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If the thought of a massive warehouse stocked up with items that aren't being ordered terrifies you, dropshipping is here to keep that nightmare from ever becoming reality. As a fast-growing e-commerce business model, dropshipping lets you ship items directly to customers once an order is placed, rather than having to keep stock in your warehouse. Empty Vape Cartridge
Dropshipping is therefore adding extra flexibility to e-commerce, lowering the barriers of entry for newcomers. However, the world of dropshipping can be daunting if it's your first time seriously thinking about getting into it.
We give you a helping hand with this thorough guide into dropshipping. From understanding the benefits to how the process work, to identifying the best dropshipping suppliers, you should feel more confident about becoming a dropshipper by the time you reach the bottom of this page.
Dropshipping is a method of business where you commission suppliers to ‘drop’ shipments to your customers' doorsteps on your behalf. No mess, no fuss, and no having to deal with tons of boxes and packages in your own garage at home.
You don’t have to stock or keep track of inventory, which can make it a very alluring prospect (especially in these post-pandemic times) as a new revenue stream, whether that’s full-time or as a side hustle on the weekends.
However, dropshipping may not be for everyone. There are a number of factors which could make or break your business and determine whether or not you will actually be successful in your dropshipping venture. In this article we’re here to give you the honest truth of the matter – warts and all – not the marketing spiel or best case scenarios.
You’ll learn how it all works, how much work you’ll have to put in, and whether or not the potential profit is worth your time. We'll also recommend ecommerce platforms you can use to kickstart your dropshipping business, with our top choice being Shopify.
As mentioned above, dropshipping is almost a “done-for-you” product shipping service from you to your new potential customers. The process is quite simple and goes as follows:
Shopify is our #1 pick of online store builder if you want to start a dropshipping business
Dropshipping is used in a variety of ways and with a variety of different products. You can start a store for almost anything you can think of these days, from phone cases to partyware – there are suppliers for everything. Once you’ve decided on what you want to sell, you can start shopping around for dropshipping suppliers. We’ve collected a few here, with some recommended based on the specific website platform you’re using.
AliExpress is the best all-rounder platform when it comes to dropshipping because of their extremely vast product range, good prices and overall ease of use.
DSers is a platform that integrates with Shopify and has a range of over 20,000 products. (Wondering whether Oberlo would be a better choice? Note that it was announced that Oberlo will be shutting down and will no longer be available on app stores from 2022).
Modalyst is a platform for primarily Wix users over 350,000 online businesses and entrepreneurs have used.
You can also run your dropshipping business on Amazon and Ebay, as long as you follow the specific rules on each platform on how to do it properly so as not to violate any of their community guidelines.
Before committing to one of the dropshipping services above, it's important you first choose which ecommerce platform you'll use to build your dropshipping store. This way, you can ensure your platform is compatible with the dropshipping app you choose – for example, DSers would be the best choice if you're using Shopify. There are also plenty of other factors to add to the equation, such as budget constraints and how much experience you have with web-building products.
Based on our in-depth research and user testing, the three clear winners on the best ecommerce platforms for dropshipping podium are:
Dropshipping beginners who want a simple and easy user experience, with expansive sales features
Users wanting a free and easy-to-install ecommerce platform that will get them operating as quickly as possible
Users that want an ecommerce platform offering high-level dropshipping product customisation and automatic inventory synchronisation
Advanced users who already have experience using an ecommerce platform to run a dropshipping business
Using multiple channels to promote the products in your dropshipping store
Dropshipping business owners with experience in website building, who want to get going with minimal outgoing and support costs
Varies – full breakdown in the pricing section
There’s no doubt that dropshippers globally are making money. Whether or not the average Joe is one of them however, is a different matter.
Dropshipping can be incredibly lucrative and successful, but it is a highly competitive market and only the best seem to reap any real benefits. According to Shopify, top dropshippers from around the web estimate that only between 10% and 20% of dropshipping businesses actually succeed.
A lot of your success will depend on scale and time.
Scaling takes a keen eye to know what products will be profitable and potentially push them further with advertising, as well as making sure your supplier can actually deal with larger demands and orders in the case of a particularly popular product.
Time is involved to potentially build a brand around what you sell in order to build trust and familiarity, and to ensure that customers have loyalty to your store in particular instead of the thousands of other dropshipping stores out there.
