Dropshipping 101: An Overview for the Total Newbie

Ever wanted to get into the business of dropshipping, but didn’t know where to start? Fret not – we’ve got you covered.

If I had a dollar for every person who ever wanted to make money online, I’d be a multimillionaire many times over.

There’s just so many ways to do it – more than you can ever shake 500 sticks at. The possibilities are endless.

One of the most discussed ways to make money online is dropshipping. Sounds simple, right?

Not quite.

See, as with anything, you need to know full well what you’re getting in to if you make the decision to do dropshipping.

It’s not as easy as following whatever “method” some “experts” follow – there isn’t any. Be very wary of “gurus” who claim that you can make $5000/day dropshipping within 24 hours of buying their information product. It’s just NOT going to happen – at least not over 24 hours.

So let’s dispel the myths by explaining clearly what dropshipping is and what it entails – so you have an idea of what it is, and what to expect should you decide to go into it.

Without the myth and the hype surrounding it. And without the logistics mumbo-jumbo that doesn’t really matter to majority of aspiring dropshippers.

What is Dropshipping?

Put plain and simple, dropshipping is simply a way you sell products to customers without keeping any of them within your inventory. Dropshipping instead involves you, as a seller, to partner with a manufacturer or supplier who fulfills and sends the orders and products directly to your clientele – from your own online (or physical, even) store.

Your profit is derived from the margin you put on top of what you pay your supplier (generally not more than 20-40% of your item, unless you can find a supplier that can produce your product for pennies on the dollar).

Simple enough, right? Let’s see how it works in theory.

How Does Dropshipping Work?

The best way to see how dropshipping works is to show you an example.

You sell widgets on Shopify for $50. Then, a customer from Belgium named Vincent buys a widget for $50. You then pay your widget manufacturer or supplier $30, which is what he charges for the widget, and have him ship the widget to Vincent. That leaves you with gross profits of $20. Deduct your transaction fees, e-commerce platform fees, bookkeeping costs, utilities, and the ever-present risk of returns and possible fraud, and then you’re left with your net profit.

There isn’t much left after the dust settles, is there? And therein lies the rub. Which brings us to our next question…

Is Dropshipping Profitable?

You’ll save yourself a lot of time, money, and frustration by knowing WHAT you want to sell and WHERE to find a reliable supplier (ha!) that can give you better margins. More often than not, you’ll be left with literally a fraction of what you charge on top of it – but not if you know in-demand, fast-moving, and low-cost electronics and accessories that you can mark up up to 100% to 200% for…and that’s easier said than done. BUT if you are able to do so, then yes, the profits will be worth the hassle of sourcing, vetting, and setting up shop.

But it will be safe to say that you won’t make $5000/day/month/year/decade doing dropshipping? YES – the odds are high that you probably won’t. But if you find the hassle worth the profit margin, then you’ll have another income stream that may be more work than you think it will. If you’re serious about it, who’s to say you can’t succeed? But you’ll have to provide a whole lot of value to your buyers for you to attract them.

How Can You Start a Dropshipping Business?

There’s a bevy of resources at your fingertips – it takes literally less than 15 minutes for you to set up your own store on eBay, Amazon, or Shopify. But the real devil is in the product research, sourcing, and relationship-building. And those skills are what you’ll need to bank on if you want to succeed.

What are Some Tools to Get into Dropshipping?

* Shopify
* Amazon
* eBay
* Wholesale2b
* Oberlo
* Magento

Summary

Dropshipping is an interesting way to make money online – but only if you’re willing to put in the hours – and a lot of them – to succeed. If you temper your expectations and understand that you probably won’t pull $5000/day doing dropshipping within a year or two’s time, then you’ll have a solid, if unspectacular, income stream that can definitely serve to augment your finances. It’s a relatively – RELATIVELY – hassle-free way to make money online after you’ve gotten all your systems running, and if you find a good supplier that you can build a relationship with. Otherwise, it’s not for everyone.

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