Hey there my loyal band of sea changers… I hope you are all well. As those of you familiar with my site will know, I spend a lot of time assisting those looking to make an income online in order to get out of the daily grind and fund that all important sea change. Today I am going to discuss another popular method of online business arrangements as we discuss how to make money dropshipping. In short, dropshipping works in a similar fashion to affiliate marketing in that you attract visitors to your website and sell the products of others without the need to hold inventory.
Can you make money with drop shipping? Yes you can – if you are willing to work at it you can definitely make enough to earn a decent living for sure – and many do!
So if you are interested in this area as a means of funding your sea change then grab yourself a drink as we check out the following:
- What is Dropshipping?
- What is good about it?
- What is not so good about it?
- How do you pick your products?
- What do you need?
Now, let's see what it is all about…
What is Dropshipping?
Dropshipping is the process where you perform the following (there are a number of variations to this but this is the guist of it):
- Choose a product that you wish to sell.
- Strike a relationship with a wholesaler.
- Promote the product for whatever price you see fit – on your own website or via a marketplace site such as Alibaba, Amazon or Ebay.
- Manage the sales processes and customer service.
- Send the final order and payment to the wholesaler for packaging and shipping.
The money that you make is effectively the difference between whatever you managed to sell the product for and the wholesale price that you owe the vendor. The process is similar to affiliate marketing in that you are generally promoting the products of others without the need to actually hold any inventory. With affiliate marketing however, you are paid a commission on whatever price the vendor sets but do not manage any customer service, sales processes or post sales requirements.
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What is good about it?
There are some real advantages to this type of online business including:
The model works – As I have mentioned above, there are many that make good money with dropshipping. It is not a get rich quick scheme (despite what some aggressive online coaches will tell you it is) but you can make some money relatively quickly here if you are able to attract visitors to your site/marketplace or choose the right products. Other advantages to this model include:
- There is no need to hold inventory or manage shipping.
- You own the customer list – which is another means of building an effective email list.
- You control the cost of the product and hence the profit margins.
- You can control when you put things on ‘sale’, group them in packages or increase the price for high demand items.
Low barrier entry costs – Again, as there is no need to pre purchase products or hold inventory, the initial setup costs here are quite low. Most requirements, such as a website or social media for marketing, are generally free, or close to it. There is some dropshipping specific software if you choose to use it however most of these will also offer free trial periods or low cost subscriptions for those starting out. In most cases, you will be able to get yourself setup to start promoting whatever product you have chosen for less than $100.
Harness the internet – With the invention of the all things internet with its websites and social media, there is a whole new range of platforms with which to promote your products. There are over 2 billion people online worldwide which has not only led to greater exposure to potential sales, but a growing number of products to promote as well.
What is not so good about it?
Now, of course there are also some sticking points with dropshipping that also need to be highlighted and whilst I personally don't believe that they should deter you if this is a line you wish to go down, they are certainly things to be aware of. They include:
Success takes a while – I mentioned this earlier, success takes time – meaning that unless you are patient and work hard, you may start to question whether it is all worth it.
You have no control over stock quality – Many dropshippers work in fast moving products and ‘fad' items such as fashion items and fidget spinners (remember those?). The trouble here is that as manufacturers of these products make more and more product (or sense that their ‘run' is coming to an end) they may let the quality of their products slip – which generally reflects directly in the dropshipper and not the manufacturer.
Slow shipping or poor customer service – Another disadvantage with dropshipping when dealing with vendors is that the customer is yours, not theirs hence sometimes shipping priorities are not where they should be.
Competition – Think you can make a fortune from Fidget Spinners? Yeah, well so does every other dropshipper out there… This can lead to reduced profits as you all try and undercut each other.
How do you choose products to sell?
As it is with affiliate marketing, dropshippers tend to fall into two main categories:
Sell and switch
These are the sellers who target high turnover and popular items and then, once the market falls, find the next ‘hot' product to sell. Don't get me wrong, this can be extremely lucrative and as we will see below, there are some software programs that can assist with this. As an example, I did some research and found some of the most popular products for dropshippers in the past 12 months (in no particular order):
- Magnetic / wireless phone chargers
- Waterproof mobile phone cases
- Inflatable pet collar
- Ear phones
- LED Lamps
- ‘Smart' light bulbs
- RFID Wallets
There are plenty more but I think these give you a good cross section. You can also not go wrong if you stick to popular online niches such as pets, hobbies, toys and self care etc.
