Dropshipping – Does It Really Work And Can You Make Money?

Many of the questions that I receive in my inbox at MyWifeQuitHerJob.com are related to opening a dropshipping store and I can definitely see the appeal.

When you run an online store that only offers dropshipped products, you don’t have to worry about inventory and you don’t have to worry about product fulfillment.

All you have to do is sell the product, take orders and make a decent profit. Easy right?

Unfortunately, it’s not that simple and with anything that sounds too good to be true, there are always gotchas.

In theory, dropshipping sounds like a great idea because it’s inherently scalable without you having to do a lot of work up front. But when you dig down a bit further, there are a lot of complications that you need to be aware of.

Most people try to open up a dropshipped shop expecting it to be easy, but in reality, there’s a lot more to it than you think.

This article will provide you with a realistic and comprehensive view of the pros and cons of dropshipping.

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Dropshipping - Does It Really Work And Can You Actually Make Money?

What Is Dropshipping?

dropshipping

Dropshipping is an ecommerce business model where you can sell physical products online without having to deal with inventory, without having to own a warehouse to store your products and without having to deal with shipping and handling.

In addition, there is practically zero upfront cost to start a dropshipped online store because you don’t have to invest any money on inventory.

In fact, you can literally start dropshipping for under $5 with a free open source shopping cart.

All you need is a website, free credit card processing and you can start taking orders immediately.

Does this business model sound attractive to you? Here’s what you need to get started.

First off, you have to partner up with a dropship wholesaler or distributor that ships products directly to consumers.

As part of your partnership, you and the dropship supplier will decide on a wholesale price for the products you want to sell.

Once an agreement is in place with your supplier, here’s how dropshipping works.

  • The customer places an order for a product on your online store and you collect the money.
  • You forward the order and shipping details directly to your dropship supplier and pay the agreed upon wholesale price for the product.
  • Your dropship supplier packages and ships the order directly to the end customer as if it was shipped from your online store.
  • You get to keep the difference between your selling price and the wholesale price.

How To Find Dropship Suppliers

dropship vendor

Because dropshipping is so popular and the internet is ripe with scammers, you first must learn how to spot a FAKE wholesaler.

First off, a REAL wholesaler will never charge a monthly fee for the privilege of accessing their catalog of goods.

Genuine dropship wholesalers are merely distributors and their goal is to sell their product in bulk, not run a monthly membership site.

Second of all, a real dropship supplier will never sell their own products to the end consumer at wholesale prices.

Remember, a wholesaler’s primary customer is a retail shop and it would go against their best interests to compete with their own customers.

In any case, once you know what to look for, you can start looking for real suppliers using the strategies outlined below.

Contact The Manufacturer

manufacturer

The easiest way to find a legit dropship supplier is to simply call the manufacturer and ask for a list of wholesale distributors.

Then once you have this list, you can contact the distributor directly and ask them if they are willing to dropship.

What’s convenient is that most distributors carry a wide variety of products from a number of different manufacturers.

As a result, if you can land a big distributor, you’ll almost always gain instant access to a large catalog of items to carry in your shop!

But establishing a partnership with a distributor can be hit or miss and you need to be prepared.

Most legit suppliers only want to deal with legit retailers so make sure you have all of your ducks in a row before you reach out to them.

Sometimes it helps to have a mock website up and running to show them you are serious.

But bottom line, you need to prove to your suppliers that you are the real deal and that you can actually move product!

Note: If you want to learn more on how to negotiate with suppliers, then check out my post on How To Approach A New Supplier For Your Online Store

Order From Your Competitor

competitor

If you know that your competitor runs a dropshipped online store, then you can find out who their suppliers are by simply placing an order.

Once you receive your package, you can look at the shipping label for a return address.

While the shipping label may not have the supplier’s name on it, you can easily Google the address and find the name of the distributor.

Attend Wholesale Trade Shows

tradeshow

Instead of contacting vendors via email or phone, it’s often much more efficient to find your suppliers at a tradeshow.

Not only does meeting face to face make it easier to develop a personal relationship, but you can also touch and handle the vendor’s entire product catalog.

Most tradeshows (at least in the US) are 100% free as long as you have a business license. As a result, you have nothing to lose for attending. Most major cities have wholesale tradeshows many times per year in a variety of niches.

Use Dropship Directories

Worldwide Brands

A dropship directory is a database of suppliers that are organized by niche and it can be a convenient way to quickly find products to sell for dropshipping.

In addition, companies like Worldwide Brands pre-vet every company in their directory to make sure that they are legit.

The main downside to using a wholesale directory is that the distributors and products are easily accessible to other members who sign up for the directory as well. As a result, the products you find in a directory may be more competitive.

However that being said, wholesale directories are a great way to brainstorm and find vendors immediately.

Click Here To Sign Up For Worldwide Brands And Get $30 Off

What To Look For In A Dropship Supplier

Because your business hinges on the quality of your dropshipper, here are a few attributes that you should look for when evaluating your suppliers.

Remember, successful dropshipping requires a partnership between you and your distributor and trust is essential.

As a result, before you rely on any dropship vendor, you should always place a test order to see how the order is handled.

Specifically, you should look for…

  • How Fast The Order Ships – Shipping time is extremely important for an ecommerce store and it’s essential that orders are shipped within 1-2 business days
  • How The Order Is Packed – Is the product shoved in a crappy box with packing peanuts? Is the box unmarked without the suppliers business name? Will the product arrive safely and undamaged?
  • The Quality Of Customer Service – Do they respond in a timely manner? Do they provide tracking information and an invoice? Do they give refunds for defective merchandise and returns?

Before you start selling, you should pick up the phone and ask the customer support rep in depth questions about the product to see if they know their stuff.

It’s also important to have a single point of contact at your distributor to deal with customer support and product issues that may arise when you start selling their product.

For example, what happens when a product is out of stock? Does the vendor offer a real time inventory feed so you don’t accidentally sell sold out goods?

All of these factors matter and you should take some time to vet your vendor for quality.

The Pros Of Dropshipping

thumbs up

If you are able to find quality dropship suppliers, then dropshipping is extremely attractive because you can run your business from anywhere. All you need is a computer and an internet connection and you are good to go.

