Dropshipping Tips

What is dropshipping and how to get started

Spread the love

There are many different ways to make money online and one popular way is dropshipping. Dropshipping is a business workflow where as a seller, you locate suppliers or manufacturers that have products that they are looking to move. As a seller, your job is to negotiate a price for those products with the manufacturer and then sell those products at a high price. In the dropshipping world, a seller is really a middle man who does not actually own the products or fulfill products but instead markets and lists the product catalogue of a manufacturer online in various ecommerce platforms and marketplaces and when sales occur, they communicate the sale back to the supplier so they can fulfill the order.

Dropshipping is often viewed as an easy way into ecommerce since it has a very low cost of entry. You do not need to buy any products as you are simply marketing someone else’s products. As you can imagine if you are just getting started with selling online and need to invest a lot of capital to acquire your initial products that you plan to sell, it can be overwhelming and based on the type of products it could be prohibitive to you getting started depending on your budget. Dropshipping removes that barrier since you do not need to put out cash to get started.

To really get started in dropshipping you first need to locate a supplier or manufacturer who has products they are looking to sell in this way. You can typically find a manufacturer or supplier by searching online using the right set of keywords to find one in the industry you plan to sell in. Once you find one you need to create a business relationship with the vendor in order to represent their products. This requires a formal business setup as you need to become a vendor of that supplier and they need to be able to charge you for the products you sell.

Once you have suppliers lined up where you have products that you can start to sell online you need to find the right ecommerce platform to sell your items on. Popular marketplaces like eBay and Amazon are usually first steps in this direction but before you get started you should look up the products you plan to sell from the supplier on the marketplace and see how many people are already selling them. You need to also look up the price competition on the products you plan to sell and compare that to the price your supplier is going to charge you for any order you send over to really get a better understanding of your profit margin.

The challenge with dropshipping is that it is a high volume game for sellers. You find a supplier who will charge you $5.00 for a product and you see it selling on eBay for $5.75. At first you think that is .75 per sale for just listing a product and if you sell enough of them, that is easy money. The reality is that every marketplace takes a percent of the sale and your payment processer will also take a percent of the sale eating into that profit margin. As a result you really need to sell more of items to really turn a profit. The more popular the supplier or manufacturer is the higher the competition and the less money you will ever make.

To be successful in dropshipping you really need to look hard to find a supplier that is uncommon. You need to find one where if you look at their products and search for them on marketplaces you are not competing against many existing sellers because if so, it will just be a price drop to the basement crushing your profits. You need to search for suppliers and you should experiment on smaller marketplaces that are more niche. For example if you go to eBay and Amazon you may find a lot of competition but if you are selling outdoor equipment and go to a marketplace like Gunbroker you may find you can make sales there since it is less known, less competition.

Dropshipping will always be about high volume of sales with low profit margins. Suppliers products quantity in stock changes constantly and you need to have infrastructure to be able to get orders from your marketplaces and set them up as orders for your supplier to fulfill which requires some level of tools and automation to make your life easier. It is a hard road to go down, harder than what you typically see in make money fast commercials so do not fall for the hype. There is definitely money to be made but you need to find the right supplier, right products on the right marketplace and utilize the right ecommerce tools to make it happen.