Finding sell and switch dropship products
To find products within this type of operation, you can find look in a number of ways such as:
- Marketplace reports – Sites such as Alibaba, eBay and Amazon (who incidentally will all manage dropshipping operations for you as well) provide sales reports on what is selling well at the moment.
- Google Trends – Have an idea? Use Google Trends to see what interest is out there in terms of online searches. Below for an example is trends over the past 5 years on fidget spinners (hmm looks like we have missed the boat on that one which hopefully demonstrates my point above).
- Website reports – There are also a number of websites/programs that an alert you to new and upcoming products such as:
Single niche selling
Single niche selling dropshippers are those who have decided to focus on a single niche or sub niche where they work on the sale of those products only. This works more like an affiliate marketing arrangement where the dropshipper will:
- Determine the products that they wish to sell within their sub niche – generally they know what they want to sell alternatively the processes discussed in the previous section can assist here.
- Build a website where they write about their chosen area in the spirit of discussing problems and outlining how their products can provide solutions (such as what golf balls to use on hard fairways for example).
- Refer the readers to a link where they will purchase the product – usually a sales/ecommerce page within the website where the sale is managed.
- Sales and shipping is manged by the wholesaler as outlined above.
Finding niche related dropship products
To find niche related dropshipping suppliers online, you can enter searches such as “dropship: xxx” into your favourite search engine. Let's for example look for dropshipping products in the travel niche:
Note: These results will usually be based on your geographical location.
From here you can search through and find programs that:
- Offer dropshipping services – Not all product suppliers offer dropshipping as a service – this may just mean that you need to organise the shipping yourself after it is delivered to you.
- Have experience and are helpful – If they are not helpful and/or appear inexperienced then you can expect the same when you are trying to process sales.
- Have acceptable fees – most dropshipping wholesalers will charge a small fee for the dropshipping service – just make sure it is not so high that it eats into your profit margins.
What do we need to do?
Once we have all of the above sorted, or at the very least a plan in place, we need to choose and setup the media that we intend to use to sell our product. This can include:
Build a Website
If you are looking to build your online business as a dropshipper or supplier in either the sell and switch or niche type arrangements, then chances are you will most probably need a website. Websites allow you to solve problems via blog posts and videos that people can view in order to identify the solutions that they need. Usually, this process is fairly straight forward in that you build your website, write posts (on how a certain type of luggage is great as it can be used as carry on for example), then provide links so that your readers can view/purchase the relevant materials from your site/ss.
Promote on Social Media
When it comes to any sort of online sales process, there is probably no more powerful tool than Social media. It has the power to reach thousands and allows you to target specific segments if you choose the correct platform. In terms of dropshipping, a good platform to start with is FaceBook where you can discuss products, components, specifications, accessories and techniques with your audience, display products in use and show videos.
However, if you are looking to set yourself up as an expert within the niche, then programs such as Instagram, YouTube or Pinterest will be your go to option. This is great for visuals such as pictures and/or videos showing you working with or demonstrating your chosen product/s.
Join like-minded groups
Anther great tool when it comes to selling products online are social groups. By getting involved with these groups you can really get a great understanding as to what its members are struggling with, what information they seek and what products they are looking to buy. Below is an example of travel related FaceBook groups (there are obviously groups for any sub niche you are interested in):
Note: Results are geographically based. Many of these groups will not allow you to spruike or promote your sites directly, however if you can interact and demonstrate your knowledge then people will ask you directly for the information. At the very least, as above, it is a great way to get ideas and insight into what people in this area really want to know about and what they are buying online.
Another necessity that might be of use for those in the dropshipping game is dropshipping software applications. These applications include such services as:
- Finding profitable products via inbuilt research tools.
- SEO and traffic generation processes.
- E-Commerce and sales pages.
- Automated order fulfillment and vendor payment.
- Find similar/same products at a better price.
- Analytics and reporting.
- Customer records management.
And so much more. These programs, like most of this type, vary in price based on the services required and the size of your store but generally start at around $20 – $40 per month. Popular options include:
Another term that has started to appear within the dropshipping world is one called dropsurfing. This is the process where software programs such as the above allow you to promote a product and then once a sale is made, utilise the software to find the same product from a number of wholesalers to find the best price. The theory is that more profit can be made by shopping around just as you would a retail purchase and not necessarily wholesaling via the same vendor for every sale – even for the same product.
And there it is – How to make money dropshipping. I hope it has been helpful and as usual, please do not hesitate to comment below if you have any questions, need some advice or have any experiences to share.
Do you want further assistance with any of the above or need help to build your own dropshipping related website?
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Until next time
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