Why Does Dropshipping Sound So Attractive To Beginners?

Everyone tries to start an online business as a side hustle, since all-in-one website generators have become more accessible than ever before. Are you too thinking about starting a dropshipping business? Have you been told that it’s one of the easiest business models, therefore you should go for it? 

Sure, drop shipping techniques are not overly difficult to learn and it doesn’t cost you a lot to set things up. But it’s just a very competitive industry, you really have to be committed to it. Do you really have a strong desire to sell things online? Then here’s a comprehensive beginner's guide to dropshipping, giving you the confidence and knowledge to embark on your e-commerce experience.

What is Dropshipping?

Dropshipping is where you sell products online without having to carry inventory or handle shipping logistics. Instead, your retailer partners will handle the inventory, packaging, and shipping of the products directly to the customers.

We have explained how dropshipping works over many years on our site, so feel free to search our past blog posts such as this one; Everything You Need to Know to Start a Dropshipping Venture.

Why Do People Consider Dropshipping?

Giving up a day job to start a business can be a risky, lifetime challenge. Nobody wants to take a new business lightly only to go bankrupt in the first few months. Very few beginners take a huge risk, and that’s why, there are some good reasons many people give dropshipping a try;

Low Startup Costs: 

Compared to traditional retail models, dropshipping allows you to start an online business with a fairly small amount of upfront investment, a $1,500 loan might be enough to finance initial costs, for example. You don't need to worry about inventory costs or setting up a physical store. This low barrier to entry may allow ordinary folks to test their business ideas without a significant financial commitment.

Location Independence

In theory, you can run your business wherever you are. If you’ve been working 9-5 for many years and have just managed to go on vacation abroad once or twice a year, location independence might sound attractive to you. 

Although drop shipping is not like “making money while you are asleep” - you still have to constantly check customer orders, stock availability, handle complaints, etc. You’ll have to get someone else to look after your business on your behalf while you spend a day or two traveling a long distance.

Wide Product Selection

This is probably a good thing for real. You don’t need to hold physical storage, which means that you can choose to sell anything you want. With that said, many dropship business owners end up selling a variety of classes of goods so they don’t really have their own unique brand. 

Do you remember fidget spinners? Dropshippers swarmed them because they were selling. You can follow the trends and keep selling whatever’s in demand at the time.

Scalability

Without having to worry about inventory management means you can also scale up your operations fairly easily. If you really become successful, one of the few things that could make you out of control is the number of orders. So you’ll probably need to employ an assistant. 

If you let them work on commission rather than on hourly/daily pay, then you may be able to scale up your business without a cash flow problem.

Should I Start My Own Dropshipping Website?

No. I wouldn’t recommend it, although using an e-commerce platform such as Shopify and WooCommerce is very popular. Because as a shopper, how many times a year do you buy stuff from individual-run, unknown e-commerce websites? And how many times a year do you buy from Amazon?

Exactly. Selling products through your own website is tough because it's hard to get people to know about your website to start with. 

Instead, using platforms like Amazon or eBay is better. These sites already have lots of customers, so you can reach a bigger audience, although again, extremely competitive. 

I would consider Amazon for a broad audience and FBA's convenience, although there’s intense competition and strict policies to follow. Whereas eBay’s policies are not as strict and the fees are slightly lower, but still it’s competitive. You’ll need to come up with good marketing tactics, such as a unique discount structure and personalized list.

This is my personal opinion from experience. 

Dropshipping Can Make You Crazy

So no inventory, no packaging or shipping to deal with. Do you really think dropshipping is an easy business model to run? I tell you it’s not as easy as you think.

Low Profit Margins and Fierce Competition

Because the industry is very competitive, until you start to sell at least several products per day (depending on the price of each item), you will suffer a low level of income. The difference between the wholesale price and the retail price is not substantial to start with. 

And because the market is already competitive, big sellers are already selling the same products cheaper than you would anticipate. If you lower your price, they’ll lower theirs more. 

Inventory Issues and Quality Control

Your suppliers fulfill your orders, which means you don’t have control over it. They may run out of stock or they may be slow in dispatching. But you are the one who needs to deal with angry customers who demand refunds.

Likewise, you have limited control over the quality of goods, packaging, errors such as sending out wrong items, etc. But it’s your dropshipping business - you’ll have to deal with that with your customers to keep your reputation.

Shipping Complexities

You think you can scale up your business and start using different suppliers. So when customers order multiple items and the items come from different suppliers, there’ll be complexity in shipping costs and various delivery times. You’ll have to deal with unhappy customers who haven’t received all the items in one go.

I don’t think a dropshipping business particularly makes the business owners “crazy.” But if you think it’s it’s easy and requires less responsibility because of no inventory, etc., then it WILL make you crazy.

At the end of the day, getting others to do something for you means you trust their job. It happens to any business owner. Dropshipping is not particularly suitable for a beginner with no solid business mindset, I tell you.

Final Words - Is A Dropshipping Business Cool For You?

If you really want to give dropshipping a try, why not start as a side hustle with a curated selection of less than 10 items or so? It's a manageable approach that lets you get a feel for the business without overwhelming yourself. 

I take it you have exceptional customer service skills. But you’ll still have to give creative marketing efforts to survive the competition. It's all about learning and adapting along the way. Good luck, enjoy the adventure, and don’t let me say “I told you so”!