What is a Dropshipping Business? – Is it for You?

What is a Dropshipping Business

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. Dropshipping


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.

Know of anyone that would be interested in this article? Just click on the social media or email tabs on the side to share.

Thank you for hanging out with me!

Karen

16 thoughts on “What is a Dropshipping Business? – Is it for You?

  1. Great article

    I can relate. I have tried many ways of making money like drop shipping and I didn’t like it.

    Since joining affiliate marketing I have started to see success and yes what i liked is that I started off with little to no money but I wont lie there is a lot of work to be done.

    1. Hi Thabo! I’m glad you can relate to my experiences with dropshipping. Yes, affiliate marketing is a lot a work, but it is possible with the proper training. Thank you!

  2. Hi Karen,

    Thanks for this article on dropshipping! In the past, I’ve been thinking about setting up an online shop. Never went through with it though. It seemed too daunting at the time, and reading about it again gives me the same feeling. To me, it just feels like too much of a hassle. Affiliate marketing on the other hand, well… I’m currently working on it through Wealthy Affiliate. One of the best choices I made over the last couple of years, so thanks for recommending that!

    Have a great day!

    1. Hi Kevin! Yes, dropshipping is daunting and you have to know what people want to buy. It’s so hit and miss trying to figure out what will sale. With affiliate marketing we’re writing about topics that help people.

  3. I always had a vague idea of dropshipping. Now I got a clear picture of it. I prefer affiliate marketing than any other online business. Especially with the platform like wealthy affiliate, anyone can learn and grow in their business.

  4. I found this article a really good read. I had some knowledge about dropshipping, but I even learned more by reading this post.

    I’ve always considered dropshipping as a good way to make a side income. But as I read your experience with it, there are downsides and something I’ve given a second thought about not doing. I’m not so sure yet, but having your opinion on the subject was very helpful.

    Great read- thanks for your recommendations.

    1. Glad I could shed some light on it for you Eric. Dropshipping can be be profitable if you know what you’re doing, but it’s not for beginners. I wish you the best is whichever endeavor you choose.

  5. Ahhhh…. so well explained. Thank you!
    I am thinking after this article that it is not for me, sounds like a lot of moving parts! I have sure liked Wealthy Affiliate as there is only the one site that you do most of your work on. This has made it so simple and easy to follow.
    Great work here Karen, very helpful.
    Have a great rest of your week.
    Molly

    1. Glad you hopped over here Molly and checked out dropshipping. It is a lot of moving parts that add up in costs. Wealthy Affiliate is a tried and true platform that offers the training that will get any novice up and running. Thank you for reading this article. You have a great week also!

  6. I looked into dropshipping a few years ago and had a similar experience as you did. At the end, it wasn’t for me. I am sure that people will appreciate this post because it pretty much explains the steps to the dropshipping industry. I know that I could’ve used this information when I was looking into it.

    1. I’m glad I can be of help to others. Just wish you and I had this information when we dove in. I wish the best is searching for the right business for you.

  7. Hi Karen and thanks for describing what dropshipping is.

    I know there are people who do this successfully, but wow… it seems to be a lot of work, with no guarantee of sales.

    Don’t you have to purchase all your inventory upfront? That would mean you need to have money to spend before you get any profits.

    I like the affiliate marketing method much better. There’s little upfront cost with that. And if you start with Wealthy Affiliate, it’s FREE!

    Thanks so much,
    Suzanne

    1. Hey Suzanne! Actually, you don’t buy any inventory,but you’re still trying to sell products. You pay to promote their product, however.

      In my opinion affiliate marketing is the best way to go.

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