Dropshipping is a type of retail business model where a store owner doesn’t stock products. Instead of that, he purchases them from a third-party supplier. After that, the supplier ships the products straight to the consumer.
I agree with the fact that that dropshipping is not a get-rich-quick scheme but the upturn of such a business model has been raising eyebrows for the last 5 years.
More than 40% of online stores use it as a fulfillment model. If the trend continues, you can easily guess what awaits in the next three years.
Why Are People Getting into Dropshipping Day By Day?
First things first! There are a lot of lazybones who have tried dropshipping but never succeeded. As a result, they’ve branded it as a scam. Well, dropshipping has many benefits that make people go for it. Let’s look at some of them:
Dropshipping Is Easy to Manage
One thing that makes dropshipping so popular is its flexibility. Just for a second, imagine managing your business anywhere on the planet. You can operate your business whenever you want and how you want. Doesn’t that give you an adrenaline rush? If that doesn’t give, this would – do you know a dropshipping business can be totally automated because of tools and Integrations that were built to simplify the process? Yes, this is true!
You Don’t Need An Inventory
Ordering inventory or fulfilling the orders in any way is not your work as it’s taken care of by a third party. What happens here is that you’re only operating an online store. Instead of purchasing products in bulk and stocking, you get in touch with a supplier and list his products in your store.
Little Capital Investment
Being a Dropshipper, you don’t need to buy any inventories, you can start your dropshipping business with as low as $30. You only need to pay for a website host, create a theme, and you’re good to go.
No Physical Store
To get a physical store, you have to pay rent for space which eventually leads to additional costs. This is not the case with Dropshipping. You can operate from your living room, kitchen, or a small office if you decide to have one.
It’s A Big Market
Dropshipping connects you with thousands of customers and stores all over the world. If you think there is a lot of competition in dropshipping, think again. If done right, you can find the goldmine.
How Much Money An Average Dropshipper Makes in A Month?
On average, the monthly income of a dropshipper ranges from one person to another and depends on several factors like experience, marketing tactics, niche selected, the current season, market trends, etc. However, rough estimates based on success stories are around $2800.
Let’s do some maths to get an average:
Let’s say the average traffic you get on your store is about 100 in a day, which makes 30,000 unique users in a month.
Now out of these 30,000, 50% might show interest in your store.
Interested users: 50% of 30,000 = 15,000
Out of these 15,000, only 10% or even 5% would actually buy a product
So basically, you will have around 1500 or 750 buyers.
Let’s take the average amount spent by a buyer = $10.
So there will be two possibilities:
- Total revenue generated = 1500 X 10 = $15000
- Total revenue generated = 750 X 10 = $7500
Assuming you get a $2 profit on every $10
Total Profit on Sales would be equal to $3000 or $1500
Removing $100 for miscellaneous expenses and subscriptions for apps and platforms. An average dropshipper would earn up to $2800 or $1300 in a month, which is not a bad deal.
What You Might Like or Not Like About Dropshipping?
Good Side of Dropshipping:
- Dropshipping offers protection from overselling
- No need to put money in the inventory
- There’s no need for a warehouse
- Compared to traditional arbitrage model, risk is low
- Dropshipping is useful in market research and testing new locations
Bad Side of Dropshipping:
- There’s no control over the supply chain
- It’s highly competitive
Is Dropshipping Worth Trying?
Dropshipping works just like any other offline business. If you think that setting up a store is enough to make money, you’re wrong. Its business model is similar to the traditional arbitrage model we see in the market. They buy at a low price, set up a store, promote, and sell at high. If you’re down to grind that much, you can surely have a great dropshipping career.
Written by Michael from Conversionskitchen.com for more free dropshipping tutorials and marketing tutorials visit our website.