Beginners Guide to eCommerce - 'How Many Distributors Per Store?'
by Palyn Peterson

This information will save you lots of money, or possibly the life of your entire business, and it will allow you to increase your profits through multiple businesses.

First off, operating an online store is a fabulous and lucrative pastime, so kudos on making that decision. But before getting into the thick of it, heed my warning, you do not want to make this same mistake: try to only maintain one distributor for each of your online stores. Two if you MUST. Three as a test, but in no way shape or form be set on keeping 3 distributors.

I know what you might be thinking right now, "But the more products I have, the bigger the selection will be and I'll end up selling more -- therefore I'll be making more profit!" And that's exactly what I thought at one point, too. But unless you are charging sky-high prices or maintaining an inventory of your entire stock, then this thought is only half-true.

It is true that you may end up selling more, but the reality of the situation will quickly appear and you will be losing money with nearly every sale. And this is all centered around one simple, and easily glossed-over factor: shipping.

Let me tell you a true story. Many years ago for one of my businesses, I had this grand idea of creating a recreation room super store. I found four distributors for billiard equipment and recreation room accessories, one for board games, one for pewter products and one for candles and other neat decoration items. It sure seemed like a good idea at the time; I would be able to sell everything a person would want and need to setup a recreation. I could virtually feel my wallet getting fatter. Then reality hit when I sold my very first order.

The customer's order consisted of 1 or 2 small products from nearly every distributor I had. Through the online store's software, I had it setup to charge shipping based on the customers final price. When all of the items were tallied up, the customer was charged about $9.00 shipping, which was reasonable for the size of the order. But when I turned around to order the products from my distributors, I needed to pay $5.00 shipping at this one, $3.00 at that one, $4.00 here and there, and $3.50 at a couple others. My shipping costs totalled nearly $20! That amount was way too much to pass on to my customer when they were just ordering a few
small items. They would have cancelled their order and moved on to one of my competitors.

After that fiasco, I quickly reconsidered the direction of my business.

So if you've got great idea that would involve more distributors, try opening a second online store. There isn't any rule that says you can't run 2, 3, or more online stores! In fact, you'll want to do that anyways -- having multiple streams of income is a proven way of making the big bucks.

Even if your stores are selling basically the same products, you will be able to better corner the market at Yahoo! Shopping, or whatever place you are selling.

Having multiple business will also give you the opportunity to test advertising with one store and see if sales grow or shrink in relation to the others. You could even provide links to your other stores and advertise them as "sister sites." If your customers trust one of your stores, they'll automatically trust your "sister sites."

Okay, okay... I admit I have stretched this rule myself... For one of my stores I have 3 distributors. It is working out nicely though, let me tell you why. I have 1 distributor that I setup the shipping cost rules for. But for the other 2 distributors I am able to advertise free shipping for all of their products because they charge very resonable flat shipping charge for all of their items. I am able to roll that charge into the cost of the item, maintain a good price and advertise the free shipping.

I just tell the shopping cart to not even consider these items in shipping calculations. I just tell the customer their order will be shipped in 2 or 3 different packages.

Opportunities for this do not always occur, but do keep your eyes open.