What is a Dropshipping Website?

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Curious to learn more about Dropshipping Websites? Then this is the guide for you.

What is a Dropshipping Website? What is Dropshipping? How is it different from Affiliate Marketing? These are all great questions, and one you might already be asking depending on your level of expertise in the online world.

dropshipping

Before we get into all that, introductions are in order! My name is Tyson and I’ll be your guide for today’s article. I am but a simple Affiliate Marketer and a student of many things related to Advertising and Marketing on the internet.

You may remember me from such guides as How To Become An Amazon Associate and How To Use Clickbank, as well as a number of other product reviews here at MHGS.

Today however, we’ll be covering all things related to Dropshipping and at the end of the article I’ll leave some links to some great learning tools that will teach you how to use methods like Dropshipping to start a business from home!

Thank you for your patience, now let’s get right into it!


What Is Dropshipping?dropshipping 2

To begin, there are 3 main components that make up the Dropshipping formula:

– The Supplier

– The Customer

– The Merchant, or Seller (You)

Dropshipping is a business model that allows a Merchant to be able to sell goods online (from a website, as an example) without having to carry or maintain any of the stock.

Basically, as a Merchant/Seller, you are not required to own any of the stock that you’re advertising, and are only required to purchase items as a result of your customer making purchases at your “store”.

So a customer comes to your online shop, picks a couple items they like, and makes a transaction right there on the website. Your job as the merchant is to order those items from the supplier, and have them shipped to the customer’s address.

Bingo! You make commission off the products, the supplier gets their money, and the customer happily awaits their recently purchased goods to come in the mail.

Pretty easy, right?


Pros and Cons of Dropshipping

Here we’ll go over some of the ups and downs regarding this business model.

Positives:

– Doesn’t require much money to get started

– Doesn’t require you to own physical products

– Can be done easily with limited technical knowledge

– Insane selection of products you can sell

– Can be managed from anywhere, as long as you have internet access

– All shipping and inventory needs to be taken care of by the Supplier

As you can see there’s plenty of positive reasons to get into dropshipping – certainly more than I’ve listed here. Being able to start a Dropshipping business with only a few dollars and some free time is a huge plus in my books, as the potential to earn money over time is amazing.

And of course, being able to work from anywhere is a very attractive feature of online work. And selling only the things you want to sell is nice too, as you are the boss now.

Negatives:

– Typically, profits are small per purchase

– Inventory Management left to the Supplier

– Some Customer Service is required

– Must keep products up-to-date on the store

– Supplier mistakes sometimes cause grief for the store

First I’ll discuss the lower profit margins – lower in comparison to business models like Affiliate Marketing, for example. In order for you to successfully sell products and still make a commission, you have to find a healthy balance in setting the prices. Too low, and you won’t make a profit. Too high and you won’t be making any sales.

In the competitive world of online shopping, you’ll want to set the prices low enough that people will want to buy, but high enough for you to make a reasonable commission. It’ll vary per item, but using a formula like Supplier Price + 15% for your markup gives you a good starting place at least.

Inventory Management and distribution is up the Supplier, which is a good thing for the most part, but you have to be able to trust that they’ll be on the ball with this stuff. If a Supplier is not updating their inventory properly, it make cause ripples on your end – like a customer purchasing an item that is out of stock.

It would be nice to not be blamed for someone else’s mistakes, but the customer will likely still blame the store as they generally have little to no interactions with the Supplier.

That brings us to another good point – customer service. As the store manager, you’ll also be in charge of dealing with customer service issues and responding to messages. Of course, you can outsource tasks like that, but in the beginning you might not have that kind of capital to throw around just yet.


Why Create a Dropshipping Website?

Because it’s a very low cost business model with minimal work to maintain once you’ve got it up and running. You stand to make a lot of sales, and in turn a lot of profits in the long run.

Is it foolproof? No, nothing in business is perfect or even 100% secure, otherwise everyone would be doing it, haha.

But the reality is, a lot of people have benefited greatly from Dropshipping businesses over the years, a couple of my colleagues even swear it’s their number one pick for making money online. I respect their opinions, and the sales numbers they have to show for it, too.

If you do any online shopping outside of places like Amazon, there’s a good chance you’ve even made a purchase from a Dropshipping business. They’re becoming more common all the time, because they work.

Would I recommend getting into Dropshipping?

Yes absolutely, if it’s a business model that interests you then I’d say you’re barking up a very good tree. I’ve recently attended a few training classes for Dropshipping myself and am looking forward to setting up a unique storefront based on these new ideas presented to me.


Dropshipping vs Affiliate Marketing

I figured this would be an important subject to touch on as we’re all about learning how to make money from home here at MHGS, and Affiliate Marketing is always a popular topic here.

I’ll list a few of the concepts of each model, and how they differ in a straightforward manner:

Who sets the prices?

Dropshipping – The Merchant (you) sets the prices and therefore determines what cut you’ll be making from each sale.

Affiliate Marketing – You earn a fixed percentage of the sale as commission, already established by the Supplier.

Who handles the transactions?

Dropshipping – Typically the Merchant does right on their online store.

Affiliate Marketing – The website that you refer the customer to takes the transaction.

Do you have to carry and manage the products?

Dropshipping – No, the Supplier looks after all the inventory.

Affiliate Marketing – No, you just have to promote the products and refer potential customers.

Who handles the customer information?

Dropshipping – You, as the Merchant, handles the customer purchase and shipping info.

Affiliate marketing – The storefront that you refer customers to takes care of all that information.

Is it expensive to get started?

Dropshipping – No, not at all.

Affiliate Marketing – Nope, and it’s free to get started.

As you can see, the two business models definitely have some overlap in the process but are unique enough in their own ways. As it stands, most of my personal experience has been with Affiliate Marketing but I can definitely see how creating a Dropshipping business can be a very lucrative opportunity as well.


Where Can I Learn More About Dropshipping?

Though there’s certainly plenty of guides on the internet right now, it can be hard to find a decent and trustworthy course that can teach you everything you need to know about Dropshipping.

If you’re looking for strictly a Free Tutorial and don’t mind doing a bit of digging, there’s always sites like YouTube that offer scraps of information here and there. I believe Shopify also has some basic guides that provide more knowledge on the subject.

If you prefer a more complete and formal education on subjects like Dropshipping, Affiliate Marketing, and working from home in general, you should check out my Wealthy Affiliate Review. It’s the best place to learn how to make money on the internet, and though it requires a monthly subscription, it’s completely Free to get started.


Conclusion

As you can see, Dropshipping overall is a pretty easy to understand and low-risk business model. The freedom and flexibility it provides makes it a very good opportunity for those seeking to make money working abroad, or just ditch their 9-5 job and start a business from home.

But as usual, a business is only going to be as successful as you can make it. So you still have to do some work to make those profits! Don’t let anyone try to tell you otherwise.

And that about wraps up another lesson here at MHGS, and thank you all for joining me here today!

As always, I invite you to drop a comment down below if you have anything you’d like to share regarding Dropshipping, Affiliate Marketing, or any other subject really. We’re all about providing education and knowledge here, and every bit counts.

Until next time, take care and I wish you all the success in the world!

Tyson

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