If you’re currently thinking of building your own business or coming up with a side hustle to get more passive income, you’ll probably have heard of dropshipping.
Dropshipping is when you can sell stuff online without ever having the products physically in your hands. Think of you, as a dropshipper, moving products from the supplier directly to the consumer. All you need to get started is a laptop, an online store and an understanding of how to do online advertising and sell online. We teach you how to dropship profitably in this article.
Focus on Execution: Bring your Dropshipping Idea to Life
Starting a business starts with an idea, but without execution, it just remains an idea. It’s the same with making money with dropshipping – your commitment will determine the success of your efforts.
Following the Covid pandemic, everyone has made the shift to buying online. Can you still make money with dropshipping or is the gold rush over for you?
For any business, one of the key drivers to success is finding the right products to sell – how do you find these, where do you find these products and how do you know if there’s demand for these products?
Welcome to the world of Dropshipping – except that you don’t handle the shipping, logistics and what-nots – you just focus on the marketing aspect of it as a dropshipper. Hence, dropshipping start costs are known to be lower than setting up a physical store.
People can sell anything over the internet, with an estimated 20 percent to 25 percent of online retailers using dropshipping, which goes to show that it’s a proven business model.
Can I make $10,000 a month by Dropshipping?
$10,000 a month is a very achievable goal. I’ve seen several people get there in just 6 to 9 months, with some making it even quicker. Most people quit shortly after trying, but from what I’ve seen, people who actually stick with it for at least 6 months almost always do really, really well.
Look at BeerCapMaps.com for instance. They sell some of these maps for $80, but you can ship them from AliExpress at a cost of $20.
If you’re spending $20 on ads to make each sale, your net profits are $40 on each map. Get to a point where you are running enough ads to make just 8 sales a day and bam, there’s your $10k/month!
Even at 3 sales a day, you’re making an Average American’s annual income on autopilot – this is how you generate passive income every month for yourself!
Advantages and Disadvantages of Dropshipping
Advantages of drop shipping are such as; lower capital requirements, wider product selections, reduced risk, location independence and highly scalable form of shipping.
Disadvatnages: However, since you will be dependent on the dropship vendor to fulfill the second part of the agreement, using this method can give a lot of headaches when trying to build a brand for your business. Sometimes the vendors can mix up your orders and send wrong items.
This is a significant problem that will make your customer not trust your business. At some point, delays can occur, and you will need to explain to customers why this happened.
I’ll break this process down to product selection, sales page build-out, and marketing in a minute but I want to make something very clear first…
You don’t want to start on Amazon (or eBay).
Sure, you can do well. But there’s just so much more opportunity in having your own platform like BeerCapMaps.com. I started on eBay at 14 years old and made thousands of dollars. But, I could have made a lot more money had I put that same time and effort into my own, separate stores.
And eventually I did.
Main reasons why you should avoid Amazon & eBay:
People come to Amazon and eBay for deals. Not only is it far from ideal to work with small margins when you drop ship, but it’s super easy for customers to compare your prices against hundreds of other competitors.
It’s hard, if not impossible, to build a brand.
Branding is what makes your drop shipped product worth the price tag to a customer. Sure, you’re just selling white label (unbranded) commodities with a mark-up. Commodities that can likely be found elsewhere. But branding is what differentiates you.
Professional photos, not stock photos. Cool logos, missions, values. Throwing free knick knacks in with orders to keep you on customer’s minds and make them happy.
But most importantly, overall design. The look and feel of the sales page- what does it communicate? Compared to a barebones Amazon page with a stock photo. Perceived value is everything.
Marketing is really challenging. 2 key takeaways here: (a) People don’t buy the first time they see your product, they buy the 5th time they think about it (on average), and (b) your best new customer is an existing customer.
You know those ads that follow you around the internet after you visit a website?
That happens because of re-targeting ‘pixels’ that you can easily copy & paste onto your sales pages to bring customers back. E-mail is another great way to keep existing customer and prospective customer attention. Blogs about topics related to your products also keep people around.
You’ve got a nice business up and running. Do you think that business will sell for more money if it’s on Amazon, or an independent, branded store?
Businesses sell for multiples of earnings, depending on risks, brand value, etc.
Not only will an Amazon business’s value be lower because earnings are diluted by fees, but you won’t have the brand, customer retention, and growth opportunities.
Plus, Amazon owns your web property, and potential changes in the way they run things pose great threats to your business.
So if an Amazon business sells for 2x annual earnings and an independent brand sells for 6x earnings, (spitballin’ here), $10k in profits a month would give your business a value of $240k on Amazon, and $720k independent of Amazon. That’s huge.
Every dollar in profits is 3x more valuable off of Amazon.
So what does it look like to dropship from your own site?
The other day I was browsing around for new product ideas. I like to use subreddits like r/Shut Up And Take My Money.
Now, I suspect what beercapmaps.com sells is not what’s on AliExpress. That being said, they are nearly indistinguishable from pictures. It’s clear you can sell the ones from AliExpress for $70 to $100, and never hold any inventory! Just ship to your customer’s address from AliExpress.
Your customer pays you $80… you pay the AliExpress seller $20… and you walk away with $60 (minus advertising expenses).
