How Do You Make Money From Dropshipping? Does It Work?

The start of the global pandemic last year has definitely made a huge impact on how we live in the present. Although we are now slowly recovering from its effects, it left a permanent scar in today’s generation.

And one sector that was badly injured in 2020 was the brick and mortar businesses. Since many cities are in lockdown, establishments were forced to close down as well.

As a result, it leads us to turn to online services for our needs, which has caused a huge boom in eCommerce.

Sure, it did generate a significant spike during the pandemic, but you have to take note that eCommerce was already growing since the mid-90s.

And as our technology progressively advances, eCommerce continues to rise as well.

Some of us may not be aware that online services and delivery has been around during such an era. One example is eBay, which was founded on September 3, 1995.

And then, waiter.com initiated what everybody considered is the first online food delivery in the same year.

For today, in particular, we will be talking about a popular eCommerce platform called dropshipping.

You might have heard about it from an online entrepreneur on YouTube perhaps or as you browse the internet for a legitimate income source.

But what is it? And how do you make money from dropshipping?

Well, if this is your concern, then you are in luck because I will be talking about this issue in our today’s article.

So without any further delays, let’s get right into it…


What is dropshipping?

Before I talk about how do you make money from dropshipping, allow me to discuss first the essentials of dropshipping.

In layman’s terms, dropshipping is an eCommerce platform that works via a retail fulfillment method.

Under this setting, the online retail owner doesn’t commonly store the inventories themselves.

The practice is that they would contract third-party suppliers or manufacturers that already possess the items. Also, they are the ones that normally accommodate the deliveries.

If you’re new to the idea of dropshipping, take note that about 33% of online stores you’ll find on the internet, and social media like Facebook is a dropshipping store. So that is that.

This type of business model is actually a perfect fit for beginners because it is relatively affordable compared to traditional retail stores.

As you see, it is essentially a hands-off process. And what you’ll basically need includes your laptop, capital, and attitude.

Your budget will comprise some of the basics such as the domain, supplier, advertisement, etc. I will briefly talk about the cost involved in a little while.

Your attitude going in is also as important as your budget because it could spell the difference between your eventual success or failure.

It would be best to manage your expectations because, like many businesses around, either traditional or eCommerce, dropshipping has its fair share of ups and downs.

If you’re a startup or a struggling dropshipper, then you can check out this site to help you turn your business around. Or, you can book a FREE 45-minute mentorship session and get a consultation directly from me.

How do you make money from dropshipping? And how it works?

As I mentioned, the retail store owner doesn’t have to deal with products directly. All they have to do is to contact a supplier and establish a partnership with them.

Afterward, the suppliers will manage the logistics part of the process.

Your main task as a dropshipper involves marketing the products on your eCommerce page and business ads on social media.

The aspects of promoting include the following—

  • Creating an online store

  • Creating contents like a blog

  • Social media advertisements

  • Email marketing campaign

These are only the basics in reaching out to your target audience. Actually, there are no limitations in regards to marketing your products. One of the tactics I see frequently is via commenting on a post or online videos.

But whatever it may be, you can freely do whatever you wish as long as you believe it would bring in profits.

Also, you need to bear in mind that marketing involves your persuasiveness and overall ability to market your products. Don’t expect to make any profits if your mindset is quick bucks and that you could easily make passive income by merely establishing a website.

You need the commitment to the craft if you want to see any positive results.

Once your customers place their orders online, you will need to notify your supplier. And from there,  they will take care of the rest—quality assurance, packaging, and delivery.

Since you don’t have complete control over the inventories, you can contact your supplier if you have any queries about the preparation of the items.

Also, you need to consider that your customer may contact you regarding the length of the shipment and the quality of the products they have received.

Therefore, you need to put emphasis on quality customer service as well.




Dropshipping startup cost

Now we go to the most frequently asked question about dropshipping—how much does the startup cost?

Estimating the amount of operating expense is important because it gives you a good forecast of your profits—General Sales minus Operating Expenses equals Net Profits. Therefore, such a topic is essential in determining how do you make money from dropshipping?

Technically, you can begin your dropshipping business today without any capital at all!

And this is possible through the combination of free trials and starter plans and the ability to look for other options that will help you save money.

