Has anyone ever used this business structure?

[mayflower232]

I was wondering if we have anyone on the forum who has personal experience when it comes to running a business with the following format.
Essentially the business acts as an online hub, taking orders and then passing the orders onto a local supplier who then builds/creates the ordered product and delivers it to the customer. We take a set commission for 'passing on' the order so to speak and the local supplier gets their markup on the product.

 

[Montaigne]

This how my business operates but I do it with services and multiple different firms, as opposed to goods.

You're essentially being a sales broker.

Isn't this something like dropshipping for manufactured goods except you pass the orders on rather than retaining them?

 

[mayflower232]

In a way, I'm just investigating an idea I had recently. Without divulging the actual product the format is pretty similar to those online florist companies who take orders and pass them on to local shops.

The business plan I have in mind is creating an online hub which allows for the exact customisation of the product. This is then passed onto a local agent who has signed up with us, we take a fee, they get more business. Win, win.

The downside however is obviously the logistics of maintaing various relationships and keeping product consistency on track.

 

[popo00]

my friend is selling wall decorating items , she doesnt even see them, she just pass the order from her online shop to the company that produce it and post to the costumer.

 

[Morraine]

In a way, I'm just investigating an idea I had recently. Without divulging the actual product the format is pretty similar to those online florist companies who take orders and pass them on to local shops.

The business plan I have in mind is creating an online hub which allows for the exact customisation of the product. This is then passed onto a local agent who has signed up with us, we take a fee, they get more business. Win, win.

The downside however is obviously the logistics of maintaing various relationships and keeping product consistency on track.

To be honest
I would just manufacture the product yourself. all of the sub-contractors you signup will have varying degrees of quality and you will also benefit from economies of scale as you get larger.

 

[Montaigne]

It depends on whether you have the skill or the setup to do it yourself. It's very easy to get set up as a sales broker, and with minimal investment, compared to setting yourself up as a manufacturer.

 

[Morraine]

It depends on whether you have the skill or the setup to do it yourself. It's very easy to get set up as a sales broker, and with minimal investment, compared to setting yourself up as a manufacturer.

Yes I agree that it's easier to do the sales broker route.

but this depends on how you would do it. If you go the sale broker route then you must be upfront that you are just an introducer to the local company and the local firm must then be made responsible for the end customer service and quality of the product.

Depending on the product this can work out very well. take florists and interflora. arranging flowers is an easy to learn skill and there are lots and lots of good florist all over the country. A red rose is a red rose pretty much were ever you buy it in the UK. Flowers also have a self-life so you need someone close to deliver and it's a personal services as flower are usually given as a gift so it can be delivered at a specific time and place.

But some other products might not be so universal. I think it totally depends on what product you want to do this with.

If you do this yourself then you have more control over the product, the brand, the quality and the price. Which could mean the difference between beating the the competition if you know what your doing.
But as said it all depends on the product and if you are very knowledgeable about that product.

Regardless of how you do it i think you should know everything about the product inside out before attempting to do it.