WHAT DROPSHIPPERS WON’T TELL YOU— What you need to know before starting your dropshipping business
What is Dropshipping?
Simply put, it’s buying something at low cost — from somewhere like Aliexpress and selling it for a higher price — keeping the rest as profit. Simply the same business model as any store would do, but without the inventory investment at start up. Simply set up your website through a website like Shopify, find your product, link the product to your website, advertise your product and have people buy it from your website. Once you receive the order from your website, you place an order from the supplier “aka” Aliexpress and they ship it directly to your customer.
Sounds easy right? WRONG!
Sounds too good to be true! Where’s the catch?
Here’s the TRUTH about dropshipping — it’s what others likely won’t tell you. After all — there are people out there making a living off selling Youtube videos to people like us who are looking for the next business model that will make us millions in the click of a button. After reading this article, maybe you’ll find that dropshipping is still for you, but at least you’ll know the other side.
It Isn’t Cheap!
Many people sell the idea of dropshipping as a cheaper alternative to Amazon FBA — simply because with Amazon FBA you need to have a start up budget that would be high enough to buy something in bulk from the necessary supplier. While it can be a cheaper alternative, it still is going to cost you a pretty penny if you’d like to see success.
Here are some of things you’re going to spend money on:
If you set up your shop on any website host like Shopify, you’re going to incur monthly charges merely for hosting your service for you. On a website like Shopify, their cheapest plan is $29.99 a month.
In addition to that, unless you want your website to be a generic shopify web address, you’ll need to buy a domain — these can range in price but average around $15.
While the website itself is a starting point, you’ll need to have additional apps installed in order to make it function to its full ability to be used for dropshipping. Some apps you might want to install, as an example, would be:
- Review apps — these apps will bring in reviews from Aliexpress directly to your website. Seamless, for sure but it comes with a monthly price.
- Email marketing apps — these apps are tools used to gather emails from people and begin the process of email marketing. It’s not only as simple as bringing people to the site one time. You want customer retention so you’ll want to start gathering info on your customers to keep them engaged. Apps like Klaviyo are great, but you’ll need to pay.
In order to research what’s going to be the next “winning” product you’ll need to use a site like Droppoint. This site allows you to easily find winning products without having to do too much research yourself. It cumulates data on Facebook ads outlining to you what the top performing ads are. This allows you to then see what you should be targeting! Again — sounds awesome, but comes with a monthly price tag!
Advertising — Facebook/Google/Pinterest Ads
This is the place where you will see the majority of your cash flow to. Advertising is the key to success in Dropshipping. Without an already established customer base, you need a way to find customers. Have you ever seen those ads on your Facebook feed, showing you the most innovative, cool things. I’ll admit, they are pretty enticing and often have unique products which you really want to get due to their clever marketing. Facebook allows you to target the exact audience that you think might be the most likely to buy your item, and if you’re right, you win! If you’re not 100% right, you’ll be spending a lot of time working with the data and losing money to testing in an effort to find the right audience. In my experience, the more money you’re willing to throw into your advertising, the higher your results are going to be. I tried drop shipping with a lot budget and this proved my theory, because it just did not work. A low budget just isn’t enough to target enough people in general, let alone to target any that would actually buy!
Chargebacks/Quality of Goods
Since you are ordering inexpensive items from suppliers overseas, you are often not getting the highest quality items. This results in the worst thing that you would want to deal with — chargebacks! People who sell dropshipping as an ‘easy business’ always seem to leave this part out. They make it seem like you sit behind the computer and you don’t really interact with people or deal with the customers — wrong! If the customer isn’t happy, you have to deal with it. Not only are you just trying to find a solution, you now must liaise as a middle man between the customer and the supplier at Aliexpress, to find a solution. Any refunds will go through the supplier and then through you. It’s a complete logistical nightmare and can be very time consuming!
The key to this obviously would be to try and at least test the products before selling, which is very unrealistic when first starting out. Many people just don’t have the time or budget to multiple items for the main purpose of testing the quality. You can read reviews, but they are usually few and far between, so can be very hard to gauge.
As you can see, dropshipping in 2020 is not as glamorous as it’s been made out to be. It’s not so easy and it’s not so cheap. If you want to be successful at dropshipping, you’ll need to be ready in invest a lot of your personal resources ranging from money to time to sometimes your sanity! I wish you good luck if you wish to try dropshipping as your next side hustle!