What is the Special Merchandise Corporation?
You’ve probably seen advertisements on television for Specialty Merchandise Corporation (SMC) and have become interested and wanting to investigate further. The ad says that SMC gives you the 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 huge warehouse full of merchandise and allow their members to buy their products at wholesale prices and sell them at a high markup without having to stock any inventory of their own. This business model is known as dropshipping. Drop shipping is where you, as a business owner, advertise and sell products on your website. When someone makes a purchase, they order the product from the drop shipper, which in this case is SMC, and they ship it directly to their customer. The CEO of the company says that his main motivation is to put people in the business. When Abe Levine started this business, he claims that he had two options. One, to hire a sales force, or two, to put people in business for themselves selling your product. I’m not sure there’s a huge difference here from his point of view. Whether he gave people the opportunity to start a business or hired them, his products still sell. For the business owner involved in SMC, the benefit is that he has the freedom to be his own boss and gets some tax breaks. He always wonders when business opportunities make statements like “Our ultimate goal is to help you start and build a successful business.” The ultimate goal is to make money, and executives believe that helping people start a business is the best way to move products.
Advantages of the SMC business model
As you may know, there are many advantages to SMC or similar companies. First you have the opportunity to become a business owner. This means scheduling your own time and having the freedom to work for yourself and not someone else. Owning a business also offers people the opportunity to reap huge tax benefits that are always attractive. Another big advantage that SMC offers is that you are buying the products at deep discounts, which means you have the flexibility to sell the product and different price points to beat the competition. Due to the fact that you have no inventory, your costs are low, you don’t need a lot of storage space, and you don’t need to hire a lot of people. In fact, you can probably do it all yourself, which makes success even more powerful. Because you don’t stock any inventory, you also don’t have to worry about shipping and packaging. Any fees or costs associated with the operation may be incorporated into the price of the product. That is why SMC offers such an attractive opportunity.
Disadvantages of the SMC business model
One mistake many people make when going into this business with SMC is thinking that SMC will set a framework for you and help you run your business on a day-to-day basis. Running an online store, selling SMC items, is essentially the same as running any other business with a difference. You don’t have an inventory to worry about. You still have to know how to prepare for taxes and protect yourself from consumers. You still need to keep track of your accounting and keep good records. You may need to get a state and municipal retail tax license…all the things they don’t tell you about or help you with. Just because the infomercial makes this sound effortless doesn’t mean it is. In fact, most people don’t make money without trying at all. You usually earn money according to the effort or efficiency you put in. Dropshipping companies like SMC often charge a fee for their dropshipping services, which could reduce your overall profit margin. The other thing is that the Internet is the largest and most diverse market in the world. What this means is that no matter what you sell, there are probably quite a few people who are looking for it. The key though is if people are looking for what you sell, how do you make it visible to them? This requires marketing your website and optimizing it. SMC does not tell you in their infomercials or on their website what it takes to market their store and products. This is the key to making money online, not the specific business model.
I am in no way stating that this business model is bad or that you cannot make money using these methods. I’m just saying that it’s not as easy as it seems on TV and it requires certain marketing skills to see real profits.