What is it?
Drop shipping is a simple online business that can provide a good living for those who are skilled at e-commerce and marketing. The model itself is simple. A drop shipper markets and sells products online. However, the products are manufactured, stored and shipped by the manufacturer.
It’s a win-win. The manufacturer benefits from the marketing effort and expense of the drop shipper. The drop shipper is free of the responsibility to maintain, store or ship any inventory.
In other independent business owner models such as multi-level marketing, the business owner must sometimes buy bulk amounts of product. He must then store it and makes no profit unless it is sold. The marketer assumes all risk of damage or spoilage. Dropshipping may represent a much better alternative for beginners.
A drop shipper takes an order for merchandise, gets paid, and then places an order with the manufacturer. The manufacturer gets paid and then ships the product to the consumer.
An example would be a customer who might pay the drop shipper $10 plus shipping costs for an item. The drop shipper immediately pays the manufacturer, say $6 for the item, and the manufacturer takes it from there. The drop shipper just made a fast $4 profit.
Some business basics
- This is a business so treat it accordingly. Develop a business plan. This accomplishes many things. First, it enables you to make mistakes on paper rather than with real money. You can game everything out beforehand. It provides you with a map to get from where you are to where you want to be. You can get business planning help for free here or high-quality, user-friendly but low-cost software here .
- The business is going to have costs just as you do personally. Figure out exactly how much you need to sell every month so that you can pay all of your bills as comfortably as possible and still earn a sufficient profit. This includes compensation for you as the owner. Learn how to set prices and profits with this short video .
- Setting up a corporation or LLC can help protect you from liability, provide tax benefits, and make it easier to raise capital. It professionalizes the business. Separate your money from that of the business by registering the business as a corporation or LLC and setting up business banking. For more information on corporations and LLCs and which one may be right for you, this video can answer most of your questions .
Drop shipping, like any other business, requires a basic foundation in business skills. Done correctly, it can be quite lucrative. For example, this student made over $178,000 in three months.
While that is exciting, he didn’t do anything you can’t do. Let’s get started on your new drop shipping business. We will use Spocket , which is a simple platform where you can dropship many goods, including trendy goods from the U.S., Canada, and the EU.
To start your drop shipping business correctly and profitably, here are some expert tips.
- Find a product to sell. To get ideas, search AliExpress or Spocket for this. Spocket does require signing in with username and password, but does not require paid membership, to view products. Some Spocket examples of popular products are below, with listing price (what the drop shipper pays) and the retail price (what the drop shipper receives for the sale) highlighted in red. The difference is the drop shipper’s profit.
- Google the product and then “myshopify.com” In other words, enter “dog collars myshopify.com”. The objective is to see the ads of competitors who are selling the same thing. That way, you get marketing ideas.
- Search Instagram for the product too.
- Instagram offers a way to market your product at zero cost. It involves influencers. Here is how.
- Revenue share strategy. Locate an influencer and ask him or her to promote your link in exchange for a revenue share.
- Long term revenue share strategy. Let the influencer take charge and send him or her a contract to complete for your mutual protection.
- Do this BEFORE you start a Shopify account. The reason is that Shopify offers a free trial. It is better to use that no-cost time to start selling as soon as possible rather than familiarization.
- Consider TikTok as well. TikTok offers more of a ground-level opportunity than Instagram simply because it is newer. While the same strategy in 4 above applies, TikTok influencers are also new and are anxious to monetize their profiles.
- Once you an idea of products to sell, set up a store in Shopify or WooCommerce .
- Next, go to Spocket. Scroll down to “Find the right products” under the Product Discovery button. Set up the Spocket plan of your choice (Starter/$19 per month, Pro/$49 per month, Empire/$99 per month, or Unicorn/$299 per month). These steps are detailed, along with tutorials here .
- Follow these instructions for connecting Spocket with Shopify and these instructions to connect Spocket with WooCommerce.
Dropshipping for beginners…a simple business that can be done from anywhere. Done correctly, it can earn the business owner a good living.
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