Dropship 101: How to Make Money Dropshipping

I remember the 90s like it was yesterday. The ecommerce industry was just getting started back then and since platforms like Shopify, Clickfunnels or WordPress didn’t exist, people had to develop their own websites from scratch. After six months of learning how to code, I opened my first online store in 1999. That whole year I stressed out over the fluctuating revenue since many people didn’t trust online stores and thought it was too risky to use their credit cards online.

Thank goodness ecommerce has evolved since then! Now there are almost unlimited possibilities for people who want to open an online store. In fact, one of the most popular ecommerce trends right now is dropshipping. It’s widely considered one of the easiest and quickest ways for anyone to start an online business.

When aspiring entrepreneurs often ask me for advice on how to open their own online store, I almost always recommend they begin with dropshipping first. Why? It’s because dropshipping gives you the freedom and flexibility to make money from the comfort of your home. You won’t have to worry about crowding your home with inventory that may not sell or rush off to the post office every day.

First, let’s discuss what dropshipping is exactly. If you’ve never heard of the term before you may be curious about what it really means. Basically, dropshipping is a business model that allows you to sell products online without having to buy and store inventory up-front or ship it to the customer yourself. It’s perfect for entrepreneurs who want to run a business online and don’t have the extra space or money to buy inventory in large quantities. Whenever someone places an order on your website, all you have to do is contact your supplier and arrange for them to ship it directly to the customer on your behalf.

Here’s an example of how the dropshipping model works. Imagine that you have an online store that is virtually stocked with vintage shirts and other apparel. Once your e-commerce store is up and running, a customer purchases an item for $100. All you have to do is buy the product from your supplier and give them your customer’s address so they can send it directly to them. Since the supplier only charged you $40 for the item, you can keep $60. 

Now that you understand how the model works, let’s discuss some of its advantages. First, it’s very affordable. You won’t need to invest a large amount of money to get your store up and running if you open a new online store with dropshipping products. All you have to do is buy a domain name, build a Shopify or WordPress store, add some products and you’re good to go!

Another advantage is that you can work remotely. I don’t know about you, but working in an office every day - especially if you have a long commute - can get really frustrating. The great thing about owning a dropshipping business is that you can work from anywhere in the world as long as you have access to the internet.

Many people also want to open a dropshipping store because there is less risk involved since you don’t have to purchase a lot of inventory upfront or open a brick and mortar retail store. Lastly, dropshipping is perfect if you want to test new products or try out a different niche. You can easily add an unlimited amount of products to your online store with just a click of the mouse. 

Although it’s a great business model - especially if you are new to e-commerce, there are several drawbacks. For example, you most likely won’t have any control over the quality of the products that you sell online. If the items are low quality or have some type of defect and you find out too late it can reflect poorly on your business. That’s why you should always research potential suppliers before you start selling their products. 

Lower profit margins are another potential disadvantage of dropshipping. Since your suppliers are responsible for manufacturing the product themselves or perhaps they act as a wholesaler with an optional fulfillment service - they usually tend to charge higher prices for their products. That means you may have a smaller profit margin than if you bought items in bulk or shipped the products yourself. However, when you take into account all the time, money, and effort you may potentially save by partnering with them- it can definitely work out to your advantage.

Another disadvantage is that you may not find out if a product is low in stock until it’s too late. We recommend that you look for a dropship supplier that notifies you immediately when their inventory reaches a certain threshold so you can be prepared well in advance.

Now that you know the advantages and disadvantages associated with dropshipping, you should have a better understanding of whether the business model would work for you. If you want to start an online business right now or only have a small amount of money to invest, dropshipping may be the perfect solution. Of course, travel enthusiasts or people who want to work from home should also seriously consider opening their own dropshipping store.

The Wealthy Ecommerce Club is passionate about helping people become financially free by starting an online business. If you are interested in opening your own store and want to build it yourself you can sign up for a free two week Shopify trial. Or you can buy a Shopify store developed by our team here at the Wealthy Ecommerce Club so you can get started right away.

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