Go onto any forum about online business opportunities and you will see a large amount of posts and questions about dropshipping. Its so hard to make money with this business model that Tai Lopez hasn’t even made a course on it LOL!
What is Dropshipping?
In case your not familiar with dropshipping, here is how it works:
- Set up a reseller account with a manufacture, wholesaler or distributor
- Sell their products on your website retail and collect money
- Place order with the supplier at wholesale cost
- Supplier ships product to your customer
So why wouldn’t you want to consider an online business dropshipping products? It can’t get much simpler than that!
You would have no inventory to stock, no packing of products to ship, no running to the post office or UPS center. It seems like the perfect online business to start.
Here’s The Problem
First off everyone is looking for the magical products with large profit margins. They want to dropship camping gear,sports gear, TV’s, cell phones, tools and many other popular categories of merchandise.
Most of these types of products don’t have a lot of profit to start with! Look how competative some of these categories of merchandise are. For example many of the larger retail chains selling sporting and camping gear have filed for bankruptcy or gone out of business. Electronics are sold by the big guys like Best Buy and Walmart.
So ask yourself, how can I compete against these giant retailers dropshipping? The answer is you can’t. There just isn’t enough money in these products to dropship and re-invest back into your business. You will only make a little for your efforts.
Many Suppliers Don’t Actually Sell Wholesale!
Need proof? Choose some products that you would like to dropship online from a supplier and then visit Ebay or Amazon to see what they are being sold at on those sites. Chances are that you as a dropshipper won’t be able to compete on price.
This is because these sellers move large volumes of merchandise and have buying power. You as a dropshipper do not have this leverage with your supplier.
Too Much Competition
Not only are you competing against all the large retail chains you are also competing with 1000’s of other dropshippers selling the same products. Do a search online for a product that your interested in buying and look how many companies are selling that product.
Look For Niche Products
Your best option is to look for niche products that the big retailers don’t carry or push aggressively. You might look into dropshipping mailboxes, safes, and other niche products. Contact some small manufacturers of niche products and see if they would be willing to set up a dropshipping account with your company.
Better yet forget about the headaches of returns, customer service, supplier screw ups and check out the best way to make money online with my #1 pick!
Feel free to leave me a comment below!