Timotheus Update: This post was originally published on 25 March 2020 on this website – Passive Online Revenue. Due to rebranding and consolidation of the two sites, the post is now on this website –
I had years of experience of trying out various ways to make money on the Internet. Drop shipping was one of them. Having tried it, I am here today to share my experience with you on How to Make Money with Dropshipping?
When I decided to do eCommerce, my first attempt was creating a private label product, and selling it with FBA (Fulfillment by Amazon). I soon discovered there were many disadvantages, and also a lot of hard work.
Then I learned drop shipping. It did saved some costs, and have some advantages over private label. But is it really a good way to make money online?
Today, in this article, I save you time, and share all that I have learned and experienced with drop shipping. I will list the advantages and disadvantages. I will also give my view on whether this is a good choice for making money online.
What is Dropshipping?
Drop shipping is when you sell products but you do not keep them in stock. When a customer orders an item from your eCommerce store, you get it from a manufacturer, a wholesaler or even another retailer.
The product is then shipped to your customer. The shipping is done with an agreed shipping service that you pay for.
What Are the Advantages of Dropshipping?
Drop shipping surely has advantages. That is why many people, including me, do this. Here are some of the benefits:
- You Do Not Need To Produce Products
- You Do Not Need Need To Stock Inventory – As such, the risks are lower
- You Can Sell a Wide Variety of Products
- You Do Not Need To Do Shipping
- Your Fulfillment Cost Will Be Low
What Are the Disadvantages of Dropshipping?
After some time doing dropshipping, I soon discover that there are many disadvantages to this way of making money online.
- You Need To Find Good and Quality Products
- You Need to Find Good and Reliable Suppliers
- You Need to Constantly Monitor Stock Availability with Supplier
- You Need to Constantly Update the Website, especially when out of stock
- You Need to Find Low Shipping Costs
- You Need to Build Brand Equity – Spend a Lot on Advertising
- Your Profits are Relatively Lower
- There is Poorer Quality Control
How to Make Money From Dropshipping?
Now that you understand what is drop shipping, the advantages and disadvantages, let me share with you how to make money using drop shipping. The first thing you need to do is to choose a niche.
Choose a Niche
The first and most important step in making money from drop shipping is to find and choose a niche. It should be one that you are interested in. Better still, make it a niche on a topic or subject that you are passionate about. For example, I am very passionate about making money online. And hence, I created this website about creating passive income via the Internet.
The reason why it should be a niche or topic that you are passionate about is because if it is not, there can be a high chance that you will soon lose interest. And that can be detrimental to your business.
Not sure how to find and choose a niche? Here is a video from an expert with lots of online businesses making tons of money. Click on the image below to go to the site, and learn how to find your right niche.
Choose a Product
I have found this to be the tricky part of the process. It takes a lot of research and time to find the right product to sell.
You have to find one that is within your niche. A product that is in demand so that you can get sales. Also, a product that, after all the costs, can make a decent profit. After all, the time and effort for a product that makes $10 is the same as a product that makes $1000.
There is a lot to consider when choosing a product. First, of course, is whether there is a demand for this product? Will people buy? Preferably it is something that appeals to impulse buying.
Then it should be something that is not easily breakable. A product delivered in bad condition will only result in an unhappy customer. And of course, the dreaded refund.
Next, you must find a product that is of good quality. I have read so many reviews of products where people criticized the poor quality after they have received it. Do you think they will buy it again? And when other consumers read the review, do you think they will buy your product?
Most times, I have ended up choosing and selling a product with a lot of competitors. It is almost a necessary evil. A product that has low or no competitors can mean that there is no demand for it. So, naturally, you would find yourself choosing one that has high competition.
Know Your Competitors
So, with high competition, it is good to know who are your competitors. Find out how are they doing. In fact, you can find a product they are selling and sell something similar.
