Making millions through dropshipping profitability: dream or reality?

"Make gigantic margins with dropshipping!", "Become rich in a few months, without leaving the house with dropshipping!", "Dropshipping allowed me to work when I wanted, as much as I wanted, and pay for this superb seaside villa!". So many ultra-positive sentences about the business model that is dropshipping! But what to believe: does dropshipping really allow you to earn millions with a minimum input of work? And more reasonably, is it profitable?

By
Julie Ribeiro
Created
July 21, 2020
Modified
July 22, 2020

Many dropshippers and dropshipping trainers claim to make sales worthy of the biggest millionaires. But in France, as elsewhere in the world, the turnover of dropshipping seems to remain lower than that of traditional e-commerce.

So, is dropshipping more than just a springboard into the world of e-commerce?

Before starting dropshipping: what are the costs involved?

In theory, dropshipping means you don't have to bear the costs of logistics, stock management, delivery, etc. 

However, in the reality of its application, dropshipping can be costly in other respects, including: 

  • The management of the online shop or the account on an e-commerce platform
  • Advertising on social networks
  • The boost of a too-low conversion rate

If you are hesitant about dropshipping the outcome can be simple: if the total amount of commissions you collect is less than or equal to your business expenses, then no. Dropshipping is not going to be profitable for you.

In reality, dropshipping is not as simple as some dropshippers claim. Before you start, or in order to take stock of your business, it may be essential to take a close look at all your expenses and income to find out whether dropshipping will really be profitable. Not sure where to start? That's what we're here for! 

Create a dropshipping website 

What attracts entrepreneurs to dropshipping the most is the freedom from logistical burdens. With that said, dropshipping still requires a small investment.

Let's take the hypothesis that you want to sell one of the flagship dropshipping products in 2019: a pocket translator, that small electronic object that translates instantly, without an internet connection. Todo so, you need a place to sell it, an attractive spot.

The creation of a shop website on the internet

From the very beginning of your business, you can invest in the creation of a dropshipping e-commerce shop in your name.

Today, creating an e-commerce site can take only a few hours and cost a small amount of money. You will probably have to pay a few dozen euros to get a hosting provider.

You can directly go through Shopify, the king of dropshipping, which is a fully automated site, to guide you in the creation of a site that suits you. All you have to do is pay a subscription fee and follow the steps by selecting the backgrounds and themes that best suit your brand image!

There are many themes on Shopify to suit the style of your business. Light, dark, sleek, stylish ... there's a theme for everyone. 

Not forgetting that there are even simpler solutions than managing a website, to get started in dropshipping. 

Subscription on a dropshipping commerce platform

As far as dropshipping is concerned, it is possible to launch a sales platform. Some examples include Shopify, Prestashop, and Woocommerce--there is a whole panel of them, you just have to choose the one that suits you!

On Oberlo (little sister of Shopify) or Dropizi (French dropshipping platform), all the steps are carefully listed. So much so that in less than 2 hours, you can launch your own dropshipping site!

The significant advantage of using platforms, in addition to their free and accessible nature, is the prospects for development. Indeed, to stand out from your competitors on a platform, you can invest more money in order to have access to particular plugins.

In terms of support, these platforms allow you to select the right e-commerce provider to sell even more pocket translators.Depending on the reputation and opinions of the suppliers, the platforms offer you the wholesaler that best meets your expectations. A straightforward path, for a few dozen euros!

Bigblue tips: When you start your dropshipping business, sales will be slow in the beginning. We advise you to immediately reinvest what you earn in maintaining and improving your site or account on the platform.

Manage the end customer and user experience

When a product is present on several dropshipping sites, it is necessary to stand out from the competition.

As a dropshipper, make sure that customers want to buy pocket translators on your site, not someone else's site, even if the product is exactly the same. Think marketing strategy and customer acquisition!

The constraints of managing a dropshipping site

While getting into dropshipping is greatly facilitated by platforms, it still requires some maintenance.

As a dropshipper, it is your responsibility to put products online, like the new Pocket Translators you just received, and to promote them while managing orders.

This means that after-sales service is up to you, not your supplier. And since it costs 7 times less to retain a customer than it does to attract a new one, it is better to make your customers want to recommend you!

Even if you don't have to take care of the delivery, it's up to you to manage the returns if customers use their 14-day right of withdrawal, for all orders within the European Union.

Between the setting online, the maintenance of the site and the after-sales service, the management of a dropshipping site becomes immediately more energy consuming. But that's not all, as marketing is also part of your responsibility!

The increase in conversion rate with SEO

When it comes to conversion rates, the platforms are pulling ahead. While Shopify has a conversion rate of around 1-2% (depending on dropshippers), Amazon's low average is around 10%.

