We all are in the online business world because we want to make money, work for ourselves, gain additional income, support our families and build passive income.
In most cases people look at 2 models:
Direct product sales...selling items you own or have ìpurchased wholesale to sell retail.
Affiliate sales ...promoting others items for commission
However there is another model that done correctly avoids the risk of spending thousands stockpiling and purchasing stock while seriously increasing profit and commission ...DROP SHIPPING
WHAT IS DROP SHIPPING?
Drop Shipping is in reality a supply chain management technique.
You as the retailer do not keep goods in stock nor do you spend in advance purchasing items wholesale.
As a drop shipper you sell items directly on your website and when a customer orders a product you transfer the order and customers shipment details to your partner manufacturer or another wholesaler who then fulfils and ships the goods directly to your customer.
Drop shipping allows you, legally, to sell products you don’t actually own.
This method is brilliant if you wish to set up your own online store. You can list and sell as many products as you wish for no initial outlay of money.
You control the cost and markup on products meaning a much greater profit margin than affiliate sales. For example if you sell PRODUCT A as an Amazon Affiliate and the cost to the customer is $100 you'll probably get 10% meaning $10. As a dropshipper the wholesaler may list PRODUCT A at $50. You can then sell it for $60 - $100 or more meaning you control the profit margins.
When a customer purchases a product from your store you forward the order to your supplier, minus your profit.
The supplier ships the goods to your customer on behalf of your company.
As with any online models the are advantages and risks. Lets look at some of these
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RamenRiches
Premium Plus
While I couldn't really see ClickBank working at all for drop shipping as drop shipping is typically for physical goods products, the other three that you list can certainly work with the drop shipping model.
I personally sell on Etsy and eBay via drop shipping, and it's a pretty good business model overall. Especially if you're interested in print on demand kind of products.
For Amazon, it is possible dropship on the platform, however you're going to be investing a significant amount of money up front. Most people get started with Amazon by joining fulfillment by Amazon or FBA.
For this business model, you need to be able to provide Amazon with enough inventory to keep your customer satisfied. Because of this, you'll find that you have to order 20 to 50 products at a time.
If you're just getting started with fulfillment by Amazon, typically retail arbitrage is the way to go. This allows you to learn the platform while also not investing too much money and selling products that are proven to be successes in the industry.
I personally sell on Etsy and eBay via drop shipping, and it's a pretty good business model overall. Especially if you're interested in print on demand kind of products.
For Amazon, it is possible dropship on the platform, however you're going to be investing a significant amount of money up front. Most people get started with Amazon by joining fulfillment by Amazon or FBA.
For this business model, you need to be able to provide Amazon with enough inventory to keep your customer satisfied. Because of this, you'll find that you have to order 20 to 50 products at a time.
If you're just getting started with fulfillment by Amazon, typically retail arbitrage is the way to go. This allows you to learn the platform while also not investing too much money and selling products that are proven to be successes in the industry.
MsMerry
Premium
Tony explains it very well and is correct. I have personally been looking into Oberlo and Shopify just because of the ease while still new and learning about this. In my searches, I came across Alidropship which is an offshoot of Alliexpress. Well known and secure. For your dollar investment to get up and running easily this is an excellent alternative.
Seems there are many ways to go but also note that Alidropship works on WordPress should you be setting up your own storefront. One cost which is for the plugin and that is soooo reasonable.
Just another way this can be done.
Seems there are many ways to go but also note that Alidropship works on WordPress should you be setting up your own storefront. One cost which is for the plugin and that is soooo reasonable.
Just another way this can be done.
Zappades
Premium
Bluemoon1
Premium
Hi MsMerry,
with reference to Aliexpress, would you please explain why someone would buy the product from you and not directly from Aliexpress ?
That especially if they know already of the existence of Aliexpress.
This question is also open to whoever else feels to answer.
Thank you in advance.
with reference to Aliexpress, would you please explain why someone would buy the product from you and not directly from Aliexpress ?
That especially if they know already of the existence of Aliexpress.
This question is also open to whoever else feels to answer.
Thank you in advance.
Zappades
Premium
Some people do not know about Aliexpress. Some people come to your niche post and find the product, find the price ok and don't search for cheaper outlets.
