I’ve spend almost 2 hours today digging through my feed reader, looking for stories. Four topics got started, but never took off… so I decided to write about something I’ve done in the past and how to avoid some mistakes I made, as well as obstacles you may run into.
Hot topic – internet business.
You are hot and hyped about the idea? Got the chills running and thoughts bombarding your conscious of the success you will achieve?
Time to take a cold shower and cool off.
Whatever you got in mind, do the research or as it’s called market analysis. You may hear this a lot, but I ignored it like many and made a big mistake.
Luckily, there is an easy way.
Ask yourself a question, what are the things that will play a key role in your future business?
Search Engines, Ebay, Trading Platforms, Directories?
It is important to identify key players in the overall plan. Internet has its own set of rules just like the offline world and you have to get the public to know about yourself, however strategies differ.
One of the greatest market research tools at our disposal are keyword research tools. One might argue: What they gots to do with my market research, I aint optimizing?
Bad, you should. Apart from optimization, research tools show demand for the products, while Google search count shows the supply. Combine the two together – you got pretty good market intelligence – supply&demand.
Here is a list of free for all keyword research tools:
SEO book keyword research tool
SEO Expert tool
WordTracker free keyword research tool
Nichebot Classic
Simply enter the words you believe people will use to search for your products and then analyze the results. This will show the demand. Now go to Google and search with that keyword, on the top right hand side you will find the number of pages Google has in store for that term. Now you know the supply. Of course the slimmer the ratio the better, however in some cases you will not be able to find out the demand for something fairly new.
Also check supply and demand on eBay. Look for your items, but make sure to click on completed listings only, and eBay will generate sold items over the past 6 month with a price tag next to them
Ebay.
The mighty bay. Started as a forum where people privately traded their merchandize based solely on trust. As the site grew, so did the need for a secure platform, hence eBay was born. There seems to be a lot of talk around success stories that eBay gave birth to, which are all true, however with massive exposure come a lot of false players.
If you’ve done any research on the topic you would notice a lot of gurus, selling Insider Secrets, offering millions of products to dropship, claiming they will take your hand and put a million in it, if you sign up for an exclusive offer.
Through many months at search engines, directories and countless websites I can say those words with confidence, experiencing it first hand – there is a billion dollar industry built around on scamming people who hope to start new internet/eBay business.
It is astonishing, the multitude surpasses genuine online shops and goodwill businesses. As example lets take eBay. Fairly new user will jump on the opportunity and will start researching the steps on establishing a successful business.
Traps on the way.
Trap number 1: Dropship.
Very soon an idea of finding the products will arise, and it seems a quick and easy solution exists. If you are not familiar with the concept of dropshipping – here is the run down. Say a distributor has merchandize you want to sell. Distributor can you give you the rights to resell it’s stock, without ever seeing it. Such a company will set up an account giving you the ability to access its stock remotely. Your job is to sell it, and simply order through the distributor the item you sold. Once ordered you must specify the address of the person who bought it from you. Kind of a middleman role, between the distributor and the buyer, where difference in wholesale price and your retail mark is the profit.
It is a good model, but you will spend quite some time looking for a genuine company, because they do not advertise online, or at the very least, you will not find them on search engines. Go to Google and type Dropship – 98% out of 2,310,000 results are scam, your task is to find 2% which are not =).
Not exactly scam, but as some one put it: “It is legal, kind of.†Though many companies position themselves to be “real deal†you can quickly spot those who are lying. No company has millions of products available, except maybe Ingram and Techdata, but that is different story.
What those companies do, is they position themselves between you and a real distributor, develop online platform and simply order products from the distributor, which you order from them to your customer. They add an extra link, which is costing money and quality. If for some reason they reject the order, you will be left with an angry customer who paid and wants it now. Not a good thing. Watch out.
Trap number 2: Wholesale
Assume dropship isn’t exactly what you are looking for and you want physical goods, on your hands. We see scammers hopping in again, smiling wide – another solution for you =). The concept is the same as above, but this time they will reduce the price a bit, which will not be competitive at all.
