Should You Be Dropshipping in 2018? My Experience
Dropshipping has been in the limelight for a few years now but still remains an attractive prospect for online entrepreneurs.
There’s still money to be made out there, but the importance of locating a suitable niche and offering it something unique is paramount to really be successful (more on this later).
The model can be very successful when implemented the right way, but equally it can produce little reward for those just stabbing in the dark.
Allow me to guide you through the dropshipping business model using my experience in the space. Hopefully my story will inspire you to create your own shop, and to do it from an educated perspective, aware of the downfalls and with realistic expectations.
What is Dropshipping?
I will try to keep this as simple as possible while covering the main points. There are many ways to dropship, just like there are many ways to skin a cat (I don’t skin cats).
Simply put, dropshipping is a method of retail in which you (the seller) go about your business without ever keeping any products in stock. We build a website where customers purchase a product. We then send that order information to a supplier who ships the product to the customer. Voila!
In essence you act as a middle man with a website that lists products from various suppliers of your choosing. When an order is made, we simply make an order with the supplier using the customer’s details. Contrary to a conventional retail business, at no point do we spend large amounts of money on purchasing and storing inventory – key!
Dropshipping in 4 Steps
- Build a website and list products from a supplier
- A customer buys a product from our website
- We order the product from our supplier using the customer’s information
- Supplier ships the product directly to the customer
So let’s build our website, add products and drive traffic – simples.
Build Your Website/Shop
The first thing you are probably thinking is great but, how do I make an attractive website that customer’s will buy from? A popular platform to use for this is Shopify, you can create a professional looking shop in days using their templates. Honestly it’s pretty easy, I was selling in about a week and I’m not a gifted website guy by any stretch.
There is a monthly fee for Shopify to run and host your website but it’s pretty manageable at £22 ($27). It will likely cost you a similar amount to create and host a website using a different platform, but here we get the all in one solution with payment processing taken care of and everything (they have a free trial too). It doesn’t get simpler than this for the setup of an online business.
Here’s two examples of nice clean, easy to make Shopify sites:
Right enough about Shopify, once your website is starting to take shape you’ll need to add products from a supplier. The easiest and most common way to do this is by using Aliexpress.com.
Find Products and Suppliers
If you haven’t heard of Aliexpress, it’s a large Chinese company that is similar to Amazon where you can find all sorts of products from suppliers the world over (mostly China). We just need to pick what products we’d like in our shop however, it is extremely important to sell good quality products to a suitably researched niche – acting without a plan here would likely be foolish.
The niche I chose to serve was the cryptocurrency and blockchain arena. The ridiculous surge in popularity over the last year struck me as an opportunity.
I asked myself a couple of questions, who was selling clothing to this passionate, emotionally driven and almost cult like following? People are likely to spend more money, more spontaneously when there is an emotional aspect at play. As such I sold apparel to the newly emerging market.
“People are likely to spend more money, more spontaneously when there is an emotional aspect at play”.
A Wise Person
So, my advice here would be to have a plan, pick a niche where demand is (on best guess) going to be higher than supply. This is deceptively simple but make sure you’re objectively asking yourself these questions. If you just pick random products and start selling them, you may find yourself struggling for traction.
Ok back to Aliexpress, once you’ve decided on a niche and some products we now need to find a supplier who stocks them. Head over to the website and make a search, in the image below I’ve found a t-shirt I like.
Now click on an item to find out what sizes, colours and shipping options are available.
Great, there’s loads of sizes, good pictures that we can ask the supplier to use on our website, good reviews for the product and reasonable shipping options. Agreeably the item also includes free shipping to the UK and costs just $8.73 or £6.66. If I were to sell the item for £19.99 on my shop, that’s over £13 profit in my back pocket per sale.
This product can then be added to your catalogue on your Shopify store, remember to make a compelling product description for the item. You want to generate as much perceived value as you can in order to make the customer unable to walk away from the offer (or we can try our best).
“Generate as much perceived value as you can in order to make the customer unable to walk away”.
A Wise Person
Rinse and repeat this process for as many products as you want, I’d recommend offering about 15 products minimum on your shop website in order to present a reasonable amount of depth and thus credibility.
One thing I would draw your attention to here is the shipping times. If your supplier is in China, expect 15+ days for your products to reach the hands of the customer. This is probably the biggest downside to the dropshipping model, as many people expect a quick delivery nowadays.
My advice is not to hide this fact on your website. Simply state that you have suppliers from around the globe and to possibly expect the longer shipping times (which may put some people off). The other option would be to say nothing and hope your customers don’t mind. In many cases they will, and they will not buy from you again – the choice is yours however, I think my opinion is clear.
Invest the time in getting your shop looking professional with no spelling mistakes and good quality images, once you’re done it’s time to go live.
Now we face the familiar story of online entrepreneurship, getting traffic.
Getting Those Eyeballs
So far we’ve had to invest very little money upfront in this business model. However, here comes the most capital intensive and thus risky task – getting people to your site.
Ok, we’ve got a swept-up store with good products angled towards a reasonable niche. Unfortunately, there will still be little sales without traffic. This is a massive topic, so I’ll just tell you what I ended up doing – but there are many many ways to go about it.
I paid people with a healthy following on Twitter to post about my website. Twitter is a very influential area in the crypto scene due to its fast-paced nature, so I made sure to use it. This was suitable for my niche but perhaps not for a different one.
Alternatively, you could use Instagram influencers, Google Ads, Bing Ads. Create a Facebook page and use Facebook Ads to circle back to your shop, the list is long!
However, the cheapest and most ideal method to gain traffic would be to get on top of your SEO (Search Engine Optimisation) – which again is another massive topic. Every website owner and his dog are also trying to come out on page 1 of Google so it can be a hard and technical task, especially for a new site.
Assuming we have little experience with SEO, a more suitable solution is likely using influencers on social media and paid ad platforms as mentioned.
Say I pay a Twitter influencer £100 for a tweet, I initially loose that £100 whether I receive traffic or not. But given the t-shirt example earlier, if I’m making £13 profit per sale, I only need to make 8 sales to cover my investment. If I make 50 sales from the tweet my overall profit would be £550.
Parting Thoughts
The dropshipping model is an extremely attractive one once you understand its simplicity and lack of up-front costs. The (smallish) risk comes when getting traffic to your shop for the first time and the downside being how to handle the longer shipping times.
I learnt a lot from my dropshipping experience but have since decided to focus my efforts on my brands that I sell using Amazon FBA as the primary sales channel. This is not because FBA is more profitable, but because the fulfilment service is taken care of for me – it’s more passive.
Related: See my 6 step guide to starting an Amazon FBA business here.
Typing in customer’s details every evening to my suppliers was worth doing for the money but as I have a full-time job, I would rather spend my limited time and energy on tasks where I can be creative and free to do as I please.
There are fantastic tools like Oberlo that can assist with the ‘manual labour’ by populating text fields for you etc to save you time, worth looking into when you get to this stage. This helps but is still not quite as passive as Amazon FBA, my weapon of choice.
Don’t let this put you off though.
For a beginner without much financial leeway, dropshipping is a great place to start and test the waters. If your shop takes off, you’ll likely make some good money. If your shop doesn’t take off, you’ve lost remarkably little, perhaps a couple of months subs to a hosting service and some advertising costs. But what you’ve gained is an understanding of the online marketplace and ecommerce which will serve you well indefinitely!!
Remember this is only one method of dropshipping, you could for example sell £700 luxury fireplaces, sourced from a supplier in the UK and using your own WordPress website as a home base – be creative, the opportunities are there.
Mentioned Tools
I hope this helps, take care.
