Disclaimer: I am starting a Dropshipping business (soon™) and wrote this from what I know about it so far. Before deciding to start a Dropshipping business I reached out to 11 Dropshipping veterans that I came across while reading about it. This is a cumulative abridged summary of all the knowledge they imparted in me. This means that I have no personal experience in Dropshipping, so I might be oversimplifying things or overstating the importance of others. It’s always best to do your own research and remember, people WANT to help you, all you need to do is ask.
Chances are, if you told someone 10 years ago that you were thinking about quitting your job and starting a full time eCommerce business, you would’ve been called crazy. Nowadays however, the eCommerce market is one of the sure shot ways to make hundreds of thousands of dollars a year; and the best part is it will at most only take you a couple hours a day for the first 3-6 months.
So what is Dropshipping? Simply put, Dropshipping is where you sell another person’s product (inventory that you don’t own) to a customer at a significantly marked-up price. Essentially, it makes selling products online completely RISK FREE by removing yourself from the fulfillment process to the customer. The process is as follows:
- Customer (A) orders product from YOU (B)
- You contact your Supplier (C) and get him to send the product to the Customer.
- From Start to Finish: A -> B -> C -> A
Three questions arise from this. In no particular order, the three I had were: how is this profitable to you (and the supplier), how does the customer find you, and how do you get a supplier?
Let’s start by talking about how you get a supplier. Before you can even find a supplier you need to find a product. Finding the product is the most important thing that you will do in this entire process. Finding a bad supplier, messing up on sales pages, or just about everything else can be rectified; finding a bad product to invest all your time into selling cannot be.
So how do you find SELLABLE products? An easy way is to browse Etsy, and look for quality products that sell for under $20, but you can easily list for $40-$80. One article I read talked about how this particular Dropshipper found China Plates on Etsy for $16 and flipped two at a time for $47.50 + Shipping & Handling. Another way is to browse Amazon’s Top Seller’s Section and then choosing a good product from there. If you are looking to fill a specific niche then that shouldn’t be a problem either.
One of the people I talked too told me he started off by listing an 8 pack of toothbrush he bough from Costco for $4 at $8 plus S&H and it repeatedly sold out. That’s not even drop shipping, but that is representative of how people will buy anything they need without even looking at the cost. It’s a very important lesson to learn early, because I plan on listing stuff I find at at least a 20% mark-up on top of the high margins. After talking to several others, I fully expect it to make as much money as the next guy who’s selling it for cheaper.
So now you have your product. How do you find a seller? Well if you’re going the Etsy route (or something similar) you can directly contact the seller and let them know of what you plan to do, and ask them how much of the product they have available for sale. Also ask about their costs and negotiate a good price. Needless to say, you don’t need to go just through Etsy. There are thousands of eCommerce websites, hunt around until you find the cheapest one for the product you’re looking for.
If you’ve found a product you want but it’s manufactured in China or somewhere, then chances are you’re not going to be able to make much in the way of margins. Chances of you making up for lost margins in volume is also unlikely. However, if you do find a product that is made en masse and you can still make a decent margin on it, then the best way to drop ship it would be to contact the factory directly and explain what you’re doing. And then offer them a percentage per sale or a royalty per month for every sale they ship for you. A woman I talked to told me that she made over $100,000 by contacting the makers of a product called Silly Bandz (when it was incredibly popular) and getting them to ship the Bandz to her customers for a royalty fee.
So this leads directly to the question of why the supplier themselves don’t do this. The reasoning I’ve seen on a multitude of occasions is that the people who make these really nice products don’t know how to effectively market them, and you can market it better (giving both parties exposure), and it’s not like the makers are losing money. It’s not a great reason, but it’s the only one I’ve found.
Now none of this would be possible if the customer can’t find you. To rope in your customers it’s recommended that instead of going through Amazon, you create your own webpage. Once you create a webpage you should buy a domain name for it unique to the product you’re trying to sell. After that you should get Google AdWords and promote as many relevant keywords as you can for the product you’re trying to sell. If you’re trying to do this without spending a penny then simply sell your product through Amazon and once you generate enough revenue, you can move your platform onto your own website and continue from there.
I did A LOT of reading before I even thought about starting Dropshipping, but everything became REALLY clear after I read Zach Pinnell’s How You can Make $10,000 a month Dropshipping and How to Start Dropshipping, I highly recommend you read this as soon as possible.
If you enjoyed this article or found it helpful please give it a 5 star rating and subscribe to The Prime Pick to get e-mail notifications as soon as a new article goes live.