Here is a couple of names to stay away from, though I haven’t tried any, you can be quite confident they are after you wallet:
Doba – they somehow managed to negotiate an agreement with eBay to become “trusted†partner. Just search for feedback on the company – it is self evident. My guess would be, due to its aggressive marketing and affiliate network, Doba is one the first names to surface for an unsuspecting user, therefore creating nice revenues for the owners. Ebay loves its stock going up, and a degree of interest from Doba in exchange for trusted link probably sealed the deal.
Salehoo.
Dropship Land
The list can be long, so to make it shorter – a genuine company will ask for legal info such as Tax ID, Vendor Permit as so on. Anyone who doesn’t – is looking to suck out some money without giving anything back.
Trap number 3: Wholesale/Dropship Lists.
A number of companies claim to have all the distributors(or as people like to call them wholesalers) in one place, ready and waiting for you. A quick question to ask yourself – why would they be selling this information when they can themselves make money with it? A quick answer – because it is worthless. No matter what they promise, stay away.
One exception can be probably made, which is Worldwide Brands. I haven’t tried them, but it seems people have good feedback, as the founder has a talk show and employs an army of researchers working full time. More info here.
Trap number 4: Trade directories.
There is a huge number of B2B platforms available online, which allow you both to sell and buy products in wholesale quantities. Be extra careful, as I would say about at least 60% of both buy and sell offers are scam. The most colorful examples would be
Alibaba
Made-in-China
Where I think about 80% of all sale offers are either Chinese or Indonesian scammers. Some will go out of their way to get your money and will have UK, US looking phone numbers, will ship you “product samples†and so on.
As you go on doing business with Chinese suppliers, most genuine manufacturers will require a minimum order starting somewhere at $10.000 depending on the industry.
Scammers paradise. They don’t have to hunt for change – deals can be struck right here, convincing websites and fake phished information do the trick. There is a number of horror stories where people were ripped off for 50.000$ US and more.
It can be quite hard to spot scammers without physical representation in that country to do the check up, however as you browse potential partners look out for the following:
Prices. Experienced scammers know it is better to keep pricing at the market level, but newer players will chop it down quite a bit, sometimes to unreal offers. Though it doesn’t work as good, it gets the attention of some people, especially new crowds.
Payment. A genuine factory/distributor will not likely have a payment section, though it is a possibility I would suggest to stay away from all foreign websites that do, as through my experience they all turned out to be scam.
Communication: Scammers tend to call you “Dear†“Darling†and so on and are usually willing to talk on MSN, Yahoo messenger, AOL and other messengers.
Do not be lured by the “GOLD†“PLATINUM†memberships. I had one guy tell me (I was posing as a woman)
“Darling I am a gold supplier, what else do you need.â€
It costs 6000$ to get gold membership on Aliababa and $600 for trustpass. It is nothing more then a marketing trick for suppliers and a way to make money for trade portals. If a scammer pulled off a profitable prank a week ago, it would only be logical for him to invest $6000 and get that GOLD status.
Trap number 5: All in One solution.
Good example is right here.
I just Googled it on random, but it is obvious what they are up to =). It is legal, but expect them to ask you to invest more, as you will be starving for traffic with unsellable prices.
It just doesn’t work that way. Those “businesses†have a number of ready to go templates and a number of outsourced middleman dealers, who will be processing the order, which will not come anyway, due to high prices and no traffic. Ugly, but true.
Back to the blueprints!
Offtopic, but it goes as Joseph Campbell put it:
“Follow your Bliss and the Universe will open doors for you where there were only walls.”
I think that sums it up. Research, research and research that’s the best thing you can do, unless there is a million dollar idea swirling in your head aka Facebook style =), which was stolen by it’s founder anyway =)))))).
Good luck.
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Google cofounder 
Google has not been happy about paid links that pass on ranking power and it seems like Googlepplex team is taking further steps to diffuse the problem.
