All You Need To Know Before Start A Dropshipping Business (Review From Real Experience)

dropshipping-business-for-beginner

If you ever learn about MMO, you must have heard about Dropshipping. This business model is often chosen because of its simple operation, which does not require too much money to start for beginners.

I have experienced this model and I will share my thoughts. I will evaluate based on different factors such as the amount of money needed to start, the profit you make, and the sustainability of the business model.

How Dropshipping Works?

The business works with the mechanism that you are a brand. First, you will find a distributor and set your price, with each order placed, the distributor will take care of everything from keeping the goods, packing and sending to your customers. Your only job is to showcase your product and make a sale. In addition, you are also responsible for taking care of customers and handling your orders. If the customer cancels or returns the order, the goods will be returned to the distributor’s warehouse.

Dropshipping Pros

You build an asset

To be rich, invest in assets. That’s why so many people get rich from Dropshipping. You build a brand that generates money while you sleep. Dropshipping provides you with a passive income stream. All you need to do is to promote your brand.

Even if you don’t want to do dropshipping anymore, you can sell your brand.

All profits are yours

Dropshipping allows you to buy an item for $1 and sell it for $99 if you want. As long as someone makes a purchase, you can get the remaining $98 in profit. Even after deducting marketing costs, you can still keep a significant portion of the profits.

Unlike Affiliate Marketing which earns profit based on a percentage of the product, you can set the profit you want with dropshipping. And for every order you sell, you get the full profit you want.

Dropshipping Cons

You have to manage customer support

For me personally, this is not a big deal. Because most of the order problem is with the distributor they have already handled. The common problem is often related to shipping time, so you can consider this when choosing a distributor.

Lots of competitors

Dropshipping is a pretty popular business model these days so it shouldn’t be hard for you to find a competitor that sells exactly what you’re selling for less or more expensive.
If you want to sell, you can hire an expert on Upwork or create your own sales strategy for your brand.

You cannot sell many products from different niches in one store

Actually, it’s not quite right because you can sell everything you want to sell. But I mean it wouldn’t be very professional. Imagine going into Sephora but seeing them selling beef, it’s very strange, isn’t it?
Therefore, if you want many products in many different niches, to look more professional, you should create different shops. And since many shops, you’ll have to consider maintenance and advertising costs, which leads to what I’ll cover later.

Cost To Start Dropshipping

Dropshipping Store Fee

To start a Dropshipping brand, you do not need to hire an entire website-building team. Normally, most of the Dropshipping e-commerce is operated by Shopify because Shopify connects easily with distributors so you don’t have to manually transfer order information. In addition, Shopify also has many essential features to make your website more beautiful and trustworthy.

Total cost

Shopify (first 3 months): 1$

Shopify (normal): 29$

Total cost (1 years): 3$ + (29$x6)= 177$

Domain name for Your Dropshipping E-commerce

You don’t have to buy a domain name to start Dropshipping, but having a domain name will make your brand look more professional.
At the time of writing this blog, I found Dreamhost which offers the cheapest domain name for around $7.99/year for a .com domain. The reason you should choose a .com domain is that it is more popular and easier to see than other domains like .store or .shop.

Domain cost: 7.99$

Marketing Fees for Dropshipping Business

Regarding Marketing fees, I cannot calculate because it depends on how much you spend on advertising and how many people click on your ads. There is no exact or definite number to measure for advertising costs.

Marketing fees: 100$ (This number is not an average, it is up to you to decide how much you will spend on advertising)

ContentCost
Store fee 177$
Domain name7.99$
Marketing Fees variable
TOTAL184.99$/year
Dropshipping start-up cost statistics table

There are many more categories when it comes to building your dropshipping business but I will just list the costs that will cost you to get started.

How Profitable Is Dropshipping?

It can be said that dropshipping will give you a very high-profit possibility because usually, the seller will set a profit of about 30% – 40% with each sale.
Let’s say you sell a $50 product, you will receive $20. If you sell about 100 orders a month, you will get about 2000$. If you expect a number higher than that, keep in mind that there is also upselling in the business, which can make you sell more products, thereby increasing profits.

In addition, if you have good sales ability, you can completely increase the price of the product to gain a profit. I know there are business stores that sell more than 5 times the original price.
In short, selling depends on how you promote your product and brand, what your message is and who your customers are, and what niche you have.

The Sustainability Of The Business Model

Many say dropshipping is dead. Reality is not. In fact, a lot of dropshipping businesses still exist.
The dead dropshipping business is usually because they set the price too high, due to the lack of professionalism, because the shipping is too long, and because the product is not good.

One thing you need to remember is that dropshipping is not fast money. You cannot open a dropshipping store and pray the money will come.
You will have to run your store like a small business. Maybe you will fail, maybe you will succeed, any way you are brave enough to start and you will learn many things along the way to manage your small business.

To sum it up, I think dropshipping is a great way to get started and make money building other assets.

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