First common mistake that new sellers and many eBay sellers make:

When they feel that they have to compete solely on price. This misconception causes many people to fail with drop shipping before they even get started.

Think about traditional retailing for a moment. Wal-Mart can always get lower prices than any other store out there because they buy billions and billions of dollars worth of inventory. How is it that any other store out there can still exist when Wal-Mart can beat all of them in price?

The answer is this - other stores do NOT compete against Wal-Mart in terms of price.

So, why people shop at other stores?

People shop at others stores for many reasons:
- They like the atmosphere.
- They are willing to pay a higher price for better quality or higher perceived quality.
- They crave luxury or the feeling of luxury.
- Some people have more money and want to pay more. Why do some people go to fancy restaurants and pay $50 for a meal when they could make the same meal at home for $5? Part of it is the experience that they're getting. Many people shop on the internet, not because they even want or even need the products they are purchasing - often times these people are shopping because they enjoy shopping for the sake of shopping - they enjoy the experience (and many are even addicted to it).
- The list goes on and on. Price is just one buying factor. There are many reasons why people shop at other stores over Wal-Mart. While Wal-Mart wins in terms of lowest price, there are many areas in which they lag. Similarly, there are many reasons why someone might purchase a product over the internet at a higher price rather than pay the lower price. Recently, I bought a laptop battery on the internet and paid $7 higher than the next lowest price because the seller promised same day shipping. The other seller, with the lower price, wasn't going to ship it until the following week! I needed the battery right away and I was willing to pay more.


There are always going to be people that want to pay more and there will always be people that are trying to find the best deal possible. Ninety-five percent of eBay sellers are trying to go after the group that wants the absolute lowest price. That's why so many sellers aren't making money on eBay. It's important to realize that there is still a big group of people that have more money and want to pay more. Don't disappoint these people! You can sell your products for more if you want. In order to do this, you might need to improve your listings and make them appeal to people that want to pay more. Maybe pick products that you can market as more luxurious or higher quality. Maybe focus on a certain type of product and figure out how to sell it for more money before you move on to other products.


Are we saying that you should definitely sell your products for more money?

 No, we're saying that you can if you want to. The important point is to know your customers. What audience are you going after? You can still go after the market that wants the best deal possible - you just need a winning strategy. Just recognize that you don't have to play the lowest-price-wins game. Too many people are playing that game, and too many of them are losing their shirts.


We have several customers who only target the upper end of the market. One stay at home mom, started off on eBay selling a Handbags that she makes as a hobby. When she first got started, she sold her crafts for no profit just to make sales. She enjoyed what she did for a while because she enjoyed her hobby. But, after a while, she became discouraged because she wasn't making any money. Her husband had been encouraging her for months to raise her prices and she never listened to him because she didn't believe that they would sell for a higher price. Finally, she raised her prices and the most amazing thing happened! People began buying more from her! Then she doubled her prices and almost quadrupled the amount of sales she was making. Since she quadrupled her sales and doubled her selling price, she effectively increased her profits by eight times! Soon she realized that she did not have enough time in her day to make the amount of crafts she needed to build her business bigger.


Her Solution was to turn to drop shipping. She still sells her handbags on the internet, and she also uses drop shipping to build her business bigger! With drop shipping, she doesn't spend any of her time making or shipping the product (unlike with her handbag business). She doesn't tie up any of her money in inventory (unlike her handbag business where she has hundreds of dollars tied up in supplies). She takes very little risk with drop shipping. The lessons that she learned from her handbag business are priceless when it comes to her business that's based off drop shipping. She now knows that higher prices can make her products appear more valuable. Unlike most other sellers, she sells many of her products at or even a little higher than the manufacturer suggested retail prices (MSRP). She often does offer free shipping on orders as a promotional deal (and her increased profit margins more than pay for this promotion).


Along with knowing what customers you are marketing to, it's important to always make sales on the "backend". Many internet sellers make the mistake of thinking that just because the initial sale was made and the product is shipped that the deal is over and the relationship with that customer has ended. Smart sellers know that after the initial sale is made that the relationship with that customer has just begun! Smart sellers are always willing to help their previous customers by continuing to offer them high quality products at good prices and excellent service as well! Smart sellers value their relationships with their customers.


One thing that every internet retailer should have is there own website. Yes, these take some time and/or money to get started, however, it is well worth it! If you don't have great technical skills, you might just want to hire somebody to do it. A website will help you keep your customers coming back for more. It will help you build a brand name and customer loyalty. Remember, are you just trying to make a quick buck or are you building a business that is going to continue to pay you well over a long period of time? Due to eBay's fee structure, the cost of making a sale on eBay is high. The cost of making a sale from your own website can be fractions of what it costs to sell on eBay. While eBay may be a little easier to get started, your own website definitely pays off more. Also, with your own website, you won't feel so much pressure to compete on price since you are not operating in such a competitive market like eBay. The best thing to do is have your own website and use eBay as a tool to drive traffic and customers to your website. Ebay should be used as one method of advertising your website and your brand while making some extra money.

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