How to Succeed With Dropshipping – Is It Still Profitable?


Dropshipping is a business model that is easier for you to start than a traditional online store. With dropshipping, you can make money by selling goods directly from the wholesaler. An easy way to make a lot of money!

Dropshipping is not a new way of doing business. Dropshipping is one of the world’s oldest business practices. Today, this business method is used in many different ways.

How Dropshipping works:

A dropshipping webshop is a store without stock, where you as a webshop owner receive customer orders, and forward these orders to the supplier / wholesaler (dropshipper), and then dropshipper sends out your orders directly to the customer:

  • The customer orders something in your store.
  • You receive an order from a customer.
  • You send orders to the wholesaler and pay for this order.
  • Wholesaler sends the product directly to the customer.
  • Grossit pays you.

When you do dropshipping, you do not have your own inventory.

You sell certain products through your online store, but these items are not in your warehouse.

Instead, you sell products from your supplier (your dropshipper).

When a customer then buys a product from you, he must pay in advance for the product (this is regardless of the most common way of shopping online).

You thus receive an order with one or more products from the customer.

You send the order to your dropshipper.

You then pay for the order with the customer’s money.

Dropshipper sends the goods directly to the customer.

The difference between what the customer paid you for the order, and what you pay dropshipper for the same order will be your profit.

You can choose how much you want to sell a product for.

How to find a dropshipper?

You can not succeed with drop shipping if you do not have a serious partner.

I strongly recommend that you use Salehoo to find one or more dropshippers for your online store (This service costs a little money, but no more than it is worth it).

With Salehoo, you get access to a limited area on the web where you have full control over dropshippers from all over the world.

There is no similar free service available. Salehoo is a unique service, and almost a necessity if you are to succeed with dropshipping.

Who is dropshipping for?

Dropshipping is suitable for those who want to start an online store and sell goods on the Internet, but who can not afford to buy their own goods.

If you do not have the capital, it is therefore a good option to choose the Dropshipping concept.

The advantage of dropshipping

There are several benefits to trading through a dropshipper.

No risk with stock. First, you have no stock and thus you escape from a great risk. What if you had bought products for 50.000 dollars, which you could not sell!

You can avoid it, as it is a dropshipper that sits on all items. You do not have to insure the goods, and there is no cost related to inventory. Cheaper for you!

No logistics. You only send orders to the dropshipper, who takes care of the transport of goods.

Dropshipper also sees that there is enough in stock. You do not spend any time on logistics.

No start-up capital. You do not have to spend money to start your own business. You do not have to spend any money at all, with a few exceptions:

You can create a webshop very cheaply (or for free), all you need is a domain and hosting.

It can be completely free for you: If you do it the easiest way you can sell through advertising services like eBay, and you do not have to spend time on your own online store.

The small cost it costs to advertise is nothing compared to what you earn on sales!

How Much Money Can You Make?

Income from dropshipping can be from a couple of thousand to several million dollars.

In the order of one hundred million, it is clear that one cannot carry this alone, but dropshipping is a very effective way of doing business, so that you can earn a lot before it becomes necessary to use any consultants.

How to make money dropshipping:

Find your dropshipper: Find a company that offers a dropshipping business model.

You will find a list of dropshippers on Salehoo, they are reliable and have the world’s largest dropshipper database.

Marketing – Once you have found one or more dropshippers, it’s time to market products that your dropshipper has in stock.

You can easily do this via online auction websites such as eBay, and if you want, you can also create your own online store where you sell the dropship product.

Process orders – When you receive your orders, you forward them to your dropshipper, this can be done automatically (easily if you use Salehoo).

Items are transported directly from your dropshipper and to the customer’s address.

Your dropshipper takes care of everything that has to do with packing, delivery and possible return of goods.

Work from home with dropshipping

Dropshipping is a very easy way to do business from home.

Much easier than if you first have to buy all the goods yourself, and then sell them to your customers.

In dropshipping, you do not risk sitting inside with a large batch of goods.

In dropshipping, there is no risk.

Here it’s just money to make, and how much you make depends on how good you are at selling.

Anyone who sells dropshipping products in an online auction should in practice be able to make money.

