Everyone wants to have an e-shop, and all the technical needs are easy now, but we face the dilemma of choosing the product to be sold, and providing that product, especially if the capital invested a little, and the person can not provide a stock of products to sell, Here.
Today I will explain to you a solution to this problem by Tesler Investments article here a bit long but useful, please read to the end
All of us hear about commission marketing, which is “a promotional process you do for other people / companies, and you get commission for the completion of the sale on your way you are at the site of the owner of the product,” whether those products are tangible service or sensory.
Some of you have heard of a common business model in America called “drop shipping” and literally translates as “drop shipping”. This translation does not reflect the actual meaning of the model. Let us call it commission sales, not commission marketing.
To sell commission, it is the promotion and sale of tangible sensory products through your electronic page (an electronic store or a sales platform), during which you get a margin of profit determined by you, not necessarily you own that product in advance.
A model for the management of the electronic product chain of stores (retail) mainly depends on the lack of investment in the purchase of products, storage and logistics associated with all this, that is, commission sales, which is a bit different from the concept of marketing commission, which I will explain in this article.
Let us simplify the process more, the problem first:
I’m thinking of starting an e-shop project, I have the idea of the products I will sell (or I had no idea of any product), but I do not have enough money to buy and store these products until I start selling in my online store.
There are companies that have a lot of products and a large stock and want to sell it stock, The solution is that there is a link between the online store owner and those companies that offer their products at wholesale prices (these prices are not available to individuals). They may be exclusive companies for specific products or companies that supply many products and in more than one field.
The owner of the e-store after the agreement with these companies (or with one company) will display the products that he has identified for sale in a warehouse, and put the price that suits him after placing the profit margin from the agreed price list, noting that the shop owner is not obliged to pay the value Products in advance and no obligation to withdraw or sell a certain amount of products
The final customer does not appear in the non-produced electronic store without the appearance of the source, as if the online store already owns the final product and is available in the stores of the store. When the sales process is realized and the store receives the value of the product sold at the same online store, With which the product is prepared and packaged for shipping and dispatch to the final customer address, with the appearance of the online store information on the shipping label. The original product agreed upon by the owner of the product is paid after deducting the profit margin and shipping cost, if any. According to the agreement between the parties.
In short, 7 Figure Cycle is a model that allows you to purchase products from a retailer wholesaler and ship them to your final customer directly.
In this model more than one bird was hit with one stone.
Offering quick solutions to start an online store or sell products online without requiring access or investment in product purchase and storage, and the often expensive and expensive supply chain.
At the same time, it provides a solution for companies with a large inventory of products to discharge their products and reduce the costs and efforts of marketing, and open up many channels of sale for the same product or products without investing in marketing and sales operations.
The commission sales model is often suitable for those who want to have their own online store and do not have the products they will sell (for whatever reason).
Benefits of commission sales:
1 – Easy to start the store online: The most important starting points of any store is to provide electronic products and secure, and this takes a lot of effort and time and money, and this model dropped all these points.
2- Little capital: You do not need investment capital to buy products and bear the costs of storage and logistic support mechanisms associated with all of this drop-ship.
3. Wide product choices: Even if you do not have an idea for a particular product to start selling, you can choose from many varieties, as well as the possibility to display more than one item and a product you wish.
4 – Ease of change: Plains change products offered in the event that a product did not succeed in the target market.
5. Reducing risk: Without spending a lot of money on a stock of products, the risk of starting an e-shop can be reduced significantly. If the website does not succeed (for any reason), the losses will be minimal There is no stock like non-filtered products.
6. Low public expenditure: the most important of which are expenditures and operating costs.
7 – Independence and freedom of movement: Because there is no need to worry about the provision of stores and operation, freedom of movement and the operation of the electronic store site from anywhere and easily available from home or “kufi office desk” with an Internet and a computer (or even a tablet) as a single condition of operation .
8. High scalability: Raising sales depends on marketing ability and reaching the targeted people. Adding new products is easier. Switching to owning your own products is effective because you have studied and tested the market, the proceeds of the store have grown and you have a market share through which you can Making the right decision with the right product.
All of 7 Figure Cycle benefits make it very attractive for every beginner in e-commerce, but wait. Life is not easy. All of these benefits come at a cost and also cost.
Commission sales defects:
1. Low profit margins: In most agreements, product suppliers do not offer significant price differentials (there is definitely a profit difference), but of course it is not the same profit margin if the product was owned from the beginning of the e-store but at the same time better than the profit margin in the marketing model Commission.
