Last Updated on January 2, 2023 by Andrew Shih
Are you thinking about starting an online dropshipping business but not sure where to start? Amazon dropshipping is undoubtedly the most popular, but what about eBay, AliExpress, and Shopify dropshipping?
We will discuss the benefits of dropshipping business, the difference between these platforms, how you can start a dropshipping business yourself, and the costly mistakes to avoid. Make money dropshipping by following the advice below.
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What is dropshipping?
Dropshipping is where a customer purchases a product from a supplier through a dropshipper.
The dropshipper lists products on their website for sale, usually at a marked-up price.
The customer purchases the item from your website.
Then you place their order with the dropship supplier.
The dropship supplier sends a tracking number to both the dropshipper and the customer.
The dropshipper sends the product, and the customer receives it.
After the customer receives the product, the dropshipper is responsible for accepting returns and customer service.
Benefits of the Dropshipping Business Model
Zero startup costs
Dropshipping has zero startup costs on free sellers platforms like Amazon. With dropshipping, you don’t have to hold inventory, so there are no immediate inventory or storage costs.
Zero overhead costs
All you need to start a dropshipping business is a computer and access to the internet. The inventory cost is essentially zero because you don’t buy and hold inventory.
Low Maintenance
Once your dropshipping is up and running, you can operate your dropshipping store on autopilot. You can outsource customer service and order handling to a virtual assistant once you have a system in place.
Expands Product Offerings
For established businesses, dropshipping provides a simple way to expand their brands without increasing their business costs.
Amazon Dropshipping
With Amazon dropshipping, it is critical to have real tracking numbers when shipping to customers.
Therefore, you have to put your email into the customer email field to receive the tracking number.
If Amazon catches you without a tracking number, they can disable your account. An easy solution is to find a dropship supplier that does FBA fulfillment.
FBA stands for Fulfilled by Amazon, where orders are fulfilled at the Amazon warehouse fulfillment center. Amazon handles the shipment and customer service. A drawback is that there is an additional cost per product range based on the product price.
So it’s important to have a quality product because Amazon FBA charges for return shipping.
eBay Dropshipping
Dropshipping with eBay is precarious because of its fixed overhead costs. If you’re not making sales soon, you can quickly lose money. eBay charges about $39 per month plus a percentage of the sale.
Therefore, eBay may not be suitable for beginners because it can be difficult to make a profit without proper experience.
Don’t make the beginner’s mistake of thinking that selling on eBay is free. Avoid the costly mistake by knowing beforehand and reading eBay’s terms of service.
Shopify Dropshipping
Shopify is tailored to dropshipping stores. We have all seen the Tai Lopez ads on YouTube, talking about how you can make 6 figures per month easily. We would all like to become a millionaire from dropshipping, but you know the saying, if it were easy, then everybody would do it.
Most Shopify dropshipping stores are sourced using an application called Oberlo, which connects to Aliexpress. Aliexpress is a popular dropship supplier that helps many beginning dropshippers list products for sale in their stores.
AliExpress Dropshipping
AliExpress is an international dropship supplier that mainly operates in Russia and China. AliExpress is great for beginners to get their feet wet in the dropship business.
When listing products for sale from AliExpress, you must rewrite the product title and description so that they make sense to customers. Many of the product titles are written by people who speak English as a second language, so many of the titles and product descriptions sometimes come off as awkward sounding with improper English.
If you want to bulk upload products, you may want to outsource writing product descriptions to a freelancer on Fiverr. The typical shipping time can be rather long with 2-3 week shipping times, which could be a problem with larger selling platforms like eBay and Amazon, where customers expect their products to arrive between 1-5 days.
Aliexpress is most suitable for integration on your own website, where you can set the customers’ expectations for shipping times. AliExpress has an ePacket option if you are worried about shipping times, which allows products to be delivered within a week.
Outsourcing Dropshipping Customer Service
Customer service can easily be outsourced on Amazon’s platform through Amazon FBA. The dropship supplier ships the product to the Amazon fulfillment center. Then when your customer orders a product, Amazon will take care of the fulfillment and customer services.
Outsourcing on other platforms requires you to either hire a new employee or a freelancer on one of the Freelancing platforms such as Fiverr. If you go this route, you may want to handle the customer service by yourself first, so you know what to expect and train your customer service team.
On other fulfillment sites besides Amazon, outsourcing customer service comes with additional liability. When Amazon damages your product or takes longer than usual to fulfill an order, they assume responsibility, cover the loss, and remove the negative review if it is Amazon’s fault.
Always review and understand the terms and service agreement when you use a fulfillment site to avoid any surprises.
Handling Dropship Returns by Customers
One of the biggest deterrents to starting a dropshipping business is the hassle and not knowing how to deal with returns.
The first step to a good return policy starts with choosing a dropship supplier with a good return policy. Some suppliers offer exchanges only if the order is wrong, and others offer money-back minus the cost of shipping.
If a supplier has a 7-day return and no money-back guarantee, you will likely be left holding the bag if a customer decides to make a return.
I would have the unsatisfied customer ship the product back to me. The money would be charged back from my account to the customer. From there, I would ship the product back for either an exchange or money back. Once I return the product, the supplier will refund me the cost of the product.
I choose a great supplier with high-quality products to mitigate the risk of returns.
D.O.s & DON’Ts for Dropshipping
Do consider shipping costs when calculating product costs.
Some products come from overseas such as China and Russia, which requires tariffs and customs fees in addition to the normal cost of shipping.
Do make test orders from your prospective suppliers.
Before you work with a new supplier, you should be aware of the supplier’s customer service, return policy, and product quality before deciding and choosing the dropship supplier. Customers may hesitate to order if a dropship supplier has long shipping times. Also, shop international drop shippers have long shipping times, which may allow customers to cancel the shipment in transit.
Don’t purchase retail, then try to dropship through Amazon or eBay.
Most major retailers send a receipt with shipments. As a dropshipper, you make a profit by marking up the product price. Customers will feel cheated when they see the receipt with the original retail price and may demand their money back.
Don’t offer the cheapest products you can find.
Often the cheapest products are of the lowest quality. I have tried and ordered super cheap products from China only to send the customers with broken and low-quality products that will be returned shortly by those unhappy customers.
More Dropshipping Tips
Source from domestic dropship suppliers
International shipping can include tariff and customs charges, which can’t always be passed on to the customer. Also, international shippers may charge shipping by container weight or cargo volume, which can substantially raise shipping costs. So source from domestic dropship suppliers when possible.
Specialize in a niche
Try to specialize in a particular niche rather than casting a wide net with your inventory categories. When you specialize, your business will have a stronger brand and hold a special place in customers’ minds. Let’s assume you sell shoes; if the customer is looking for shoes, your business is more likely to come to mind than if you sell a bunch of random items.
Plan to scale dropship business early on
Set up a system early on, so you can scale your business as it grows.
As the numbers of orders increase, you may have to hire additional employees. The last thing that you want is to have employees that don’t understand the process and mismanage the business.
In Conclusion
Dropshipping is a great business model for beginning entrepreneurs and experienced business owners alike.
Whether you choose to start with Amazon dropshipping or other platforms, there are costly mistakes that you must avoid. Starting an online dropshipping business can seem overwhelming at first, but it can be a profitable business model once you know how it works.
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