How Does Dropshipping Really Work? Here’s What You Need To Know

how does dropshipping really work
April 5, 2018 Jordan Meola 5 Comments

 

 

Ever thought about diversifying your income? Believe it or not, we live in a day and age where building your own successful business is amazingly easy, amazingly affordable, and amazingly risk free.

 

With the majority of business going online, the biggest opportunity out there is dropshipping.

 

So let me answer 3 big questions:

 

1. What is dropshipping, and how does dropshipping really work?

 

2. How do you make money with dropshipping?

 

3. How do you find a dropshipper to use?

 

 

what is dropshipping?

 

 

What is Dropshipping?

 

With the rise of webstore builders like Shopify, and inventory suppliers like SaleHoo, building a shop or business online has become absurdly easy. What was once an expensive project, requiring savings, bank loans, tons of expenses, and some help from a coding expert, is now a few clicks of a button at an affordable rate.

 

When building and running a webstore is so easy, the real challenge is now just picking a good product(s), developing your brand, and shipping it out.

 

 

dropshipping

 

 

Growing and shipping inventory, though, can be a scary thought. Why?

  • Buying up inventory can be expensive
  • Storing large inventory can be extremely costly, extremely cluttered, or BOTH
  • Worst of all, buying inventory and not being able to sell it leaves you stuck with the bill

 

Dropshipping is revolutionairy for small businesses because it solves all 3 of those problems.

 

Instead of buying up a bunch of inventory, and then trying to sell it on your website/store, dropshipping offers you a risk free opportunity. You find a dropshipping company to use, and when and only when a customer places an order of one of your products, you contact your dropshipper, pay the wholesale price for the product, and have them ship it out for you. 

 

Dropshippers will store your inventory without you even purchasing the products, and you buy your inventory only when you make a sale. This is basically like guaranteeing a return on your investment. I’ll explain more about how to find a good dropshipper in just a bit!

 

That’s something to get excited about…

 

 

is dropshipping a good opportunity?

 

 

How Can You Make Money With Dropshipping?

 

 

The first thing you need to do is research some good products. My friends over at SaleHoo (one of the top droshipping platforms) have a good guide on how to research that.

 

Once you’ve narrowed down some good product ideas, you need to start building your brand. This will take time and plenty of effort. You need to be everywhere. Work hard. Post wherever you can. Building a lucrative business is a rewarding accomplishment, but building the story and style around your brand will take work.

 

Now for the money making part.

 

Dropshipping companies help you make money because you can get products in bulk for wholesale prices (way cheaper than the selling prices) and then you can mark them up to sell.

 

The example you will usually see me using is a wallet, because it’s pretty easy to understand. My brand name wallet cost around $25. It’s real leather. Feels great. Smells great. A real leather, quality wallet can be purchased at wholesale price for around $4. Yet people are buying nice leather wallets for $25 to $30!

 

I’ve seen real fox fur coats on Alibaba (a reputable wholesale dealer) for $250. Search full fox fur coat prices… they go, on average, for around $3,000.

 

Can you see how money can be made?

 

The beauty of dropshipping is that not only do you not have to carry all your own inventory and ship it out, but you also don’t have to risk buying a bunch of $250 coats (or whatever you’re selling) until you have someone offering to pay for one!

 

 

 

arms full of inventory

 

The easiest places to start out selling is in places that already have a lot of attention, like Amazon and Ebay. These places already have a lot of traffic, so it’s easier to make a name for yourself.

 

But you will want to branch out to your own webstore as soon as you can! Your own webstore built through Shopify, BigCommerce, or SaleHoo Store will put A LOT more of the money back in your own pocket. Amazon and Ebay will take commissions as high as 10% – 15% of your profits, while you’ll make ALL of the profits on sales through your own store.

 

How Do You Find a Wholesale Dropshipper To Use?

 

 

Finding a good dropshipping company isn’t too easy if you don’t know where to look.

 

The reality is even though you can find a lot of really cheap wholesale deals from China, you can’t necessarily trust every wholesale dealer out there. Many international wholesale suppliers have even been known to receive payments, and then not deliver the products.