A lot of people go into dropshipping thinking it will be a ‘get rich quick’ scheme, when that is definitely not the case, so they don’t put enough effort into these two crucial aspects. The industry is certainly not without its fair share of failures.
Zeky Ahmed of Zeky Enterprises, Inc. spent 2 years dropshipping before he closed down his e-commerce business and switched to affiliate marketing and selling digital information-based products.
“I tried dropshipping back in 2016 and spent a good two years trying to build that business. It didn't work out and ultimately I had to shut it down, losing a lot of money in the process, because I ended up running out of the cash I needed to keep running ads to my store.
I'd say dropshipping can definitely be worth it if you know what you're doing or have someone reliable who can show you the ropes…. I have friends that are currently making a lot of money doing it. But for most beginners, they SEVERELY underestimate how challenging it is. You need to have a big enough budget of at least a few thousand bucks to test your products, marketing and everything else until you finally get profitable.”
The average dropshipper in the UK in 2022 made around £2000 a month, but there is no limit to how much you can earn. People like Irwin Dominguez from San Diego for example, is a fast growing and high-earning dropshipper who made $1,000,000 in profit within 8 months.
The niche you choose has an impact, as some are much more profitable than others. The most crowded and profitable niches are in the Gadgets, Devices, and Accessories Niche according to Alidropship, with 18.5% of all dropshippers catering to the high demand for new trending technology.
A higher price point too would decrease the amount you’d have to sell, and that would also have an impact in gaining more profit.
As an example of the type of profit you could make: if you sold 25 phone cases a month at £80 and deducted the supplier's wholesale price of £20, that would put you in the market of the average dropshipper’s profit range – a potential earning of £18,000 in a year.
You can make a rough estimate based on a 20% margin and 2% conversion rate but you need to factor into your profit calculation that your discount from wholesalers might be less than 20%, with other expenses and competitors undercutting you at this profit margin.
It’s important to show discernment when researching stats online before you compare yourself against anyone in the dropshipping industry however, or get too starstruck by the larger numbers.
Smaller dropshippers and people wanting to sell online courses will often embellish and promise huge numbers as their sales strategy with no viable evidence that they can provide this for you – while the larger dropshippers are actually generally more private about their exact earnings since they don’t feel the need to boast – so the figures are vast and hard to get a truly accurate read globally.
It makes sense to set up your ecommerce platform before committing to a dropshipping provider. This way, you can ensure the provider you choose integrates well with your online store.
We highly recommend Shopify owing to its excellent offering for dropshippers – especially those new to the game.
Our independent research reveals that Shopify offers some of the strongest sales features on the market, like easy multi-channel integration, fully customizable checkouts, and unlimited inventory allowance for those wanting to scale their stock without additional costs. You can start a free trial today!
If you haven’t prepared with as much knowledge as you can, especially in the beginning, then yes there is the potential to almost certainly lose money. As mentioned above, a common mistake most new dropshippers make is failing to choose a good niche.
Other ways you might lose money include needing to purchase your own products at least once to test quality, see how fast they are delivered, and that your supplier is reliable. You may need to verify your business with your online banking providers before any influxes of huge profits lead to your account being flagged for suspicious activity. These are two examples illustrating the multiple, most common setbacks that can occur rapidly for newer dropshippers.
Aaron Agius, Managing Director & Co-Founder of Louder Online shares:
“As far as numbers are concerned, I can't say dropshipping is the same it was 5 years ago. It's a highly competitive market with low-profit margins, low supply chain control, and legal liabilities. It's also harder to build a lasting brand through dropshipping than it was before. All things considered, dropshipping is still a viable business option IF you can meet the right conditions.”
While the uncertain dropshipping atmosphere rages on, there are some people who advise to avoid it altogether and still swear by older and more tried-and-true methods.
Rick Hoskins, founder of Filter King is one of them. He states:
“Dropshipping is not a good long-term strategy. You’re leaving a tremendous amount of money on the table by not owning your own inventory and logistics processes. This could be the difference between a profitable business and a time consuming hobby.”
Yes, you can succeed at dropshipping.
With the right drive, mindset and tools at your disposal, you can potentially succeed with any new business.
