eCommerce Lifestyle
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The Truth About Why Brands Pay Us BIG $$$ To Sell Their Products!

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Why do brands and manufacturers pay us to sell their products instead of selling direct to consumers? Anton answers that question, plus more in today’s episode of the eCommerce Lifestyle podcast.

As always, if you have any questions and suggestions, please feel free to leave a comment below. Don’t forget to share this with someone who needs to hear it.

What's Covered in This Episode:

  • Why don't brands sell DTC?
  • It's a different business model.
  • They can focus on what they're great at.
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Links From This Episode:

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Transcript

What's up everybody? Anton Kraly here from ecommercelifestyle.com and welcome back to the podcast. So if you're a first time listener here, just know that this show comes out every single Monday and Thursday with a new episode. And all of these episodes are designed to help eCommerce store owners to increase their revenue, automate their operations and become the authority in their niche.

And it's actually crazy. I was just looking back and we're almost at 200 episodes. So if somehow you're just stumbling upon this podcast today and you get value I would highly encourage you to go to whatever podcast player you use, we are on all of them. Search for eCommerce lifestyle and make sure you subscribe to the podcast and also go through all of our back catalog. Again, you'll get a bunch of tips on how to build and grow and scale an eCommerce store.

And a lot of what we talk about on this show, it's, eCommerce in general. It'll work for any type of store owner but a lot of it is really focusing on the drop-ship business model, specifically the model that I've been using myself since 2007 and that I teach at dropshiplifestyle.com.

So with this model, we're not drop-shipping from China. We're not trying to find some products that we can private label or just work some deal in and build a trending store. That's not what we do. What we do with our business is go out there and find the best brands in the industry, or as I call it niche that we're getting into and we form actual relationships with these companies. So we become authorized retailers, to sell products for these brands.

Now, to me, it's just like, yeah, that's what we do but I realize that it might not be clear to everybody on how this works and the reason this came up and the reason I'm recording this podcast right now, is because I just, well, seven hours ago at the time we're recording this, I got a comment on one of our YouTube videos and this came from a guy named Tom.

And he said, "Please explain why suppliers and manufacturers do not advertise their products on Amazon or their websites, to sell direct to consumers," or he said, "Direct to customers but rather a allow you to drop-ship. I believe most of them have the capabilities to do what you do in eCommerce. Thanks."

So I gave him kind of like a two sentence answer because I don't like typing. And then I said, I'll make you a podcast and kind of expand on this. So fair question. Again, it basically is why would these brands that you sell for, that you're an authorized retailer for, allow you to sell their stuff? And it's because what they do, their business model, is not eCommerce. And I'll go through this a few different ways.

But picture a company, they're not all like legacy brands. But picture a brand maybe that makes... I don't know, that makes pool tables and that has been making pool tables for the past 50 years. Their business is to make excellent products that consumers want but their business isn't, back before the internet, it wasn't go from town to town and open up showrooms and get people to come in and run ads in magazines and in radio and newspapers and say, "Hey, come buy our pool tables." That wasn't their business.

The thing that's confusing now, or I think the reason this question is appearing more and more, is because there are some of these breakout brands in eCommerce. You can kind of even call them almost unicorns but they're these brands that are direct to consumer. So their business model is, they're going to find what customers want. They're going to make these products but they're going to do all the work as well, right?

They're going to hire an eCommerce team. They're going to find somebody amazing with conversion rate optimization. They're going to hire digital marketers to run Google ads, Facebook ads, Pinterest ads, YouTube ads, just every platform they can get on. Do direct media buys. They're going to hire a sales team for when people call in to buy stuff. They're going to hire a team to do customer service. They're going to figure out all the technology that are going to power their eCommerce side. And everything that they do, in order to drive sales is going to be dependent on what they do as a company.

Now that again, there are companies that do that, and I do think there'll be more and more of them over time. But these direct to consumer brands, by the way, which I think is a great business model and I'm not saying nobody should do but they make up a minuscule percentage of the brands out there, that actually manufacture products and that actually look for retailers like us, again to bring them sales. Because the biggest thing to really, I guess, understand, is the business model of manufacturing and logistics and forecasting sales to make sure you have product in stock.

