Can you still make money with dropshipping ? Many people have tried it and many have failed. Before getting to the heart of the matter, it makes a lot of sense to look at the numbers and form an informed opinion.
While it is true that many people have made money from dropshipping , there are also more who have lost a lot. And when people lose money on a business, their immediate reaction is to blame others, calling a dropshipping business like Shopify a scam.
There are also those who have taken dropshipping courses, opened a store and never made a sale. With many dropshippers competing with you, can you really make money with this business model?
What is Dropshipping?
Dropshipping is a business model where you find a supplier for a product you want to sell. This supplier has the product readily available, or he can produce the goods on short notice, and he keeps these goods in his warehouse.
As a seller, you will sell the manufacturer's products in your online store. If a customer orders, this is when you place the order with the manufacturer or supplier, then the supplier will ship the order to the customer.
It's a great business model because you don't have to rent your own physical wound. You don't have to pay warehouse rent and you don't have to pay for the goods before they are sold.
You make a profit by selling the item at a higher price. If a supplier sells the goods for $10 plus $5 for shipping, you buy them for $15 and then sell them for $25. You keep the $10 profit. If you want, you can even increase the price.
So why do people fail? And with this business being so easy to do, meaning lots of people are doing it, are you still going to make money?
Dropshipping Statistics
In 2017, it was estimated that 23% of all online sales worldwide were made through dropshipping. If you think that all products on Amazon are supplied directly by the product manufacturer, you are wrong. Many people who sell on eBay and Amazon don't actually have inventory with them. They sell products and only order them after making the purchase.
23% of global online sales are approximately $85.1 billion. That's a lot of money. Also, around 33% of all online stores in the world are run by dropshippers.
E-commerce continues to grow. Today you can buy anything online. You can even order your toothbrush and groceries online. Online sales are growing at a constant rate of 17% per year.
This means that more and more customers are leaving physical stores and they now feel more confident buying online. This includes gifts, shoes, hobby items, furniture and more.
As more customers shop online, new opportunities are opening up for dropshippers. With new people getting jobs every year after graduating from college, there are more people who will have the purchasing power to spend money on the items they need or want. .
How Money is Made in Dropshipping
The simplest explanation for making money dropshipping is to calculate the difference between your expenses and your capital.
The problem is, people do it wrong all the time. They only think of adding a price markup over product cost and shipping, but they never even consider the cost of their own time, the cost of marketing, and the cost of maintaining a store. in line.
If the item you're selling costs $15 and that already includes shipping, you'd be happy to add $10 to it and make a profit of $10.
Later you will realize that you are not making any money. You also have the challenge of finding leads, generating sales, and managing your online store.
The most dangerous mistake a person can make is thinking that dropshipping is free. While it's free to create a website, free to find a product, and free to upload your products to your store, it's not free to process payments. It's not free to advertise, it's not free to find leads, and it's certainly not free to have unhappy customers asking for a refund.
Dropshipping is serious business. Only those who are serious will succeed. And like any serious business, you will only make money if you spend money.
Not learning is dangerous
A lot of people fail in this business model because they watched a YouTube video for 15 minutes, spent another 15 minutes finding a product, then spent the next two hours building a website.
After that, they expect sales to come in. As the sales don't come in, they start advertising on Facebook or Instagram. They start paying bloggers and graphic designers.
Still no sales.
Although the experts make it sound easy, convincing a potential customer to part with their money isn't easy. You must be a trustworthy person for someone to pay you for a product. For starters, you're not a well-known brand.
Generating sales, finding leads, getting your name out there, getting your website on the first page of Google, and doing your ads well are just a few things you need to learn. And not just learn, you have to get good at it.
Little learning is dangerous. Just because you watched a video doesn't mean you can start a business now.
The same applies to people who have purchased a course. Just because you followed the instructions doesn't mean you'll be successful. Think of the course as a college education. Not everyone who graduates from college will get a job commensurate with their course. Your success is up to you, not Shopify or the dropshipping expert who taught you lessons about the business model.
The importance of doing things right
So can you still make money from dropshipping?
The answer is a very positive YES, provided you do it right. It takes patience to build a successful store, and here's a quick guide to help you get started.
- Select a niche and do your research
- Choose a supplier
- Create a store
- Plan a business process
- Market your products
It's just five steps. Although they seem easy, they really aren't. Each phase is difficult, and you need to spend some serious time studying it and getting it right.
When selecting your niche, you don't have to involve your emotions in it. Just because you love shoes doesn't mean you'll be able to sell shoes so easily. You have to do research to find out what people are buying. Do they buy rubber shoes or stilettos?
If you know what sells, you need to know where the customers are coming from. Just because the US is the biggest economy doesn't mean you can sell your products there.
When choosing a supplier, you need to check if this supplier is trustworthy. You have to buy the product yourself. A mistake many people make is that they don't order the product. As such, they don't know the actual shipping time and they have no idea if the product is of poor quality. They also don't know if the supplier accepts returns and issues refunds.
A store is the first thing a customer sees. A bad design will drive your customers away. Create a professional store to watch and take your time to create one. Make sure your store is responsive and has fast loading times, so customers don't have to wait forever to load your product pages.
Then you need to have a plan. How will you order the products? What is the timeline you can commit to your customers for shipping and processing? Also consider your customer service strategy, as well as how much you will price your products for sale to ensure you make a profit. A business process is nothing but a standard set of actions so that you can run your business smoothly.
Finally, market your products properly. Just because you created and launched an ad on Facebook doesn't mean it will work. You need to study things like Facebook pixels, retargeting, branding, SEO, and more. Done right, your ads will find their way to the right people, and you can expect to generate sales.
Summary
Dropshipping is a business model that works. Soon it might even overtake other companies. It is a business model that makes products affordable as there is no need to pay unnecessary expenses like warehousing. There is also no need to pay a lot of employees as many systems are now automated.
If you do it right, you can make money dropshipping. And not just money, you can earn lots of money that will help you achieve financial freedom.
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