Ever since COVID-19 changed the world as we know it, there was a significant rise in the number of work from home jobs. This called for companies to undergo a rather rapid change to up their game as they familiarized with technology, collaborations, and outsourcing so that they would grow and wouldn’t suffer during a difficult time.
With this scenario becoming normal, the chance for people to freelance and take up on business opportunities in the comfort of their own home has spiked massively. This made it easier to find a job that pays the bills without exposing yourself to any possible harm.
And just like that the idea of starting a drop shipping business was born!
If you’re relatively new to the concept, allow me to catch you up to speed with a detailed guide of what it is, how it has helped many people with working remotely, and how it can be beneficial for you as well.
Let's start.
Okay. So, What on Earth is Drop shipping?
In plain and simple words, Drop shipping is a retail fulfillment method where the store doesn’t stock up on any inventory of the products it sells. Instead, the store using the drop shipping model purchases the item from a third party and has it shipped directly to the customers address. This way the seller doesn’t have to handle the product directly, or even invest a massive amount of start-up capital to get the business started. In fact, thousands of shipping companies compete for work to grab such opportunities.
The biggest and possible most important difference between drop shipping and standard retail shipping is that the selling merchant doesn't stock or own any of the products listed. All they really need to do is purchase it from a third party source - which could be a wholesaler or manufacturer - to complete the orders.
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But Why Would I Want to Start a Drop shipping Business?
COVID-19 was the change the world surely wasn’t prepared to take on so soon and for so long. But there are some people out there that dream of managing a profitable business that serves customers all over the world. This sector happens to be that sweet balance between ease and equal opportunities for everyone. It has made it easier for people to work from home and help others without spending a fortune. What more could one possibly ask for?
Yet again, the greatest advantage of no manufacturing or purchasing costs still stands tall. If you have a stable internet connection and access to your favorite stores and wish to share what they have with others - then drop shipping is your new best friend!
How Does the Magic Happen?
- Take your time to search online and do thorough research to find the stores that have the products you are interested in selling.
- Put up those products on your website with marked up prices and advertise them in every creative and eye-catching way you can think of.
- Receive direct payments from the customers who buy from your website to use that to purchase their item of choice from the original store.
- Redirect the orders to your suppliers and pay them at the original price. Got all the profits in the bag, and you’re a winner!
- The supplier will ship the order directly to your customer.
- And Repeat!! Find more products and suppliers to add more exciting new things to your site that will make you everyone’s new favorite! Possibly even their go-to website to get all the things that aren’t available elsewhere.
Benefits of Drop Shipping
Drop shipping is the best place to start with for aspiring entrepreneurs because it requires less capital, it's fresh in the market, and it’s highly competitive. It allows you to quickly test different ideas, with limited downside, while you learn about choosing a market and how to target the products that are high in demand.
Here are the reasons in detail:
- Less Capital, Low Overhead, and More Sales!
Without a doubt the biggest advantage is that it can be launched without having to invest or tie up thousands of dollars in inventory. With this model in motion, you don’t need to stock up on products, you simply purchase them once a customer places an order and has paid for it.
Since you don’t have an inventory, you don't have to bear the extra expenses of managing a warehouse or transporting the products around. This means your overhead expenses are close to nothing. Many successful drop shipping businesses just require a little more than a laptop and a few recurring expenses to operate. The costs might increase over the time, but will still be lower than most brick-and-mortar businesses.
- Get Started in Seconds
If it’s an ecommerce business, you have little to nothing to worry about. Since you don’t have to deal with physical products, it’s a lot easier to manage.
You’re free from things like:
- Packing and shipping out your orders all the time.
- Managing and/or paying for a warehouse to stock up on inventory.
- Tracking inventory to add to your accounting section.
- Handling any returns and inbound shipments.
- Reordering products frequently to maintain a certain stock level.
- Easy to test and Scale
This line of business is convenient for everyone. How? Since you don’t have to purchase the products and stock those up you can keep testing your customers with various kinds of products or entire lines. Depending on their reaction you can maintain the products that are a hit and remove the ones that were a miss!
The more the sales, the more work you might have to put in- but it surely does pay off! Usually you will have to face a lot of customer support but there is a chance that as you expand the incremental work will drop significantly.
Different Types of Drop shipping
Most common grouping of drop shipping is in two different categories; Low ticket and High ticket.
Allow me to further explain what this means.
Low Ticket Drop shipping
The most common business model that gets pushed around heavily all over the internet in advertisements is Low ticket drop shipping.
