But, the more important questions you need to ask are "is dropshipping profitable?" and "how do I make money dropshipping?" Dropshipping businesses can see strong returns when run well.
Read on to learn how to make money from dropshipping, things to avoid, and ways to maximize your profits.
How to Make Money Doing Drop Shipping
The dropshipping business model offers a lot of upside for entrepreneurs. Low overhead expenses, easy set-up (especially if you use BlueCart eCommerce), and vast scalability. Once you learn how to dropship and how to start a dropshipping business properly, you’ll know there's a lot of money to be made.
Here's how to make money dropshipping:
Keep it Simple
The dropshipping model can be a bit complicated, we even had to put together a guide on dropshipping for dummies. This is particularly true when you use multiple suppliers. To avoid creating a complex web of processes, focus on streamlining your business. Aim to use as few suppliers as possible and research everything before making decisions. This includes using a wholesale directory to know how to find vendors, choose the best eCommerce platform, and build your site with eCommerce SEO in mind. You need to know how to find dropshipping suppliers that are reliable.
Choosing a platform like BlueCart eCommerce can make this much easier. Our all-in-one platform handles your digital catalog, has robust SEO for eCommerce product pages, and processes eCommerce payments. This lets you focus on what you do best, selling products.
Choose High-Quality Products
Dropshipping businesses had a bad reputation for a while due to many new dropshippers flooding the market with low-quality, low-cost goods. This led many to question, "is dropshipping dead?" and "is dropshipping legal?" Luckily, you can avoid the pitfalls of those businesses by only sourcing best dropshipping products that are well-made. This does mean the costs will be higher, and you won't be able to sell in bulk as easily. However, it also means your customers are more likely to view your business favorably and prevent you from crashing and burning. This is also vital if you choose the reverse dropshipping model.
Keep Shipping Times Short
Dropshippers rely on their suppliers for a full range of order processing and order fulfillment services. This includes warehousing products, providing eCommerce packaging, eCommerce shipping, and tracking deliveries. However, customers will still hold you responsible for any issues that occur during that process. Work with your suppliers to ensure these processes are fast and efficient, so your customers can receive their orders in as short a time as possible. Any issue here can quickly become a headache for your customer service for dropshipping team. In fact, more than 2/3rds of customers say they are less likely to shop with a business if delivery is late by only two days. If you routinely run into issues with lead time and delivery delays, you should start looking for more capable suppliers.
Since you don't have to purchase or store any products you can't sell, a dropshipping business can offer much more diverse products and shift gears quickly. Perform regular eCommerce keyword research to see what products people are looking to buy. Then, work with your supplier to add new offerings that fall in line with the shifts in the market. You should also perform demand planning and look at other dropshipping websites to estimate the sales you can see from each product and uncover seasonal trends. Not doing this is one of the biggest dropshipping beginner mistakes.
Try Drop Surfing
Drop surfing is a unique take on dropshipping that is built around maximizing the dropshipping profit margin for every product you offer. Instead of sticking with a single supplier, you pick the product you want to sell and shop around for the lowest cost. This method is great not only for keeping costs low, but will let you increase eCommerce sales by undercutting your competition. It's a great way to eke the most out of your product offerings, but can complicate your fulfillment process and shipping costs.
Luckily, BlueCart eCommerce is great at handling these calculations. Whether you ship from one supplier or a hundred, our system is built with automated dropshipping in mind and will automatically calculate the associated costs for you. This eliminates errors and saves you time and a headache.
How to Avoid Losing Money Dropshipping
Though creating a dropshipping business is relatively easy, there are a few things you'll need to avoid to ensure success. You’ll need to focus on growing your business properly and put in the effort to keep revenue flowing in.
Here are the most important things to know to avoid losing money dropshipping:
Dropshipping Requires Focus
Many new business owners think that dropshipping is as simple as building a storefront and walking away. This is not the case, and you will face challenges along the way. You can have issues with product lead time, a poorly performing website, or a lack of eCommerce marketing and dropshipping ads. Put your full effort into dropshipping and treat it like any other business. You need to invest your time and money to ensure you stand the best chance of succeeding and standing out in a competitive marketplace. You should also make sure your website includes a shipping policy page so your customers know what to expect. If you use a dropshipping website builder, there should be a page template you can use. You can also ask your supplier to include a packing slip and RMA in each order to streamline any returns, saving the customer time and lowering the chance they’ll immediately ditch your business.
There are Costs Involved
Dropshipping may have low startup costs, but they're still costs. Beyond the basic costs of a headless eCommerce platform or online marketplace, you also need to pay a fee to your suppliers for their dropshipping services. You'll also have costs associated with marketing efforts that attract customers to your site. These may include eCommerce PPC advertising, eCommerce email marketing, or even eCommerce marketing automation tools. These costs can add up quickly, but are essential in growing your business and competing. Plan a budget from the start to avoid being overwhelmed by these costs and understand that no business can operate for free. By choosing the best eCommerce platform for SEO, you can eliminate some of these costs. Also, your costs will go up once you've scaled to the point that you need to fill dropshipping jobs.
Aim For Long-Term Success
Though dropshipping businesses are quick to get up and running, they aren't a get-rich-quick scheme. Overnight success is unlikely, so you shouldn't sell up your store in a sloppy manner. Build your site properly from the start and establish relationships that you can depend on. This means you need to invest in good eCommerce software and a standalone or subscription website. You won't have to invest as much time and money as if you started a traditional business, but you still need to put in the effort if you want your business to succeed.
Pay Attention to Copyrights
One of the biggest pitfalls of dropshipping businesses is selling products that are copyrighted. These products are easy to sell and attract customers, but are also illegal if you don't have the legal right to sell them. Unfortunately, many companies that provide products for dropshipping operate out of countries with lax copyright enforcement. Make sure you work with a supplier who understands both their rights and yours, so you don't end up in legal trouble. You can have your eCommerce business license pulled and lose your entire business by selling products that belong to another company.
Diversity Is Key
Many new business owners become overly reliant on a single supplier from a wholesale marketplace or product offering for their dropshipping business ideas. This may seem like a good idea when profits are rolling in, but a single shift in the market can really damage your bottom line. By using multiple suppliers and targeting a range of dropshipping niches with your products, you can get a steady stream of income from multiple areas. You can even add a subscription box business model to some of your products for additional income.
If you do want to add subscription payments to your business, BlueCart Subscriptions is the best choice. It comes out of the box with integrated billing capabilities and everything else you need to be successful, with none of the hassle. It's the best way to adapt your business to the subscription box model.
Money, Money, Money
Dropshipping businesses are cheap to start, easy to run, and can turn a profit quickly. Now you know how to make money dropshipping, and following the tips we've listed above, you can maximize those profits and build a lasting, successful business. You should also look into affiliate marketing vs dropshipping for ways to market your brand and grow sales without needing to invest in costly ads. Just make sure to include any changes you make in your drop shipping business plan.