Lesson 3 Reflections – Manufacturers, Wholesalers and Affiliate

This week we had some interesting activities. We did some research for Aviator sunglasses and whether it was better to go through a wholesaler (LA Wholesale), or individual manufacturers on Alibaba. We had to rate them according to what criteria we valued. The criteria I chose were Cost (40%), Minimum Order (30%), Customer Service (15%) and Selection (15%).  With this criteria, I determined that my recommendation was to go with LA Wholesale because of their low minimum orders. We could get a reasonable variety that way without investing in as much inventory. I also thought it would be better to get a variety with one company than have to deal with 12+ different manufacturers to get a variety. I was also concerned with dealing with companies overseas and the time it would take to receive products etc. The suggested profit for each pair of sunglasses with LA Wholesale would be approximately $8.25/pair. I felt that was reasonable to start with, but many in the class recommended to go with Alibaba because they wanted to make more profit. I feel that after the business gets going and some profit is made that we can then possibly start adding other vendors when we have a place to stock inventory etc.

Our next project was to analyze whether or not we wanted to sell guitars using an affiliate model or by using the drop shipping method. Some people in the class did not really understand the drop shipping method. Some of the same people who were advocating for the manufacturers on Alibaba were advocating for the affiliate model to avoid potential customer service issues with the drop shipping method, which didn’t make any sense to me. I found what I think is a good drop shipper, Wholesale Music Warehouse. There website was atrocious, but I was impressed with their reviews and such and felt pretty good about them. The affiliate that I compared it to was Musiciansfriend.com. The criteria I used was profit potential (40%), quality of product (30%), and ease of doing business (30%). I think most of the class underestimated the stress of having to continually come up with content to blog about to keep traffic coming to their site. Many of the class members recommended the affiliate model, but the profit potential would definitely be less and take longer to generate. I felt like once the website was created for selling the guitars, there was a much better profit potential. I really liked the idea that I would not have to invest in and store inventory or worry about shipping product, but still be able to have a business where I was selling product, controlling markup and creating my own specials. With the affiliate model, I would have to worry about continually coming up with new content on my blog and that would be very stressful for me. My recommendation was for the drop shipping method. I did’t feel like there would be a lot of customer service problems especially if I had a good drop shipping company. I found it interesting that classmates would rather deal with manufacturers from China for sunglasses to earn more profit, but not a wholesaler in America for guitars to earn more profit. I think that the wholesaler is the one that has to deal with the manufacturers from China for you.

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