Low margins. Difficult supplier relationships. Customer satisfaction hurdles…
Is it really still possible to make money drop shipping online?
Absolutely.
There is a substantial opportunity to make money drop shipping online. Despite some of the less appealing aspects of the model, you can still generate a good income. Besides, it has a lot of positive features as well. Approach the model with a broader perspective and the entrepreneurial mindset and you can be sure that you WILL make money drop shipping.
How do I do it? What’s it gonna take?
To answer that, let’s take a look at the current eCommerce drop ship landscape.
A Flooded Space
The drop shipping space has become more and more crowded over the past 10 years. Many startup business owners have latched onto the model because of misconceptions about what it can achieve. It’s not a get-rich-quick model. Setting up a drop ship business takes a good amount of hustle, vision and focus. Yet because of the overblown claims of directory websites and similar platforms, a lot of startups have been duped into running headlong into drop shipping. This has created a level of competition that is daunting when you look at raw numbers.
Don’t be discouraged by the sheer volume of online stores that drop ship. Making a business out of selling online is much more than listing a bunch of items you found on Alibaba and waiting for people to add to cart – lucky Maneki Neko gold-beckoning cat or not. Sadly, this is how many drop shippers do it. Fortunately for you, this lack of commitment makes it easier to build a strong presence in the market.
I wouldn’t even use the term carving a niche. You can make money drop shipping without killing yourself even in this swarming space. The key is to go about it with the mindset that you are building something – as opposed to strolling down to the nearest corner and haphazardly plopping a rusty can down with a crumpled cardboard sign and a couple of grainy clippings attached. Strap on your thinking cap, double-tie your laces, and get down to business.
Low Margins
Drop ship margins are low – there’s no misunderstanding there. You are sourcing directly from distributors and manufacturers – the latter not necessarily the more lucrative choice – so you get factory pricing or thereabouts. However, you are not getting good bulk deals because you are making orders piecemeal. Similarly, you also have to pay more for shipping small packages individually. Depending on what areas you are willing to serve, it can be more or less expensive. But along with this comes how limiting your reach will affect order volumes. Research, source, compute, negotiate, recompute, project. Prepare for a lot of that.
I must mention that the competition can make low margins even more of a challenge despite what I mentioned above. Allow me to explain.
When shoppers go to market and see a bunch of stalls offering the same produce, it’s not easy for them to know which one offers the best deal. Some will choose the nearest one because they are tired. They might be willing to pay a higher price or accept lower quality. Others will shop around to test these and other factors – do you pack well, do same day delivery and offer free gifts?
Yet others will not even know where to begin looking. They will ask directions and therefore will be limited by what is shown to them. These consumers compose the bulk of shoppers in the vastly expanding online world of drop shipping. The competition is already out there. If they have managed to rank on Google or Amazon and are known on Facebook and review sites, you’ll have to break into these spaces, too. Still, it’s not going to be that hard if you are willing to do what it takes. Put up a nice, clean stall with good products and clear details. Reach out to people who are looking for stuff. Offer a good customer experience. You will make money drop shipping because you shine brighter.
In connection, not all of the best products and suppliers are already taken. But you will need to go that extra mile to find a profitable niche that you are happy with. You need to find a few good products and a few good suppliers. You can copy the guy next door and try to pirate a few of his customers or complement his offerings to attract the full number and possible others as well. Do the legwork. This is how you make money drop shipping online.
Tricky Supply
Establishing a reliable supply of your products is possibly the most challenging aspect of drop shipping. Many businesses who use this model are doomed to failure because they are unable to overcome supply issues.
The trickiness of supply includes a myriad of elements. Just to give a few examples, you are looking at supply capacity, manufacturing quality, lead time, shipping cost, and customer service. These can be unknowns or manageable factors depending on how you handle them.
Yes, every drop shipper depends on suppliers to do most of what’s involved on the operations side.
But, it is really you that your business must depend on to make sure that things run smoothly.
Drop shipping is still a viable eCommerce business model if you set it up and manage it properly. Rely on your own efforts to research and connect and compute and monitor. Don’t expect suppliers to care if you make money drop shipping. Control is something that you realistically don’t have over what a supplier can send your customers, when they want to send it, or if they will take pains to ensure that it gets there in good condition. You have to work around these limitations to reduce the huge margin of error that this presents.
Uncomfortable about the possibility that first customers will complain because of quality issues? This will rarely happen if you diligently check the supply beforehand and continue to do so at reasonable intervals. Worried that without keeping stock you might get orders that your supplier will suddenly be unable to fulfill? There is little chance that this will be the case if you have carefully lined up backup suppliers. Deterred by the prospect of slow and sloppy fulfillment? Don’t stop at researching the supplier but get information on every step that your item will take until it reaches your customer’s doorstep.
Ultimately, a huge contributing factor to improving your chances with all of the above is to take pains on your end to build good relationships. Treat suppliers with respect. Don’t be a doormat, but be fair and show that you are eager to mold a mutually beneficial arrangement.
Yes, You Can Make Money Drop Shipping
As with anything worth doing, you need to make the investment. You reap what you sow. It’s unreasonable to expect the dollars to start pouring in after having made only a few simple preparations.
I talked about slipshod drop shippers who only want to make money drop shipping without going through the correct process to get there. Other drop shippers have a more sober approach to it, which is what we want to emulate to really make money drop shipping. Know and work through the challenges.
I also said that there are benefits to the drop ship model. You don’t need huge startup capital. You don’t have a lot of expenses or time involvement for operations. When you make money drop shipping, it can become a passive income stream, although a somewhat hybrid one. These are just the top advantages, but they are huge ones. You will see how much you don’t have to deal with when you really break them down and see what you are saved from when you choose to begin the journey and commit to make money drop shipping.
Plus, the true entrepreneur always gains something priceless from simply going out and doing it.
And don’t worry, it’s a long road ahead, but you can also look forward to living the dream. If you are willing to put value in at first, you will enjoy a great work-life balance as a successful entrepreneur.
