Dropshipping is one of the best online business model out there. It’s better than other ecommerce business types, such as wholesale, because you don’t interreact with the products you sell … at all!
If you’re thinking about starting a dropshipping business, then you are on the right track! This business model will only continue to grow in the next several years, as more and more people tend to spend their money online.
One of the most common questions I hear from beginners is how much do dropshippers make on average? This is a great question, as it establishes an income level that beginners can expect once they start getting a hang of it.(1)
As an entrepreneur who is running ecommerce businesses for almost a decade, I think I am one of the best people to answer this question.
Average Earnings Of A Dropshipper
Dropshippers usually get around 15%-20% profit margins for every sale. This means that if they show you a screenshot of a month where they made $10k, they most likely made around $2k in profit.
Once you start getting more experienced, you will be able to increase your profit margins more and more. For example, in my ecommerce businesses, I average around 37% profit margin, which is really cool.
It’s very easy to get false information online. This was one of my biggest problems when I first started out in this business. It’s not even illegal to share false information that could potentially cause serious financial damage to the reader.
That basically means that your favorite “gurus” can say anything they want and claim any kind of bold statements. Nothing can happen to them because it’s not illegal. That’s why I decided to create this blog and give you accurate information for you to apply in your business.(2)
Whenever someone shows you a dashboard on Shopify for example, keep in mind that the number you see is most likely revenue, and not profit. So … keep that in mind.
Don’t get easily impressed by those numbers. If you make $100k per month but only $99k is profit, then you kinda have a crappy business, don’t you?
What Is The Approximate Profit A Dropshipper Can Make?
It’s a big difference between revenue and profit. For example, in a dropshipping business, you still have some expenses. You still need to pay for things even if you don’t buy products in bulk.
Such things include your marketing budget, processing fees, software subscription or shipping. If you are a beginner, your profit will most likely be 10% from each sale.
Don’t get discouraged, if you continue to improve your business, you will get more experience month by month. It is definitely possible that you reach 30% profit margins in your second year!
It’s important to remember that profit depends on a variety of factors, some of which you can’t control. For example, the seasons, the economic factor, the holidays in which people expect discounts (Cyber Monday, etc).
In order to make as much money as possible, you need to take advantage of these things, and not to complain about them. I remember a couple of years ago when I made a deal with a supplier for Black Friday. You should experiment with these kinds of things, they are absolutely amazing!
The good part is that you can control the ones that maximize your profits. One of the biggest expenses in a dropshipping business is the advertising budget.(3)
If you run profitable Facebook ads, you don’t want to cut down on the budget, don’t you? You want to pour money into your ads and make more money.
Also, you should test product prices. You might be leaving some money on the table if you don’t try different price tags.
More Experience = More Profit!
You’ve probably heard this a million times but you know it’s true. The more knowledge you have in something, the easier it is to do it.
Once you start getting a hang of this whole dropshipping thing, you will start to be more and more efficient and therefore, make more and more money. You will be surprised on how well you do once you start getting some momentum.
All beginners make mistakes. Not only in dropshipping, but in anybusiness model. So, don’t expect to do everything perfect right from the start. You should allow yourself to make some mistakes.(4)
If you fail in the beginning, don’t get upset. In stead, be happy because you found something that doesn’t work! You will be surprised how much progress you will make in 1 year.
Related: Dropshipping vs Amazon FBA
Dropshipping Is Scalable
One of the biggest advantages of dropshipping is that you are not tied to a specific profit that you can make (like with a social media marketing agency). The key to success with dropshipping is slowly increasing your business.
Slowly increasing? Yes. I’m telling you from my own experience, that the best way to scale your business is slowly. Start with a small-medium budget (more on that later) and test marketing ads and different products.
Even if you spend $10k on an ad, you can still lose money by promoting the wrong product.
I would advise you to test different products with Facebook ads and once you start getting a positive ROI, then it’s time to put a little more money into it.
Speaking of risks, I think there are a couple of important aspects you should understand. There is risk involved in ANY business, and there is the possiblity to lose money.
In dropshipping, the more risks you take, the more profit you can potentially make. In my experience, it usually tends to work out like this.
If you are scared of risks and think that you can start a business with 0 downside, then find another one. And after you find it, you can tell me about it as well. Because I haven’t seen any.
The biggest advantage in any business when speaking of risks is that it tends to scare some people. Meaning that there is less competition for you and me. Also, this is very helpful when you’re negotiating with suppliers or manufacturers.
Biggest Factor That Infleunces Profit
The most important aspect of any business, online or offline, is the traffic. If nobody sees your products, you can have the best ones on the planet.
On the other hand, if you have crappy products but you are able to generate tons of traffic, then you will make money. Traffic is the single most important thing in any business.
In regards to an online business, like an ecommerce store, traffic can be divided into 2 types: free and paid. The free traffic is the people that see your content for free.
Kinda like you are doing right now. I didn’t pay for you to see this article, meaning that you ended up here organically.(7)
On the other hand, paid traffic is amazing. It’s definitely my favorite way to generate quality traffic, and also the one that I suggest you start out with.
Paid traffic basically gives you instant results. You don’t need to wait months and months for people to show up on your pages.
Related: How To Make Money With Dropshipping
How To Bring More Traffic To Your Store?
There are several (free and paid) ways to bring more traffic to your store. We already established that more traffic = more sales = more money. Therefore, it would be a good idea to focus on driving targeted traffic.(8)
Social Media Marketing
Social media became more popular in the past couple of years. You can leverage Facebook or Instagram in order to bring more customers to your online store.
I’m personally not very familiar with this tactic, but I do have friends that are very successful with social media traffic. You might want to give it a try.(9)
This definitely wasn’t around when I first started. Nowadays, anyone with more than 10k Instagram followers is an influencer.
If you are familiar with Instagram and have paid influencers before, then you might want to give it a try. However, I would just investthis money in YouTube or Facebook ads.(10)
One great way that I have had success in the past with is creating a blog for your store. You can write articles and get traffic with SEO.
It is a fact that blogging is one of the best ways to bring targeted traffic to your blog. Also, it’s a great way to build trust and authority.(11)
How Much Money Do You Need To Get Started With Dropshipping?
The cool part about dropshipping is that you don’t really need to invest a ton of money to get started. You dont need but it is definitely recommended.(12)
What I mean by that is that the bigger your budget, the higher your chances of success are. It’s pretty straightforward.
For example, you need a subscription to the software which you will use to communicate with suppliers. For that matter, I recommend SaleHoo as it’s the one I use.
You will probably make some mistakes, and the last thing you want is to run out of money. If that happens, then your business slowly dies off and you are back to your 9 to 5.
In my opinion, you could realistically start a profitable business with around $2.5k – 3k. You can, however, definitely get by with less than that.
Dropshipping is a great business model that will continue to grow year by year. I would definitely recommend starting an online business, as it can really change your life.
You need the right information in order to succeed in business, and that’s why I suggest investing in the 100k blueprint if you have the budget.
You will learn everything about dropshipping, therefore your chances of success will be as high as they can get. I wish I has such a course when I got started.