HoR Story Part 6: How It Works

So after finally getting HouseOfRave.com off the ground, this is how it works:

I will show what happens from the time I get an order, till the customer receives their order. Everything is done in 5 steps. I can accept, process, account for and send off 2 orders in around 2 minutes with this system. 10 orders will take me about 10 minutes with this system:

1.) Check, View and Review Orders.
I login to the backend of my Shopsite software to see how many new orders I have waiting. I click to view all the orders and do a quick skim of the order information. I am looking for any subtle signs of fraud at this point. After 5 years, I’ve become pretty good.


I can view individual orders or all the orders at the same time:



2.) Charge Orders.

This is the most inefficient step, as I choose to process cards manually to become more familiar with the customer names, locations and spot fraud. I login to my merchant account digital gateway and copy/paste from Shopsite the needed customer information. This step goes quicker than imagined because I use my tablet PC pen. During busy times I turn on automatic charging, so this step sometimes takes only one click to charge all the orders.


Here I find out if each order is legit. If the order is declined, I make a note of it and move on. If the order was paid for using PayPal I already know it was charged. If the order looks suspicious or comes back with negative address verification, I will often call the person on the spot to verify the order.

3.) Enter Into Accounting System.
This step is very quick and allows me to see my estimated current profit, my expenses, what I owe etc.. I’ve used some pre-made accounting modules for Shopsite in the past, but I like my Excel sheet better. Over the years I have honed it to help predict my profit at the end of each month. I don’t know my exact profit until I get the monthly bill from my supplier, but this Excel sheet gets me pretty damn close.

4.) Create with Word & Send.
This step is the way THIS particular business of mine works. Once an order is ready to go, I copy/paste the information into a Word document and send it via email to my supplier. From there, they print it as an invoice and send the order. This is the way my particular supplier chooses to do business, others may have different methods.




5.)Followup.

My supplier will send me a tracking number once the order is sent. These go into my tracking system where customers can check the status of their order. The tracking module also sends customers their tracking numbers via email automatically.

How I make Money:
I pay wholesale price for the products I send out from my supplier. They send me a bill for the products & shipping each month. I charge retail price on the website and bring in all the money myself. At the end of the month, I cut a check to my supplier and the difference is my income after product expenses. I then subtract my server costs, merchant account costs, PayPal costs and phone bill costs to get my total profit amount.

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Hopefully this mini-series helps someone further understand the inner workings of a small drop shipping business!

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The House Of Rave .com Story
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Part 1: The Beginning
Part 2: Finding Something to Sell
Part 3: Finding A Drop Shipper
Part 4: Getting A Site Setup
Part 5: Pros and Cons of Drop Shipping
Part 6: How It All Works
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    Blog posted on: December 15, 2007

    16 comments on “HoR Story Part 6: How It Works

    1. michael

      This is probably one of the best sources for dropshipping information on the internet right now. Thanks. Michael Plater II

      Reply
    2. LukasR

      Nicely written series – well done! I especially liked Part3 particularly the word of caution about watching a product being picked up the big stores. A few years ago I dabbled in importing cheap mp3 players and digital cameras from China and selling them online. This happened to me when the particular model of mp3 player I was importing became very popular and not only several other online players started importing it but it started appearing in local electronics shops. I was still left with a considerable volume on hand and had to sell at huge discount – the last units below my wholesale cost just to get rid of them. This ate into the profits considerably. I guess this is where the drop-ship model is a bit better since you don’t actually hold the stock on hand.

      Reply
    3. taj

      Neville is a class act. I have spoken to him before and he is nothing but helpful. Because of this website, a fire was reignited within me to find good dropshippers because I saw it was REAL. I searched and searched and am happy to say I am now successful on EBAY with an Ebay store and will probably open an independant store soon.
      Thanks for the inspiration Neville!

      I really appreciate it dude!

      Tajwar from Atlanta.

      Reply
    4. Anonymous

      Great post Nev. Very informational, especially for anyone looking to get into web business/e-commerce for the first time.

      Adam McFarland

      Reply
    5. Marco

      Great info as usual Nev…on a side note I just wanted to let everyone know about a great product that allows you to “sound” big on the phone even if you are not. The name of the company is GotVMail the website is http://www.gotvmail.com. I have heard a lot of good things about this and if you are someone like Nev who has a nice site and wants to have a professional phone image to go along with it, look into this product.

      -Marco

      Reply
    6. Brad

      Nev…this was definitely the best article I’ve read on here in a while. I really enjoy when you do articles like this that are very in-depth and helpful to the readers. I check the blog about 2 or 3 times a week and it’s always a joy to see new articles posted.

      Keep it up!

      Reply
    7. Kevin H

      Nev,

      Great Blog! I’ve been an avid reader for quite some time (about two years now). Always look forward to your posts. Keep up the good work.

      -Kevin

      Reply
    8. Lindsay

      Nev,
      This is a wonderful and inspirational blog. I recently graduated from college and went along with the crowd and became a excel monkey in the corporate world. After a few weeks of cubicle life, I wanted to call it quits but alas, I really don’t have any other options. If only I had an iota of your entrepreneurial spirit and tenacity, I would turn in my pink slip before you can say excel. You’re a great inspiration for the young and old alike, and may all your wishes and goals come true in ’08!

      Reply
    9. Anonymous

      This is inspiring on a lot of levels. Drop-shipment makes sense for what most small businesses are selling, then, doesn’t it? (I mean, assuming someone has the requisite drive – and the cajones to step outside of working for their local insurance company or other corporate entity…)
      Great blog.
      Jerry
      http://www.leads4insurance.com

      Reply
    10. teddy

      Great Post Nev. It will be excellent if you also tell us about how to prevent fraud transaction, and how many % from your experience we have to prepare to loss because of this fraud.

      Reply
    11. Kemp Goode Jr.

      Great post! I have been spinning my wheels for a long time until I found this post. My first mistake was Googling "Drop Shippers" :)

      I actually ran across your site while I was researching the Lexus GS300. As someone has recently totaled my Camry I am seriously pursuing the Lexus. Anyhow great post once again. I am definetly bookmarking your blog.

      Reply
    12. Pingback: HoR Story Part 4: Getting A Site Setup - Neville's Financial Blog

    13. Pingback: HoR Story Part 5: Pros and Cons of Dropshipping - Neville's Financial Blog

    14. Kevin

      Hi Nev,

      I just read your great posts, can you tell me how you test your niche to see if there is demand for it?. Do you use Adword to market your site?

      Regards,
      Kevin

      Reply

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