Could dropshipping be the new way to sell and earn?
I (Nikki) made a small part-time income dropshipping back when I started my online business journey back in 2012. Funnily enough, it’s where I met my work/business partner Gill, as she was dropshipping, too!
So What Is Dropshipping?
Dropshipping is a service whereby you sell something but don’t have to hold any inventory, as the sold item is sent out directly to the customer from another source.
For example, you find an item to sell on website A, you list it for sale on website B. Then a customer purchases it from you on website B, you then order it on website A, and they and ship it directly to the customer.
What Are The Advantages Of Dropshipping?
- Start-up costs are relatively low – you just start selling products. Many people – like us – sold on eBay and in Shopify stores, but you can find many other ways to sell if you put your mind to it. Once you become more experienced, you can then start sourcing your own products with very little financial impact.
- It’s extremely easy to get started, especially as you do not have a physical product to sell and keep in storage. You can research your niche and if it’s not a hit, you can change and work with another one, especially useful if you are looking into setting up a commercial store.
- You can run your dropshipping business from anywhere, as long as you have internet access. This makes this type of business very flexible.
What Are The Disadvantages Of Dropshipping?
- Inventory issues can be a bugbear as stocks in the stores can change on a day-by-day basis. Fortunately, there are a lot of apps that can track inventory in stores. One that I used was Oberlo, which you can get if you have a Shopify store, and DSM tools. These track inventories of stocks for selected stores only.
- Shipping costs can be an issue if you’re using multiple stores. If a buyer orders multiple items that are from different stores, you will incur the three different shipping costs. Also, you need to be vigilant with regards to delivery costs, as shipping and return costs vary amongst different retailers.
- Supplier issues – this is a hurdle you will have to deal with. For instance, there will be customer complaints, faulty items, delays with shipments, etc, because after all, no one is perfect and mistakes do happen. These errors, however infrequent, can damage your reputation, so choose your suppliers wisely.
What Can I Earn Dropshipping?
Earning potential can vary depending on the niche (products) that you choose. When I started this, my goal was to earn between 10-15%. When fixing your selling price, you need to take into account where you are ordering from, shipping cost, etc.
Your profit is the difference between what the supplier is charging and what you are going to charge your customers.
If you are looking for higher profits, many dropshippers use Aliexpress and Wish, but please bear in mind delivery will be a lot longer. We personally never got involved with companies like these.
The book, DROPSHIPPING: The Ultimate step by step Guide to build your E-Commerce Business*, is an excellent read and very much worth the money. It takes you through all of the basics of dropshipping as well as how to set up a store.
How Much Will It Cost Me To Set Up?
You have a variety ways of doing this as there are a lot of free resources out there, so I will base this on you choosing to use a website to display your products.
Website monthly fee averages around £30/month. I only ever used Shopify where you’ll find some pretty good deals. Web hosting should be around £3/month for your first year. The domain name is generally free with BlueHost but a domain can cost around £5-£20 a year, depending on your choice of name etc.
Advertising
If you are going the e-commerce website route, you will want to do ads. Allow around £250 initially for up front costs, but we would advise spending no more than £500 in your first year. This is not mandatory and again depends on the route you choose to take.
Please let us know if you’ve tried dropshipping, if you’re currently involved, and what you think the benefits and pitfalls are.
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