Learn more about DropShipping with AutoDS
In recent years, there is a growing trend where people quit their 9-5 job to become online entrepreneurs. With dropshipping becoming one of the best ways to do it, many want to know what it’s all about, how it works and why it’s so popular.
Dropshipping gives you the ability to make high profits, work on your own schedule and do so from anywhere in the world. The only things you need for success are a laptop, an internet connection, and the will to succeed.
On this page:
What is Dropshipping?
The concept of dropshipping can be explained in several ways. However, it usually refers to an online fulfillment method where sellers do not hold a physical inventory of products. Instead, they offer products for sale on a marketplace and place orders with suppliers on behalf of customers.
This is in large contrast to traditional sellers who purchase their stock in advance, placing them at a great disadvantage. Once they buy inventory, there is no going back; they must get rid of it even if it means doing so at a loss.
Furthermore, such sellers must invest in warehouses where they can store and ship products from. Coupled with an expensive payroll, traditional selling results in a high-risk business producing relatively low returns.
This is how the dropshipping business model works:
The process of dropshipping consists of three simple steps. When done correctly and repeatedly, it can yield high profits. Let’s use as an example a customer purchasing a computer desk.
Step 1, a customer buys the desk from you at a retail price of $150 and pays you for it on the spot.
Step 2, you order for the desk from one of your suppliers at a wholesale price of $100 and instruct them to send it directly to your customer.
Step 3, your customer receives their item, and you end up with a clean profit of $50.
How much it costs to start dropshipping?
Since the dropshipping business model does not require us to purchase stock, no initial investment is required. Customers buy products from your store and pay you first. After that, you pay suppliers for the order.
Therefore, almost anyone can start this kind of business without worrying about startup costs.
Contrast that with standard online stores where you need an initial investment to purchase products with the hope that inventory sells. Dropshippers don’t have to worry about that.
Additionally, dropshipping is a low-risk/high-reward business. The worst that can happen is a lack of sales, but there’s no harm since you didn’t purchase inventory beforehand. Your initial investment here is the time and work you put into product research and testing.
For Shopify You’ll need to use free marketing techniques like Search Engine Optimization (SEO) or paid advertising. So compared with other channels, Shopify requires an initial marketing investment of time and money.
How to start Dropshipping?
You can do that with eBay, Shopify and Facebook.
eBay is one of the most popular marketplaces globally, with close to 900 million monthly visitors. With such high organic traffic, it requires no initial marketing budget.
It is quite simple to start an account and list products on eBay. However, the platform initially subjects you to selling limits. Luckily, there are a few cool tricks to quickly raise your eBay selling limits, so you can scale your business and increase your earning potential.
Starting up an eBay dropshipping business does require some time-consuming work, including learning how to set up business policies. This is especially true for dropshipping, where business policies must match those of your suppliers one for one. However, once you’re set-up, selling and processing orders is as simple as it can get.
In contrast, Shopify has no selling limits, and thanks to its legal pages, does not require business policies set up.
Additionally, it is fully customizable. Consider this a DIY project where you get to design your store however you want and outfit it with a whole host of apps and features to increase sales. Shopify is designed specifically for online sellers, making it rather simple to set up a store.
However, there is hardly any organic traffic to a Shopify store. You’ll need to use free marketing techniques like Search Engine Optimization (SEO) or paid advertising. So compared with other channels, Shopify requires an initial marketing investment of time and money.
Check out AutoDS’s A-Z Shopify course, where you’ll learn everything you need to know about starting a dropshipping Shopify business that works and earns profits.
Unlike eBay and Shopify, Facebook Marketplace is an untapped selling channel with little to no competition and tons of free organic traffic (and sales). While previously Facebook Marketplace was used as a local exchange for used goods, it is fast becoming one of the best places for dropshipping.
To begin with, Facebook Marketplace has the lowest startup and overall operational costs of any selling channel. There are no monthly selling fees, and you only get charged %5 or $0.40 per sale (whichever is lower).
Additionally, thanks to the high volume of daily traffic, there is no need for investment in marketing. Furthermore, you can boost your listings by adding them to local buy and sell groups or converting them into ads.
It is effortless to start dropshipping on Facebook. Just log into your account, create a listing and start importing products to the Facebook Marketplace.
Finally, there is no need to set up business policies or legal pages; Facebook already has its own set of Commerce Policies. Just make sure to pick suppliers that can abide by the rules and expectations.
If you have further questions about this topic, please do not hesitate to address us at the support chat - we will be more than happy to assist you.