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Earn thousands with no effort and no risk!

So, here's a business model for you:

Sign up with a couple of drop-shippers who will ship product for you and take a large percentage of your sales. Sign up with a company that will make a website for you and take a small percentage of the sales. Sign up with a marketing company that will promote your website for a small percentage of the sales. Sit back and sip lemonade while the money pours in.

What's the problem with this scenario?

1. The "large" percentage the drop-shippers take will be very large.
2. That large percentage plus the two other percentages will approach 100%

"But," you insist, "that's okay! Even if it's 99.9%, I'm making money without working, and all I have to do is scale up my volume!"

This leads us to the real problem:

3. Nobody will buy from you.

If you're working with a drop-shipper, you are competing with anyone else who wants to work with that same drop-shipper. You are all selling the exact same product, with the exact same level of service, and exact same fulfillment cycle. What can you compete on?

Price.

But you can't compete on price, because you have no margins! And because you are drop-shipping, and buying everything at single-unit prices, anyone who has invested in buying bulk and warehousing their own product will undersell you.

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This page contains a single entry from the blog posted on October 19, 2005 3:19 PM.

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