This is what the business model looks like:
- It starts off with a Shopify store with products listed off of AliExpress. The number of products and the size of the site can vary from a site that is constricted to focus on selling one product, all the way to a “general” store that has a wide variety of different products to choose from.
- Then, it is advertised on a social media platform to direct traffic directly to your store.
- Or, alternatively you can opt to reach out to social media influencers to advertise your stuff and offer them to choose between a commission and a fee.
By the looks of it this model seems to be the cherry on top of a successful venture, whereas all that shines isn’t really gold. This business model may seem easy for one looking at it from the sidelines, but nothing good comes this easy.
However, given the proper amount of time, effort, and input - this campaign can make a sizable profit.
High Ticket Drop shipping
This usually seems to be the winner out of the two categories most of the time as it ensures a business that can be built as something sustainable rather than a risky campaign that could only last a few months.
- First off, you create a Shopify store and then partner with high-end established brands or distributors that are selling expensive and/or heavy products that are conducive to being drop shipped.
- Add up their products to your store and advertise with the help of Google Ads.
- It’s up to you to figure out what keywords and phrases will get you the most conversions at the lowest possible cost.
- As soon as you get a hold of a profitable arrangement with the ads, move towards experimenting with a higher budget.
- It is important for you to nail the campaigns to be rather “evergreen” as your choice of targeted audience includes people that are actively searching around the clock.
- Once you have made it successfully to this step, go out in search for more products and/or suppliers to keep this process on a loop.
- This will ensure a rather evergreen profitable campaign and scale your business in a sustainable manner.
The High Ticket drop shipping method tends to be more comfortable for you and your target audience as you are drawing in the crowd that is already looking to buy. This is called “High buying intent”. It usually is more trustworthy too since you’re partnered up with real businesses and brands that already have a name in the market.
How Much Could I Make with Drop shipping?
No business model is easy or can guarantee 100% that you will be successful. It is important to set reasonable expectations, work consistently and adapt to whatever situation you end up in and make it out of it alive.
After COVID-19, many people turned towards this business model to keep in a decent cash flow and it’s safe to say, if you chose the high ticket drop shipping campaign - you can be making a hefty amount ranging between $200-$3000 easily! If you put in the extra effort and happen to get a little lucky along the way, your first month will be nothing but rainbows and butterflies.
Once you start getting your hands dirty and put in a sufficient amount of work into it - you will develop your own methods that will get the job done as you make your little tweaks to the model simultaneously.
In high ticket drop shipping, your income hinges majorly on one factor: How many good suppliers you can get a hold of and develop a strong relationship with. If you manage to score one supplier with enough products to lift off your site, you will be crossing 5 figures per month without a doubt!
Because of how easily accessible and comfortable this method is, it has created more opportunities for those who got lost in the downsizing caused by the pandemic. Who would say no to extremely low expenses and a high income?
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It’s a Competitive World out there
COVID-19 has really pulled the inner entrepreneur out of most of us which has pushed us to focus solely on the whole “low overhead” part of this campaign.
Considering how it is mentioned thoroughly all over the internet that starting a drop shipping business requires very little capital. However, because of this very reason it also makes this out to be one of the most competitive businesses out there.
In such a competitive market it is pretty difficult to pin down the exact number of competitors that could be selling the same products as you. But even with that, you are just a few exclusive deals away and you have the upper hand in no time!
This may sound difficult, but if you can answer the question “Why buy from you” - then you have nothing to worry about.
How Drop shipping has Changed Lives
Of course it isn't going to be the simple solution to all your problems, but it sure is a great place to start! When all was lost and there was nothing to help take the pressure off from your shoulders, you found peace from the stressful environment while you packed your time with the start of a successful business. The model has some advantages, but also has many complexities at the same time.
Regardless of that, drop shipping businesses have helped people survive through the pandemic and build their businesses up massively into a successful venture of today. It has created many job opportunities for the people who were struggling massively and suffered through the dark patch brought by the pandemic.
Final Thoughts: Is Drop shipping Really Worth it?
If you opted for the high ticket drop shipping business model, then prepare yourself for what is coming your way because it will be nothing but rainbows everywhere! It is a quick and reliable way to get started with an online business almost instantly with massive profits. It’s not capital intensive like other business models, and has the lowest cost overhead you could ever imagine.
If you need to start generating positive cash flow quickly without investing a heavy amount that, high ticket drop shipping is one of the few business models online that allow you to do that.
Author Bio: Asad Ali is a professional SEO expert with 7 years’ experience. He is working with a Dubai based company Go-Gulf and is currently working on the Web Design Turkey segment.
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