subject: 4 Hurdles In Creating A Drop Shipping Site [print this page] It honestly doesnt matter what your motivation for trying to create an online income is. The fact is that with the economy the way it is at the moment, a lot of people are looking for ways to increase their income, either as a side business or as a potential full time business. As Ive said many times, I think I have tried just about every online monetizing method out there.
But the one, method that has seemed to resonate with me the most, is Drop shipping. I wrote about how i got into it and some of my experiences in this post, My First Drop Shipping Site.
Drop shipping is a supply chain management technique in which the retailer does not keep goods in stock, but instead transfers customer orders and shipment details to either the manufacturer or a wholesaler, who then ships the goods directly to the customer. As in retail businesses, the majority of retailers make their profit on the difference between the wholesale and retail price but some retailers earn an agreed percentage of the sales in commission, paid by the wholesaler to the retailer. Wikipedia
Now I have two product sites, one is a complete Drop shipping site, where I dont own or warehouse any of the products. The other is a physical product site, meaning that I import and warehouse products my self, I also process orders and mail out the products.
My drop shipping site, is in the Electronic niche. Its been an interesting journey in developing it, so I wanted to share the 4 hurdles that I faced along the way.
Hurdle 1: I can make big money for little work
Nope ! not even close, running any business is a lot of work! There is no doubt that Drop shipping has saved me costs in warehousing, inventorying, and packaging and shipping items. The reality is the wholesaler absorbs those costs, and charges you.
So the likely outcome is that profit margins are thinner because the drop ship supplier takes on much of the risk and costs involved with warehousing the products. This means to make any really money on it, you need to hustle.
Hurdle 2: All drop shippers will be happy and willing to work with me
Some drop shippers do work with anybody. But those drop shippers will typically have a fee associated with them, or else their wholesale price is not as good. I stumbled across Saleshoo, which has over 4000 verified drop shipping companies. I would suggest spending a little money on this service first, it will save you a lot of time, and it also provides a lot of useful tips. Also, keep in mind depending on where you are, Some countries will not ship internationally
Hurdle 3: Its impossible to make money with drop shipping
Well, your profit margins will be thinner, but some of the Internet largest retailers use drop shippers as their product supplier, think about Amazon.
Also a lot of new online entrepreneurs fail to understand is that pricing is only one small part of business. If your focus is exclusively on price, then your business will never succeed because youll be completely ignoring the many other parts of business that are required to succeed.
Hurdle 4 : Drop shipping is the magic solution
In a nut shell Drop shipping is a specific service that fills a specific need. I took to drop shipping pretty well, but I have certainly learn t some lessons along the way. But make sure it fits in line with your business plans.
So there you are the 4 main hurdles Ive faced with developing a Drop shipping site. My average markup is 40%, which allows for taxes and other associated fees. So far so good, I regularly add more products to my site