As a result if you are brand new to ecommerce with a small budget, you can use dropshipping as a stepping stone to get started and then transition to more lucrative business models when you are ready.

In addition to convenience, here are some other benefits of dropshipping.

Pro #1: The Setup Costs Are Practically Zero

pennies

Here’s the bare minimum investment required to start a dropshipped online store if you use a free open source shopping cart platform.

If you tally everything up above, that comes out to between $3.95 and $53.95.

Bottom line…

There is no upfront inventory cost.
There are no warehouse costs.
There is almost zero overhead.

I can’t think of any business model that is less expensive to start

Pro #2: It’s Simple To Setup

Shopping cart

Back when I started my online store, my options were limited. But today there are literally hundreds of services out there that will help you setup an ecommerce store in less than a day.

The right option for you depends on your budget, what features you need and how extensible you need your ecommerce platform to be.

For more information, checkout my tutorial on How To Start An Online Store Without Any Technical Knowledge Required

Pro #3: The Risks Are Much Lower

safe

The beauty of dropshipping is that there is practically no risk. Because you are investing so little money upfront, there is very little to lose.

Because your business is inventory-less, there’s no pressure to make sales because you don’t have to bear the overhead of storage or shipping.

In addition, you can carry a huge variety of items in your store because you don’t have to store any of it!

If you browse dropship directories like Worldwide Brands, you’ll find dropship suppliers for practically any niche you can think of.

You can choose to carry 1 product or 1000 products online. It doesn’t matter! Once you figure out what you want to sell, you can usually find a dropship supplier to supply it.

Pro #4: Dropshipping Is Location Independent

nomad

A dropshipping business can be run from anywhere. You don’t need an office or a warehouse or any employees at all.

As a result of this freedom, you can focus your efforts on growing your business instead of taking care of inventory and overhead.

Overall, dropshipping is one of the most scalable ecommerce business models out there because your overhead does not grow linearly with sales.

In fact, I have several colleagues who run good sized dropship businesses with just a handful of people.

The Cons Of Dropshipping

thumbs down

If your gut is telling you that dropshipping sounds too good to be true, then your instincts are correct. As with everything in life, there are always downsides to every business model.

Most people stumble into dropshipping with the expectation of quick riches only to realize that making money with a dropshipped store is actually much harder than they anticipated.

Below are all of the cons of dropshipping that you must consider.

Editor’s Note: If you want to learn more about all of the ecommerce business models, then check out my post where I compare dropshipping vs selling on Amazon vs running a traditional ecommerce store

Con #1: You Won’t Be Getting The Lowest Price

price

Most people open up a dropshipped online store with the misconception that they will be receiving the same wholesale pricing as everyone else for their products.

In reality however, dropship distributors often charge extra fees and/or tack these fees onto the quoted wholesale price.

Put yourself in your distributor’s shoes for a moment.

Would you prefer to sell a large bulk quantity of products all at once to a store or would you rather sell onesy, twosy amounts to individual customers and be forced to individually ship and pack each item?

The distributor is doing all of the work here and this will be certainly be reflected in your wholesale price.

To throw out some numbers, most dropship stores get between 10-30% gross margins whereas most traditional shops that carry inventory have 50% gross margins. It’s a huge difference!

Because your wholesale prices are higher than a traditional store, you will not be able to compete as effectively on price unless you take a good sized profit hit.

In addition, lower margins will inhibit your ability to advertise on sites like Facebook and Google. Not only that, but less profit per sale also makes customer service problematic.

For example with our online store, our margins are between 70-90%. As a result whenever we get an angry customer, we simply give them a refund AND let them keep the product.

Because our margins are so high, we can afford to take the hit. With dropshipping, the convenience of not having to fulfill orders comes at a cost.

Con #2: You Will Need To Charge Higher Shipping Costs

shipping

Often times, you will require the use of several dropship distributors to fully flesh out the product selection for your store.

Using 2 or more different dropshippers means that 2 or more companies will be making separate shipments to your customers, which means that 2 or more companies will be charging you their own separate shipping costs.

If I’m a customer and I buy products from your store across 3 different distributors, you will have to charge me a much higher shipping cost just so you can break even.

The only way around this is to only use one dropship distributor which may not carry the breadth of products that you need. The result is that you will have to pass these extra costs onto the consumer which reduces your price competitiveness.

Con #3: Dropshipping Can Be A Logistical Nightmare

nightmare

You might think that since the dropship distributor is doing all the work that you can sit back and relax. Unfortunately, you have to deal with your customer base.

You have to be the one that answers all of the questions. You have to be the one to apologize when an order doesn’t arrive on time.

The main problem is that when you use several different dropship distributors, getting the entire order to the end customer can be a logistical nightmare.

All distributors will have different shipping times and will be shipping from completely different locations.

If a customer orders products across 3 different distributors, they will end up receiving 3 different packages at varying times.

If an order is particularly time sensitive and needs to be rushed, you will have to make sure that all of your distributors can deliver the product on time.

In effect, you are staking the reputation of your online store and linking yourself to all of your dropship distributors in a single chain. If even a single distributor is unreliable, then it will reflect negatively on your online store.

Con #4: Your Customer Service Will Be Out Of Your Hands

phone

Customer service and your online reputation can make or break your business. With the world wide web, social media and Twitter, news of a botched transaction can spread extremely fast so it is absolutely crucial that you maintain a great image for your online store.

Whenever I receive a call for our online wedding linens store, I always take the time to ask how they found us. And the majority of the time, the people who find us do so because they were referred to us by one of their friends.

Word travels fast.

Our customer service is one of the main reasons why we have grown over 3x in the past 3 years.

With dropshipping, you unfortunately have very little control over your customer service. Since you are not in charge of product fulfillment, you can’t control when a customer will receive their product.

If a customer wants to make a return, it’s a major pain because you have to make sure that you get your money back before you can provide a refund.

Sure, there are always ways to mitigate these problems but the solution inevitably involves either raising prices or taking a profit hit at the expense of customer satisfaction.

