What is Specialty Merchandise Corporation?
You have probably seen advertisements on TV for Specialty Merchandise Corporation (SMC) and found yourself interested and wanting to investigate further. The advertisement says that SMC gives you freedom to work from home and achieve your goals. So what is SMC and how does it allow you to work from home? They are a massive warehouse full of merchandise and they allow their members to buy their products at wholesale prices and sell them at a huge markup without ever having to store any inventory of their own. This business model is known as drop shipping. Drop shipping is where you as the owner of a business advertise and sell products on your website. When someone makes a purchase, you order the product from the drop shipper, which is SMC in this case, and they send it directly to your customer. The CEO of the company states that his ultimate motivation is to put people in business. When Abe Levine started this business he claims that he had two choices. One, to hire a sales force, or two, to put people into business for themselves selling his product. I’m not sure there is a huge difference here from his point of view. Whether he gave people the opportunity to start a business or he hired them, his products are still getting sold. For the business owner involved in SMC, the benefit is that you have the freedom to be your own boss and you get some tax benefits. You always wonder when business opportunities make claims like “Our fundamental goal is to help you start and build a successful business.” The fundamental goal is to make money and the executives believe that helping people start a business is the best way to move products.
Advantages to SMC Business Model
As you might know there are many advantages to SMC or companies like it. First you have the opportunity to become a business owner. This means the scheduling of your own time and having the freedom to work for yourself and not for someone else. Owning a business also offers people the opportunity for huge tax benefits that always are attractive. Another huge advantage SMC offers is you are buying the products at really large discounts, meaning you have the flexibility to sell the product and different price points to beat out the competition. Due to the fact that you have no inventory, your costs are low, you don’t need a large storage space and you don’t need to hire a lot of people. In fact you can probably get it all done yourself, which makes success even more powerful. Because you do not store any inventory, you do not have to worry about shipping and packaging either. Any fees or costs associated with the operation can be built into the price of the product. This is why SMC offers such an attractive opportunity.
Disadvantages to SMC Business Model
One mistake that many people make when getting into this business with SMC, is to think that SMC will set a framework for you and help you run your business day to day. Running an online store, selling items from SMC, is essentially the same as running any other business with one difference. You don’t have inventory to worry about. You still have to know how to prepare yourself for taxes and protect your self from consumers. You still need to keep track of your accounting and keep good records. You may have to get a state and city retail tax license…all things they don’t tell you about, or assist you with. Just because the infomercial makes this sound effortless does not mean it is. In fact most people do not make money by putting in no effort at all. You typically make money consistent with the effort or efficiency you put in. Drop shipping companies like SMC often charge a fee for their drop shipping services, which could cut into your overall profit margin. The other thing is that the Internet is the largest and most diverse market on the earth. What this means is that no matter what you sell, chances are there will be quite a few people that are looking for it. The key though is if people are looking for what you are selling, how do you make it visible to them. This requires marketing your website and optimizing it. SMC does not tell you on its infomercials or its website what it takes to market your store and products. This is the key to making money online, not the specific business model.
I am by no means stating that this business model is bad or that you cannot make money using these methods. I am simply stating that its not as easy as it sounds on TV and requires certain marketing skills to see any real profits.