verybody wants to increase their income and dream of a job that helps they earn a lot of money without any risk. To achieve that, many people are swept into the money earning cycle, some of them make mistakes and lost all the capital and many precious opportunities. Why have to try so hard while there are a lot of solutions out there that do not require any capital, even a penny. In this topic, let’s find out how to make money online with dropshipping.
What is dropshipping?
Dropshipping is simply understood as selling without caring about the shipping step. That means the sellers do not need to keep the products in their stocks. When orders occur, the sellers will purchase the products from the suppliers then ask them to deliver the goods to the customers. Therefore, the store owners do not need to take care of the shipping step, what they need to focus on is marketing, tracking orders and customer care service.
In other words, the store owners will act as a third party (wholesaler, manufacturer). They buy the products at a low cost in one place then sell it at a higher price in another market. By that, they earn profit from the difference in price. This difference will depend on the product types, it can be up to several hundred percents if they have good skills in choosing the right suppliers and products.
It sounds similar to the traditional retail model, so what is the difference here?
How is The Dropshipping Different from The Traditional Retail Model?
The biggest difference is that the dropshippers do not have to keep the products in their stocks. Therefore, they do not need to receive or even touch the products they are selling.
On the contrary, the retailers own the inventory of the products, they buy it in wholesale and sells it to the customers for earning the profit.
Who Can Make Money Online with Dropshipping?
The answer is nearly everyone, as long as you have a little spare time and want to earn more money online. Usually, there is 3 kind of people will be very suitable for this kind of business:
- Officers: If you are an officer and have 2-3 free hours per day, you can start finding other income besides your salary. Dropshipping is really suitable for you.
- Students: Another interesting point of dropshipping is that it is really suitable for the one who does not have any capital. With dropshipping, students can learn much valuable knowledge instead of playing games or watching movies online. The feeling of earning money early while you’re still a student is really awesome!
- People who are new to online business: If you are an amateur in online business, knowledge and experience are factors that you need to cultivate. With dropshipping, you can be equipped with all the knowledge about market analysis, product research, the source of goods, marketing methods,… to enter the business market.
So you have known who is suitable for dropshipping, let’s move to the most anticipated part: How to make money online with dropshipping?
6 Easy Steps to Make Money Online with Dropshipping
Step 1: Choose a niche that you’re truly interested in.
This is really important because if you passionate about your products, you will have the ambition to write about it more and be patient in scaling your business. A good niche is a product that satisfies these factors: attractive, low shipping costs, high searching among community and ability to impulse buyers with disposable income.
Step 2: Select a reliable supplier.
Cooperating with a wrong supplier can lead your business to failure, so be careful in very steps. You need to communicate confidently to negotiate with them about the price and shipping methods. You have to make sure they have the ability to accompany and scale your business up. This step will define 80% of your success if you do it right.
Step 3: Choose the distribution channels.
You can upload your products to eBay, Amazon or your own e-commerce website store. To find out what is the most suitable channels for selling, you can put them on the scale to compare the advantages and disadvantages of each channel. Another way is you could A/B testing each channel and using a website analytics tool to review the effectiveness of them specifically.
Step 4: Buy the products and send them to your customers.
You use the money that customers paid for you, buy it from your suppliers and ask them to deliver the goods to your customers’ hands.
Step 5: The suppliers deliver the products.
The suppliers then pack the products, deliver it and send the tracking information to you, your work now is tracking the order and focusing on customer care service.
Step 6: Review and revise.
After 1-month selling, you need to make a report to figure out how much you have earned for each product, what is the thing you have to improve and how to optimize every step in the buyer’s journey to increase your income next month. If you have difficulties in making a report, an analytics tool is a good choice for you. There are many analytics tools on the market, but choose something easy to learn and have the ability to show you where you should improve clearly.
What Is The PROs and CONs of This Method?
Like every business method, dropshipping has upsides and downsides.
Low upfront cost. When you make money online with dropshipping, the initial investment costs are low. If the system grows up, the cost insistence starts to increase. But it is still much lower than regular business method.
Easy to start. Fast capital turnover, flexible time, suitable for nearly everyone.
No worry about inventory. You will have much time to focus on marketing and customer care service.
Received money immediately. Commissions are received right after completion of each order. You won’t have to wait for a third party review.
High competitive. Because it’s really easy to start so you will meet money rivalries in the market. Therefore it will be a difficult problem if you want to scale your business.
Hard to manage products quality. You cannot see or touch the products for real, so you won’t know if the products have any problem. It will depend on the way you choose your niche and suppliers and how you communicate with them.
Have to learn some basic skills. To succeed in this industry, you require to absorb knowledge about marketing online (PPC, SEO,…), how to create an account in Amazon, eBay without being suspended, how to establish your own website store,… to increase your profit.
Cannot manage stocking, packaging and shipping step. This is dangerous because you won’t know if there are some sudden out-of-stock items, or you cannot control over customers’ unpacking experience. Sometimes you even have to face with complaints about late shipping.
How Much Money Can Dropshippers Earn?
The answer is: it depends.
There is no limit when you make money online with dropshipping, as long as you can run your business effectively. In order to make your dream comes true, you need to equip yourself first with sufficient knowledge about how to operate an online store, then track your business carefully to make sure nothing is out of your control.
It’s necessary to understand some metrics about marketing and finance so that you could review and revise it real-time. But if you do not know where to start, you can find an analytics tool for yourself. It will show you every conversion number you need, give you insights about your audiences and suggest you on how to increase your revenues.
A good analytics tool that you could consider should satisfy 3 elements: it could provide all important metrics that you want in one place, easy to set-up and learn, ability to suggest on how to improve your revenue.
Ecomfit is now providing free analytics tool for e-commerce newbies, which helps website owners make informed decisions based on data and optimize conversion in an easy way.
Do you eager to make money online with dropshipping? But wait, although dropshipping is open to nearly everyone, there is nothing come to you that easy without sweating, effort. If you want your business to success, try to accumulate as much knowledge as you can about marketing, finance and data analytics. Therefore, when problems happen, you would be ready and confident to face the challenges ahead.
Next time, we will give you tips on how to choose a niche for a new dropshipper. Stay tuned!
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