Con #5: Amazon Makes Dropshipping Even Less Attractive

amazon

Prior to Amazon, it was much harder for companies to sell their goods to the masses. As a result, distributors had to rely on traditional retailers and dropshippers to help them move product.

Today, Amazon controls such a large piece of the ecommerce pie that most companies can get by with just selling on Amazon as a 3rd party seller.

Amazon handles your sales, your product fulfillment, your customer service…basically everything that a traditional retailer would typically take care of. But the difference is that the distributor gets to keep all of the extra profit!

If you are a dropshipped store selling the exact same products that can be found on Amazon, it will be impossible to compete on price. As a result, you will have very little leverage.

After all, would you rather buy from Amazon at a lower price or pay more to buy from an unknown shop?

Editor’s Note: If you are interested in selling on Amazon, check out my article on How To Sell Private Label Products On Amazon – The Definitive Guide

When Dropshipping Makes Sense

While I would never start a pure dropshipped store today, there are many ways to use dropshipping to your advantage.

Because you don’t have to carry inventory, you can instantly throw up an online store with hundreds of products in a short period of time.

Then, you can use this shop to conduct market research. Based on which products sell well, you can pick and choose the most successful products to buy inventory for and enjoy higher margins.

Dropshipping is best used as a vehicle for product validation or for fleshing out an online store that is sparse in certain categories.

Editor’s Note: If you are interested in learning how to start your own online store, click here to take my FREE 6 day mini course on ecommerce.

When To Avoid Dropshipping

Unless you are a brand new entrepreneur on a budget or an online store owner who is exploring new products, dropshipping is generally not a good choice for seasoned shop owners.

Because you are selling other people’s products, it’s difficult to build your own brand. After all, there so many aspects of your supply chain and your customer service that are beyond your control.

For example, you have no control over the customer unboxing experience because more often than not, your product will arrive in an unmarked brown box with zero branding.

If an order is shipped late or never arrives, the blame is on you.

You also have no control over inventory. If you have a hot selling product but the supplier is out of stock, then you won’t make any money.

In a nutshell, your dropshipped business lives and dies with your suppliers. If they are not reliable, then you won’t succeed.

Therefore, if your goal is to build a brand, then dropshipping is not the way to go.

Is Dropshipping Really Less Work?

It really depends. Arguably, the time that you save in not having to deal with inventory and fulfillment will be spent dealing with customers unless you have a reliable core of dropship distributors.

One thing that I forgot to mention is that many drop shippers don’t use automated supply chain technology with a real time API. What this means is that you may not be alerted in real time whether a particular product is available for sale or not.

Therefore if an item is out of stock, you will have to interface with the customer to let them know when they can have their items. Unless your shopping cart is closely tied with your dropshipper’s database, it will be difficult to maintain an accurate inventory count.

With dropshipping, you are trading off not having to deal with fulfillment logistics with having to deal with more customer headaches. And depending on your personality, this may or may not be a wise tradeoff.

While the tone of this article has been anti-dropshipping in general, don’t get me wrong. Many people have been successful with dropshipping as it works very well with small niche stores but my personal opinion is to avoid it if you can.

Editor’s Note: If you are interested in learning how to start your own online store, click here to take my FREE 6 day mini course on ecommerce.

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150 thoughts on “Dropshipping – Does It Really Work And Can You Make Money?”

  1. Pingback: Tweets that mention Why Dropshipping Isn't As Easy And Simple As You Think | MyWifeQuitHerJob.com -- Topsy.com
  2. Carmen says:

    Thanks for this information. In the world of location independence, dropshipping is often touted as a great way to set up an online business so that you can travel. It’s very helpful to have information on some of the realities of this choice so that people can have a clearer picture of what it means.

    1. Sarah says:

      Actually on the contrary dropshipping on ebay with the right company is worth it and isn’t a hassle.

      1. Michael says:

        It really does come down to selecting your drop shipper(s) very carefully. Margins don’t always have to be thinner. Not all drop shippers charge a per item fee. If you are a legitimate business you can source your products at true wholesale prices. That’s what Worldwide Brands is all about. True wholesale suppliers. Most drop ship and or offer light bulk sales.

        The problem is that most people get into this business model with their eyes wide shut.

      2. Ben L. says:

        I want to go the ebay route, any tips or advice for this nube?

      3. Matt says:

        What wholesaler do u use? Obviously u have found a good one. Plz respond because I am seriously considering starting an online store.

      4. jill says:

        What company do you recommend?

  3. Alexa Samuels says:

    Thanks, Steve, and nicely put. You reinforced my concerns.

    For any of the readers who have had dropshipping success, would be great to hear what works for you. My guess would be, as Steve mentioned, a narrow niche with few SKUs….

  4. Carla | Green and Chic says:

    Though I do a lot of my own order fulfillment, some of my vendors are drop shippers. They are all small businesses and I have closer relationships with all who I work with. Its rarely left up to chance because of the close relationships I have, but I do understand how it can be a disaster.

    In terms of the costs of shipping, you are absolutely right. Unless a customer only orders one brand that drop ships, I’m left paying more for the shipping myself.

    After a year and a half, I haven’t really found a better solution. My capital isn’t large enough to carry inventory of ALL the products I sell – no way.

    For me, the appeal of drop shipping is more of the upfront COST not necessary the perceived ease and convenience.

    1. Tanya Kazor says:

      I use Gooten for my dropshipper and it sounds way simpler than what you described in this post. Once someone orders something from my shopify store, they do their thing, and I literally don’t have to worry about anything. I’m happy with their pricing and my customers are happy with the quality. I was hesitant to start so I get alot of what you’re saying but just find someone who has good customer and tech support and dropshipping isn’t so scary.

      1. Maly says:

        Hey Tanya is it possible for you and I to connect to have more conversations about your knowledge and experience with Shopify?

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  7. Steve / Sweetwater Logistics says:

    Interesting article with a number of robust things to consider when determining if drop-shipping is the most appropriate means to deliver product to customers.

