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Product Sourcing

This week I learned different methods of product sourcing and online marketing. The first method presented to us is drop shipping, which is a more hands off approach to doing online business. Basically, you create an online website, find a reliable supplier, decide on a product, list it on your website for a profitable and competitive price and you're done--almost. When someone purchases your product, you will then fill out an order to your supplier with the customer's shipping address. The idea behind this method is to save on inventory space an management.

As is true of every element of business, drop shipping is not without risk. Drop shipping gets sticky when it comes to returns, failed deliveries, or faulty products. Because the product ships directly from the supplier to the customer, you have no opportunity to inspect it for quality. If the customer isn't happy, though, it's not the supplier they'll contact for a refund--it's you. That could lead to a loss of profit. Also, depending on the supplier you choose, returns might prove even more costly as you may have to pay shipping for them.

The other method we learned about this week is affiliate marketing. In this method, you partner with an affiliate company and promote their product. When the item sells via your referral, you get a percentage of the proceeds. Your goal is to create engaging content and drive customers to the affiliate's product.

There is very little risk involved in the affiliate method, as you don't have to worry about inventory, customer support, or shipping at all. What you do need to worry about is whether or not you can drive enough traffic from your website to your affiliate's products to make a profit. Remember you'll be paying to host your own website, as well as taking on the advertising costs.

All in all, pretty interesting businessy stuff.

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