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The opinions in this article are solely mine, are are not intended to offend or discriminate. All information in this review has been researched on the public domain of the internet.
How Does DropShipping Really Work
A number of years ago, I decided to try my hand at opening an online store after hearing about people making good money online from dropshipping. I wasn’t really up with the dropshipping model and needed some education. The question I kept asking myself was, how does dropshipping really work, and can anyone do this.
I found out that this is a common method that has become increasingly popular in recent times. I’ll discuss how the dropshipping model helps online store owners and whether this opportunity is for you.
It took me a few months to realize that, whilst this is a genuine and legitimate opportunity, it just wasn’t for me. I don’t just mean dropshipping, I actually mean the online store option. Some people don’t mind dealing with taxes, returns, shipping etc. Instead, I’m an affiliate marketer, which means I don’t deal with such issues.
So let’s run through how dropshipping works.
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Dropshipping in a Nutshell
The actual process of dropshipping is simple, and goes like this.
To avoid having to stock inventory yourself, you can promote manufacturers or suppliers products, and have them ship the product directly to a customer when purchased. However, you’ll be required to make the purchase on behalf of the customer. Here’s an example, assuming you already have your chosen niche, and website method.
Step 1 – Create an account with a supplier. The most common supplier that people use for dropshipping, is Ali Express, but there are many others. In fact Ali Express encompasses hundreds of smaller suppliers that you’ll work with. The great thing about suppliers like these, is that you don’t have to purchase in bulk. That’s what makes this model so effective. Ali Express is the smaller brother of Alibaba, the site you go to for purchasing in bulk lots, at even cheaper costs.
Step 2 – You choose a product and copy some images of that product from the supplier. Upload them to your website and add any variations, such as color or size.
Step 3 – Come up with a price for your product. Let’s say you choose a necklace from the Ali Express website which costs $2.50. You can advertise this necklace for $8.99. Your online store may offer free shipping. If so, remember that YOU will have to pay the shipping for Ali Express to send to the customer, so make sure this cost will be covered. It is possible to get free shipping with some suppliers, look for whats known as ‘epacket’.
Step 4 – Now that the product is uploaded to your website, it’s live for anyone to purchase. If somebody does buy this necklace, the funds will be transferred to your account. It’s now time for you to purchase the item from Ali Express, and have them ship the product to the customer.
Step 5 – If setup correctly, you can have an invoice sent to the customer with your online business logo etc. Let the retailer, via Ali Express know, not to add their invoice in the package.
Step 6 – The customer will now receive their product without you even seeing it. The item gets delivered straight to the customer from the supplier, and you’ve emailed out an invoice from your online business. The profit you’ll make is the difference between to price you’ve labelled on your website, and the cost through Ali Express. Minus shipping if this is included (although you can make money on extra shipping costs).
As previously mentioned, Ali Express is known as the most popular supplier in this industry. That’s not to say they are the most competitively priced, but they would certainly have the largest range of products.
The majority of cheaper suppliers are based in Asia, like Ali Express is. Other lesser known Asian suppliers are as follows:
- Deal Extreme
- Light in the Box
- Deals Machine
- Bang Good
- Mini in the Box
- Dino Direct
- Geek Buying
- Tiny Deal
Not all dropshipping needs to be done via Asian suppliers though. You may be promoting more unique products that are not mass produced in China. So, you may have to research some of the US manufacturers or suppliers in your country.
One of the large benefits to using US suppliers (for US stores anyway), is that the shipping is generally much quicker than waiting for a product to be shipped from China. You’ll generally find that reputable couriers will be used to ship products within 1-3 days.
These companies also have reliable tracking systems to keep an eye on where your customers delivery is located.
However, there’s also the obvious downside, in that the costs will be more expensive than the Asian competitors.
Here’s a quick way to find some US suppliers. Salehoo has a huge list of over 8000 vetted suppliers, which includes US dropshippers. As a taster, here’s a list of 10 verified dropshipping suppliers that Salehoo has sent me to share with my readers.