But do remember that this will mean that your product will be seen as the same as your competitors. As a result, it will be tough to market and sell it. On the upside, it is a product you know that many people are interested to buy. When there is high demand, there is a chance for you to get sales.
Some products are also sold by the big guys like Amazon. Watch out for such products. They will be very hard to sell. It would be very difficult to compete with Amazon. And it is worse if you are also selling on Amazon.
Find a Good and Reliable Supplier
When finding and choosing a supplier, be very careful and do your due diligence. Make all efforts to find a supplier who has good reputation and good record.
Most drop shipping business find suppliers from Aliexpress. And on Aliexpress there are many poor quality suppliers. Take your time to find a good and reliable one.
Also, be careful that some are not manufacturers. Some are resellers. This means that they get the products from manufacturers, and resell them to you. As such, they will charge a higher price than when you get direct from a manufacturer. Also, note that because they are not the manufacturer, they do not have control on stock supply, production lead time, and product quality.
Other things to look out for when choosing a supplier is the communication. Because many of the suppliers are from overseas, you need to make sure that you understand each other clearly. Also, look out for the speed of response. When the communication is not good or fast, move on and find another supplier.
When assessing a supplier, ask as many questions as possible to get all the facts you need. For example, ask about their production capabilities. Are they able to cope when your business grows and you need more products? Can they maintain the quality as the production and business scale?
Create Your eCommerce Store
You can do drop shipping on marketplaces like Amazon or eBay. But you will still need your own eCommerce Store. It is the best because your business will look more professional. It is good to have a website where people can see that you are a serious and legitimate business.
At the same time, they get to know of your brand and website. Having your own eCommerce store creates brand exposure and brand awareness. With a website, you get direct sales rather than on marketplaces where they get a cut. This means more profit for you.
You can choose to create your eCommerce store using Shopify or WooCommerce. Shopify simplifies the process. You can get your store up and running quickly. This is because Shopify has powerful technology and apps to handle the online sales and payment processes for you.
Having a website is one thing. Being seen on the World Wide Web by Internet users is another. Just because you have a website is no guarantee that people will find it.
You will have to do digital marketing to get your store seen. For example, you need to do SEO (Search Engine Optimization) to get your website ranked on the first page of search results.
Being on the first page will get many people to click on your website. This drives traffic to your eCommerce store. And with high traffic volume, you get more people that you can convert into customers.
Another way of increasing online visibility is to do social media marketing. Social media is free, and is an excellent way to increase brand awareness and brand exposure. When people learn about your business on social media, they may visit your website. Again, this drives traffic to your website that can be converted into customers.
Build a List of Customers
Another strategy you have to do to make money with drop shipping is to do email marketing. On your eCommerce store, encourage people to join your mailing list. Build your customer base.
Then send emails to your list on a regular basis. Sell them your products. Build brand loyalty so that so that they come back and buy more stuff.
Engage and Build a Relationship with Your Customers
As with any business, your drop shipping business needs to engage and build a relationship with your customers. As mentioned above, one of the strategies is to do email marketing.
Another way of engaging and building this relationship is on social media. Social media is an excellent platform where you can hear first hand from your customers what they love or hate about your products.
For products they love, encourage these fans as brand advocates. For the haters, it is a good idea to find out what they do not like. It is an opportunity to improve your product. The improve product can open your business to a whole new market.
Analyze Your Data and Optimize
Another way to improve your business is to analyze your data, and optimize your business. Do this by using Google Analytics, Facebook Insights, Facebook Analytics, and many other tools to help you look at the data and metrics. Analyze them and learn from the data so as to optimize and grow your business.
One of the ways is to track your conversions. For example, using Google Analytics, you can know where customer is coming from. You can follow and find out what path they took to reach your site. Also, you can see where the sale occurred. With this information, you can repeat and scale it to get more sales.
Keep running and fine tuning your campaigns. Test, test, test. Do this to optimize your campaigns and spending. Ultimately, the goal is to get more sales.