There are lots of cool products on AliExpress that offer similar opportunity. Go ahead and browse around AliExpress, sorting by # of orders, and paying close attention to reviews. Ask yourself, what can sell for $20+ more than cost with a dedicated sales page, brand, nice photos, etc?
Alternatively, you can do what I do to find product ideas: browse subreddits like r/Shut Up And Take My Money or r/INEEEEDIT. When you find something you think you could promote successfully, find it on AliExpress and start building your sales page.
Building sales pages can be tough, especially because you’re starting with a blank canvas with so many different decisions to make.
You need to dropship a quality product
At the end of the day, you need to deliver a quality product, even if it’s private labeled. This is important.
Get samples from the best vendors and differentiate yourself.
Invest in quality design – this is big.
People don’t like to pay a lot for crappy design. Yes, the labels count and so does the packaging. But, in the beginning, get the bare bones to get sales rolling and reviews kicking.
You need a system for soliciting reviews and don’t be afraid to lose money on your first batch. Just order a small quantity, sell out, and when you start profiting, use that to grow your business.
Once you get to a reasonable amount, you can move to your own website.
You need to build assets in order to sell one day. Never build your whole business on rented land (you don’t own Amazon.com or the customers, Amazon does).
So, how do you get dropship suppliers?
- Call all local and international vendors who you already know and offer them opportunities to expand the sales volume by selling on their behalf.
- Use the internet to search for manufacturers and suppliers directories, but be careful not to fall into the traps of fake ones. Most drop shippers will not request for upfront fees if you get this type of response run as this could be a fake supplier.
- Attend local and international exhibitions; this allows you to get in contact with manufacturers directly
- If you have the financial investment, buy bulk from wholesalers and receive a discount on the product purchased.
- Use existing business in the market to start off your project. Sell product of other store owners in your country of origin and work your way up the ladder.
Once you have a product, you can start easy by selling on Marketplace and later create your standalone eCommerce website once you have the resources.
What if I dropship products from China?
One of importing things that you should manage your supply chain in China. The cheaper product comes from factory. Focusing on Amazon Marketing and find a potential product.
There are some tips for you if you source from China.
Product Development in China
If you are ready to source from China or initiate other potential category. Ensuring your product competition from your Chinese supplier. Product similarity is a common thing on Amazon.
Find out if you can improve a product or not.
The best way is to see what every customer is complaining about to check it out at critical reviews. But you should remember that it isn’t as easy as making the bigger change of products to improve it from your China factory. Sometimes you might need to change the material or the design even to completely reconstruct the product what you want.
Will extra production cost bring you extra value?
Chinese factory will keep molds in their warehouse. Tooling cost are used when manufacturing your customized products. This will be lots of money when you need to design your special product from your drawing.
However, you can negotiate with suppliers to reduce your mold costs or flat with them. Often, if you purchase a large amount they would not charge for your mold fee.
This will not be possible in every niche.
Before you ensure the niche market where you want to approach. Understanding extra production cost whether how much extra value brought for you.
If the extra cost to improve a product is way too high cost then it would not be a best decision to make a vast changes. You must understand what is flaw going on.
Even simple products have a variety of materials that can be used to cut down or increase on price. It can take considerable time to dig into market and figure out what everyone is doing.
Product development is a long time, you need to constantly communicate with your Chinese suppliers/factories to understand the production process.
However, if you have free time to visit the factory in China, it will promote your new product development more efficient.
There are three options you can try to fix it better.
#1 Multiple Sizes and Colors
As long as you do not change the mold of the product itself, then you do not have to worry about the large additional costs.
Many Chinese factories haven’t publish their products for more size and color choices on Alibaba or they do not use B2B online platforms at all.
Requiring them to provide more choices for your target product. Besides that, some of the usual size and color of products should reach the factory’s MOQ (Minimum Order Quantity) to get started.
If your quantity lower than the MOQ, it’s available only when your factory get other order of same product to mix production, or you will have to find another smaller factory.
Chinese factories will not re-purchase raw materials for hundreds of pieces. They are willing to customize your product’s size and color, but need to meet their required quantity.( 2000-3000 depending on scale of factory and product type)
Difference of material could be affect product’s durability, functionality and appearance. Let’s take a stainless steel product as example.
What do you need to know? #304 stainless steel is much expensive than #430 due to it’s better performance of rust-proof. When you get understood of this, you can mark the title or description like: “304 stainless steel made, won’t be rusting”.
And you can also use thicker material of stainless steel to claim “25%/35% thicker stainless steel won’t warp”.
All of these will become unique selling points for your amazon products. Surely, it will lightly increase your cost, you should pay attention to the cost and make sure your pricing if acceptable by your potential customer.
You have to be proactive about this, building good relationships with your supplier because they would not tell you anything before you do business with them.
#3 Packaging Option
A good packaging design will help you stand out in similar products.
Do some research of your competitors packaging to see if you can beat them in this aspect.
If yes, go to Fiverr: The Marketplace for Creative & Professional Services or Elance to hire a good designer to improving it!
Just one thing need to keep in mind, DON’T go with oversized packaging. It will be costly on shipping and warehousing.
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