So, you’ve been thinking about starting a dropshipping business? Or you’re at least looking for something you can do to make good money from home. Well…today we’re taking a look at what is a dropshipping business.
I’m going to share with you my own experiences, then you can determine if starting a dropshipping business is for you.
What is Dropshipping? – Do I Need Inventory?
According to Wikipedia, dropshipping is a supply chain management method in which the retailer does not keep goods in stock but instead transfers the customer orders and shipment details to either the manufacturer, another retailer, or a wholesaler, who then ships the goods directly to the customer.
In other words, you set up an online store through a website and offer products to purchase. The customer orders the item from you and pays you. You then order the item from the supplier and pay them a discounted rate, then they ship the item to the customer.
You make a profit and don’t have to keep inventory. The concept of this type business is a dream…but is it a dream come true?
What’s Involved With a Dropshipping Business?
1. Online Store. First you need to set up a store online through your own website. The most popular dropship platform is Shopify. They have a few website themes for you to choose from to get your store up and running.
My Experience: Setting up my website was very frustrating because I had never set up one before and it wasn’t very user-friendly. There is no training and even searching on Google didn’t turn up much information that helped. There is also no support system of other members through the platform.
2. Select Suppliers. You choose the suppliers and download the products you want to promote on your website. You then set your price to what you want based on the profit you want to make. Most of the suppliers will recommend what to sell the item for. They will also show you what the product costs you. They charge you shipping even though the item is shipped to the customer, so you’ll need to charge the customer shipping or build it into the cost.
My Experience: Many of the items are from China or other oversees companies. The items from China are cheaply made and all items from oversees take longer shipping time. Most people don’t want to wait over 2 weeks to receive items, so I only selected items made in the US and Canada. Since the biggest supplier, AliExpress, is from China this limited the products I could offer…my choice though.
It also took a lot of time to search, download, and set prices on items. The suppliers also limit your downloads (more on that below) based on your membership level.
3. Update Website. You have to stay on top of what’s available in your store. As the product becomes unavailable from the supplier, it will automatically be removed from your store. This causes a need to search for new products to add to your store.
My Experience: I was constantly replacing items, which took even more time, but it was just part of the process.
4. Taxes. Depending on what state you reside, you may have to collect and pay quarterly sales taxes.
My Experience: Fortunately for me my state requirements for collecting sales tax did not apply to me. I’m exempt from my state because I don’t have a business location and don’t have sales that exceed $1 million annually. Oh, to have that problem! You will need to check with your state tax commission to see what applies for you. I’m not aware of how all this works if you’re not in the US.
This may seem simplistic and you would be right. There are more little details, but this should give you an overview of what to expect.
Are There Costs Involved? – It’s Starting to Add Up
Yes, there are costs involved and they do add up. If you’re a wiz at setting up a website then you may be able to get around using a platform like Shopify, but they are set up specifically for online stores. There are still expenses involved, like paying for your domain. Below are some expenses you can expect to pay:
Shopify. Shopify offers multiple levels of membership starting from $29.00 per month (and 2.9% + 30¢ per transaction) all the way up to $299 per month (and 2.4% + 30¢ per transaction). You pay the monthly fee regardless of making a sale.
Suppliers. You will need to have a membership for each supplier you choose. Each of these vary in price, but most of them offer a free member with a limited amount of product downloads. And if you want to offer the higher quality products, you’ll need to upgrade to one of their paid memberships.
My Experience: I did not make any sales, so I lost money.
Doesn’t Seem for You? – May I Suggest an Alternative?
At this point you may be thinking this isn’t for you…it wasn’t for me either. After loosing time and money I ended up on the search again. That’s when I found affiliate marketing.
Affiliate marketing is an opportunity to earn a commission by referring readers to another site to purchase their products. There is no stock or shipping involved for you. As an affiliate marketer, you only guide visitors to another site so they can purchase certain products or services. You can read my article HERE on how to start in affiliate marketing.
The vehicle used to direct readers to the products is through a blog that you write on your own website. You can read my article HERE on how to start blogging for money.
Affiliate marketing business does take time and work, but it can be started for free.
The difference for me is that I found an affiliate marketing platform that shows me the correct way to set up my website and attract traffic. I am part of a program that offers training and a support community that answers questions and encourages me. If you’re serious about learning the affiliate marketing business in a way that will make you money, then I recommend you read my review of Wealthy Affiliate HERE.
My Final Thoughts
Even if you decide to pursue dropshipping, I recommend that you check out the training at Wealthy Affiliate. Although the training is geared towards affiliate marketing, the information can be used in setting up any website. I am confident that the Wealthy Affiliate platform and training open up many doors for success in online businesses.
Did I mention that a free Starter membership at Wealthy Affiliate provides two websites to help you get started in learning how to set up a website and make money? Oh yeah, it’s in my review…right HERE.
I hope this has given you something to think about and some insight as to what is best for you.
I’d love to hear from you. Drop me a line or two in the comments below. Have any questions? Post them in the same place.
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Thank you for hanging out with me!