for; they will search a different way. So, if your 7-day listing is not within those top 3 pages, chances are they will not see it until the last 24-36 hours of the listing. Most listings get the majority of the viewers in the last hour of the sale. A lot of serious bidders will only bid within the last five minutes! Call it competitive human nature or general shopping behavior, consumers are more willing to purchase a product when time is running out.
Tip: If you want to reach the ‘top of the pile’ quicker, list your auction for 2 or 3 days instead of 7 days.
When to push your listing live
So, how can we make sure they see our listing? Two factors can really increase our chances of that camera being seen: listing day and listing time. This may not seem really important at first but it may determine whether your product sells or not.
Day of the week
Most people who sell on eBay will tell you that for the best chances of selling, your auction should end sometime from noon Saturday to lat evening on Sunday. This is when people have the most time to browse online. So, you want your listing to end during this time frame. Ending your listing on a Monday morning is not going to get a lot of viewers.
Time to end the listing
Here again there are some things to consider. First, who am I trying to sell my item to? If your target market is younger people, 18-24 for example, end the auction later at night. This is when they are online and looking for deals. If you're selling items that appeal to young adults, it's good to take a look at the television schedule. Maybe ending an auction during an episode of "Lost" isn't the best time; nor would a Friday night be a good time. For older people, 45 and older, end the auction in the late afternoon to early evening to get the maximum number of viewers. There is one other thing that you might want to remember. Ebay is on Pacific Time. Therefore, any listing you make will be entered on the auction in Pacific Time. If you are on the East coast, you may want to allow for the three hour time difference in calculating you ending time. It may be 7:00 am in Maine when you place your listing but it is 4:00 am when it is listing on eBay in California and that is the time it will end.
Other Factors
We are all consumers. Think of your own shopping behavior and what elements may change your decision to purchase products. Be aware of things like holidays, special events, and weather. Ending a listing on Christmas morning is a bad choice as is ending one on the evening of elections, Oscar night in Hollywood or major sporting events like the Super Bowl or World Series. Consumers will be in front of their television, not their computer shopping. Golf clubs sell best later in the day, when people are not golfing... after they are done golfing and need to replace the pitching-wedge they threw in the lake! It also may seem odd, but the weather can make a difference. If it is really how or cold, people will stay at home and will be looking for something to do. Great weather is bad for sales.
Want to Hear from You! Want to see your question featured in the eNewsletter Member Q&A? Well we want to hear from you! Please email education@doba.com if you have any non-account related questions or topics you would like us to write about. If you have questions concerning your Doba account, such as billing, product or order questions, please search our knowledgebase site content or contact our Customer Support.
About the Author:
Kay “Papa” Russon is an eBay Certified Consultant, Customer Service Team Lead, and technical liaison for Doba. His knowledge, experience, and expertise assist retailers daily in running a successful online business. Before Doba, Kay was a team leader, supervisor, trainer and manager for World Support, Digital Equipment Corp., Digital Remote, SBC, AT&T, Macromedia, Sun Microsystems, and Motorola and served in the Army National Guard.
Partner Highlight
OrangeSoda is proud to offer SEM and SEO services that have been tailored specifically for the small to medium sized business. They provide an easy to use integrated platform for clients to track and manage all of their online search efforts. Exclusive offer for Doba members: With any OrangeSoda search engine optimization (SEO) campaign, get listed in the 50 most important online directories for Free! ($600 Value). Click here for your Free Search Engine Submission!
Supplier Information: New Suppliers and Products from the Doba Product Catalog
Starting an online business is relatively easy. Making it a success takes hard work and the right mix of products. To help you achieve your business-related goals, we recently added new wholesale suppliers and manufacturer to the Doba Catalog:
Supplier Vard - Supplier Vard are experts in sourcing distressed, closeout, overstock and value-priced merchandise. With over 25 years of sourcing experience in a variety of categories - They carry a product to fit almost every retailers' need.
2-21 LED Flashlights |
2 Mosquito Swatter with LED Light |
Sterling Silver Heart Bracelet |
Supplier Manin - Supplier Manin is one the most exclusive and strategic distributors in the close-out and class-b consumer electronics world. Primarily known for Sony, Supplier Manin carriers premier consumer electronics brands.
Sony DVD Recorder |
Sony Digital Recorder |
Sony Bluetooth Transmitter |
