Thinking of starting a new onlinebusiness? Don’t know where to start? What about considering drop shippingas a career?
Don’t know what’s drop shipping? We don’t blame you. The term drop shipping is still relatively unknown. But once we explain how it works, you’ll probably get a clearer picture.
Drop shipping is a method of supply chain management where a retailer does not keep goods in stock. Instead, the retailer acts as a middleman of sorts. The retailer transfers the customers’ orders to the manufacturer or wholesaler. The goods are then shipped directly to the customer. Sounds simple, right?
You might add, how might one gain a profitfrom drop shipping?
Like any other retail business, retailers make their moolah on the price difference. More particularly, their profit is the difference between the wholesale and retail price. Though, some retailers do earn an agreed percentage of sales from wholesalers in the form of commissions. In the end, it all depends on the circumstances.
Sounds like an easy-money kinda business, right? We don’t mean the pop your bubble but drop shipping isn’t as easy as it sounds. Problems with suppliers, managing complex numbers, customer dissatisfaction, and so on are just the tip of the iceberg.
With that said, there are people who have taken up drop shipping and succeeded. Here are some of them:
1. Icelacc Ho/Icebikeheaven
Icelacc Ho was just a university student who had a passion for cycling. Long-distance cycling tours with his friends were the norm for this young entrepreneur. Like any cycling enthusiast, he frequented bicycle accessory shops to prepare for upcoming tours.
He became familiar with bicycle shop owners and subsequently became exposed to drop shipping. He realized that drop shipping was a great way to start a business. Ho started to drop ship bicycle parts and accessories from various local sellers.
“I started my business with literally zero cost because I use drop ship from other sellers.”
By drop shipping, Ho only needed to promote the products without spending a single cent. All that he needed to do was to inform the sellers he dealt with once he received an order. The sellers would then ship the products over to the customers.
Within four years and an almost zero budget, Icelacc was on his way to becoming a successful e-commerce entrepreneur. He began to explore his options once his business became more stable.
Naturally, the young entrepreneur looked to import as he realized he could not control the quality of the products received. This led to him setting up Icebikeheaven.com, an e-commercesite for cycling enthusiasts.
Zappos.com is a huge US-based online store specializing in selling shoes, bags, and apparel. It’s a well-known store around the globe thanks to its incredible customer service.
This online store’s current success came about thanks to the drop shipping model.
Tony Hsieh, Zappos CEO, got involved in the drop shipping business way back in 1999. Back then, the company had almost zero sales and was basically fighting to stay above water.
At that point, Hsieh decided to overhaul the entire company’s business model. Utilizing the drop shipping model, the company acted as middlemen. With the workers collecting and transferring orders from customers to suppliers.
This meant that there was no need for manufacturing products or to manage stocks. Moreover, the responsibility of shipping and delivering the products was out of the hands of the company. Plus, the company didn’t need to buy and store products in bulk. Thus, this model allowed the company to cut costs, and to funnel the saved capital into client support.
With time, Zappos began to regain its legs. Using the drop shipping model resulted in the business gaining a higher turnover. And it’s this boost that allowed the company to set up their own storage facilities to store products from suppliers.
By 2003, the company began to transform their business model once again. And with their new approach, Zappos became what it is today. Safe to say, the decision to use the drop shipping method contributed to the company’s success today.
3. So Aesthetic
So Aestheticis an online store specializing in clothing and apparel. The store’s founder, Justin Wong was only a university student when he started the business.
Wong used several ready-to-use e-commerce platforms to start his business. And it took the young entrepreneur two days to set up the store the way he wanted it to look. In particular, he swears by the usability of Shopifyfor non-programmers.
As for his products, Wong initially did not know what to sell. He found inspiration through AliExpress, by sorting products based on popularity. What he found was women’s fashion was the ideal choice. Thus, began his journey to sell products through his online store.
Leveraging social media, specifically Instagram, Wong opened an account for his store. He started sharing his products by the hour and used tons of hashtags. About a week later, the So Aesthetic’s Instagram had over 1,000 followers. However, having lots of followers didn’t translate to sales.
Another plan was set in motion. Wong decided to reach out to influencers, using Iconosquareto identify popular accounts. He utilized discount codes and gave interested parties an affiliate fee for each sale. Following this, he gained over 100 partnerships, though most of them weren’t interested.
Currently, Wong is planning to continue building the store. He plans on building a better and more sustainable plan. The end goal for him is to replace his day job with his online store.
“The Internet gave me the ability to start a business in only a few days. It’s an opportunity that’s there for everyone, you just need to take it.”
4. Irwin Dominguez
Irwin Dominguezis one of the most successful drop shipping e-commerce entrepreneurs out there. His crowning achievement in the industry being earning one million dollars worth of sales within eight months.
But how does one follow in the footsteps of such an individual?
Dominguez was inspired by a friend’s online store to create his own. With little experience in the market, Dominguez learned as he went along, looking for answers to problems as they arose.
Dominguez started by learning about e-commerce using Google. He then signed up to Shopify and started to use Oberlo. He used the Oberlo platform to help import drop shipped products into his e-commercestore. Oberlo also enabled him to ship products directly to his customers.
By utilizing drop shipping, Dominguez was able to source his products efficiently. He could then focus on the marketingside of his business, a skill he picked up in his prior career. Rather than waste resources, he stuck to what he knew and kept the rest as simple as possible.
Dominguez made his first sale using Facebook adswhich ate into most of his profit. He swears by the platform as he deems it worth the investment in order to jumpstart his business. Most of his current success, he says is due to advertising on Facebook. Though, he does stress that business owners should learn how to balance the cost of Facebook ads with profit margins.
Today, Dominguez pulls in an average of $10,000 a day with his best being $30,000. All this, thanks to drop shipping.
Drop shipping is indeed a very lucrative idea if you’re only at the beginning of your entrepreneurship journey. But keep in mind that it is not the be-all and end-all of entrepreneurship. Rather, we’d classify it as an excellent start to your very own business adventure.