    We have found there are many instances where the benefits of drop-shipping (someone else deals with logistics of fulfillment) can be combined with the benefits of handling it yourself (lower costs, increased customer service, better information control, increased profits) by using a fulfillment company.
    There are fulfillment companies that focus on small to medium size businesses, particularly those ready to make the step away from a drop-shipping model.

  8. Pingback: Dropshipping - Why It May Not Work For You | SMALL BUSINESS CEO
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  11. Chris says:

    Thanks for this great information on drop shipping Steve. I learned a lot!!!! 😉

  12. Drop Shipping says:

    I meant to mention that I agree with you Steve. It is a lot of hard work and you definitely have to find the right drop shipping company.

    Thanks again for this great post!

  13. Gene says:

    Nice article. I found your blog some days, and most of your articles are great. I always avoid an affiliate business model (making money for a product owner and getting peanuts). Now after reading this article i understood why my good business wasn’t happy when i offered him started as a dropshipping store.
    Good luck to you and i’ll visit your blog often.

  14. Gene says:

    sorry, i misstyping a few words in my last post.

  15. Tiare says:

    Thanks for the dose of reality. My husband and I had a dropshipping business on eBay back in 2004-06. Back then, everyone only talked about the pros of dropshipping. But from personal experience, I can agree with all the downsides you mentioned. Glad you’re one of the honest ones who tell it like it is.

    1. Steve C says:

      Thanks Tiare,
      Dropshipping is good way to create a lifestyle ecommerce business but the profit margins aren’t nearly as high as carrying inventory.

      1. Justin says:

        Hey Steve, I’ve been looking for a course / mentor to start with, but I’m finding that NONE are transparent about their current or past success’ and/or business’. Who do you suggest I could learn from that is completely open about their past AND day to day DS business. I don’t want to “learn” from someone who only knows how to sell an online course, you know what I mean? Looking forward to hearing from you.

  16. Jasmine B says:

    Very great information! Im curious, you mention that the time you save with drop shipping is replaced dealing with customers. If you we’re selling your own inventory would you have to spend equal amount of time dealing with customers as well.

    1. Walter says:

      What he means I think is that you dont have control of nearly anything yet you still have to deal with customers instead of the manufacturer.
      Sure, you would have to deal with customers either way, but at least if you controlled things, you could possibly reduce customer issues.

      If you have a good drop shipper to work with, this is less of a problem from what other people say, but this means it comes down to who you are working with, so learn and be careful.

  17. miranda says:

    Great article. Let the truth be told Amen.

  18. Mitesh says:

    Dropshipping is not easy. As a first time entreprenuer who doesn’t want to hold inventory its a lot of work, if ecommerce were that easy everyone would be doing it. It’s like running a marathon with no finishing line in sight. There are e-tailers who make billions who use this method of fulfilment like net stores aka hay needle, don’t know if they still do this and have started holding stock.

  19. Sam Corruthors says:

    Just to add to Jasmines comment – I like dealing with customers as it lets me stay connected with the truth and understanding from the people who pay the bills what they actually want. Lets face it Drop shipping is a great way to leverage and scale a business however comes with the traps listed in this article. Great read about drop shipping.

  20. Roger Hicks says:

    Hello,

    You bring up a lot of good points. Though drop shipping can be tough if done right can certainly be worth while. Finding a quality wholesaler is a key player in success. One downfall many have is trying to create a website built upon too many products from several drop shippers without any niche in mind.

    – Roger

  21. Lisa says:

    Great article about dropshipping…finally someone reveals the truths. I was a dropshipper for over 5 years (pretty profitable after about 2 years) until my main supplier went out of business, leaving me no choice but to close my business. All points in this article are very relevant and anyone considering dropshipping should take them to heart. I started out dropshipping from too many suppliers, getting mixed orders for “this product and that product” and ended up losing too much in profits to shipping costs (products shipped from different suppliers). I finally decided to just go with one of my most profitable products and was successful, however the “logistics nightmare” is on point. I was the only customer service and while I liked having the interaction with my customers, it mainly came down to not having control over shipping that created so many headaches. I had to get into contact with my suppliers about missing orders, damaged orders, etc. then appease my customers. One time in particular almost sent me out of my mind. The Today Show did a televised segment on a Saturday for one of the products I was selling and the orders began streaming in faster than ever before. I thought it was an error until I realized the orders were legit. The warehouse couldn’t keep up in fulfilling all my orders (let alone the other dropshippers that had hundreds of orders as well) and for weeks (yes, weeks!) I was constantly dealing with customers wanting to know where their orders were. It was a true nightmare (although in the end the profits were exceptional :). In addition, if you don’t have any ecommerce experience it will be a challenge to get your website (product) found, set up merchant accounts for accepting payments, integrating the payment method into your website, you’ll have to pay more money to have security for payment processing (a must!) etc. There are all-in-one websites out there (i.e. Volusion) that you can start with, but I found after being with them for about a year, the cost was cutting into my profits too much and I decided to design my own sites, I have experience with this, but that is not an option for many. In addition, your shipping options will be limited, for example, you can’t offer expedited shipping or various shippers (i.e. USPS, FedEx) as you don’t know when your supplier will actually get to shipping your order. And if you have more than one supplier, you will more than likely have more than one shipping company. I have to say at this point (after my business has been closed for about 1 year) I have been looking into products that I can stock and ship myself, knowing that having control will offer me the ability to offer my customers exceptional customer service from start to finish.

  22. amin saleh says:

    Thanks so much for this great post. I think drop shipping business is relatively new and innovative type of eCommerce. it is actually similar to selling as usual online except for the shipping which done via third party companies. so I think the most important good effect is that by implementing drop shipping business you will save more time and money. on the other hand you must learn drop shipping business from an expert so that you will not fall in many holes along your way.

    If you would read more, I did this post that shows you the drop shipping business process in action

    http://www.2dropshipping.com/drop-shipping-business-process/

  23. Rich Hohd says:

    Hi Steve,

    You’re obviously against dropshipping – but only because of your circumstances. You obviously live in one location and don’t move around and can carry inventory.

    I on the other hand am nomadic, which means I live in a different country every 3 months (by choice as well as necessity). So it means I don’t have a home base anywhere to store inventory (and I’m not interested in renting storage space, because I move around).

