I should probably start this one with a disclaimer.
I’ve never tried dropshipping.
So this isn’t a step-by-step guide from someone who built a seven-figure dropshipping empire from his bedroom.
Instead, I wanted to understand something much simpler:
Is dropshipping still a legitimate way to build an extra income stream – or is it mostly an internet business model that had its glory days years ago?
Like most ways of making money online, dropshipping has attracted its fair share of experts promising ridiculous returns for very little work.
But strip all of that away, and the basic business model is actually pretty simple.
Building Your Exit Roadmap
There isn’t one way to build your exit. This series explores several. Some people succeed with one income stream. Others combine several. The important thing is finding the path that fits your skills, interests and goals.
1. What You Actually Need to Start an Online Business
2. The Real Job of a Freelancer
3. Why Start a Blog? Build a Platform, Not Just a Blog
4. Build Trust and Add Affiliate Income
5. Print on Demand – Build a Catalog, Build an Asset
8. Dropshipping
What is dropshipping?
In a traditional retail business, you buy products, keep them somewhere and sell them to customers.
With dropshipping, you remove the inventory part.
A customer buys a product from you. You order it from your supplier, who ships it directly to the customer.
The product can go from supplier to customer without ever passing through your hands.
As far as I understand it, dropshipping isn’t really a logistics business. It’s an extra layer of marketing between the supplier and the customer.
So what exactly is your job?
First, you need a product.
And that doesn’t mean scrolling through a supplier catalogue until you find something that looks cool.
You need to research demand, competition, prices, trends and margins. Who is already selling the product? What are they charging? Are people actually searching for it? Is interest growing, stable or disappearing?
Then there’s the supplier.
Can you trust them? What’s the quality like? How long will delivery take? What happens when something goes wrong? Can they handle increased demand if your little experiment suddenly starts working?
Ideally, you’d probably want to order the product yourself before selling it to anyone else. If you’re putting your name on something, it seems sensible to know what your customers are actually going to receive.
There’s another catch. The supplier may ship the product, but it’s still your customer. If something arrives late, breaks or needs to be returned, you’re the one they bought it from.
Then you need a niche.
Who are you selling to? Why would they want this product? And why should they buy it from you rather than one of the thousands of other stores on the internet?
Now we’re getting into positioning and branding.
You’ll need some kind of store or landing page, product pages, images, payment processing and a reasonably trustworthy-looking brand.
And then comes the small matter of getting people there.
SEO. Google. Instagram. TikTok. Pinterest. Facebook. Paid ads. Organic content. Influencers. Email.
You certainly don’t need all of them. In fact, trying to do everything at once would probably be a terrible idea.
But somehow, somewhere, you need traffic.
And getting traffic isn’t enough. You need copy that catches people’s attention, product descriptions that create interest, offers that make sense and calls to action that turn visitors into customers.
Congratulations. You’ve built yourself a funnel.
And then there’s the maths.
What does the product cost? What does shipping cost? What does it cost to acquire a customer? What are your payment and platform fees? How many products get returned?
After everybody else has taken their piece, how much of that $40 sale is actually yours?
Depending on where you’re selling and where your supplier is located, you may also need to understand taxes, VAT, customs, imports, consumer protection, product safety and return policies.
So yes.
There’s quite a bit to do.
You don’t need a warehouse full of stuff
Imagine starting a traditional retail business.
You find a product you believe people will buy. Your supplier charges $10 per unit, but you need to order 500 of them.
That’s $5,000 before you’ve made a single sale.
Maybe your research was right and customers love it.
Or maybe you’ve just purchased 500 very expensive doorstops.
With dropshipping, you can find the customer first and buy the product second.
Find the customer first. Buy the product second.
I wouldn’t say you can start with literally zero money. You may need a domain, an e-commerce platform and a few other tools, depending on how you choose to sell. I’d also want to order samples before selling anything.
But compared with filling a warehouse with inventory, the initial investment can be pretty small.
You could create a simple store, choose a narrow niche and start trying to attract people organically through social media, SEO or whatever channels suit the product.
If you start making sales, you can reinvest some of that money into advertising.
Instead of betting thousands on an idea and hoping you’re right, you can test it relatively cheaply.
And if it works, something else becomes possible.
It doesn’t have to stay dropshipping forever
Let’s say you’ve found a niche that works. You’re generating sales and one or two products consistently outperform everything else.
You could keep dropshipping them.
Or you could take the next step.
You could buy inventory in larger quantities, negotiate better prices, create your own packaging or perhaps develop your own version of the product.
In other words, dropshipping could potentially become a lower-risk way to test the waters before building a more traditional retail business.
You don’t have to take it in that direction.
But you can.
And I think that’s ultimately what makes dropshipping interesting.
It’s not passive income. It’s not easy money. You still have to do the research, find the customers and learn how to sell.
But you don’t necessarily have to risk a lot of money to find out whether you’re any good at it.
You can start small without necessarily staying small.