Newsletter Archive

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. Also, check out our new blog at DropShippingBlog.com for drop ship news, information, commentary, and community.

	Featured Article: Why You Can't Compete Against Amazon.com Stuart Lisonbee, Doba Marketer, explains why you shouldn't go head to head with Amazon.com, and gives some alternatives.
	Member Q&A: The Money Back Guarantee and The Mirror Nate Cottle, Doba's Sales Manager, answers the common question (regarding membership and product pricing), "Do you offer a money-back guarantee?" Do you have a question you want answered? Email education@doba.com.
	Supplier Information: New Suppliers and Products from the Doba Product Catalog Expand your niche with new products and suppliers added to the Doba Product Catalog.

Featured Article: Why You Can't Compete Against Amazon.com

By Stuart Lisonbee, Marketing - Doba

Pretty glaring title today, don't you think? And yes, I already know what some of you are thinking, "But Stuart, if I can't compete against other retailers on the Web, than why even bother?"

That's a legitimate question. After all, if you could capture just 1% of Amazon.com's market, you'd be sitting pretty. Here, take a look at Amazon's most recent quarterly income statement (taken from Yahoo! Finance):

Over a period of one year, you can see that 1% would come out to about $24.5 million in sales. Well, I hate to break it to you, but you're not going to get 1% of Amazon's market. While you can eventually do 1% of their business, you're just not going to get it by stealing their customers.

Now understand that when I suggest avoid competing with Amazon.com, I'm talking about trying to go head to head with them. Don't try to sell everything under the sun the way Amazon.com does, and especially don't go after their customers by competing on price.

How Does Amazon Do It?

Have you ever noticed that Amazon.com has the lowest price on virtually everything they sell? There's a reason for that, and it's not because they are getting the lowest price on the cost of goods sold (wholesale price). When you have the power to move $9.5 billion worth of inventory in a single quarter you've got some serious price-negotiating power under your belt. That said, I doubt Amazon is getting a better deal than, say, Wal-Mart, who reported revenue just short of $100 billion in the 4th quarter of 2009. Yet, somehow, Amazon.com still always seems to have the lowest price, not to mention free shipping on many orders.

Let's look at Amazon's income statement again. If you look closely, it appears they are marking their product up about 26%, but the truth is that not all of that 26% gross profit is from items sold. In fact, the reason Amazon.com has such low prices is because they sell many of their items at or even below cost. But if they are doing that, how are they making any money at all?

To better understand how Amazon makes money, it helps to know that large volume retailers like Amazon.com often operate on a net-30 basis. That just means that when they place an order for a product they're selling, the distributor will ship it without getting paid, floating the cost until 30 days later, when Amazon is required to pay.

With some retailers, the product they order is sold in about 30 days, at which time they'll pay the distributor for the order, keep the profits, and then place another order which they won't pay for for another 30 days. But most retailers take longer than 30 days to turn their inventory over, so in order to pay their distributors, they rely on the profits made from whatever inventory they have managed to sell.

Amazon, on the other hand, turns inventory over on average every 20 days or so. Well, if you've just brought in over a billion dollars in that 20 days, and you have 10 more days before you have to pay your distributor, do you think there's something you can do with a billion dollars in 10 days to make a little bit more money? Amazon sure does.

And that's exactly why Amazon.com is able to get away with selling items at cost. They make it up by selling billions of dollars worth of products, then investing those dollars during the 10+ days they are allowed to keep it before paying their distributors.

So some of you reading this blog post will probably ask the question, "If I can't compete with Amazon.com's price, why bother?" Well, you should bother for the same reason that BestBuy.com, ToysRUs.com, Costco.com, Staples.com (all of whom use a drop ship aggregator similar to Doba to fulfill at least a portion of their product orders), and every other retailer on the Web bothers. There's more to making the sale than price. Much more.

Check out Competing on Trust – Part I, Part II, and Part III for additional information on competing on something other than price.

Update 2/19/2010: For some additional tips for selling on Amazon.com, check out Mikal's blog post, 5 Tips for Selling on Amazon

About the Author:

Author
Stuart handles search engine optimization strategy and education at Doba. In the past, he has worked as Content Manager for one of the nation's leading online advertising agencies and manager of a department store's eBay PowerSeller account. He has also authored hundreds of articles on online business success along with several eBooks, and is the co-author of Drop Shipping For Dummies. Stuart enjoys card games, particularly poker which he first took up over 23 years ago. When opportunity permits, you can find him (not) counting cards in Las Vegas or catching one of the many great shows on the Vegas strip. Stuart also occasionally volunteers as a DJ at a local radio station.

Partner Highlight

3XP Web Solutions
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: The Money Back Guarantee and The Mirror

By Nate Cottle, Sales Manager - Doba

If I had a dollar for every time someone asked me, "Do you offer a money-back guarantee?" I'd be well on my to being the next Jeffrey Preston Bezos. All joking aside, the truth of the matter is that in my role as the manager of the Sales Department here at Doba, I'm asked that question all the time, and much to everyone's surprise, my response is always the same:

"No, we do not, and that's because you are your best and only guarantee."

Let me explain. The money-making opportunity associated with using Doba as your drop-ship product partner does not fit into the "get-rich-quick" approach to business. If you want to be successful in online retail, you have to be committed to doing the necessary things to earn a profit and then some. The bottom line is if you are looking for a guarantee, look no further than the closest mirror.

Think of Doba as a car. You need transportation to propel you from point A to point B. As the Doba car manufacturer, I can guarantee you many things, including:

Doba connects you to over 300 unique wholesale suppliers
With Doba, you have immediate access to over 1.5 million products
Customer service is available 12 hrs. a day, Monday through Friday, and the Doba Education Center is available 24/7/365
I guarantee that Doba is an eBay Certified Service Provider and that we have an A rating with the Better Business Bureau
I can even guarantee you that Doba provides unmatched monitoring and protection against fraudulent orders placed by unscrupulous buyers online

There are hundreds of examples of successful entrepreneurs driving a Doba-manufactured and serviced vehicle, and plenty of them earn a significant income as a result. That said, I couldn't guarantee that you will drive the car down the pathway of profit and success. Sure, there are plenty of potholes and speed bumps along the way but you are in charge of your own business, just like you are in charge of your own automobile.

With Doba, you drive the Cadillac of all drop ship suppliers and related software, and you and only you get to decide how fast and far you will go. While using our member-only educational tools, supplier scorecards, partner offers, and more, almost guarantees you'll get there safe and secure, we can't drive the car for you. So, while we do not offer a money back guarantee, we're quick to point out that the person in the mirror can.

About the Author:

Nate has worked in our sales division since 2005, and is responsible for leading our amazing team of sales representatives. Previously, as a business owner himself, Nate provided services for Coca-cola, Office Max, K-Mart, Burger King, Pep Boys, and other large and small companies. When he's not working or spending time with his wife and six children, Nate enjoys flying high-end radio-controlled airplanes and bodybuilding.

Partner Highlight

HammerTap
HammerTap is an eBay research tool that will help you discover what products to sell and how to make more sales more often. With HammerTap, you'll receive the research tool, plus free webinars, a ten-part Power to Profit course, and articles to help you dramatically increase your eBay profits. Try HammerTap Free 10 Days!

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 Swiss - Supplier Swiss offers huge discounts on fine watch brands like Invicta, Omega, Movado and Seiko. From dress watches to casual watches to sports diver watches, Supplier Swiss has the selection priced right for you. They offer a great selection of men's watches and women's watches from some of the world's most famous designers.