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Ecommerce: The Full Guide to Dropshipping Part 1

For the most part, I spend quite a bit of time on this blog talking about digital marketing. Though I feel as if digital marketing is the most efficient, and by far the easiest method for making money online, I can’t deny that there are other (very bankable) methods for earning an income from the online world that doesn’t involve digital products.

In 2007, a book by the name of, The 4 Hour Workweek, was introduced to the world. The author provided insight into how he was able to create a vast amount of money while traveling the world, and only working a few hours a day; which is a dream for most.

The method used to procure this freedom? Dropshipping physical goods.

Dropshipping is a form of automation that allows you to sell physical products on your website while having a third party actually fulfill the order for a lowered price, allowing you to pocket the difference.

Within the United States alone, Ecommerce sales hit approximately $262 billion in 2013.This is a jump of 13.4% from $231 billion in 2012. What does this mean exactly? More retailers are taking to the web to purchase their much needed goods than ever before.

There is A LOT of money to be had, but it takes a bit of knowhow and ingenuity in order to turn your online habits into a fully fledged business. More and more people are realizing that dropshipping is an incredibly lucrative option for e-retailers.

What’s not to like about it? A person can make a fortune from the comfort of their own home, selling merchandise, without ever having to handle a piece of product.

Sounds easy right? Not exactly. Unfortunately, 85% of all new businesses fail miserably within the first year.

The majority of people turn to dropshipping in the hopes that it will bring instant riches, when in reality; there is a lot of work required, just like any business. I have created this guide in hopes of showing you exactly what to expect so that you do not become a statistic.

Over the next couple of days, I will be going into great detail about everything from pricing to properly dealing with oversea sources in order to keep your businesses as safe and as profitable as possible.

Choosing Your Market

Prior to even thinking about narrowing your search down to specific products, one should first research a designated market. In 2013, the most profitable market included;

  • Apparel and Accessories / Clothing (this was the highest grossing industry)
  • Computer and Electronics
  • Jewelry
  • Health and Beauty
  • Home and Garden
  • Toys and Hobbies
  • Baby Clothes
  • Gaming
  • Books, Music, and Video

Though it is not 100% necessary to focus on one of the market, it would be highly beneficial as they are proven performers and a necessity for most.

Choosing A Niche Within Your Market

Say you decided to choose to sell Apparel. You wouldn’t just open up a store that sold any old apparel, as you would get crushed by every major corporation that spends millions in advertising to sell apparel online. Instead, it’s important to dig further into your market in order to find a niche. This is an area within your chosen market that has a need, but few competitors that are fulfilling that need.

A common mistake e-tailers make, is to narrow their search to a niche that they are the most familiar with. However, just because you are interested in this area, does not mean that there is a high demand for it.

Now it is time to roll your sleeves up and do some REAL research. There is no single way to find a niche or to determine what will sell and what won’t. Here are several options that will help you on your way;

Find out what is selling within your market on popular shopping sites such as Ebay and Amazon.

You don’t necessarily need to sell a specific product that is listed, but these listings will give you an idea of what is making money and what isn’t.

Ebay no longer offers tools to truly analyze what the best sellers are. Most likely because this was abused as e-tailers would flock to see what was selling and attempt to jump on the bandwagon, forcing that specific market to become saturated rather quickly, and angering top retailers.

Luckily, they do offer an area of their site known as Popular.Ebay.com. This shows products that are currently trending within a selected niche. At the time of writing this article, it is rather warm outside; so naturally, there are a ton of listings for sunglasses that are showing as “trending”.

This may entice some people to look into selling sunglasses in their dropship store. Unfortunately, sunglasses are seasonal, so for many e-tailers, this may not be the best option for their store as profits will drop significantly 6 months out of the year.

Amazon offers its top sellers listing. It also allows you to narrow your search to items that are increasing in popularity, top rated products, and most wished for products within a given niche.

There is another lesser known feature that Amazon has that allows you to see what people are searching for. The top search bar is similar to Google, so if you’ve narrowed your search down to a few products or brands, begin typing the first few letters into the search function.

The search function will attempt to finish your search query and give you the top searched for terms that fit that spelling.

For instance, I typed in the word “coconut” into the search function. Before I could click for the search to begin, Amazon showed me a list of words that fit. The top listing was “coconut oil”. This shows me that coconut oil is the most searched for word for coconut products.

What to keep an eye out for?

– What is Hot within your market?

– What is the need within your market? Is there a need that consumers have that is not being fullfilled?

– Do these “Hot” items require accessories? Looking at accessories will not only help further your search for a specific niche, but may offer opportunities to sell multiple products per customer (which equates to more profit $$$$

– What are the price points of these items? In the later articles of this series, we will analyze price a bit further, but it is necessary to begin thinking about the estimated profit margin would be per item. If a product only sells for $3, it would take A LOT of sales to create enough revenue to even be worth it.

Get ready for part 2 of our series as we dig even further into our search for a solid product to find using Google’s tool’s, analyzing competitors, and various risk factors that kill e-commerce profits instantly.

 

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About Sean Donahoe

Sean is one of the most recognized industry leaders in business and marketing. As a popular speaker, author, consultant he has helped over 50,000 students world wide find success in their businesses and has consulted with Fortune 500 companies and businesses of every size grow and thrive...

3 comments

  1. Sean Again you put out Another great post! Ecommerce is one of the best ways to make a good living online. Other then List building and building your own products. I really liked this article.

    All The Best
    Edward

  2. Great post Sean, Many people under estimate the earns that can be made with eBay and Amazon. I found it’s a question of learning how the system works. Many people earn 5 and 6 figure on eBay and Amazon. But you need to be careful using drop shipping on either, make sure the companies you use can deliver and keep you up to date on there stock, or you’ll soon find your business shut down.

  3. HI Sean, Just wanted to point out the obvious, and say, you have one of the nicest looking blog sites around. Wondered if might share with me what style theme you started with or did you make her from scratch? Thanks my good man.

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