Dropshipping Bandwagon. Who makes money?

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Dropshipping is a very popular way of making money online, but who is making good money? Is it as easy as we are led to believe?

From time to time certain business models become very popular because they are promoted heavily by clever marketers who make money out of teaching their methods.

Dropshipping is currently the latest bandwagon to get this treatment, but few success stories have been posted on the forum, except by those who want to teach others how to do it, or their affiliates.

I am inviting newbies who have started within the last 12 months to tell us their stories.

1. Have you succeeded in your new dropshipping business?
2. What profit margins are you making?
3. Are you selling fakes?
4. Do you have problems with shipping times?
5. Are your suppliers reliable?
6. Are returns a problem for you?
7. Do you dropship from China?
8. Have you considered carrying inventory instead of dropshipping?

Walter Hay
#bandwagon #dropshipping #fakes #makes #margin #money #profit
  • Profile picture of the author Oziboomer
    Thanks Walter for bringing this to light.

    It is an issue because many readers want "Instant Profits"

    My business that is 26 years young has dropshipped and continues to dropship but it is not a drop shipping business.

    Drop shipping is only a small part of a bigger operation.

    I'm fortunate that I have good relationships with multiple suppliers and have buying power because of the volume we move through our brick and mortar business so it only makes sense when I'm approached to supply a specific product that I don't have in stock to drop ship directly.

    I wouldn't recommend it as a business model to someone who *thinks* it will be a profitable business in it's own right particularly if they have no other business management skills or experience.

    We have negotiated pricing in place and multiple stock-holding in partner warehouses that facilitate a seamless supply chain but these things have taken many years and serious negotiation to put into place.

    The relationships are what make things work and I'm not talking about just being a rank and file affiliate of a larger business but having the ability to work both with multiple suppliers and multiple purchasers and keep it all together because the systems have been established that ensure reliable supply chains and processes so everything functions.

    One area drop shipping newbies fail to realise is the marketing costs involved in attracting clients.

    We are fortunate enough to have good organic positioning and we back that up with paid advertising and other lead generation techniques but competitors who enter our space find it difficult to generate positive ROI on advertising and even more difficult to generate organic traffic.

    I've read and studied your Proven China Sourcing publication and I can see where a person who is a starting out maybe considering drop shipping as a business model would be far better off looking at sourcing their own products and getting educated on how to sell products on Amazon or elsewhere as a better route to higher profits than becoming a lackey for some drop-ship company.

    Although I'm not a student of Jim Cockrum's PAC I can see how combining your understanding of product sourcing with what Jim offers for people wanting to get started on Amazon is far closer to a high profitable model than one based around drop shipping.

    I'm generally not one to recommend IM products one way or another because there is plenty of rubbish out there but from what I've seen you've always answered the product sourcing questions on the forum with authoritative advice that benefits the person asking the question in a direct, no BS manner and for people considering any ecommerce business that involves selling stuff I'd say they should read your posts and if they can afford it, they should study your importing guide..

    Best regards,

    Ozi
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    • Profile picture of the author Importexport
      Originally Posted by Oziboomer View Post

      Thanks Walter for bringing this to light.

      It is an issue because many readers want "Instant Profits"

      My business that is 26 years young has dropshipped and continues to dropship but it is not a drop shipping business.

      Drop shipping is only a small part of a bigger operation.

      I'm fortunate that I have good relationships with multiple suppliers and have buying power because of the volume we move through our brick and mortar business so it only makes sense when I'm approached to supply a specific product that I don't have in stock to drop ship directly.

      I wouldn't recommend it as a business model to someone who *thinks* it will be a profitable business in it's own right particularly if they have no other business management skills or experience.

      We have negotiated pricing in place and multiple stock-holding in partner warehouses that facilitate a seamless supply chain but these things have taken many years and serious negotiation to put into place.

      The relationships are what make things work and I'm not talking about just being a rank and file affiliate of a larger business but having the ability to work both with multiple suppliers and multiple purchasers and keep it all together because the systems have been established that ensure reliable supply chains and processes so everything functions.

      One area drop shipping newbies fail to realise is the marketing costs involved in attracting clients.

      We are fortunate enough to have good organic positioning and we back that up with paid advertising and other lead generation techniques but competitors who enter our space find it difficult to generate positive ROI on advertising and even more difficult to generate organic traffic.

      I've read and studied your Proven China Sourcing publication and I can see where a person who is a starting out maybe considering drop shipping as a business model would be far better off looking at sourcing their own products and getting educated on how to sell products on Amazon or elsewhere as a better route to higher profits than becoming a lackey for some drop-ship company.

      Although I'm not a student of Jim Cockrum's PAC I can see how combining your understanding of product sourcing with what Jim offers for people wanting to get started on Amazon is far closer to a high profitable model than one based around drop shipping.

      I'm generally not one to recommend IM products one way or another because there is plenty of rubbish out there but from what I've seen you've always answered the product sourcing questions on the forum with authoritative advice that benefits the person asking the question in a direct, no BS manner and for people considering any ecommerce business that involves selling stuff I'd say they should read your posts and if they can afford it, they should study your importing guide..

      Best regards,

      Ozi
      This thread has produced a couple of interesting responses so far.

      Thanks @Oziboomer for your clear account of the role of dropshipping as it relates to your business. The way you use dropshipping as an addition to your successful business makes a lot of sense. Your business could serve as a good model for others to follow.