Instead of selling your own products, you sell other people’s products.

Packing, delivery and return of goods are tasks that your dropshipper handles.

Why start with drop shipping

Money. Dropshipping is an easier way to make money, and you can make good money too, many make millions on dropshipping!

Freedom. You can live anywhere and earn a lot of money even if you work from Africa or the South Pole.

Where you live does not matter, all that is required is access to the Internet.

You decide when and where to work.

Buy cheap. With dropshipping, you can buy cheap products for yourself and your friends.

Everything can be bought directly from your dropshipper.

Dropshipping is fun! Dropshipping is a relatively easy way to make money, but it is also fun.

How to make money on dropshipping

You can use dropshipping as a way to make money on the internet, and it is perfectly legal.

The method described here can be used to make millions of dollars online. Here’s an ingenious way of working from home that actually works:

  • Sell products directly from dropshipper on eBay, etc.
  • Receive orders from customers and forward them to your dropshipper.
  • Make money: Your profit corresponds to the difference between your price to the customer, and dropshipper’s price to you.
  • This really is not difficult, and most people should be able to succeed in dropshipping if they really try, and I mean really try.

More in-depth explanation

1. Choose the right financial niche and market

The first and most important step to make money through dropshipping is of course to choose the right product for the right market.

You have probably already thought about some products that you think would sell well online, etc.

My advice is to ensure that your niche is also sustainable from a dropship perspective. Choose items that guarantee high profitability.

You also want to choose products that give you the opportunity to create a “wow experience”.

You simply want to give the market something that is unique and that solves a common problem that occurs with your target audience.

Define and analyze your market.

When you sell online, the geographical boundaries are blurred.

Define your actual market online, are there international or national companies already offering the product in question?

Examine whether your products stand up to price and any other customer benefits.

Avoid selling products that are already on your market.

Make sure your product niche has high conversion. You should keep in mind that the people who come to your online store or website should be impulsively inclined to buy.

This is a difficult task because higher priced products are usually more difficult to sell to impulsive buyers.

I therefore recommend that you choose a niche that attracts people in a target group who have the capacity to pay a high price even for more spontaneous purchases.

2. Conduct a competitor analysis

  • Identify your competitors. It can be physical stores that are your competitors as well as international players that you do not spontaneously think you will fight for market share. Define and document.
  • Identify your competitors’ strengths, weaknesses, strategies, etc. It may sound overambitious or even very theoretical to analyze and record information about different competitors, but believe me it does not have to take that long. You can use a SWOT analysis to get an overall picture of your main competitors.
  • Evaluate. What makes you different? You should have a clear strategy formulated.

3. Find wholesalers in America & Europe

Although this set of avoiding warehousing and logistics (TPL) is hot now, not all vendors outwardly offer this type of solution.

In different European countries, strangely enough, it is common for retailers to contact suppliers on their own to investigate the possibility of selling the supplier’s products via dropshipping.

However, I believe that the absolute best way for those who want to get started is to sell through a portal for dropshipping!

The advantage of a portal or platform is that you get a ready-made solution with connected suppliers.

You can choose the items that suit you and start selling right away.

There are several interesting services to choose from for those who want to try dropshipping.

The best portal or platform available is Oberlo. Oberlo is an additional service to Shopify that can be used for free.

The problem with Oberlo is that many (but not all) products that you access via the service are Asian-made, which can mean that deliveries and customs are not advantageous for European companies, not sure if the same applies for America.

Oberlo is thus integrated with AliExpress and gives you access to more or less all products from AliDropship.

For this reason, Oberlo is more popular among European users who want to sell in non-European markets.

The disadvantage of Oberlo or AliDropship for those who want to sell in non-European markets is that the competition is tougher than in the European markets.

Looking on your own for suppliers who may offer to dropship products to your customers can of course be a solution for those who focus on selling products of a more unique nature.

But in general, it is a more complicated solution. To be successful, high demands will be placed on you to have a professional webshop or well-made, own website with a nice layout and well-written content.

You will need to find suppliers who are flexible and open to this type of collaboration, but above all you will need to sell your idea to succeed.

