What is Dropshipping?
The term dropshipping can seem confusing at first but it truly is a simple concept. The official definition is to move (goods) from the manufacturer directly to the retailer without going through the usual distribution channels. Simply put, customers come to your website buy the products you do NOT keep in stock and the order goes to a retail fulfiller that will pack the product and ship it to your customer for you.
Can dropshipping be passive?
Many people think running an e-commerce website is very time consuming and a lot of work which is can be. Dropshipping takes away the need to manually pack orders and ship them off to your customers so it will take less time. There are a few mundane tasks you will need to do to keep your e-commerce website up and running. Some of these tasks are responding to emails, running advertisements, changing prices of products as they fluctuate, add and remove inventory as needed, etc…A lot of these can be automated. Marketing, for instance, can be completely automated once set up. You can also set up a really in-depth FAQ page which will help reduce emails. If you don’t know what passive income is, our last episode (What Is Passive Income) covers it.
For the most part with some of these manual tasks, automated dropshipping can be passive.
Why my dropshipping site failed!
A year or so ago I attempted to start a dropshipping website to sell drones. I massively failed and I’m sharing why I failed to help you not fail. I was looking to sell all brands and ranges of drones from higher-end consumer drones such as DJI and Parrot that cost anywhere from $500 to thousands to cheaper $50 or less drones. The issue was price fluctuation. A lot of times the higher end drones would go up to two times the retail price so there wasn’t any way to make money and quite frankly no one was going to buy a drone that’s above retail price in the first place. After numerous emails to the individual retailers on all express, I was forced to remove the higher end drones from my site. This left only being able to sell the cheaper drones which the prices still fluctuated on daily but at least they never went above retail price. The issue was my main market was for the higher end DJI drones and Parrot drones. So I decided to close down my website and learn from my mistake so I could share my advice with you!
So the best advice I can give is to pick cheaper products to sell which will have less price fluctuation.
The Struggles of Dropshipping
You hear about all the money you can make while you sleep with dropshipping but there’s more to it! Besides price fluctuation, there are other things you will need to be prepared for.
Processing and Shipping: Long processing and shipping times can be challenging and cause a lot of customer service emails coming in. Each retailer on ali express has its own processing time it which can be confusing since all seem to be different. Shipping times will also fluctuate with each retailer. Most specify how long shipping takes to get to different countries. Many are located in China which can extend shipping times to the US for example. There are some that have US warehouses and if you can pick products that have more US warehouses you can ship from if your customers are located in the US that will really help with your shipping times. Also, shipping prices are often overlooked. A lot of times the final price you see does NOT include shipping. Some offer free shipping but often have longer shipping times and the other options are usually very expensive. So keep this in mind when setting your final prices and be very upfront with your customers on shipping expectations.
Broken or Incomplete Products: Each retailer has reviews. Read them to ensure they are reputable and don’t ship bad or incomplete products. Some don’t ship in original boxes so be aware of that if that’s something you’re concerned about. For example, some of the drones would not come with propellers or something simple but could cause a headache for your customers. So just be sure they’re reputable and keep in mind things do get broken during shipping so be sure to have a return policy in place that makes sense for you and your dropshipping website.
Knock Off Products: This would seem obvious but once again read the reviews. Some products are made to look identical to a name brand product. Make sure that if your advertising a name brand product that what your selling is an actual name brand product. This can be hard but generally, the reviews will give you insight on this.
Is there anything good about dropshipping?
Yes! Dropshipping is amazing and can really become a great passive income. Every passive income idea will have something that could stand in the way of your success but keep in mind many people dropship for a living are making tons of money doing it. So you can too! My goal is to inform you of some of the issues that I had to deal with so you can be prepared and go into dropshipping without as many issues or at least be prepared and have a plan to overcome these!
Should I buy an existing dropshipping website?
This definitely depends on how much work your willing to put in up front and how much money you have to invest. You can definitely save a lot of time and start making money right away with an existing dropshipping website. Most of the time the seller will spend time showing you what they do day to day to keep the site going as some take more work than others. If you purchase from the Shopify Marketplace aka Exchange Marketplace you can see if their profitable and how much they make after expenses which is just amazing. Of course the more you spend the more money it’ll be making. You can spend anywhere form $5 to thousands of dollars on an existing website. So the answer is if you are looking to do less work up front and jump right into making money and have a little more upfront to spend then go for an existing dropshipping website. If you have less money to spend or have more time then go for starting from scratch.