Bluemoon1
Premium
Thank you for your input Stefan.
I was just wondering if that is the only explanation or if there are more.
I think that a better model would be the one in which the prices on the drophipping store (Aliexpress), would actually be higher than the prices of the associated external sellers (us).
That would motivate any price conscious buyer always to buy from associated external sellers.
Would you know of any reliable dropshipping store who adopts this model ?
Again, this question is open to anyone.
Thanks.
I was just wondering if that is the only explanation or if there are more.
I think that a better model would be the one in which the prices on the drophipping store (Aliexpress), would actually be higher than the prices of the associated external sellers (us).
That would motivate any price conscious buyer always to buy from associated external sellers.
Would you know of any reliable dropshipping store who adopts this model ?
Again, this question is open to anyone.
Thanks.
Zappades
Premium
Yes, you don't have to ask me this, I'm not into drop shipping so far. I think if you work directly with producing companies would be the most lucrative. You would have to contact these companies and work out a business relationship.
This is more time consuming but finally what retail sellers do.
This is more time consuming but finally what retail sellers do.
Zappades
Premium
I hope you get better answers. I didn't want to say don't ask me, but sorry I'm not a specialist.
MsMerry
Premium
Sorry for the late reply I was away from the back office here. It is much safer for me to purchase through a proven and certified supplier and so much simpler time wise. Also, Aliexpress offers you more than just the supplier. You can upload your products to your website easier and they have e-commerce options that can be much cheaper than doing it yourself. Hope this helps a bit.
MsMerry
Premium
It could work this way Stefan, but if you are not totally familiar with Drop shipping having the security that Aliexpress offers is great. They actually have what I will call a sister called Alidropship which is awesome as costs are so much better for the long haul. If you have only one or two products going directly to the supplier as you suggested may work well. Retail sellers do wholesale rather than drop shipping I think, but then again I am pretty new to the drop shipping end too. :)
fpesca
Premium
Hi Ms Marry, nice to hear you mentioning Alidropship. I am starting to set up a dropshipping store an I have done some research on ways to automate it.
I also found Alidropship and I believe it is an interesting option especially considering their pricing. A reasonable one-time flat rate compared to all others that offer monthly plans that increase with the number of orders and products.
On the other hand Alidropship is the only one that doesn't offer a free trial option, so for now I am trying the others that offer a free plan (Shopmaster and Ezusy namely), but unfortunately so far I have experienced issues in importing the products to my Woocommerce store (hosted here at WA), they both returned the same error and could not import the product,
Ttheir support seems not to be able to solve the issue and I fear that there might be an issue on WA hosting preventing this (such as some security settings)
so I am wondering if you tried to do the same with Alidropship and it worked for you
Thanks
Francesco
I also found Alidropship and I believe it is an interesting option especially considering their pricing. A reasonable one-time flat rate compared to all others that offer monthly plans that increase with the number of orders and products.
On the other hand Alidropship is the only one that doesn't offer a free trial option, so for now I am trying the others that offer a free plan (Shopmaster and Ezusy namely), but unfortunately so far I have experienced issues in importing the products to my Woocommerce store (hosted here at WA), they both returned the same error and could not import the product,
Ttheir support seems not to be able to solve the issue and I fear that there might be an issue on WA hosting preventing this (such as some security settings)
so I am wondering if you tried to do the same with Alidropship and it worked for you
Thanks
Francesco
Nice post, Jason. I especially liked your pointer with the shipping fees, hadn't thought of that yet. The profit margin may be smaller but you also don't have the risk of being stuck with unsellable inventory, so that ay even out a bit.
Is there a special 'lingo' for dropshippers? I can imagine it being so popular that googling 'dropshopping inventory' may not lead to the best results ;-)
Thank you, Wim
Is there a special 'lingo' for dropshippers? I can imagine it being so popular that googling 'dropshopping inventory' may not lead to the best results ;-)
Thank you, Wim
kapalmquist
Premium
I work in the IT department ("backoffice" enterprise group) of a fairly large electronics component distributor. I am deeply involved with our dropshipping operations. I would agree wholeheartedly with your analysis of the pros and cons. I recently developed an auto-dropship system that creates Vendor POs from Sales Orders. Even with more than one year to deliver, a large budget and several testers I must say that auto-dropship is one big headache. And it wasn't even considered until the volume of dropship orders exceeded 400-500 lines per day. So your advice to stick to manual fulfillment is spot on.