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The Good & Bad of Dropshipping
The start-up costs with this dropshipping method are relatively small, certainly in comparison to opening up a physical store. Your initial costs are the obvious, a domain name and hosting provider. In my opinion, the most secure way to do this (as you’ll be accepting payments), is to use BigCommerce or Shopify. These web solutions will include secure payment gateways built in.
Another big plus, is the fact that you will not need to store a large inventory. If you weren’t dropshipping, you’ll probably be buying in bulk and storing all your goods in a garage. The other problem with this, is that you could be stuck with lots of leftover products that cannot be sold.
Following on from this last point, the risks are reduced because you can experiment with various products, which is because you won’t be purchasing in bulk. If a product is not a good seller, simply try something else without the need to move on old stock.
As with many online opportunities, there’s always a downside. Firstly, you may not make as much profits because bulk purchases will cost you less. Don’t concern yourself too much with this though, there’s still good profits to be made.
Another issue you may face is the shipping times. Coming from China, some packages may take a while to get across the seas. In fact some packages can take a few days, even up to a week to be sent out the door. Many of these companies only send out their orders on a particular day of the week, or when they have enough orders to make a shipment.
An issue I sometimes faced, is that a supplier could run out of a product. This could just be a colour or size of a product, but your customer won’t be happy if they’ve already ordered through your website. Often you can find the product elsewhere, but you don’t always want to rely on searching other stores for the same product, and then find out it’s going to cost you more.
One other issue you may face is the customer service. You will be your own customer service for YOUR online business, but what about if the dropshipper send out a faulty product and doesn’t want to face up to refunds. You’ll have to foot this cost.
Please…don’t let these issues put you off if you’d like to start an online dropshipping business. Many people have been successful at this, and the profits can more than cover the limited number of returns.
One last thing to cover though, is the competition. Loads of people have setup an online dropshipping store, not all become successful. You need to know what you’re getting into. You will have to deal with returns, customer service, shipping, taxes, invoices and so on. This can be a steep learning curve, but there is a great course that covers all this.
Learn Dropshipping From The Best
Adrian Morrison runs a course called eCom Success Academy. As far as I’m concerned, it’s the best course out there to learn all the in’s and out’s of setting up a dropshipping store. He also teaches how to promote through Facebook advertising, and how to target the correct people. When I took this course in late 2017, the course was all relevant to how Facebook was at the time. I believe he updates the course to suit changes to Facebook’s latest modifications.
There are other courses which I have also taken. Dan DaSilva and Jon Mac are also experts at this dropshipping method, so don’t discount their courses either. Sometimes you may prefer to take advice from one person rather than another, but they basically all teach the same information. I found Dan DaSilva a bit, in your face. Jon Mac is a much calmer fellow.
I’ve also recently reviewed eCom Lifestyle University by Ricky Hayes, which is a brilliant alternative if you can’t afford ECom Success Academy. eCom Lifestyle is a fraction of the cost, as explains everything required to get set up with an online dropshipping Shopify store. You can read my review of eCom Lifestyle University here.
Creating an online store is a total legitimate way of earning money online. Dropshipping is an increasingly popular way to sell products, but as I’ve suggested, the competition has become extremely large.
Having said that, there’s no reason you can’t be more successful than anyone else if you get it right. What many of these courses don’t teach is SEO. They tend to stick to paid advertising with the assumption that profits will outweigh the cost. In my opinion, I’d be writing blog articles to get free traffic also. Anyone can learn how to write website content for action taking.
In my opinion, dropshipping is a great way to make money online, it’s just not my preferred method. I find that affiliate marketing works for me because I don’t want the stress of dealing with disgruntled customers, returns, shipping, suppliers, or foreign tax implications. If you’d prefer the affiliate marketing model, read on below.
Hi, I'm Nudge
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