    I’m thinking about starting an online store (and even doing your course) but this post of yours is made me question that. In fact, this post has put me off your entire blog because it’s so negative and one-sided!

    I don’t see any other post in your blog to counteract this negative post – for people who have had great success with dropshipping (and who prefer it to carrying inventory). Shame on you for that.

  24. Rich Hohd says:

    Steve,

    I’ve just posted here at https://mywifequitherjob.com/why-dropshipping-isnt-as-easy-and-simple-as-you-think/ – you obviously have a bias against dropshopping without actually letting us know why you have this bias. You offer nothing that is pro-dropshipping. You’re obviously pro-inventory only because it’s worked for you.

    But just because dropshipping hasn’t worked for you doesn’t mean it’s wrong.

    The lack of balanced views in your blog is shocking.

    I was thinking about dropshopping, to suit my nomadic lifestyle, and doing your course to set up my shop. I won’t be doing your course now, since it’s clear you won’t be supporting my choice to dropship.

  25. Kenesha thomas says:

    Hi Steve,
    I live in Jamaica I want to start an online store but shipping costs and time for me would be crazy. Jamaicans are not into online shopping yet. My main Markets would be USA And Europe.

    My Mother makes sandal on a small scale and we want to turn that into a online business and supplement it with other shoes while building her Brand.

    I had considered drop shipping as a method of meeting my customers needs but this post has me really concerned.

    Do you have any other suggestions?

  26. Julia Gifford says:

    That’s quite a strong opinion about dropshipping!

    I think a lot of the issues you’ve mentioned can be resolved by choosing one dropshipping partner to fulfil all of your orders. That would mean only one supplier/contact point for issues, that means stable and foreseeable shipping expenses. Not to mention with the most popular ecommerce plaftorms like Shopify or Woocommerce, if you’ve got a technologically advanced fulfilment partner, then they can automatically push the shipping and tracking number notifications to the end buyer without you having to do any of the work.

    I look at Printful, and see that if you had gone the on-demand print product route, you wouldn’t have any of the problems you’re outlining.

    I sincerely urge you to open your mind and give it a try, despite your previous experience with dropshipping.

    1. Steve C says:

      Hey Julia,

      I wrote this post during a time when dropshipping was all the rage so I decided to take on a contrarian point of view. Dropshipping can definitely work but the ramp up takes longer.

      1. Julia Gifford says:

        How clever 😀 Cheers to that, Steve!

  27. NewEra says:

    Great article about dropshipping…finally someone reveals the truths. I’ve been a dropshipper for over 5 years now and i love it… I do it full time now and I make way more money now than before working a 9pm to 5pm job.

    Check this Out, this is how I started. My little Secret to you, It’s Great for any Droppshipper..
    http://24e85vcmjpf0hm4mbcu8-k5l3k.hop.clickbank.net/?tid=SALEHO

  28. John says:

    Here in the states there is a store called designer shoe warehouse (aka DSW) and they sell shoes for up to 80% off. Because of my (free) membership discounts I was able to get a pair of winter boots that are worth $200 original price for free. I didn’t even have to pay a penny. I use my member rewards and the fact that the boots were already priced 80% off I was able to get them for free because my member rewards covered the remaining 20% I was supposed to pay.

    So my question is instead of just droppshipping would you recommend going to a place like DSW (or any outlet store for that matter) and buying expensive brand name stuff at outlet store prices and then selling them full price online? Have you had any sort of good experience with this? I actually looked up my boots on ebay and found they sell like hotcakes so I figured why not? But I wasn’t sure I know this is a little different than drop shipping itself but this could be a goldmine for money if you can keep buying shoes for 50- 80% off and just turn around and sell them for full price but I just don’t know if you had any experience with this method.

  29. Alex says:

    I’m from the UK and i’ve just started an e-bay shop selling men’s accessories.

    I have looked into drop shipping so i can increase the range of my products, mainly small kitchen appliances and other consumer electronics.

    In my research i have found the profit margins to be non existent or extremely small ie: 3-6% my biggest concern is losing that grip on customer service and as you put it ‘logistical nightmares’. if you hold stock you can say to your customer ‘no problem i’ll ship you out a replacement and it will be tracked and with you on x date’ but with a drop shipper you have less control over the process. Also you may not have an integrated order system with them so you could sell 5 of one product and the drop shipper only has 2 left, leaving you with 3 orders to fulfill and 3 disgruntled customers.

    You also have to wade through the vast amount of scam artists out there, and really do your research on the prices, i have often found products cheaper on amazon and ebay 10 and even 20% cheaper than the price a dropshipper offers at supposedly wholesale prices! and don’t forget to add VAT as almost all drop shippers charge inflated delivery costs and don’t advertise the price with VAT included. You also have the monthly or yearly fees to pay many of them too, so if you find you sell less than 10 products it could really eat into your profits.

    The old sayings still hold true today in my opinion, buy low sell high, and stack em high and sell em cheap. People want things too quickly in this day and age, they want to put little work in for big profit, but like any business it takes long hours, plenty of effort and hard work, and sweat, tears, pulling your hair out and banging your head against a wall. There are NO shortcuts to success whatever people tell you at the end of it all it’s down to how much you want to succeed and how much you are willing to learn and how much work you are willing to put in.

  30. Pingback: The Consequences Of Taking The Easy Route When Launching Your Business
  31. Laura says:

    I’m in the early stages of choosing between being a affiliate or dropshipping (neither being my full business model). This piece was invaluable. Thank-you!!!

  32. Lourdes Victor(htt//www.phillymedoamarking.com) says:

    I do not know why would you think that drop shipping isn’ t great. That is your opinion no body can stop you from expressed yourself. I think it’s because of your circumstances. To me it’s a great thing to do specially when you shop online even though you pay for the shopping.