However, you will need to consider if you are truly passionate about the time and effort it will take to build, and how much you desire to see your store in the estimated top 10-20% of all dropshipping businesses around the world. Currently, that’s the kind of drive it takes for real life-changing success.
You will be met with struggles. The biggest hurdle – as reported by 84% of ecommerce retailers – is finding and securing a good supplier to get their business going.
Once you’ve overcome that, you’ll need to actually launch your brand new onlilne store, your chosen range of products, and ideally have the beginnings of an incredible brand (which will most likely involve a brand story and an action plan for marketing).
Austin Fain, the CEO of Perfect Steel Solutions emphasises:
“If you already have an existing following or online presence, that is something that can put you ahead, or if not, at least have a plan to create content and grow your following.Then if you have the funds and the right know-how for an ad budget (up to £100 on average to start) that can go a long way.”
The great part about dropshipping is that it's a pretty sturdy business model during a recession. Because of the low upfront costs, you have enough to keep you afloat as soaring inflation and costs make life hard for other types of businesses.
Depending on the levels of success you want to reach, the level of work, time and expertise will be different.
If you’re looking for your dropshipping venture to be a small side hustle on your lunch breaks or after work most days, it can be a good source of extra income. However, doing it this way has a greater risk of failure due to all businesses needing strong commitment to them, especially in the beginning stages, leaving you with more lost costs than earnings.
“For anyone thinking of starting to dropship as a mode of making passive income, you have to realise this isn't passive at all.” Fain insists. “ You have to be on it all day, customising ads, finding winning products, maintaining your website, and contacting suppliers. While it might be a popular way to make money, it's not an efficient one.”
If you want a breakout brand however, that reaches the high numbers everyone has seen around the web and that others only dream of, it is going to take a lot of work. It is not something you should begin lightly. While you don’t have to keep stock and that is a huge advantage, dropshipping still has all the other needs of any other business – and unless you have enough money to hire a team to help you, it will involve you being the driving force behind everything: content, promotion, brand strategy, budgeting, operations and more.
Bogdan Krstic, owner of RepairSprout speaks on the opportunity behind hard-working dropshippers:
“Personally, I don't see drop shipping going away any time soon. In fact, I only see it growing.
While the market is indeed ‘saturated’, most of the competitors one will face throughout their journey will not be there in a few months because all of them have entered the market to ‘get rich quick’.
I have tried dropshipping in the past and yes, it is (and always will be) a viable model, not a ‘biz opp’ or an ‘MMO scheme’. Instead, it's a way people can get into the eCom business without a ton of money and experience.”
According to Shopify, it will realistically take about a year on average to build a business that generates an average full-time income, but for some people it can take as little as a few weeks. This all mostly depends on how much they knew of the industry and the size of any audience they had beforehand.
But no matter what, ensure that you give yourself a grace period before celebrating too hard and spending all your profits – because as with most businesses, there will always be some people who may want to return items for whatever reason, and these requests will often have to be resolved, coming back out of your profits.
Beware of relying too much on your profits if they do well in the future too, because online sales are largely inconsistent and hard to rely on as a sole source of income.
There are many positives to starting a career in dropshipping – as well as a few negatives. The most prevalent positive being that there is really no upper limit to the potential new profit you can make, and the most prevalent negative being that it takes more work and effort than most people imagine especially when first starting out.
Throughout this article we discussed how dropshipping works, the best platforms for dropshipping, the type of money you could stand to lose or gain, and whether or not all of it is worth it.
Overall, by having a strong awareness of what you’re about to get into, understanding the strengths and weaknesses of the business model, and knowing that it is not a ‘get rich quick’ scheme and there will be real work involved, you could achieve a very viable dropshipping business.
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Vape Pen Cartridge Stephanie Lennox is the resident funding & finance expert at Startups: A successful startup founder in her own right, 2x bestselling author and business strategist, she covers everything from business grants and loans to venture capital and angel investing. With over 11 years of hands-on experience in the startup industry, Stephanie is passionate about how business owners can not only survive but thrive in the face of turbulent financial times and economic crises. With a background in media, publishing, finance and sales psychology, and an education at Oxford University, Stephanie has been featured on all things 'entrepreneur' in such prominent media outlets as The Bookseller, The Guardian, TimeOut, The Southbank Centre and ITV News, as well as several other national publications.