Hustle Rating: 4/5
Difficulty [Easy/Intermediate/Hard]: Easy
Earning Potential [per month]: £200+
What is Dropshipping?
Dropshipping is working as a middle-man between a supplier and your customer. In its most basic sense, you build a platform to sell a product you don't actually own. Once the product sells you let your supplier know and they will post the product direct to your customer.
As far as the customer is aware, you have sent the product yourself and any profit left between your purchase price and sale price is in your pocket!
Steps
1. Source a product to sell. Look for good arbitrage opportunities (buy low, sell high)
2. Negotiate a price with a supplier. Discuss delivery times etc so you have an idea on how long the product will take to get to your customer.
3. List your product online (Amazon/eBay/Shopify/Other Stores)
4. Wait for your product to sell
5. Once the product is sold, place the order with your supplier and provide the buyers delivery address
6. Job done!
The below image from Shopify sums up the process perfectly
Dropshipping can be very easy to start with as you need very little startup capital as the customer will have paid for your product before you order it with your supplier. You don't need any space to store inventory as you never actually hold the product.
Advanatages vs Disadvantages
Advantages of Dropshipping
- Easy to start
- Easy to manage
- Easy to grow
- Low startup capital
- Flexible
I have touched on most of the above apart from flexibility. Remember that if you are dropshipping you make the rules! You decide when to work and when not to work. Obviously the more you work in general the more income you will generate so definitely be aware of that.
I would say out of the majority of hustles on this forum, dropshipping is definitely up there with being highly accessible to all styles of life. The low startup capital and flexibility make it a popular option!
Disadvantages of Dropshipping
- Margins - Margins are often slim so you have to be particular in which products you choose.
- Delivery Times - Remember your products are being shipped from a supplier. If your supplier is based in China and your customer is based in the UK, you need to set that expectation with your customer that their product won't be arriving the next day!
- Control over your product - As you never see your product in the flesh you need to be sure you can rely on the quality of that product. Order test units to your door when first sourcing a product and make sure it is what you're expecting before sending them straight to your customers.
There are downsides to most things if you look close enough so don't be too disheartened, I would just rather be transparent from the beginning so there are no nasty surprises down the line!