  33. Bryan says:

    Question for anyone who can answer and/or point me to the answer:

    My family owns a brick and mortar retail shop and recently started selling our products online. Our e-commerce site is technically drop shipping but products bought online then ship to our retail shop for in store pickup. We’re using the same distributors and shipping methods as if we placed an order for our own inventory, but instead customers are paying for and placing the orders directly which are then fulfilled and shipped automatically. It’s a seamless, hands off process on our end.
    Well then, What’s the issue? The issue is that the e-commerce site is entirely 3rd party operated and costs us $200 a month. The biggest PRO is the inventory is auto updated and synced real time to distributor stock levels. If products become out of stock it won’t let our customers purchase, so no backorders.

    BUT, the CONS are the fact all product descriptions, site design, site architecture and navigation is set by 3rd party. Only things we can “customize” is which products to display and the price margins we want to make, and can choose from like 10 different generic skins for the style.

    I’ve come to the conclusion their overall e-commerce site design for us sucks and simply does not convert into sales. Navigation is horrible and I really need to write the descriptions, show related products, upsell, offer “coupons”, etc..

    So IN CONCLUSION, I want to cut out the middle man! But HOW do I do that? How do they sync with my distributor and fulfill orders like this? Again:
    – real time inventory levels
    – orders purchased then pull item from distributor stock and start process.
    – their payment then goes to our bank account
    – We then “manually” verify the order w/ the distributor, which was placed by our customer right when they clicked “purchase”. Essentially the orders been on hold, waiting for our payment to them, and the green light to ship it to us.

    PLEASE ANYONE WHO CAN HELP. Thank you so much and God Bless.

  34. Nina says:

    “Because your wholesale prices are higher than a traditional store, you will not be able to compete as effectively on price unless you take a good sized profit hit.”

    This doesn’t follow. Yes, your wholesale prices are higher, but your overhead is reduced in other areas. You don’t have to rent storage space, buy packaging, or hire anyone to handle storage and distribution. You’re also not taking on the risk of holding onto product that may go bad/obsolete/damaged while you’re holding it, or that it just won’t sell in a reasonable period. If your distributor is big and longstanding, it’s very likely they can handle these things more cheaply than you could.

  35. Matt says:

    Do you need web developers to build or maintain your stores? I am highly experienced in Magento.

  36. Meg says:

    Hi Steve, I’m afraid that I agree with Rich Hohd. Your comments, views and opinions are very negative and one sided. Whilst some of the problems about dropshipping you mention here might be true for some, there are hundreds of people on Ebay successfully running dropshipping businesses so it cannot be all that bad and hopeless. Even if you hold your own inventory and arrangement shipment of your own inventory things can still go wrong. For instance your supplier could run out of stock due to importing problems, warehouse fire or any other problem that could occur. Sometimes items can become damaged during the delivery process even if you do arrange your own shipment. Posting centre can make errors. So I think it goes to show that even if you are an inventory seller, a number of things can still go wrong to give you headaches. Each selling method has its own pros and cons. And steve, I am just wondering, are you sure you are not trying to put people off dropshipping because this is in direct competition with your type of business? No need to answer, just a question that occured to me.

  37. iRepricer says:

    Great article!,
    Dropshipping is the best bussiness in E-commerce.
    as i said about dropshipping is the most easy bussiness and there is alot of automation tools out there to make it even more easy…

    Good luck everybody… !

  38. Adam Duffy says:

    I own a Scuba operation in Mexico.
    I was thinking about adding an online store to my website and offer t-shirt sales that would be shipped to guest and waiting for them when they get home. We don’t have the room for holding inventory. What do you recommend?

  39. Don Hesh says:

    Yes,
    It is never easy to handle shipping and complains.
    In my site, I put. “All Items are coming from China”

  40. Amy says:

    This is an amazing article! I feel like I now completely understand the real risks involved in dropshipping. I will be re-evaluating whether or not I will still undertake a dropshipping venture. Thank you so much!

  41. Zbynek says:

    Some very true facts in this. The key is to choose good partner, test it first yourself (purchase something) and use good dropship-API. Using several dropship partners is not a wisest choice. Your margin is smaller but you also dont have to pack and ship stuff or put a load of cash upfront into your stock. When you grow, you can always switch from dropship to your own fullfilment with own stock and overcome multiple-partners problem.

    Affiliate is not all roses too as the partners always shuffle links, products, prices, screw something etc. Also the margin here is very very small = huge volumes or pocket money. And with affiliate you have no control over the price, so affiliate shop is not a very good idea. Its better to have some “review blog” or something like that.

  42. Pingback: 7 Reasons Why Most Drop-Shipping Stores Fail - Banker in the Sun
  43. Ivan says:

    http://bit.ly/1p386YV I believe this site is one of the best dropship suppliers and wholesale sellers. You have to check it out for yourself

    1. Skip says:

      Don’t let this drive you away. Only states the obstacles and not the advantages. Ecommerce platforms like Shopify, 3Dcart, Big Commerce, etc have so many tools to make it easy…ier. Dropshipping can be a logistical nightmare…not really, these e-commerce platforms allow you to identify each ship point by manufacturer and calculates the correct shipping cost based off that location. Product is shipped once…not twice. Like once to your warehouse and then to customer. The manufacturer can also pass on better shipping costs due to their volume. Costing – sure you were not getting the same cost but you also have a lower margin requirements and less funds sitting in a warehouse not moving. I was a buyer for a fortune 500 company and have been working for a national manufacture for years. This is where the industry is heading for sure. It’s all around finding the right product with the right suppliers. If you do that, you’ll be fine, but nothing is easy or everyone would be doing it. I know so many people doing this and doing it well because of the fear of others not to do it.

  44. Pingback: 7 Common DropShipping Mistakes & Errors - Banker in the Sun
  45. Marie Cathwell says:

    Hey Just pointing out there, that there is a really good drop shipping platform that has over 8000 suppliers with really low prices. Just go here. I’ve been a customer here and there great!

  46. Michael says:

    Zappos started out by drop shipping as many orders as they could in the beginning. They eventually grew out of it and started fulfilling their orders. They still fulfill some orders using drop shipping, as does BestBuy, Target, Home Depot and hundreds of other companies.

    My point is that drop shipping can work as a fulfillment method but it doesn’t have to be the only method you use. Not everyone’s situation or gaols are going to be the same.

