Dropshipping has helped many people to start earning a side income which then can be converted into an Online Business which supports their lifestyle and gave them the possibility to stop working for somebody else and life the live by their own terms doing what they want when they want wherever they want.
But What is Dropshipping?
Dropshipping is an online business model which enable a company to operate without having any stock , warehouse or retail space or even having to manually process and ship the products they are selling to their customers themselves.
The way this business model works is that the owner of the company contacts with the suppliers and agree a price with them and then when the items are sold the only thing he needs to do is to contact their supplier with the customers address and then the supplier will ship the products to his customer on his behalf.
What are the different Drop shipping business models Online in 2018?
There are many ways of doing drop shipping this days , you can even do this business model Offline although the best models that we have found are working in 2018 are the one’s below
- eBay Dropshipping : One of the easiest drop shipping business in this list , it’s perfect for beginners to get their feet wet. Perfect for anybody as eBay will take care of bringing in the traffic for you , your only concern is to find the winning products and sales will start to come in , and more important this is a business model that is supported by eBay.
- Amazon Dropshipping : Another great way of building a side income which then can turn into a full time income , similar to ebay dropshipping but this one is a bit more complicated as Amazon does not allow you to dropship in their platform , having said that , there are a lot of people who does it and are very successful with it but you need to be very careful with the metrics as Amazon are very strict with it and will close your account if you don’t meet them.
- Shopify Dropshipping : Last but not least , this business model is by far the most complicated one but it is also the one than can bring you more profit and a very successful long term business if you are able to build a brand around it , the cons of this online business is that you need to generate your own traffic and you need to be able to build a professional looking and trustworthy website in order to convert your visitors into customers.
Advantages of The Dropshipping Business Model:
Dropshipping as a trype of business has a lot of aspects which makes it very appealing for a first time Entrepreneurs:
- Set up simplicity : It is very easy to set up your dropshipping business , the only thing you need to do is to find reputable suppliers and decide which products you are going to promote as well as setting up your website if you are going to the Shopify business Model or registering in eBay or Amazon if you are doing the other two business models mentioned above.
- Very Low Set up Cost: In the past if you wanted to set up your business you will have to spend a large sum of money to start with it , Nowadays thanks to the dropshipping model you can start with a very little investment to cover for the website , hosting , subscription …
- Minimal Overhead Costs : In relation with the last bullet point , the Dropshipping model does not require you to have a warehouse or inventory as well as employees to run your business therefore the Overhead Costs are very minimal as you only need to worry about maintaining either the website or your Amazon/eBay Shop.
- Low risk Business: Very Small Start up Cost , no investment in inventory therefore if your business fail you lose next to nothing.
- Allows you to life the live at your own terms: No Office or Warehouse , no employees or boss , therefore this business model gives you a lot of freedom to work when and wherever you want , the only thing you need to be able to generate income is a laptop and internet connection.
- Millions of Drop shipping Suppliers to chose from : There are millions of products and therefore millions of drop ship suppliers to chose from in this business model ,therefore you have the advantage to sell anything you like or you think you can make a profit with.
- Scaling and Managing this Online Business is easier than a traditional One : In traditional retail business models if you want to increase your profit you need to invest more resources into employees and stock , whereas with this business model you can focus on finding this products and growing this business as your suppliers will take care of managing your orders as well as holding the stock for you , so you have more time to concentrate in the money making aspects of the business.
- No Stock Damaging Loss : As you are not sending the products directly from your warehouse you don’t need to get your supplier to send you the gods therefore you avoid a cost of the stock being damaged during transit by reducing the shipment steps involved.
- Flexibility and rapid adaption to market changes: Another advantage of this online business is that you can adapt better to the market changes as well as getting into a product trend quicker than the retail stores as you do not need to wait for the stock to land to your warehouse as you are sending it directly from your supplier which makes the process a lot easier as well as reducing the risk in case the product does not sell anymore because you haven’t had to buy the stock you just using your supplier stock..
Cons of The Dropshipping Business Model:
Like the other Business Models dropshipping also have some cons that you need to know before starting :
- Small profit margins than retail or other online business : As the entry barrier is low the competition is very high and therefore the profit in this business is Small but doable , you only need to get the volume going and will realize how powerful this business can be
- Customer Service : Although the dropshipping supplier will send the product to your customer on your behalf , if something is wrong with the product or the customer does not like the product and was to return it , this will be your responsability and you need to make sure you customer is happy with the outcome as without customers there is no business to run.
- Lack of Business Control : You don’t own the products that you send to your customer , therefore you need to make sure you chose the right suppliers to work with , as dealing with a bad supplier or a supplier where the quality is not the one you or your customers expect can be very dramatic to your business.
- Shipping times : Due to the flexibility of this business model , you can sell various amount of products from different suppliers which can cause different shipping times and costs. This can be a problem if you do not explain what happen when a customer purchase different products on the same order i.e. the shipping cost may be higher for some products and you then need to transfer this costs to your customer which will lead to a non great customer experience and therefore a lose in customers or profit.
- High Lever of Competition: The Low Barrier entrance and the popularity of this business model makes it very competitive for the main niches but you can always do a proper research and find niches or products that are not that competitive..
- Inventory Management: As mentioned before with dropshipping you can sell multiple products from multiple dropshipping suppliers which then can be very difficult to organise that’s why you need to use listing softwares or inventory management softwares to make sure you have control over your inventory and prices..
Is Dropshipping a profitable Online Business Model?
Drop Shipping isn’t a perfect business model as we have mentioned above but , due to the fact that you don’t need a huge investment to start with and the overhead costs are not high to maintain we know this business model works and can be very profitable if it’s done correctly.
The most difficult part of this business is the start, as you will need to spend many hours finding out how to make it work, finding the winning products and defining your strategy as there are plenty of them , you can go for low number of transaction but higher profit margin per sale , you can work on volume with an small profit margin or you can do a mix of both.
Once you find the strategy that works for you this online business model can be very profitable and can replace your day job very soon , which will allow you to earn money from home and work whenever you want wherever you want.
What Dropshipping Model is the easiest one to start you online business?
We have been in the Dropshipping business for some time now , around 2 years and after trying the different models mentioned above we believe the one that is the easiest one for newbies would be dropshipping on eBay , we also have a channel about it that you can check below here.
If you want to start your dropshipping business today we have put together a FREE eBay dropshipping Training for you to give you the dropshipping basics about ebay and how to be successful with it.