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Dropshipping – What Is It?

I 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 that is fulfilled by a third party which enables the seller not to have to hold inventory, as this is posted out directly to the customer.

What are the advantages of dropshipping?

  1. Start-up costs are relatively low – you just start selling products. Many people like myself sold on eBay, Shopify stores, and 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.
  2. 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.
  3. You can run your dropship business from anywhere as long as you have internet access, which makes this type of business very flexible.

What are the disadvantages of dropshipping?

  1. 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 Shopify store, and DSM tools. These track inventories of stocks for selected stores only.
  2. 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 3 different shipping costs. Also, you need to be vigilant with regards to delivery costs, as shipping and return costs vary amongst different retailers.
  3. Supplier issues – this is a hurdle you will have to deal with. For instance, customer complaints, faulty items, delays with shipments, 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. 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.

A book that is a great read which gives you the basics of dropshipping and how to set up a store can be found here – this is a great read and worth the money.

How much will it cost me to set up?

Well, you have a variety ways of doing this as there are a lot of free resources out there, so I will base this upon whether you decide to use a website to display your products.

Website monthly fee averages around Β£30/month. I only ever used Shopify where you can get some pretty good deals.

Web hosting you can get for around Β£3/month for your 1st year. The domain name is generally free with Blue Host but a domain can cost around Β£5-Β£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 Β£250 initially for up front costs, but no more than Β£500 in your first year. This is not mandatory and all depends on the route you choose to take.

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