And now that I have become an "expert" and am looking to enhance my pre-retirement income and develop income streams that I can continue after my official retirement, it looks like Dropshipping could be a winner for me.
And now that I have become an "expert" and am looking to enhance my pre-retirement income and develop income streams that I can continue after my official retirement, it looks like Dropshipping could be a winner for me.
NWHiker
Premium
Hi, Thanks for your information on drop shipping. Do you know of any plugins that will calculate a shipping quote for a customer on a site linking into the API from a trucking company, UPS ground or FedEx ground? I saw this capability on a website recently. You could get a UPS ground quote or press another button, fill out a small amount of info and get a LTL truck quote.
John
John
DaisyB
Premium Plus
Hi Jason, Good information.
Questions: When you are checking out the reputations of various drop shippers, how do you find out whether they actually fulfill their ends properly? Is there somewhere to see any comparison charts of the different drop ship companies?
Is this the same thing as if you find a company that sells and ships it's own physical products which you become a (seller) for. For example, I know a company called Regal that produces it's own stuff and looks for people to market it. They will give you your own site or just the ads. You post these on your site with pictures and your link back to the company site where they process the purchase and order. If this is not drop shipping - what is it?
Questions: When you are checking out the reputations of various drop shippers, how do you find out whether they actually fulfill their ends properly? Is there somewhere to see any comparison charts of the different drop ship companies?
Is this the same thing as if you find a company that sells and ships it's own physical products which you become a (seller) for. For example, I know a company called Regal that produces it's own stuff and looks for people to market it. They will give you your own site or just the ads. You post these on your site with pictures and your link back to the company site where they process the purchase and order. If this is not drop shipping - what is it?
JasonGB
Premium
Hi Daisy
The best is to find a drop ship listing company . There are many but you need to verify the quality by reading their reviews and recommendations
Dropshippers basically are the suppliers of products. They will form an agreement with you to sell you their products for a certain price. You then list those products on your website and you decide how much to charge your customers. When someone orders a product they pay you. You then order and pay the dropshipper. So if you sell a product for $25 you may only be paying $15 to the dropshipper
You keep the profit and the dropshipper sends the product to your customer.
What you describe is more affiliation where you promote the goods but the order is actually made on the suppliers website and you gain a commison - like Amazon
Hope this helps
The best is to find a drop ship listing company . There are many but you need to verify the quality by reading their reviews and recommendations
Dropshippers basically are the suppliers of products. They will form an agreement with you to sell you their products for a certain price. You then list those products on your website and you decide how much to charge your customers. When someone orders a product they pay you. You then order and pay the dropshipper. So if you sell a product for $25 you may only be paying $15 to the dropshipper
You keep the profit and the dropshipper sends the product to your customer.
What you describe is more affiliation where you promote the goods but the order is actually made on the suppliers website and you gain a commison - like Amazon
Hope this helps
JamesGoolsby
Premium
Jason, I would love to hear your recommendations for quality drop shipping suppliers. My wife and I tried to make a go of it a few years ago and by the time we factored in all our costs it just wasn't worth it with the companies were were using. In fact, on more than one occasion we actually lost money on the deal. We still shipped, of course, because the customer expected what they bought, but we soon threw in the towel. :-)
JasonGB
Premium
Wow, one very good example of why finding the right suppliers and planning profit margins remain important prior to any agreement. Thank you for sharing this with us. I know there are some pretty unsavory dropship suppliers out there.
OldMCSEGuy
Premium
I've done this in the past. I think this will be one of the features of my new high in store but it won't be 100% drop ship. at this point I am just at the stage of getting my suppliers. but my goal is a little bit bigger. This does require some work and access to some software to avoid things like promising stuff you no longer have in stock. currently we have 21 employees so after this big Christmas rush I think we're going to tackle it.
JasonGB
Premium
Sounds excellent, you're right it does require work but is a great way to get into larger scale retail. Wishing you much success
