eCommerce Lifestyle
Shares

When To Get a Warehouse

Shares

When is it a good time to get a warehouse? 

The podcast is also available on all major podcast players including, Stitcher and Spotify.

Links From This Episode:

Transcript

What's up everybody, Anton Kraly here. And as you most likely know, what I typically talk about is drop shipping. But today it's a little bit different of a topic. Still talking about e-commerce, but specifically I want to answer a question that came in, which really boils down to when to get a warehouse and if you ever should. Now the specific question that came in, I'll just read it to you. It says there are suppliers in my niche that do not drop ship directly to my customers. I am thinking of signing a lease for a warehouse space. Do you think this is a good idea? After looking for the quickest answer, the answer is no, you can turn off this episode, move on to the next one and enjoy the rest of your day. But if you want to know why I think the answer is no, and when a good time to get a warehouse can be then stick around for a little bit.

I'll keep this straight to the point, but basically what will happen when you are looking at different niches to sell in when it comes to building an online business, specifically an e-commerce store, if you go through trainings like I have over at dropshiplifestyle.com, you're going to find a lot of different suppliers, possibly hundreds, sometimes thousands in a specific niche. Now, many suppliers are going to drop ship, meaning fulfill orders for you, ship products directly from their warehouse. And if you find suppliers the right way and validate that they are drop ship friendly, then that's what they're going to do. But if you don't know really what you're looking for, and you're just looking for brands that manufacture niche X, Y, Z, I'm at a standup desk now, so say standup desks, you'll find a bunch of different companies you can reach out to, suppliers.

Some of them will drop ship. Some of them won't. So it sounds like, and I'm sorry, I didn't copy the person's name over, but whoever asked this question, maybe didn't do enough research in the research phase of the process, because some of the suppliers they reached out to said, we'll work with you, but we don't drop ship. You got to store the inventory. Now, even if you had right, let's say somehow you came into this business after a successful exit in another business, right? And you have a million dollars in the bank and you're like, I want to go all in and I'm going to open a warehouse now. And all these suppliers that told me, I need to stock inventory. I'm going to buy that inventory. And I'm going to open this online store. I would tell you, save your money.

Don't do that. Okay. Especially when it comes to working with new suppliers, companies you've never sold for before. They might seem great and they might be great, but the truth is until you actually list their products for sale on your own store you are going to have no idea how their inventory moves. Not just in general, but on your specific store. How much can you sell? Which items can you sell? If that brand has 100 different SKUs, meaning 100 different product variations. Are you going to open in a warehouse and bring in one of each, are you going to bring in five of each? Like what are you going to do? And then you're going to wait to see which one sell. And if they do and they don't, then what do you do? It's a mess. It's a headache. That's not necessary. What should you do then?

Well, do what I teach over at dropshiplifestyle.com. By the way, if you want a free training on how to get started, go to dropshipwebinar.com. I'll link that up in the description also, there's my little ad for this video. But the truth is what you should do is only work with suppliers who are drop ship friendly in the beginning. You can get started in this business for a few 100 bucks. I've done videos on how to start for 1,000. I've done videos on how to start for 5,000. I've done videos on how to start with free traffic. So I'll link them all up below as well. Give you a bunch of stuff to go through if you're looking to get started at different price points with building one of these businesses. But what you want to do is build your store, sell your products that are being drop shipped, make your money with that minimal amount of upfront investment.

And then over time a day might come where it makes sense for you to actually open a warehouse. But when that day comes, I promise you or at least I'm advising you, don't let that day be because a supplier told you, a new supplier told you, you have to stock our products. That is way too much risk, not even in the expense and the mental bandwidth that'll go into the warehouse ownership, but the actual cost for the products. Again, not proving that they will sell. So if you do want to actually sell for one of these brands that's telling you that and if you already have a bank role, you already have industry experience in your niche. Your store's been running for a while. It's making sales, it's making money, then possibly and this still, for most people, I wouldn't recommend this, but what you can do if you really want to sell for one of these brands is find out what their best selling two or three SKUs are, their top two or products, and then try to find a fulfillment center where you can send those products to.

So not in your own warehouse, not 100 different products, not you laying out tens of thousands or $100,000, but instead, having a few products that you now own, because you pay wholesale in advance. You have them in a fulfillment center and then when you sell them, you have them shipped from your fulfillment center to your customer. And then you can determine with that supplier, if you want to add more and more products on. Now, going back to the warehouse, right, because I mentioned at the beginning of this episode, there are times that it makes sense. Again, right now 20 feet from me is a door that goes to our warehouse, but this is not there for me to bring in products and to ship from here, anything like that. This is here basically as a way to be able to produce content, get products that are demonstrable or demonstrable however you say it in stock.

So we can make videos and create ads with it. But that has nothing to do with filling this huge warehouse with tens or $100,000 products and hoping you pick the right ones because they'll sell. So if you want to do eventually a small studio space where you can do things like get unique product images and videos, where you can bring in products to test them, where maybe even you want to bring in free gifts that you'll ship to your customers as bonuses, things like that. It makes sense for a small place, but in my opinion, do not invest into a warehouse because first of all, you should be drop shipping anyway. That's the whole point of everything we do. And on top of that, even if you want stock products, your core products, go with fulfillment center.

It's not worth your time, your money, and the risk. So hopefully you found this helpful. Again, I'm sorry, I didn't copy over the person's name who asked this question, but anybody else that was considering, should I get a warehouse? Should I not? Again, for most people, the answer is no, it is definitely not necessary. For the vast majority of time over the past what is it? 12, 13, maybe 14 years now that I've been in eCommerce, I have not had a warehouse. I have had spaces like this in the past where we have a small warehouse area and a studio, but most of the time I had no place at all. For times I used fulfillment centers, but again, the vast majority of our sales, our revenue, and our profit come from companies that drop ship for us. And that's what I think you should stick with too.

Do the research the right way. Find suppliers that are drop ship friendly. You will do just fine. Again, if you want to know how to do that, that is in the drop ship blueprint. Perfect place to get started is over at dropshipwebinar.com. Free training from me, that'll show you exactly what you need to know to pick profitable niches, how to do your research on them to validate their good ideas. And then I'll even tell you how my team can build a store for you should you want us to do that. So link will be in the description. As always, hope you got value. Appreciate you. And I'll be back Monday with another episode. See you.

>