No matter which platform you choose, boosting your site's SEO will always attract customers. Indeed, SEO (Search EngineOptimization) is a complicated art which requires special involvement and mastery. 

Take the time to train yourself in SEO and create a great web marketing strategy. Keyword search, image optimization, ergonomic UX, netlinking... Many dropshippers abandon SEO without waiting for results.

SEO is useful for writing the product sheet of your pocket translators. All your words should be chosen with care. You should use a consistent semantic field: "instant translator", "translation application", "direct translation" or "available in all languages".

That way, the search engine will take you to the top of the search results page! 

SEA optimization to get ahead of the competition

Where SEO works over time, paid referencing (SEA orSearch Engine Advertising) is a real springboard for popularity.

To be sure to be THE most popular dropshipping site, you have to secure your place at the top of the search results. To do so, try to buy the main keyword of the item you are selling on Google AdWords. For example, buy "pocket translator" for a limited time. Buying a main keyword, coupled with a good natural SEO = an explosive cocktail!

From more of a marketing point of view, customer acquisition can be done through targeted publications or retargeting. On social networks with Facebook Ads or on search engines with Google Ads advertising banners.

Paid referencing and sponsored advertising can greatly increase your traffic, and therefore your conversion rate. Be aware of this small downside however--with the rise of dropshipping, the cost of advertising explodes year after year.

Bigblue tips: Before you start dropshipping, it's best to take the time to learn the ins and outs. Not only about what dropshipping involves, but also about natural search engine optimization and after-sales service techniques.

Improving your traffic and conversion rate is one of the most complicated parts of dropshipping, and it's not innate. You have to play by the rules of the search engine and according to customer requirements if you want to attract internet users!

Advantages and disadvantages of dropshipping compared to traditional e-commerce

Getting into the dropshipping business is quite simple. But at the end of the day, is dropshipping better than traditional e-commerce?

In theory, dropshippers can focus fully on marketing since the logistics management is the responsibility of the supplier. This is true for the vast majority of cases. However, the reality can be very different. In case of a problem, your customer will not send his pocket translator back to the supplier. He will send it back to YOU, even if you did not initiate the delivery. This means that you may end up with a stock on your hands. And it will be up to you to manage the cost of returning or reselling the product. 

Moreover, the dropshipper is only a "reseller". This means that, in contrast to traditional e-commerce, he only has a choice of certain product categories. He cannot therefore sell items that standout, such as a pocket translator that cannot be found on the market. As a result, competition as a dropshipper is quite strong, whether in a niche or general market. Where the average e-merchant can compensate with originality, the dropshipper has to use pure marketing techniques to stand out. And this can seem quite redundant in the long run.

Finally, a dropshipper and its wholesaler are interdependent. So, it's a double-edged sword: if you select a supplier with whom you have a good relationship, that's great news! You can then negotiate purchase price. Otherwise, your dropshipping business may suffer. And unlike traditional e-commerce, it can be difficult to go elsewhere.

Bigblue tips: To make sure you can delegate the logistics burden without any unpleasant surprises, there is an e-commerce solution which does not need to do dropshipping: go through a logistician! An expert in the field of deliveries, returns and shipments, a logistics specialist knows the regulations of international logistics can takeout the thorn in your side.

That way, you can focus all your energy on the purely marketing dimension of your dropshipping site, as well as on optimizing your brand image!

How would you like to make money with dropshipping?

Dropshipping is a business model that can be profitable in the long term. But from there to making a fortune from your couch, there's a whole world out there!

Some people say that dropshipping has stopped working since 2014. In reality, with the increase in the number of suppliers and dropshippers, the rules of the game have simply changed. 

Today, dropshipping is a solution that allows you to get started in the world of e-commerce, but it requires more work. Indeed, a dropshipper must invest and find the means to boost his conversion rate.

If a dropshipping site is not properly maintained, the expenses will soon exceed the commissions earned, and the business will no longer be profitable.

Want to give it a try? Here are 3 mistakes you should avoid making when starting a dropshipping e-commerce website:

  • Don't believe everything you hear, and don't think you're going to make a fortune doing nothing: dropshipping takes work and patience.
  • Don't think that you are exempt from involvement in the logistics side: whether it is for returns, customs or delivery charges, you may always have to do some logistics management in one way or another.
  • Don't lower the selling prices of products: if you do this in order to attract more customers, remember that it will lower your margin rate at the same time. So, you have to find a middle ground, the profitable price.

So, before you start, ask yourself: are you organized and motivated enough?

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Everything you need to know about dropshipping in 5 minutes!
Julie Ribeiro
Marketing specialist and content writer at Bigblue.
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