  47. Ramon Smothers says:

    Very informative. I was just introduced to drop shipping and began my research here. Nice things to take into consideration in contrast with affiliate marketing. Thanks for the info!

  48. Fallon says:

    A great read. I have an online store, and something that I’ve found VERY difficult is getting my wholesale company to ship in a timely manner. They are very unorganized and it unfortunately trickles down to me and makes ME look unorganized.

  49. DSM Tool says:

    When I started my dropshipping business in 2011, there had been very few people and experts who actually know about dropshipping. But since 2014, a lot of companies, specially dsmtools.com has been providing very good help, support and tools for dropshipping. These tools really make a lot of things easier and help us all in moving ahead to make a bigger impact in the small size to mid size businesses and lives of smaller businessmen.

    dropshipping

  50. Pingback: What is Dropshipping? – Go To Reviews.net
  51. sam says:

    Dropshipping is clearly more easy than buying wholasale and going to post office for shipping order everyday, so never listen to any negative thinker. You will lose faith and give up.

    1. pikss says:

      Agreed. here only the negatives have been outlined, the writer has clearly only stated WHY it won’t work. Like with everything else there will be problems that need to be solved, we need to think HOW to make it work. Good luck to everyone in their pursuit

      1. Wrath says:

        The internet is full of overblown claims about the glories of drop shipping, but there are far fewer sites exposing any of the downsides. I already know the upsides of the business. That’s why I’m investigating it in the first place. What I REALLY need is to know the pitfalls before I invest my first dime. This site helps immensely with that.

    2. Kenneth Grubba says:

      Obviously this guy has drop shipped before – he is not being negative he is giving us the nitty gritty details. Great referral plug there towards the end buddy! You gave us a strategy and then immediately used it yourself. Thanks for that.

  52. shoptruck says:

    hi

    i have question i want to build website to sell affiliate products which website you recommend? but i want to add button not a link and when my customers press the button will take the products to shipping cart and pay money through me
    i do not want the button move the customers to the affiliate company i want them to stay on my website how i do that ?

    1. tyler smith says:

      Make your own product and brand. Do you really think you can get rich selling somthing that’s easily and redly available online ? First find your market THEN make your product.

    2. Jo says:

      You want to advertise affiliate product in your website and want customer to pay you money at your website? Let me ask you this question. How about the seller that you are affiliating their product? They ship out product without getting any money? You doesn’t make any sense dude!

  53. roger says:

    hi Steve. a good app for dropshipping from ali to ebay is the Dropshipping eBay Lister (black lister).Have 100 supported suppliers and list the items on eBay only with few clicks. Connect more than one Repricer. Edit your images with Photo Editor . SEO Templates with shortcodes meta-tags. Fast & Auto Listings.

  54. Pingback: The True Cost of Drop Shipping: 16 Top Questions Answered! - Done Deal Wholesale
  55. Therlo says:

    I’m just starting out with drop shipping …..
    It can be something of a headache but as the saying goes you never know once you try it yourself .

  56. Prateek says:

    Realtime inventory updates is the biggest challenge I have seen so far

  57. Linda Holland says:

    I thought this very interesting. Things to know. I am 73 wanting to work and make Xtra money. I don’t have money to give any one thank you

  58. International Shipping says:

    This was by far the BEST and clearest advice i have seen, thankyou so much 🙂

  59. James Quinn says:

    Hi Steve. Good explanation of Drop shipping. The key points are very well understandable. I will agree on your points of drop shipping and thus it solves the problem of OUT OF STOCK.
    Can you add best companies for drop shipping? So that it will be easy for sellers to find out best companies. I have found out this link http://mobilityecommerce.com/ over Google while searching.
    Do you think it is a good company to start off with drop shipping?

  60. Vince Millican says:

    I’m just now thinking about trying dropshipping for my business dont even have a website yet but, I’m not sure I want to even try this now! But ive got to do something. Im a very disabled Vet because of chronic arthritis and, I can’t do much physical Labor. So I’m needing to try something online. Anyone have really good advice?

    1. frankwilliams says:

      Yes, I would highly recommend affiliate marketing for 1 as well as selling your own products that you own to sell on Shopify, that way you have all control over your products and business.

      unfortunately, running a successful drop shipping business is very expensive and stressful, it does work for some people who has the money for it if you don’t have the money for it forget it!!!

      also, some of these distributors can be from china it would take over 3 months before your customers get the products which means you would have to deal with that.

      Ps. I know plenty of people who makes a good living just by doing affiliate marketing without a website.

      1. Donald Zwack says:

        can you send me a link or 2 to point me in the right direction to start affiliate marketing

    2. Wendy says:

      Stay Away from China! It is a nightmare. Aliexpress, DHgate, all of those can take a month to two months for orders to arrive to your customer. Just don’t do it. And besides, it’s time we took back our Country! Made IN USA!!!

  61. Pingback: A Playbook For Driving Business To Your Dropship Business
  62. Ed Harris says:

    Steve, I want to get started in ecommerce . I have been reading your posts and I feel like I am going around in circles . I really like your posts, but in one post you say to avoid Drop shipping and then I read one where you you say if you were to start an online business now, you would go with drop shipping because the ramp-up to a quicker profit is not what you need at this point in life. Either way you will still have to deal with customer relations . I have no idea where to start, please help .

  63. MIraj says:

    I Will Find Killing Product 4 Dropshipping Aliexpress, Shopify, Amazon, eBay, Moreover, I Will Start Drop Shipping, Store Creating, Products Sourcing, Marketing
    Please checkout my gig on Fiverr here https://www.fiverr.com/mirajsujonbd

  64. Suyash says:

    Kinda funny because you don’t even have a mindset of doing dropshipping. Like literally author of this article don’t know how to rule dropshipping business. Like literally supreme is selling without any advertisement and you can’t even make your suppliers handle in low costs for real??…..well literally don’t run an article if you don’t know how to run the world son…!!

    1. Debra Washington says:

      So since you know how please forward info on how to dropship successful.

  65. Juno says:

    Starting and running any business has its ups and downs. For my dropshipping business, I use DSMTool.com and it is really helpful.

