You've done the research, found a niche market and created a product that your customers would like to buy. However, sales remain sluggish and you don't know how to increase your income. You wonder if setting up a website will solve your problems. The options listed below give you an idea of how to make the most of your website. To make more sense of the options, assume that you've written and published a cookbook that specialises in Thai cuisine. You currently have 500 copies of this cookbook which you'd like to sell as fast as possible.
Option 1: Selling your own product.
On your website, you show your customers the benefits of buying your cookbook. You also display your email address and have a 'Buy This Book' button that allows your customers to pay for your cookbook online. Selling the cookbook in this manner allows you to have total control over each sale. As your cookbook is self-published, you will know how much money you spent to publish it. Therefore, you can fix a retail price that is higher than your cost price, but lower than what your competitors charge for similar books. In addition, you will sell directly to your customers and 'cut out the middle man'. For example, a similar cookbook might sell for $20.00 elsewhere. The cost price of your cookbook is $8.00. Even if you fix a retail price of $14.00, you will make a profit of $6.00 on each sale.
Option 2: Drop-ship products.
Drop-shippers keep clients' stock in warehouses. Upon receipt of notification from the clients that a sale has been made, the drop-shipper will pack the order and send it to the clients' customers. With your cookbook, you will begin by arranging for a drop-shipper to store all 500 copies of your cookbook. A customer visits your website and pays $14.00 for your cookbook and $7.00 for postage and packaging. When you receive the order, you send an email to the drop-shipper with your customer's name together with postage and packaging information. The drop-shipper packs the cookbook, puts your label on the package and sends it to the customer.
The drop-shipper will bill you for the wholesale price of your cookbook - assume that the wholesale price is $9.00 for the cookbook. The drop-shipper will add the $7.00 fee for postage and packaging. However, as you have passed the postage and packaging fee to the customer, you have just netted a profit of $5.00 (the retail price minus the wholesale price of your cookbook). While it may seem lesser than what you might earn if you sell the cookbook directly to your customer, remember that you did not use any of your resources to store the stock. The only effort you made to fulfill your customer's order was to send an email to your drop-shipper.
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