 

So how can you find a good and reliable business to business network where everyone plays fair?

 

 

best wholesale suppliers directory

 

 

The pain relief came in the form of a New Zealand based company called SaleHoo. Essentially, SaleHoo is a massive directory with 8,000+ wholesale suppliers that are all verified to be safe and reliable.

 

SaleHoo enables you as a business owner to manage relationships with all of your dropshipping services, so that your brand can maintain its quality and good reputation.

 

A bad product or bad service can have a deeply damaging effect on your business. A product that is below the advertised quality, shows up late, is shipped badly, or has some illegal qualities would be devestating. Not only would it result in the loss of a customer, but in a world where the success of a product now depends so much on positive reviews, 1 star reviews could ruin business.

 

That’s why SaleHoo exists. To keep the peace between you, your dropshipper, and your valuable customer.

 

 

good customer service

 

 

Using SaleHoo saves hours of exhaustive research by finding the best results for any product instantly, even including market research on the kind of profit you could make off of each product.

 

It looks like this screenshot below:

 

 

how is salehoo

 

If you sell, for example, textured foam rollers for stretching, yoga or fitness, SaleHoo will give you info not only on the costs and profit margins, but will connect you with all of the best dropshippers to use instantly.

 

Pretty easy, right?

How To Succeed In Business Without Really Trying

 

how to succeed in business

 

 

I couldn’t resist a nod to Broadway… my point is really this – eCommerce is the future, and dropshipping makes it easy.

 

Is building a brand or a business really a piece of cake? Definitely not. If someone is telling you that there’s probably a massive sale waiting for you at the end. The most rewarding opportunities are very rarely if ever easy.

 

But dropshipping, and companies like Shopify and SaleHoo, have made starting your own business (even a multi-million dollar business) both easier, and more profitable.

 

Instead of pouring most of the gross margins of your business back into the business, start taking advantage of today (and tomorrow’s) innovations to get ahead.

Dropshipping is Simple, and the Opportunities Are Great

 

If you have any questions please feel free to ask me below! And to check out SaleHoo’s directory and strategies just follow this link.

 

 

 

 

 

5 People reacted on this

  1. Fantastic article! I’ve been curious about drop shipping and how to go about using it for my business. You’ve explained it beautifully and I appreciate it. I’m gonna check out salehoo now. Do you have any suggestions on which platform is best to build an ecommerce store from? Thank you.

    1. Hello Lace, I’m glad you found it helpful!

      What kind of business do you have?? The best and most comprehensive platform for building an ecommerce store is definitely Shopify! You can check out a review on it right here – https://young-retiree.com/shopify-in-review with some of the details! There are a few others that are slightly cheaper that you could use to get started, like WooCommerce, but the best best is definitely Shopify. The starter membership is $30/month, and it has a TON of features you can use to make an amazing store!

  2. Fantastic article! I’ve been curious about drop shipping and how to go about using it for my business. You’ve explained it beautifully and I appreciate it. I’m gonna check out salehoo now. Do you have any suggestions on which platform is best to build an ecommerce store from? Thank you.

  3. Hey JMeola, your post is excellent. Thanks for taking the time to share this exquisite knowledge because I’ve been indecisive about trying the dropshipping aspect and applying it to my business.
    I have a question for you, how do you know which wholesale company to buy from or to do business with, I was always under the impression that everyone was good as long there was money involved so whose good and whose bad?
    Now after reading this, I feel like I am ready to take that leap into dropshipping and try it with my business to see what happens.

    1. Hello R.J., I’m so glad you found it helpful Thanks for your encouragement!

      That’s awesome that you’ve got your own business online! I think you’ll find a lot of opportunity in dropshipping. It takes a lot of time and effort, just like affiliate marketing blogging, or really any other worthwhile business venture, but the internet is a huge marketplace to make money in. 

      Yes, I would say if you have a Shopify store you’re super well set up already, and you can use Oberlo to get reliable, quality products. If you have your own a shop that’s not on Shopify, or if you’re using mainly Amazon or Ebay to sell your products then SaleHoo will provide you with lots of good options :). 

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