Are work from home drop shipping businesses a scam?
If you’ve recently lost your job or looking to earn an income with a home based business on the internet, starting a drop shipping business sounds like a dream come true. You have low startup costs, unlimited earning potential and no need to stock or handle inventory. All you need is an ecommerce website, add some products and watch the money roll in, right?
But as the saying goes ‘if it sounds too good to be true it probably is’. Earning $100s or $1000s a week through a drop shipping business model is possible. But there are a lot of hoops to jump through and pitfalls to avoid.
Drop shipping works like this:
1. You find stock to sell (newbies will typically just Google ‘wholesale dropshipping’ and take what’s on offer).
2. You sell the product online, either through your own website or a third party site, like eBay or Amazon.
3. You forward the order to drop shipper.
4. The drop ship company completes the order and ships it to your customer.
5. You keep the profit
Sounds easy. But if it was the simple everyone would be doing it. There are a few problems that can get in the way:
1) Wasting time on money on saturated products and bogus wholesalers – the internet is now awash with websites posing as wholesalers when all they are is middlemen. These middlemen will claim to be offering wholesale prices when in fact the goods they are offering are available elsewhere for less, making it almost impossible to sell them yourself for a profit. These middlemen are normally who’ll appear when doing a basic Google search for wholesalers, and buying from them is a common newbie mistake.
2) No differentiation from Amazon or eBay – It is going to be impossible to compete with Amazon or eBay on price. Instead you have to find a way to differentiate your website so that it gives people a reason to buy from you rather than hunt for cheaper prices elsewhere. This means creating a website that offers added value to buyers. This could include advice on how to use the product, buyers guides, how to videos or a membership section. To be successful in dropshipping you need to go beyond simply putting up an out of the box e-commerce website and hope for the best. You have to go that extra yard to attract buyers and keep them on your website.
3) Inventory of a dropshipper gets sold out after a customer has placed an order – Even once you’ve been able to get people onto your website and buying, you can face the disaster of customers placing orders and paying money only for dropshippers to run out of inventory. This can happen when sourcing from dropshippers who don’t stock enough inventory or you haven’t managed your ordering system properly.
4) Unable to make a profit – While it is possible to earn $1000s every week running a dropshipping business from home, profit margins can be razor thin. You have to ensure you’re selling products there’s a market for and not selling in markets that are saturated or dominated by the big retailers with massive buying power. What’s more, if you decide to stock products on Amazon or eBay you will have to hand over a healthy slice of profits along with PayPal fees and postage costs (which your competitors might be offering for free). You have to get your sums right otherwise you could be struggling to make a profit from day one.
Setup your own drop shipping website to avoid third party listing fees
Possibly the best way of making a decent income running a work from home drop shipping business is to setup a website through which people order directly. This avoids eBay’s listing fees and means you can automate much of the process. The drawback is you first have to setup a website and then attract traffic through the search engines, which takes time.
Getting a high ranking in the search engines so customers can find you takes hard work, perseverance and a fair amount of internet marketing know-how. So all in all, work from home drop shipping businesses aren’t a scam, but it takes a lot of hard work to earn the $100s or $1000s you might be hoping for.
Learn from a dropshipper with 10 years experience
As you can see, there are many challenges and pitfalls to launching a successful drop shipping business. In fact, the majority of ecommerce websites fail to make a profit because of the challenges of avoiding middlemen posing as wholesalers, sourcing products people are buying at the right price and then attracting people to your website, or eBay/Amazon listing, to make enough sales.
When launching a home based business working on the internet with so many pitfalls to avoid, I find the best strategy is to learn from someone that’s already done it successfully. Allan Morgan has been running a dropshipping business for over 10 years, going from a struggling ecommerce website owner to a dropshipping juggernaut making over $10k per month. He’s created a guide on how to build a business like his called Drop Shipping 4 Idiots. It includes step by step tutorials, an easy to follow business plan and software for setting up your own ecommerce drop shipping website. Some of the information it provides includes a list of 300 reputable and legitimate drop shipping suppliers (so you can avoid bogus middlemen), guidance on how to avoid running out of stock, where to list and sell your products and the secrets to being successful on Amazon and eBay.
Drop Shipping 4 Idiots enables you to avoid all the pitfalls and mistakes newbie dropshippers make, which can cost huge amounts of time and money. Instead you can fast track your route to success and get a dropshipping business up and running successfully for less than $50. What’s more, the guide is sold with a 60 day money back guarantee, so you can give it a try and if it’s not for you then you can ask for your money back and look for a more appropriate home based business opportunity elsewhere.
Disclaimer – The links in this article to Drop Shipping 4 Idiots are affiliate links. However, I wouldn’t recommend the guide unless it had received positive feedback and can help you to avoid the mistakes made by the majority of people when starting out in dropshipping. If you can imagine how much an hour of Allan Morgan’s time would cost, less than $50 is a bargain to get his expert advice on becoming a successful and profitable drop shipper.
Originally posted 2012-01-03 18:37:20. Republished by Blog Post Promoter