When it is time to ship the product and fulfil it, that is when the drop-shipping provider takes over. The drop shipper holds the inventory in its warehouse. You send your drop shipper the orders that come in, paying the wholesale price for each order. However, you can still make a profit as a drop shipper, despite the low margins.
If you want to increase your profits, you can raise your prices, at least as much as the market will allow. You can also sell more volume. And you can always contact your dropshipping provider to negotiate a lower handling fee. Dropshipping is a method of order fulfilment that allows shop owners to sell directly to consumers without having to store any inventory.
When a customer buys a product from a dropshipping shop, a third-party supplier ships it directly to the customer. The customer pays the retail price you set, you pay the supplier's wholesale price and the rest is profit. You never have to handle the products or invest in inventory. If you want to make a decent income starting your side business, dropshipping is worth it.
However, if you want to make a lot of money in a short time, then dropshipping is definitely not worth it. For dropshipping to work successfully, you will have to invest time, money and effort. All you have to do is sell the product, take orders and make a decent profit. Her logic says that many dropshippers can make money by pooling different items from a variety of dropshippers based on a common theme and thus create a dedicated buying base.
Kate is not making millions like other dropshippers, but I decided to write about her as I think her story and business strategy contain great actionable ideas for dropshippers in general. It can be complex, but it is possible for international merchants to incorporate a company in the United States, which gives them access to dropshippers and US-based customers. Although it may seem like a no-brainer, dropshippers always have to deal with their wholesale suppliers, order processing, returns and customer service. Dropshippers are essentially trapped, doing little more than waiting for the supplier to solve problems and, at the same time, reassuring the customer about something that is out of their control.
Like ghostwriters or behind-the-scenes composers, dropshippers must understand that the credit for their work belongs to someone else. Another grey area where most dropshippers get confused is whether they can do it with eBay or Amazon. Using two or more different dropshippers means that two or more companies will ship separately to their customers, which means that two or more companies will charge them their own separate shipping costs. As a result, distributors have to rely on traditional retailers and dropshippers to help them move product.
In the future, you may want to differentiate yourself from all dropshippers selling the same product. I've been dropshipping from Amazon to eBay for 3 years now, and just when eBay started cracking down on dropshippers and making the future of dropshipping look super scary, my dropshipping automation software PriceYak decided to make their software completely free for users with less than 10K listings. You don't need to get a second mortgage, but you will have to put some money into your dropshipping business before your dropshipping business puts money in your pocket.