  66. Amy says:

    Write an article about our dropshipping company, we will pay you 10% on all sales as our affiliate.

    Let me know.

    Amy
    MentalBunny.com

  67. Pingback: Warning: Don't Start a Dropshipping Business Without Reading This
  68. samwel dollah says:

    Great article about dropshipping much appreciated.Learning a lot on your blog buddy.I will look into shopify dropshipping.

  69. samwel dollah says:

    Thanks for the info very useful

  70. Paul says:

    With the negative view of dropshipping it’s seems it will probably be difficult to do a niche store as well. You have persuaded me to not start. I will look at other avenues.

  71. Mohamed Shykh says:

    That was a great article, had a good read.

  72. emmy says:

    This is the best dropship solution ever
    you can find trusted suppliers of brand name products which you can sell on Amazon, eBay, and your own store without having to buy, store, pack, and ship stock. Over 1,000 trusted dropship suppliers check it out
    http://infoguid.pro/dropshipbusiness

  73. Elaine Smith says:

    Hello All,

    Can do guest postings on sites like Huffington post, DailyKos, Business.com, Forbes, Inc, Devsaran, Buzzfeed.com, and many more.

    Very low-cost price

    Best regards!
    Elaine

  74. Danial says:

    Hello Amazing Article. I have one question. I saw a lot of people drop ships and gets a customers complain about the products quality. how to handle this situation?

    1. Fallon Sartin says:

      I’ve had this problem some. They usually have mixed reviews, so unless it’s constant negativity toward the product and/or returns, I leave it online. If it is a constant issue, I discontinue the product. I would love to know how others handle it as well. Of course there is good and bad with every business, and this is one of those factors that is hard to control as the middle man. Also, damages can be an issue, and since it’s not coming directly from you, it’s difficult to have the supplier to improve packing. SOME suppliers care and are good to take into consideration problems like this and will help, but unfortunately not all. I have a 50/50 mixture of what I would consider good suppliers who will communicate with me and some act like they don’t give a crap to be quite honest. I don’t really understand that since it is technically their customer too. Lol

  75. Yeshua Chuck says:

    hello nice article, do you have any other articles related to drop shipping from ali express?

  76. Angel says:

    Thank you very much for this post it´s really instructive, I personally started the online selling business and it was very difficult to find trustable suppliers until I found this amazing web with more than 1000, I personally have done business with a few and the products are very good, I truly recommend it for everybody in this area.
    For the economic freedom!!

  77. John says:

    Hey that web it´s really good thanks for sharing

  78. Lucinda says:

    Thanks Angel, your tip was very helpful

  79. Pingback: Useful Tips to Maximize Your Earnings by Dropshipping Products on Shopify - Entrepreneurship Life
  80. Rolands says:

    Great article. I have had dropshipping business before and it was closed due to inventory problems in partner company. I got orders, but the stock was zero, so I had to refund the money and apologize the customer.

    It was not profitable experience, but I gained some knowledge about marketing and sales which I use in other projects.

  81. moulay says:

    Hi There ,
    If any one is looking for a US Based dropshipping company , we are located at the hearth of the fashion district in New york , we are wholesalers since 2000 and we started dropshipping since 2014 , and we dropship clothing women’s clothing
    to be more precise 🙂
    http://www.smainyc.com

  82. Jacklas says:

    Very informative article about dropshipping. But another side still it’s full-fledged business where you only get profit. Many giants across the world are using this approach to deliver the product to its customer without any involvement. Thanks for sharing such an article. I would recommend you write about Affiliate marketing.

  83. Sam Reid says:

    It’s true that competition in drop shipping is high and fierce, but it doesn’t mean that it won’t work and won’t gain any profit. If you love the business and work hard on and for it, you will surely reap what you have sowed. Drop shipping tools like DSM Tool are esential and of great help when doing drop shipping.

  84. Pingback: Why Buying Wholesale Can Be Misleading - Your Topstore Finest E-commerce solutions
  85. Srinivas Boreda says:

    i was started ecommerce business intialy facing problem with wholesalers
    Finally i got solution with salehoo for easy finding best products and brands https://bit.ly/2LHOvtb

  86. Won says:

    cool tips man! will need to find an influencers niche. Despite I’m busy working in sales sector, I had an idea of starting drop-shipping like a year ago. Finally i did! Good I found Bitdegree free secret formula dropshipping courses. Good lecturer and well explained, I made everything by myself and already in the stage of driving sales.

  87. Peter says:

    Poor branding possibilities were not mentioned. Going down the road you may want to differentiate from all the dropshippers that are selling the same product.

  88. Pingback: Ecommerce Dropshipping: Is it Still Profitable in 2018? – EBANX : EBANX LABS English
  89. lulu says:

    You can check the sales amount or people who are running that business, if there is an obvious decrease, it means that business is hard to get profit.

    According to the search results of Oberlo, the total sales amount and the number of businessmen in dropshipping are increasing year by year in most areas of the world.

  90. Rafael Piancastelli says:

    We are just about to start our store and would love to have your thoughts about customer support, shopify and cash flow.

  91. JohnSiva says:

    Having tried it myself, it is steadily losing its power as a source of income as more and more flood into the scene to get involved

  92. Josh says:

    I still believe that the dropshipping business model has a great potential! And many of the problems described in the article can be solved with the help of AliDropship plugin.

  93. Tom says:

    What about buying an established drop ship business instead of building one

  94. Gary says:

    I’ve been dropshipping from Amazon to eBay 3 years now, and just as eBay started cracking down on dropshippers and making the future of dropshipping seem super scary, my dropship automation software PriceYak decided to make their software completely free for users with under 10K listings. So the setup costs are no longer “practically zero,” they’re just zero. I’ve used a lot of other software like Easync and SaleFreaks and DSM Tools but PY easily has the best support and most powerful features.

  95. Ana says:

    Does anyone know how long ago this article was posted

  96. carlos says:

    To avoid higher shipping cost, I only suppliers who offer free shipping. By doing so, I can pass on the saving to the customers. I do not charge them shipping fee.

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