Dropshipping is one of the safest and easiest ways to do that! It is a low-risk online business model that can help you get from 0 to hero with a few hours of work per day and it doesn’t require a big investment. Dropshipping is a type of order fulfillment where store owners don’t manage inventory themselves. Instead, dropshippers buy the items from a third-party supplier who fulfills customers’ orders for them. As a dropshipper, you do not need to buy hundreds or thousands of collars or leashes in advance and store them in a rented warehouse (or your garage) until you make a sale. Instead, you find a third-party vendor who has the warehouse space to stock your items.
Once a customer purchases from you, your supplier (or suppliers, there can be many of them), takes over the process and ships the product directly to your customer. You never need to deal with logistics! Your main task as a seller is to get the customers to your online store – do marketing for your dropshipping store. You can do that from anywhere as long as you have a laptop and internet connection!
Why dropshipping became popular
Technically, dropshipping goes back to the 60s when you could order things from a mail catalog. You chose a product you liked, made a call, and you’d have it delivered from a warehouse straight to your door.
But let’s talk about what has happened since the internet came into play.
In the 2000s, Amazon and eBay made it possible for people like you to sell online. Both Amazon and eBay allow dropshipping. They take dropshipping fees, though. For example, Amazon takes between 10% to 15% of your profits. However, Amazon allows you to get in front of over 300 million active users with high purchase intent.
Dropshipping on Amazon
The most well-known of the online marketplaces, Amazon is said to have 300 million active users. In 2016, more than 100,000 sellers made more than $100,000 on Amazon. Amazon offers additional services such as fulfillment by Amazon and Amazon Prime. Fees vary a lot, but it’s estimated that most sellers will pay about 15% of their sale price to Amazon. It’s a popular option for dropshippers and there’s a heap of benefits of Amazon free shipping for dropshippers.
Dropshipping on eBay
eBay is said to have 171 million active users with about 1 billion products listed across 190 different markets. eBay charges listing fees (but offers a limited number of free listings) and sale fees, which are generally less than 10%. eBay has an auction option and also operates as a standard online retail platform. There are plenty of tips on how to find success on eBay out there.
Dropshipping on Etsy
Etsy is said to have 54 million members, about 2 million active sellers, and about 32 million active buyers. It’s extremely popular with women (84% of sellers are female). Etsy has established itself as a more trendy online marketplace with a focus on arts, crafts, and handmade goods. As well as home decoration dropshipping stores. Plus, it’s easier than ever to dropship on Etsy.
Dropshipping on Walmart
This superstore now has its own online marketplace, which could be a great option for dropshippers. Alongside offering the traditional dropshipping model for listing items to be dropshipped, it also supports different dropshipping business models, such as dropshipping Walmart items on other marketplaces. As a newer option, you may be able to beat some of the competition already present on Amazon and eBay by selling on this marketplace.
With the rise of Shopify, people were able to create online stores in just a few steps. Other marketing automation apps in the Shopify App Store allowed merchants to make their lives even easier. For example, SEO apps for Shopify can help you rank on a search engine like Google. With more than 5,300 apps in the Shopify App Store, entrepreneurs like you can now become dropshippers easier than ever.
Dropshipping really kicked off with Shopify!
BigCommerce is a hosted ecommerce platform. It has a fair share of the ecommerce platform market and claims to host more than 150,000 websites, both big and small. It is known for its simple user interface and quick ecommerce setup process. As a hosted ecommerce platform, compared with Shopify, BigCommerce is more affordable because it doesn’t charge any transaction fee, and offers unlimited staff accounts, apart from other prominent features.
Magento is the third most used ecommerce platform in the world. It is powerful but complex and may not be suitable for beginners. Magento is a developer-friendly ecommerce platform and requires at least basic programming knowledge. Most dropshippers using Magento as an ecommerce platform either know about Magento store development or have hired developers for that purpose.
Spocket is a phenomenal ecommerce dropshipping platform designed for ecommerce store owners who focus primarily on dropshipping. Keep in mind that this is not a standalone platform; it will integrate with WooCommerce and Shopify stores.
Facebook Marketplace is humungous; the CEO, Mark Zuckerburg, reports that more than 250 million people are interacting with Facebook storefronts each month. For this reason alone, it’s well worth building a Facebook business page and selling on this platform.
Fast-forward 10 more years, AliExpress happened and enabled anyone in the world to buy products directly from Chinese manufacturers.
The launch of AliExpress massively influenced the dropshipping industry because:
- The language barrier was gone.
- The buying process became easier and cheaper.
How dropshipping works
A supply chain is the process of a product moving from a manufacturer to a customer. Technically, the chain goes as far as the mining of the materials used. However, to understand the dropshipping business model, it is enough to focus on the key players: manufacturers, suppliers and wholesalers, and retailers. Therefore, the supply chain consists of three parties:
The manufacturer’s role in a dropshipping business model includes creating products, carrying inventory, shipping products to customers on behalf of the retailer, replacing defective products, and restocking them.
the manufacturer of the products you dropship; sells those items in large quantities to suppliers and wholesalers.
If you want to get products directly from manufacturers. For example, instead of going to AliExpress to look for suppliers, you can contact manufacturers at Alibaba.This way, you will pay less for your products because you skip the supplier. You will also be able to customise your branding a little too.
Sometime, manufacturers usually have minimum order requirements. So you will have to meet the manufactures requirements. This means you will have to invest large sums of money upfront, which can be risky when you’re still just starting a dropshipping business.
The person who buys products from manufacturers and sells them to retailers (dropshippers).
Suppliers usually specialise in a particular niche, making it easy for you to find the items you want to sell. They mark up the products a little. However, their purchasing minimums (if they have such) are usually much lower than those set by manufacturers, making it much more convenient for you.
The person selling products directly to the customer – you! This is the point of sale for your customers.
Once the product goes through the supply chain and is marked up several times, your task is to make sure your profit margins are high enough for you to earn money, yet not too high that your potential customers would choose your competitors instead.
Are dropshipping companies profitable?
Today, dropshipping is a legit business model that can help you earn $10k in two months or more once you get the hang of it! The sky is your limit. Dropshipping works so well that more than 33% of online stores use it to fulfill their product demand.
Like we discussed before, dropshipping is projected to be a $591.77 billion industry by 2027. How do you get a piece of that? Let’s go back to your imaginary dog product store.
Let’s imagine that one of the products in your store is this orthopedic dog bed.
You can buy this bed on AliExpress for as low as $8.45. You sell it for $39 in your online store and shipping and advertising costs you $9 per product (most customers expect free shipping, so we advise included the shipping costs in the price of the product).
Let’s count your profit:
$39 – $8.45 – $9 = $21.55 per product
If you want to make over $10,000 per month, you need to sell about 464 of these dog beds.
When you think about it, 464 is not that many when you can target potential customers from all over the world. With the right advertising tactics, you can make thousands of dollars per month!
So, yes, dropshipping can be a highly profitable business model. You just need to find winning products and install a few Shopify apps that will help you get sales. Many of those apps offer a free trial to make it easier for you to choose the best one.
Dropship your way to ecommerce success.
All in all, a dropshipping business can be a fantastic way to get started in online retail, a side project for those in full time work, and even a profitable standalone venture.
It’s easy and inexpensive to get started, so we hope this guide has helped you suss out whether or not dropshipping is a viable business option for you.