In this section of the article, I will relay both avoidable and unavoidable costs in starting a dropshipping business. So, let’s continue…

The first expense you have to consider is the eCommerce platform you’re going to use. Two of the most popular applications are Shopify and Oberlo.

Fortunately, both platforms offer free-trial and basic starters plan.

Shopify has a free 14-day trial period, and then you have to pay $29 per month after that. On the other hand, Oberlo has a free basic plan, but you won’t be able to scale it because of the 500-product cap limit.

In any case, you can upgrade your Oberlo account as soon as your retail store starts to boom and decide to take your business to the next level.

The basic startup cost for Oberlo is $29.90. But you can maximize your profits through their free account first before fully committing to dropshipping.

Your domain is the most important aspect of eCommerce because it shows that your business is legitimate.

Shopify will ask you if you want to buy a new domain during the registration process.

So if you’re a serious dropshipper, then you’re looking at a $72.90 monthly expense.

How about operating cost? I will briefly discuss them in the next section…

Operating expenses in running a dropshipping store

Other expenses you have to consider in running a dropshipping business are store applications

Shopify and Oberlo don’t have an integrated application. You have to purchase and install them separately.

Some examples of their upselling and cross-selling include the following—

  • Bold upsell - $9.99 per month

  • Cart Convert - $19 per month

  • Cross-Sell - $19.99 per month

Some examples of their bulk packages include the following—

  • Quantity breaks - $16.99 per month

  • Sales scheduled and bulk discounts - $18.95 per month

  • Discount pricing package – the cost is about $19.99 per month to $89.99.

Some examples of their exit intent include the following—

  • Spin-a-sale - $9.99 per month

  • Wheelio - $14.92 per month

  • Messenger popups and exit intent - $29 per month

What are the challenges that dropshippers commonly face?

Some of the common challenges that a dropshipper will have to face are the following—

Competition

If you haven’t done your assignment in researching your demographics, then your chances of falling behind the competition are almost inevitable.

To get ahead, you need to study what your competitors are doing right. You can then adapt some of their techniques, benchmarking if you will, but never copy someone else’s creative work.

You can use applications such as Word Count and Commerce Inspector to analyze your competitors’ marketing strategy.

Delivery period

This is a very common problem encountered by both customer and the dropshipper.

Since the products would mostly come from China, you can expect a 2 to 4 week delivery period. During such time, you will have to focus on delivering quality customer service due to the length of the delivery.

If you don’t mind spending a couple of dollars to provide satisfaction to your customers, then you can try ePacket. But if you’re aiming to maximize profits, then you need to exercise a lot of patience as you deal with your customers.

Errors by the supplier or manufacturer

Another issue that may occur is errors committed by the third-party supplier. There may have been lapses during the quality assurance and packaging process that caused the errors.

In this case, it again relies on quality customer assistance.

If you don’t mind the expenses and inconveniences involved, you may immediately accept their request if ever your customer asks one.

Or, you can exercise your customer service skills and try to persuade them to cancel the return request.




Final thoughts

I hope today’s blog has provided you the answer you seek on how do you make money from dropshipping.

As I repeatedly emphasized, the potential of earning a significant income in dropshipping is very likely.

Sure, not managing the inventories yourself saves you a lot of time and money. But this doesn’t mean that you will no longer put up capital to operate the business.

Also, such a setting is extremely enticing that many individuals harness the wrong mindset about dropshipping. Sadly, easy-money is what some gurus are promising as you venture in.

Well, this is not entirely the case. As I said earlier, you will still experience hurdles along the way. But with the right tools and proper attitude, earning 6-figures as a dropshipper is possible.

And if you’re looking for more information on dropshipping, then you can check out our resources here.

Or, you can sign up for my mentorship program if you are in need of more intensive lessons in dropshipping.

As of today, my program was able to help many struggling dropshippers turn their businesses around that created their own success stories in the process.

If you’re in doubt about the program, you can try to talk to me personally before making any decisions.

Book a FREE 45-minute mentorship with me, and let’s see how I can be able to help you take your business to the next level!

Well, I believe that is just about it!

Thank you for the time, and I hope to see you on the next topics!

Peace!

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