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Kurt Heinrich’s Story


Kurt Heinrich

“You should definitely start a drop-ship business and sell things online. That’s what I did. I started an online shop for iPod accessories and made $17,500 during my first Christmas season. That was in middle school, then I kept the business throughout high school and grew it from there. Here’s the long story:

When I was in middle school, I used to look forward to getting my monthly issue of Popular Science magazine. In one particular issue, they had a how-to guide on how to turn an Altoids tin into an iPod charger. I thought this was awesome, so I went to RadioShack, got all the parts, then built it. I then took it to school to show all my friends. Before I knew it, all my friends wanted one too, so I started selling them for $20 each.

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I quickly realized that RadioShack did not provide the best margins, so I started looking for ways to buy the parts online, in bulk. I found a guy that was selling the kits for chargers online. I contacted him and asked him if he could give me a discount if I bought multiple kits in bulk. He did.

Eventually, one of my friends half-jokingly suggested, “Why don’t you sell these things online?”. At the time, I knew nothing about starting a a website, but it definitely got me interested. I started reading up on HTML, CSS, and all that good stuff. After a few weeks, I had put together a basic website and was accepting transactions via PayPal.

I did not do any marketing or SEO at the time, but fortunately enough people stumbled across my website when they searched Google for how to make these Altoids chargers. Shortly after, I was spending the minute I got home from school to when I went to bed, making Altoids chargers and shipping them out of my basement. While it was fun, it was a lot of work. I think I was making about $5 on each order (after shipping and PayPal fees), but it took ~1.5 hours to make each charger. I realized I would be better off working at the local Chic-fil-a or something like that, but I was not old enough to do that anyway.

I wondered if I could start selling pre-made products (a.k.a reselling), like accessories they had at the Apple store. I had no idea how to get my hands on products like these, but I applied the same strategy I used before in buying the Altoids kits in bulk. I started contacting sellers on eBay that were selling iPod accessories and I asked if I could get a discount for buying in bulk. Initially, I started selling things like iPod headphones and silicone cases. In fact, one of my first best-selling products was color iPod headphones, like these:

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As you can see, these headphones look like knock-offs from China, and most of the stuff I was selling at the time was. So I wondered if I could bypass the eBay sellers and just get the products cheaper from China directly. After some digging around, through sites like Alibaba, I found a few suppliers in China. I did a lot of due-diligence before I made any purchases, because each supplier required bulk purchases (e.g. 1000 items or greater, but keep in mind that each case is like $0.20, so 1000 cases was still affordable). I also took pre-cautions like only using suppliers that accepted payment via PayPal (since doing wire transfers was risky) and negotiated with suppliers, so that I could buy different items, but still get the bulk discount (e.g. instead of having to buy 1000 iPod cases of the same color, I would buy 1000 units total of cases, headphones, and other items). Before long, a massive box of iPod accessories was on my doorstep, ready for re-selling.

I started selling the items on my website and eBay, shipping the items out of my bedroom. Each time I finished selling a box of accessories, I would buy more from China. However, I soon realized this model was not going to scale, since my bedroom closet was only so big and I was spending more than 4 hours a day just shipping items. Also, I started getting returns through the website, as well as my friends at school, for headphones and cases that sometimes broke after only 2 weeks of use. I didn’t like having to sell cheap, no-name products. I wanted to be able to sell high-quality, reputable products like they sold at the Apple Store and Best Buy, but also not have to do all the shipping myself.

That’s when I discovered drop-shipping. I went to the Apple store and wrote down a list of the manufacturers of each of the accessories. I then started contacting all of those manufacturers and asking how I could re-sell their items. Sometimes, the manufacturer would drop-ship directly, but most times they would refer me to one of their distributors, that drop-shipped for them. Before long, I was selling brands like Griffin, Belkin, OtterBox, Speck, ezGear, and more. In fact, one of my best-sellers early on was the ezVision glasses, which retailing at $400 each, gave me a very healthy margin:

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The benefit with drop-shipping, was the manufacturer or distributor would drop-ship the item straight to the customer on my behalf.
I would receive the order through my website
I would then notify the distributor of the order
They would ship it to the customer
I kept the profit
While this sounds simple, there’s a lot of work that goes into a successful drop-ship business. I started learning about SEO, PPC ads, and other ways to market my site. I even did creative things, like send free iPod cases to an influential person on YouTube who did un-boxings. Most of these people were kids my age or older, but did not even suspect it, just like anyone else I did business with.

So to wrap up, I kept running my online shop for iPod accessories throughout high school. I even had multiple drop-ship businesses in different niches. While it certainly paid well for a high-schooler, I think the best thing I got out of it was the learning experience.

My current company today grew out of my previous drop-ship companies. Essentially, my drop-ship businesses grew to the point where I was spending 4+ hours of my day just processing orders and keeping inventory levels up-to-date on my website (2 of the major challenges with drop-shipping). Over the years, I had developed software for my own sites, to manage the inventory and orders automatically. I then took that software I built for myself and turned it into a software platform that other online retailers who drop-ship can use. This is my current startup, eCommHub .

So, in summary, drop-shipping is a very viable business model that I encourage any ambitious teenager to pursue. Big companies, like Zappos, started with drop-shipping. I see drop-shipping and third-party fulfillment as the future of e-commerce, since it no longer requires a lot of capital to start an e-commerce business.Today, it’s even easier with all the e-commerce tools out there. There’s shopping cart platforms like Shopify and Magento that anyone can use to set up an online store. There’s also resources like ecommercefuel.com and practicalecommerce.com where you can learn about e-commerce and drop-shipping.” – Kurt Heinrich

 

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About Keerthika Singaravel
Engineer,Investor,Businessperson

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