2 – inventory follow-up: because the inventory is not yours, will spend a good time to follow up the inventory and make sure time to time of availability at the supply companies, and increasing the time to increase the number of companies that deal with them (if more than one), yes possible Solving this problem by linking a certain technical between the supplier company and the electronic store in any mechanism and method was, but unfortunately not all supply companies support these technologies and do not wish to enter into the development of these particles.
3. Quality of products: I do not mean that the products provided by these companies are of poor quality, but be sure of these companies and the quality of the products they offer, as there are good companies with strong products, there are medium companies with weak products.
4. Follow-up Processes: Due to the multiplicity of supply companies, and the multiplicity of products in the online store (if this is done), the focus will be more on completion of the sale of any product, conversion of the order information to the correct product source in order to send it in time, Each supply company on its own and each product displayed, and do not forget the follow-up between the client and the supply company in the event of a request for the return and retrieval of any product sold.
5 – Supplier’s faults: If there is any mistake from the supply company when shipping and sending the product sold to the customer, the electronic shop is the first and last contact, and must accept responsibility and solve the problem.
Tips when working on the commission sales model:
Here are some tips for those who want to start an online store without products and using the commission sales model
Search and Search: All companies supplying products that accept dealing with this model, knowing their products, reading contracts and what is binding on you and you should be investigated and analyzed. You must be careful before you start dealing with any company. Your online store reputation is at stake here.
Clear contracts: After selecting the supplier company and the quality of the products, there must be clear contracts between the parties, specifying the mechanism of dealing with them and methods of financial accounts, shipping and return, responsibilities and duties, especially in the case of errors (such as sending a product is incorrect or bad, Or the delay in sending the orders once they have been achieved, and a lot of legal and financial matters and executive steps between the parties.
Product Experience: Yes, it is best to ask the supplier to send you a sample of the product (even if it is worth it), and here you can know the quality and nature of the product you will display and sell on your website, as well as the possibility of professional and written description It is appropriate for the product through its sensory experience.
Drawing steps for implementation: It is best to draw clear and written steps for each of the parts of the operations in the project, for example:
* – After sales steps and how to inform the supply company demand and follow it until the arrival of the client
* – Financial liquidation steps between the store and the supply company
* – Steps to return and return products
drop-shipp Store Policies: Must be (and must be confirmed) that the shop has policies and clear and written on the pages of the special website, which explains the implications of the site responsibilities and duties, and what the customer expects to receive from the service and products, (Expected at its highest limit), as well as the mechanism for returning the products and correcting each step.
Customer follow-up: It is best to have a mechanism to follow the customer after the sale and receipt of the product sold, to ensure the satisfaction of the customer and have a good shopping experience, and in this way can avoid future errors with another client and raise his work and work in the project, with the modification or selection of better products ( In some cases), and do not forget the customer loyalty to the website after making sure that the online store is accused of.
Product selection: It is best to choose niche products to target a specific market instead of entering a large, highly competitive market with niche products for the niche market, although this is certainly possible.
Prices: The margin may be simple, and in some cases may reach 100% if the retail product is very specialized or got very competitive (and beware of those products whose price is highly competitive, you should try it before you sell it in your store) You need to be smart about how to price your products and calculate all costs. Check out a booklet entitled “Costs to attract customers to your online store”
Accompanying services: The small profit margin in the products can be compensated by providing in-store services and offers that increase the overall profitability of the project, while at the same time increasing the value added to the customer when shopping for your store. For example, And the sale of alternative), and another entitled (4 strategies for pricing exceptional electronic stores)
Marketing and Marketing: Yes, the time, effort, money and the start of the e-commerce project have been shortened, but the responsibility of marketing and the delivery of your website and e-store to the target market and potential customers is not neglected.
Sources for supply companies:
I did not find sources for companies in the Arab homeland to provide this service, but I will hit some examples of companies and sites in the US market provides a list of companies that deal with this model as suppliers,
Shopify, offering a sales platform with commission sales products
Doba, provide a list of suppliers
World Wide Brand, provide a list of suppliers
Sun Rise, provide a list of suppliers
Drop Shipper, Provide a list of suppliers
Is it worth it?
As I said at the outset that life is not easy and that the model of commission sales is not perfect and is not free of problems, as it has advantages and benefits it comes as complexities and difficulties, like any business facing various obstacles, and the idea of how to overcome these difficulties and complications to reach A profitable e-commerce project.
Commission selling is not a magic recipe, and success needs work and time, but it provides a solution to start a profitable ecommerce business is feasible and low risk.