There are a lot of people who advertise their services on YouTube and Facebook to help you succeed at dropshipping. There are also a lot of people who will help you get started in this business by giving you free tutorials.
But why do people like it? Some people say this is a scam, but is it really?
Let’s look at the dropshipping business model and try to figure out why it has become one of the most popular ways to make money online.
How does dropshipping work?
Dropshipping is a business partnership, but the two people involved don’t have a written contract. In this business strategy, the seller looks for a supplier for a product, and most of the time, he doesn’t even have to meet the supplier in person.
The seller only has to talk to the supplier, and sometimes he doesn’t even have to do that. There are a lot of dropshipping sites like AliExpress where you can find suppliers. Also, you can become a member of many companies, like Spocket, that have a list of suppliers in a country of your choice.
The seller will sell this product online once he has chosen a supplier and a product to sell. He can do it on Amazon, eBay, Facebook, Instagram, or he can build his own website where he can list the items.
The seller needs to be good at marketing and quick to answer questions from customers. This means that the seller has to know how the products work, if they can be returned or exchanged, and how long it will take to ship.
Once a customer buys something, the business owner will only buy that item from the supplier once, and the supplier will ship the item to the customer.
The seller doesn’t have to keep an inventory, and he doesn’t even have to go to the FedEx or DHL office. All of this will be done by the provider.
When the seller places an order with the supplier, he or she will use the customer’s shipping address, not their own. Even if the customer is from another country, the supplier will take this into account and send the item to them.
But there will be customs fees on international shipments.
What does the seller do to make money?
When the item is sold for more than it cost to buy, the seller makes a profit. If the seller buys an item for $15 plus $10 for shipping, he might put it up for sale and ask $35 for it. His initial investment is $25, and his total profit is $10. He keeps the $10 and gives the supplier the $25 that the customer paid.
From the $10 gross profit, the seller has to take out the money he has to pay for things like electricity, employees, an internet subscription, advertising, and other business costs. The amount left over is the net profit.
At a gross profit of $10 per item, and if the seller sells 10 items per day, that’s 300 items times $10, which is $3,000.
This is not a small accomplishment, since the seller made $3,000 by running this business for about two to three hours a day.
Why do so many people use dropshipping?
As you can see from the description of the business model above, dropshipping is a very popular way to do business for a number of reasons. In short, it helps both the seller and the supplier in a lot of ways.
Dropshipping is popular for these reasons:
No stock is needed
You don’t have to buy the items before selling them. All you have to do is buy at least one so you can try out the product. If it’s good quality, it will be easy to sell, and you won’t have to worry about customers being upset.
Easy to manage
Dropshipping means that you don’t even have to keep track of your own sales or inventory. There are many apps that will automatically do this for you. You don’t have to change the prices on your website when the prices from your suppliers change; the system will do it for you.
No trouble with logistics
You don’t need to print a label for shipping. You don’t have to put the items in a box and take them to FedEx. This will be done for you by the supplier. The only thing you need to do is sell.
Small capital needed
Dropshipping is different from many other businesses in that you can start with as little as $30. Since you don’t need to buy inventory, the only money you need is to pay for a website host. If you don’t want to pay that, you can start your business for free by dropshipping through Amazon or eBay.
No real estate required
You won’t keep an inventory, so you don’t need to rent a warehouse to store your goods. You also don’t need a big office.
You can work from your living room, kitchen, or a coffee shop if you want to. You can also hire freelancers who will work from their own homes to help you.
There are many things to choose from.
There are millions of products made by thousands of different companies. You can choose products that are selling well or you can pick a niche and find the right market for that product.
The whole world is your store. Since you can find suppliers from all over the world, like the UK, China, Australia, the US, and many more, you can sell your products to countries near the supplier for fast shipping.
Simple to understand and set up
To be a successful dropshipper, you don’t have to finish college. You just have to be willing to learn it. Also, you don’t have to build your own website because you can use automated drag-and-drop web builders.
Suppliers are ready to sell.
Many suppliers are happy when you sell their products because it lets them focus on making the products instead of selling them. If 100 people are selling a supplier’s products, the supplier might be willing to lower the price and sell the products to the sellers at wholesale prices, even if the dropship sellers are only buying one item at a time.
Statistics about dropshipping show how popular it is
Here are some call statistics about dropshipping to help you learn more about how it competes with huge, well-known companies.
- The dropshipping model is used to fulfill about 23% of all online sales around the world. That’s about $85 billion, not millions, of dollars per year.
- 34% of sales on Amazon are made by dropshippers who put their products on Amazon.
- Every year, e-commerce grows by about 17%, which includes sales from the dropshipping model.
- If a supplier sells to a dropshipper instead of making sales from their own online stores, they make 18.33% more money.
- Dropshippers can make more than 50% more money than people who keep their own inventory of goods.
Where Can You Learn How to Dropship?
There are a lot of good dropshipping courses and tens of thousands of dropshipping videos out there. The problem with free stuff is that it doesn’t teach you very much.
If you really want to learn how to dropship, you need to be willing to spend money and think of it as a formal business education.
Find a course on dropshipping that covers the following:
- How does dropshipping work?
- How does it work
- How does one get started?
- How to find a product that sells well
- How to look for a provider
- How to set up a store on the Internet
- How to make your online store SEO-friendly
- How to find clients through ads and how to use Facebook, Instagram, email, etc.
- How to make a business plan that will make money
- If the course covers these things, you’re in good shape.
How do I get started with dropshipping?
It’s easy to build an online store by following a few simple steps. But you should know that dropshipping is a serious business, and you need to put in time to make a website and business that look professional.
Here are the steps:
- Pick a winning product and vendor
- Make a store that looks good and has a way to take payments.
- Plan a business process that includes correct pricing, policies on refunds, etc.
- How to sell your goods the right way
Dropshipping is popular because you, as the seller, can make a lot of money with a small amount of money. In reality, your time is the most important thing you’re putting into this. Since you will be doing this on your own, be ready to spend a lot of time researching good products and suppliers, making a great website, and learning how to sell your products.
Getting things done is the key to being successful. If you study on your own by watching a lot of videos from different places, you might get too many different points of view. Dropshipping as a business has a lot of methods that you may or may not want to use, but all successful dropshippers do.
Focus on one course and learn the techniques well to avoid this. After you finish the course, you can start your dropshipping business and learn as you go.