Guest Author - Scott Prock

A conversation from a gentleman inquiring about our subscription reminded me of how the dropshipping industry is so far out of control.

If you ask anyone about dropshipping and whether it is a good place to start, you are bound to get as many answers as the number of people you ask. There are definitely good sides and bad, but there are a few things that a dropship company can do to reduce the negatives.

If a dropship company wants to gain business from those who sell on eBay then by all means do some research yourselves. Put some employees in charge of researching eBay sales, and only carry products that will sell well on eBay. Let's face it, if you get members who lists 10 different items on eBay and none of them sell, do you honestly think they will stick around to see if anything else will sell, not to mention you (mr/ms dropshipper) didn't make any money off that attempt either.

Instead of making money, the dropshipper now has an angry customer that will run around the internet spouting how bad the dropshipping industry is and why everyone should stay away from it. the only people who benefit from that are those who are successfully selling via dropshippers who would rather not see more competition enter the market.

Something else can be said about using dropshippers only for eBay, if you want to making money using dropshippers you will have to learn how to take your sales off eBay. Not only will you have more control over your fees, but you will end up with less competition, and a higher sale resulting in more profit.

A suggestion to the dropshippers would be to mark products as good or bad sales potential for eBay, which will make it easier for a seller to decide on what to carry.

Another issue that could be improved on - the first company to do this will win a BIG share of the market - create an inventory supply and demand control.

My Solution ...

Treat the inventory similar to the way a bank will treat your online checking account (or at least this is how mine is set up ) When I make a purchase via POS ( Debit Card ) there will be a pending charge placed on my account until the funds are actually taken out and sent to the company I purchased from. I can view this in the "actual balance" vs "available balance"

This can be transfered to any dropship company, when a customer wants to sell 'x' amount of a product they will place a sales request, the request is processed and then 'x' amount is subtracted from the "Available Units" this will place a hold (say ten days) on these products, thus if a buyer doesn't actually place an order to purchase the units, the units will be sent back into the "Available Units" balance.

Obviously there would need to be a way to prevent abuse, and that can be handled a few ways.

One would be to require a deposit for new buyers until they build credibility with your company, or you could limit the number of units a new buyer is allowed to place on hold. You can further protect yourself by penalizing a buyer if they make a habit of not following through with a purchase, however, some of that may be out of the buyers control if they fail to sell a product.

Another benefit with this would be in knowing what kind of a demand there is for products. If a buyer notices a product has 50% of it's inventory placed on hold on a consistent bases, then they know that product is selling well, this could also help dropship companies understand the demand for a product. This could be similar to the stock market, where you have 500 units available but you have 1000 buy requests. You could allow a buyer to place a buy request even if there weren't any available inventory. This would allow a person to basically be on a waiting list for new inventory, or inventory that falls back into the available balance.

So come on Dropshippers, the first one to address these issues will get my endorsement.

. . . Scott