4. Build a professional e-commerce site

The absolute best and easiest way is to choose a complete solution that gives you everything (features, web hosting, SSL, etc.) in one place. In my opinion, the best complete solution on the market is Salehoo.

Building your own online store is both easy and inexpensive, but it takes a lot of time.

Another interesting solution is to buy a completely finished webshop that is adapted and delivered according to your needs.

It is especially recommended for those who want dropshipping via Salehoo.

Ordering a ready-made webshop from Salehoo or Aliexpress that is built according to your instructions costs approx $ 299.

5. Digital marketing

You can have a fantastic product that the market demands but the fact is that dropshipping is about being visible.

I recommend that you focus on a marketing channel that you will be really good at.

For dropshipping, marketing via Social Media (Facebook and Instagram) is usually the best channels. Even TikTok can work.

Do not think that it is easy to market yourself via social media. It takes time to get good, but with a really good course you get a good head start and it is well invested time.

If you are going to market yourself via, for example, SEO or SEM (which I usually do not recommend for dropshipping), then there are a lot of good tools you should know.

Check out Google Trends and Google Keyword Planner.

These are great tools for understanding how to attract potential customers online.

What are the disadvantages of applying for dropshipping partnerships on your own?

My advice is to go through a portal for dropshipping to minimize risks and problems that might otherwise arise!

Anyone who wants to find dropshippers on their own should first consider the following:

1 If you fail to find a reliable supplier who is not able to maintain a high level of service, it can have devastating consequences for your business.

The customer will perceive that your service is poor as the supplier fails to deliver according to agreement.

One way to avoid this is to develop a collaboration regarding drop shipping with an existing supplier.

By letting this collaboration grow gradually, you take less risk.

2. You will not be able to control the logistics flow.

If your supplier has problems, it will be difficult for you to quickly solve the customer’s problems.

In some cases, you can send a substitute product, but this presupposes that you also have your own inventory for part of the range.

Regardless, all logistical problems will most likely be more difficult for you to solve for you.

3. Although you minimize the handling cost with dropshipping, you should not underestimate the job.

Expect that you will need to administer and set up processes to clarify the demarcation between you and the supplier.

For example, who is responsible for the order slips, returns, complaints, spare parts, invoices, balances, customer coupons, discounts, etc.?

As a rule, this is handled by your supplier, but sometimes the demarcation is not clear.

Make sure you set up clear processes and boundaries regarding ownership.

For well-established companies that work with dropshipping, these processes are complete and you do not need to think about this.

It is different if you start a collaboration with a company in, for example, Sweden or the Nordic countries that does not have this experience. (I am swedish, thats why I bring it up).

4. Dealing with taxes is usually no more complicated than when you buy from a regular supplier.

Do not forget to count on VAT if you choose to sell within the EU.

5. Price war:

with this set you will have small margins which means that you will have a hard time offering the best price for products sold by several other players in the market.

Make sure you have a strategy where you, for example, offer more niche products / services or that you can add something else that the customer is willing to pay for.

Conclusion

As with any business, this is gonna take a lot of work and I am not gonna sugarcoat any of this, the majority of people who start a dropshipping business fail.

Why? You may ask, becasue the majority of people give up too fast. They think its some easy get-rich-quick scheme and thats simply not the case.

Starting a Dropshipping store can also be a great segway to starting a bigger company later on. Dropshipping can be a great learning curve on how to run a business.

Also check out this video of a guy on Youtube trying to start a Dropshipping business.

You will get a general idea of how it can go and what to expect.

probably the most realistic video out there.

Keep in mind, all the succesfull dropshipping busineses have 1 thing in common, they never gave up!

Sources

https://dl.acm.org/doi/abs/10.1145/3271972.3271993

https://books.google.se/books?hl=en&lr=&id=FAChBQAAQBAJ&oi=fnd&pg=PR11&dq=Dropshipping&ots=OX5Sm3h5gj&sig=jdrMjxl-_pt4FosDPR-Qo1gV-lY&redir_esc=y#v=onepage&q=Dropshipping&f=false

Kevin

This article has been reviewed by our editorial board and has been approved for publication in accordance with our editorial policies.

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