Making money with dropshipping has become one of the go-to ways for beginner entrepreneurs to start their online journey. But is it still a viable way in 2021?
Well, the short answer is yes. BUT there are some things to keep in mind. Ecommerce is not the same as 10 or even 5 years ago. Many things have changed and it’s a bit more competitive.
As I always say, never be scared of a bit of competition. If you do the things that we are about to discuss in this article, there is no reason why you wouldn’t manage to build a successful dropshipping business.
So, if you’re here to find out how to make money with dropshipping, you’re in the right place! In this article, we will go over everything you need to know about this business model.
Also, we will tell you a couple of golden nuggets that we found out (the hard way) from our own experience. Stay tuned!
Make Money With Dropshipping
Starting an online business is not easy. But with the right mindset, anyone can be successful. The first thing to keep in mind in regards to a dropshipping business, or any business for that matter is that you need to have something to sell (a product or a service).
For example, when we’re talking about ecommerce, there are 2 options: drop shipping (which we will talk about in this article) or wholesale. Wholesale is basically buying a ton of products in bulk and storing them in a warehouse. If you’re an experienced marketer, I would totally recommend this. Drop shipping is a bit different and more beginner friendly.
In this case, you sell products that you don’t even manufacture or own. Isn’t that great? Manufacturing product is incredibly difficult. With dropshipping, you bypass all of that hassle.
That doesn’t mean you can become a millionaire overnight. You still need to have marketing skills in order to make it work. If you know how to run ads and drive traffic to your online store, you will be able to build ANY online business.
These are skills that stay with you for the whole life. To put it in simple terms: if you know how to drive traffic, you will never need to worry about putting food on the table.
Drop shipping is basically one of the most lucrative and beginner friendly business models out there. If you want to start an online business, this is a very good option. Now, let’s have a look at some of the things you need to keep in mind when starting your first ecommerce business.
How Does The Dropshipping Model Work?
Dropshipping is a business model that allows entrepreneurs to sell products without owning the stock inventory. This is a very big advantage, as you don’t need to risk money by buying bulk products.
When a customer buys a product from your online store, the supplier packages and ships the product directly to him. As a store owner, you are not responsible for delivery, manufacturing or packaging. Your job, as a dropshipper, is to just drive traffic to your store.
The customer pays the price that you set on your store, while you pay the supplier the price you negotiate with him. I suggest taking a look at SaleHoo, as it’s the platform I use for finding good suppliers with quality products.
You will need to create an online store (it’s just a website, don’t worry about it. It’s not as difficult as it sounds) and a brand that will last long term. Your brand needs to let people know that you’re a legitimate entrepreneur and not a scammer. That way, they will come back to your store and buy more of your amazing products.
Why Do People Get Into Dropshipping?
There are a ton of reasons why people are attracted to this business model. I will start by telling you the reasons that I personally took into consideration when I started my ecommerce journey. Let’s have a look at them:
- It’s easy to get started with dropshipping: anyone can start making money with this business model. Even if you don’t have experience in online business, you can realistically start making money within a couple of months or even weeks. Obviously you will have some expenses, but it’s best to view them as learning costs. Once you start getting more experienced, you will find out that’s it’s not as complicated as some people make it seem. Also, if you do have experience with other business models (for example affiliate marketing), you will really have an easy time starting an ecommerce business. At least I did.
- You set the price: Once you find cool products that you can dropship, you can literally sell them for as much money as you want. For example, if you pay $5 for a pair of sunglasses (that you find on AliExpress for example), you can sell that pair of sunglasses for $50 on your own website. I’ve had a ton of success with sunglasses and hats in the past. You can give it a try.
- No inventory: one of the biggest advantages of drophipping is that you don’t need to buy products in bulk and risk not selling them. Once a customer makes an order on your website, the producer will take care of everything else. They will ship the product to the consumer without you even touching the product. This reason alone is good enough for you to even consider starting a dropshipping business.
- Easy to scale: Other business models (for example social media marketing agencies) have a hard time scaling their business once they reach a certain level of revenue because they need to hire a ton of people. With dropshipping, the sky is the limit. You can sell as many products as you want because you don’t own them. Also, you can hire virtual assistants and go on vacation whenever you want. It’s amazing to have this option and I personally take full advantage of it.
- No company needed: you don’t even need to start a company or any kind of business entity in order to start making money with dropshipping. It’s important to note that it’s best to create one, as you have certain advantages. I personally have one and it really does help. If you want to learn more about the legal aspects of dropshipping you can read this article. Although I suggest you don’t waste your energy with such small details.
Challenges Associated With Dropshipping
As you can probably imagine, dropshipping is not just sunshine and rainbows. There are a couple of things to keep in mind before starting your business. These are the problems that I’ve personally encountered in my 7 year ecommerce career. Keep them in mind as you can save a lot of money and time by avoiding them:
- Supplier errors: sometimes the supplier will send the wrong product to the customer. This happened to me like once a year and it’s not a big deal. But keep in mind that there is a possibility that your customer can sometimes get the wrong product. I made the mistake to get angry when this happened. You should handle this situation like a good entrepreneur and send them a brand new product or offer them a refund. Suppliers have a lot of orders and we should understand that everyone makes mistakes sometimes. Don’t take it personally and act like a legitimate businessman. Also, if the customer sees that you handle this situation in a professional manner, there is a high chance that they will appreciate the gesture and come back to your store to buy other products.
- Shipping time: these products are sent from China, which means that the customer can receive the product after the deadline. This is not ideal, but in my experience, the customers tend to understand the process and don’t complain about this. My advice is to make it clear on your website that the product might be a little late or that it will take X number of days untill it arrives. Customers really appreciate you being completely transparent with them. This is a great way to create trust and recurring customers.
- There are costs: If anyone tells you start you can start a dropshipping business for free, they are lying to you. In order to start a legitimate business, there are some costs you need to take into consideration. For example, you will need to have a marketing budget in order to attract customers to your website. Also, if a customers requests a refund, you will need to handle the return. My advice is to have at least $1000 to start with. In this way, you will feel safe in case you run out of money.
- Learning curve: I know i told you that you can start making money in a matter of months. This is tru. But keep in mind that this is only possible if you work your ass off and don’t give up. When I started my ecommerce business, I would literally work 12 hours a day to make it happen. This is a business, so treat it like one. A business is not like your typical 9 to 5 where you can put the minimum amount of effort.
Dropshipping is a great business model and it will not die anytime soon. Remember that starting an ecommerce business can literally change your life.
For that matter, you should take it seriously and expect it to be hard in the beginning. There is no “easy money” like the YouTube gurus want you to believe. You should focus on improving your business every day.
Imagine starting a business and working hard for 1 year. Where will you be after the year has finished? My guess is that you will not be at your 9 to 5 anymore. Spending time with your family will be your highest priority.
If you want to learn how to start a dropshipping business from A to Z, I suggest investing in the Kibo Code. It is probably the best ecommerce course out there. Also, the community is full of successful entrepreneurs that can answer your questions.
Dropshipping works. It’s up to you to put in the time and effort in order to succeed.
Related: Kibo Code Quantum Review