      I did something similar when running my importing business. Loyal customers would ask if we could supply other products. The quantities involved didn't justify importing, so I bought from importers who handled those products. Customers happy, small profit for me or my franchisees, and it was easy to do.

      I see many people following bad advice such as on one wildly popular thread promoting dropshipping of fake branded goods. I am curious to know how many have been caught by the authorities or sued by the brand owners.

      There is currently a big law suit under way in the US in which a big brand owner is suing over 200 businesses. Their first step was to close down the thieves' websites, so effectively they are out of business. As the case progresses, there is no doubt that the brand owner will seek damages and if awarded, that could bankrupt many of those small business operators.

      When such a small amount is needed to start a legitimate business direct importing inventory, or one like your own business, I wonder why so many fall for the "Instant Profits" idea you refer to.

      Walter
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      Use emotions and perceptions to build a great brand. Ask me about my book LabelsThatExploit. For safe sourcing and easy importing from 41 countries globally, see https://provenglobalsourcing.com
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  • Profile picture of the author mgabriel
    Yes, I have owned a dropship store for over three years. It has take a lot of work, time and dedication. But it's been worth it, it has been a game changer for my family.
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  • Profile picture of the author dave_hermansen
    We are certainly not "newbies", but we did put up more than 50 new eCommerce websites in the last year. Of the 50, we dumped two and are re-evaluating whether to keep another handful. The rest all are making decent money, several of which make more than $5,000 profit per month, which really isn't bad for being less than a year old. We're expecting really big things in year two.

    You can definitely make money dropshipping if you have the right suppliers. Every niche will not be a goldmine, but you never real know until you try.
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    • Profile picture of the author Importexport
      Originally Posted by dave_hermansen View Post

      We are certainly not "newbies", but we did put up more than 50 new eCommerce websites in the last year. Of the 50, we dumped two and are re-evaluating whether to keep another handful. The rest all are making decent money, several of which make more than $5,000 profit per month, which really isn't bad for being less than a year old. We're expecting really big things in year two.

      You can definitely make money dropshipping if you have the right suppliers. Every niche will not be a goldmine, but you never real know until you try.
      Thanks for your contribution also Dave. I would never describe your business model as jumping on the bandwagon. I see it as a serious business model that many people could benefit from if they were willing to learn.

      One really "hot" dropshipping system bandwagon being promoted on the forum is based on selling fakes of big brand name items. I have given up trying to warn people of the risks.

      They gamble on not getting caught, but most would be ignorant of the fact that in a big lawsuit under way in the US, one big brand owner is currently suing hundreds of businesses in the US and other countries. The first step was to shut down all the illegal websites, so there are hundreds of people who suddenly had the wheels fall off their bandwagon.

      Before the lawsuit is over, there will undoubtedly be damages imposed, and that could result in a lot of bankruptcies.

      Walter
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      Use emotions and perceptions to build a great brand. Ask me about my book LabelsThatExploit. For safe sourcing and easy importing from 41 countries globally, see https://provenglobalsourcing.com
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  • Profile picture of the author dabobrown
    Thanks for this discussion...I am the new member of this conference, so give me a chance to present my view regarding this topic and also some other business ideas in shipping and the import-export business.
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  • Profile picture of the author umerdurrani
    I am just starting with this business model online and i believe the hardest thing is to find the right supplier in our niche and than maintaining a healthy relationship with them as our business is some what relying on them supplying us the goods.
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  • Profile picture of the author silveroaks
    I think dropshipping has a lot of potential. But there is no overnight riches. It takes a lot of work and a lot of research. But if done rightly all the work will payoff. If you ask whether dropshipping is here to stay i think it will not last much longer as many people starting to realize its potential and aliexpress is becoming popular among the end users and they are ordering directly from ali express and saving money on that as well.
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  • Profile picture of the author dabobrown
    I think the drop shipping has lots of benefits because in this the positive cash cycling flow has occurred because the seller pays amount during the purchase. There are numerous modes of transportation like airways land ways and also ocean ways, all are helpful for easy shipment.
    I know one of the real freight forwarders, Thunderbolt they have success business in shipping.
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  • Profile picture of the author fmckinnon
    WE have been doing this for many, many years and have generated well over $50 million in sales, primarily in dropship. But we're finding it harder and harder to succeed and have started moving more to wholesale and private label, with our % of dropshipping orders going down slightly.
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  • Profile picture of the author PvtSlippyFist
    1. Have you succeeded in your new dropshipping business?
    I have only recently started, but so far so good. over $3k sales in 2 months with minimal promotion via facebook and google ads
    2. What profit margins are you making?
    anywhere from 25%-115% depending on the type of product sold and which dropshippers i am using to supply the product
    3. Are you selling fakes?
    nope, everything i have in my shop is 100% authentic
    4. Do you have problems with shipping times?
    everyone once in a while a package arrives a day or two late, this is mainly due to weather which we do explain to the customer
    5. Are your suppliers reliable?
    so far so good, have even dealt with a couple returns without issue.
    6. Are returns a problem for you?
    see above
    7. Do you dropship from China?
    absolutely not. I refuse to offer my customers cheapo goods and from my experience, chinese suppliers are horrid when it comes to providing quality goods, managing returns and general communication. my suppliers are US based and 90% of them manufacturer the goods here in the USA.
    8. Have you considered carrying inventory instead of dropshipping?
    Yes! several items from my suppliers are almost guaranteed to sell and i make more when i buy them in bulk vs one at a time
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