That is not the same business as being a digital marketer or an eCommerce store owner, or as a person that builds systems and operations for distribution online and all your marketing sequences and the copywriting. It's not the same thing. It's two very different business models.

That is not the same business as being a digital marketer or an eCommerce store owner, or as a person that builds systems and operations for distribution online and all your marketing sequences and the copywriting. It's not the same thing. It's two very different business models.

And it's funny. It's not like they don't even know it. It's just for a lot of these companies and these brands that we sell for, it is like a trade off of where is our time and our resources as company best devoted? Or where is that time best spent?

And one way I learned this super clear, probably back in like 2010 or 2011, one of the biggest brands that I sold for... Well, they weren't one of the biggest brands, but we sold for bigger brands but we sold a ton of product for them. The owner was visiting New York City, where I was living at the time and he was like, "Oh, let's have a meeting." So we went and we got coffee at this really sick restaurant on Central Park. And we're sitting there and we're talking and this is only when I was a few years into my eCommerce journey. So still a complete newbie, learning everything as I went. And I remember as we were talking, he was giving me all of these tips about search engine optimization and how to structure our page titles and our URLs and just all of these things.

And I was taking notes. This guy is sharing all this stuff. And I was just thinking like, why, if you know all of it, aren't you doing it? And I realized as we had this conversation and I asked him, it's because his goal wasn't to be the company that makes these products and that has to deal with driving all the sales and having all be reliant on what their marketing team that's nonexistent can pull off.

Instead, what they wanted to focus on is making the best products, that are the best quality, that customers love and then looking for retailers, like us and like many others that can drive these sales in and basically be that part of the business. So again, it's not the same business model. And some companies that are really great at making products don't want to also be reliant on just them being great at digital marketing.

So not saying none of them can do it, but there actually is even more risk involved. There's definitely more expenses involved if they were to do it themselves. So for them, they like to go with the strategy of having experts like us drive sales for them. And again, it's not just us. They're not reliant on, if we stopped selling for them, they're out of business because they have this retailer selling for them and this retailer and then this store. So it's not as risky for them and they're more than happy to give us a margin, in order to handle that part of the business for them.

So really what they want to do is focus on what they can do great. And then pretty much, you can call it outsourcing, you can call it partnering but work with companies like ours that can help them to actually make money and have sales continue to come through.

So that's really all I wanted to share. Again, I'm not big into typing, so my two sentence response to Tom, on YouTube, I probably didn't do this justice. But the main takeaway that I think everybody should realize, when you learn how to build online businesses, when you get great with eCommerce and driving paid traffic and conversion optimization and all different types of marketing, like email marketing, and following up with people on social and using messenger and all of these techniques and strategies and tactics, as you learn them and as you get better at them as a business owner, as an eCommerce store owner, that skillset is extremely valuable. Not just to you and how much money you make every month but it's also extremely valuable to people that run huge businesses. Probably businesses bigger than yours. Definitely bigger than mine, some of the companies we sell for. But to them, that skillset is well worth those margins of having companies like ours to handle that part of the business for them.

So hope that makes sense. Hope that provides some clarity and value. Even for anybody that's listening that was thinking about getting into drop-shipping and like, "Oh, why would anybody let me sell their stuff?" It's because there's real value provided. We don't do this because we are pulling one over on anybody. We do this because we bring a lot of value to the table and there's no reason why you can't too.

So if you want to know more about this, if you want to know the exact model we use for drop-shipping and how we become authorized retailers for these brands, my advice is to go to dropshipwebinar.com. I will link that up in the podcast description and you can get a free training from me there and also a special offer for my flagship program, that was voted best eCommerce course by Shopify. So again, that's dropshipwebinar.com.

So that's it for today, guys. Again, if you're not subscribed to the podcast, make sure you do so. New episodes every single Monday and Thursday. Always just trying to share stuff that I think can help you out and further your journey into the world of entrepreneurship and especially in a way that can provide more freedom to you, as you build your business.

So that being said signing off and I will talk in the next one. See ya.

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