Do Not Forget to Retarget
All eCommerce stores face a common problem. And that is abandoned carts. One of the solutions is to do retargeting to recover the sales.
For example, there is a cart abandoned on your store by a customer. The customer then goes to Facebook. Your retargeting efforts will show them the product they left in the cart in their newsfeed. The promoted post can ask them if they forgot to complete the purchase? Or it can be a message to encourage them to complete the sale.
Fulfill Orders Immediately
After you have done all the above, you finally get a sale! Congratulations! Now, you must fulfill the order.
One point to note – always fulfill the order immediately! Any delay can create a negative review or cause you to lose a valued customer.
So, you need to have the fulfillment process in place. When you get a sale, you must immediately go to your supplier and order from them. You will need to pay for the item. Arrange for the product to be sent to your customer. You will need to pay for shipping.
Then take note of the tracking number. Send an email to your customer to inform them that the order is on its way, and give the tracking number to them as proof.
Your sale is complete only after your customer receives the product. And there are no issues or complaints.
The Better Alternative – Affiliate Marketing
Why Affiliate Marketing is Better Than Dropshipping?
Some people enjoy the thrill of running an eCommerce store. They love the hard work of finding and choosing products. And they love to populate products on their website, and sell them online. And they get excited when customers purchase their products. All and good for them.
Some people, just like me, prefer less work and still make lots of money. And while it is not completely passive income (what is really?), affiliate marketing comes close to it. And I do this business model to make my fortune online.
What is Affiliate Marketing?
Initially, it is almost the same process as drop shipping. First, you find your niche. Then you find the product you would like to promote. Next, you find and become an affiliate of the supplier or manufacturer of the product.
You then get an affiliate link. Use this affiliate link to promote the product. It can be done on your website or social media. When people click on affiliate link, and make a purchase, you earn a commission.
Awesome, isn’t it? I wrote about how to make money with affiliate marketing. Click here if you like to learn more about it.
I truly recommend doing affiliate programs. If you are not sure what it is about, below is a free video training from a affiliate marketing veteran, Kyle, of more than 20 years experience. Click on the image below to watch and learn.
Does affiliate marketing’s power to create passive income interest you?
Click here now to start learning how to do affiliate marketing.
(No credit card required for Free Starter Package)
When you join the above program, I will be your mentor. I will guide you and help you do affiliate marketing successfully, and make money.
How to Make Money with Dropshipping? – Passive Online Revenue Final Word
Drop shipping definitely has many advantages to it. But there are also many disadvantages, too.
Compared to private label business, there is less work to be done. Also, less time spent, and less risks.
But ultimately, I still find nothing beats the affiliate marketing business model. With affiliate marketing, you do not need to deal with suppliers, fulfillment companies, or customers. All of which can cause a lot of stress.
All said, I do find drop shipping a good option for making money online. If you like to sell products, enjoy the admin work, thrill to the logistics, and find it fun to engage with customers, then this is a good choice for you.
If not. If you are like me. Someone who enjoys a more passive way of making money, then affiliate marketing is for you.
You can join the Free Starter Package with just your email. No credit card needed for this Free Starter Package.
There is some free training as well as really powerful tools and features to help you do digital marketing for your online business.
My #1 Recommendation
Get your Free Starter account Now!
Join the Wealthy Affiliate as a Starter member for Free! And get access to free training as well as many free features and tools (including powerful keyword tool). Plus, you get to create a website hosted on the Wealthy Affiliate server for free.
When you join the above program, I will be your mentor. I will guide you and help you do affiliate marketing successfully, and make money.
If you have ANY questions about How to Make Money with Dropshipping?, ANY at all, please submit your questions as comments below. I will be happy to help you out.
As the digital landscape grows and changes, more opportunities will be created. I will continue to share more of these. To receive updates on more opportunities as well as more information on each of these opportunities, please join my I Love Passive Income Community.
Thank you for reading this.
Best wishes to All!