August 21, 2018

#ECxFAQ is a section where I will answer in detail some of the most commonly asked questions from my readers.

If you have thought about starting an online business, one of the most common things you would have thought about doing is drop shipping.

The most attractive part of a drop shipping business is that you do not need to spend money to stock up on inventory. Instead, you send your customer orders to your suppliers and they will help you fulfill your orders.

Though, does this make drop shipping the easiest online business for beginners to get started in?

Here’s what I have to say:

Drop shipping is a method of order fulfillment. The only thing that differentiates drop shipping from a normal online business is that you do not need to keep stock or fulfill the orders yourself.  Your supplier can help you with both.

The rest of the business stays the same. You will still need to set up your store, promote products and do customer service.

The benefit of using drop shipping is that you will not need to save up capital to stock up on inventory. This means you can get started for cheaper than if you had to buy stock.

Other than that, with no inventory, you also will not carry the risk of unsold inventory. If any of the products you promote don’t sell, you can promote another product. This can be a huge advantage for people with limited capital.

But do these advantages mean that drop shipping is the easiest way for beginners to get started with an online business?

To me, other than the benefit of not needing to spend money on inventory, drop shipping is not that much easier to get started with an online business compared with normal online businesses.

You will still need to spend a lot of time and effort in marketing your products and closing sales. In fact, for beginners, this may be the hardest part of all. If you do not know how to get sales, it doesn’t matter that much how easily you can get inventory.

On top of that, you will also be making a lot less money with drop shipping than you would be making by keeping your own inventory. The margin on drop shipping can be anywhere between 8 – 15% only as compared to a possible 20 – 200% margin on inventory you keep yourself.

In conclusion: Drop shipping can help reduce the cost of starting a business. This can be a huge advantage for people who want to get started but have limited capital to stock up on inventory.

But other than a lower starting capital, drop shipping is not the easiest ways to start an online business. You should still expect to work just as hard as a non-drop shipping business if you want to build a sustainable income stream with drop shipping. You would also need to bear with a lower margin.

What do you think? Do you think drop shipping can make it easier for beginners to start an online business?

About the author 

Lu Wee Tang

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  1. Testing
  2. Hi, may i know how to get the dropping suppliers? For example like i would like to sell at Shopee? How to get drop shipping suppliers that willing to help me print out the documents and sen to customers?

  3. Hi Lu Wee,

    I read lots of your post recently and wanting to start my own journey in e-commerce but I am afraid of the unknown. I keep flipping back and forth on drop-shipping and normal business. I have sent an email through your contact us page but not yet receive your reply. Would like to hear some of your opinion:
    1) I have a long-term goal in my e-commerce journey, I have a vision for agriculture field but now, I want to start small. Which option would be a better stepping-stone for me? For drop-shipping, it would be selling things that not related to the field but I know I can gain some marketing experience through it and would not burn too much of my wallet. For e-commerce, it will be building it for a long-haul and a focus-directed business but I do not have experience in it so it might cost me much and fail very easily.

    2) Do you have service in providing mentorship? I hope I can meet up with you to run through my option.

    Hope to hear from you soon. Appreciate your advice.

    Thank you.

    1. Hi Joanne,

      Sorry about not getting back. I didn’t receive your e-mail. I probably need to get that checked. Sure, I’ll be happy to share my opinion on your questions.

      1) Sorry, I’m a bit confused by your questions. Just to clarify, drop shipping is an order fulfillment method for e-commerce businesses. So maybe you mean drop ship e-commerce vs e-commerce for agriculture-related products? If so, I’d say there are challenges for both. For drop shipping, the biggest challenge on top of marketing for your business will be finding good products to sell and finding suppliers who will ship them for you. If you have no experience, you can expect to learn for at least 1 – 3 years to get a better idea of how it’s done.

      As for the e-commerce store for agriculture, I can’t really say because this depends on a lot of factors. If you already have the suppliers and have an idea of the demand, you might have a better shot at this.

      2) I do, but I only offer Skype call mentorships. Let me know if you are interested. I’ll send you an e-mail with more details.

      Hope this clarifies! Let me know if you have further questions.

      Best,
      Lu Wee

  4. Hi Lu Wee,

    Following the info in this post, is there any risk the consumer will just buy directly from the supplier after they came across your marketing work? (assuming supplier have their own e-commerce site)

    After all, a dropshipper will usually sell an item at a higher price to that of supplier for a profit.

    Regards,
    J

    1. Hi Jason,

      This really depends on the channel you are selling on. If let’s say it’s a marketplace like Shopee or Lazada, the chances of supplier competing with you is a lot higher since the barriers to entry are lower. But let’s say you have a successful FB, AdWords, IG, SEO or e-mail marketing campaign, then it will be a lot more challenging for the supplier to compete with you as they are usually not lean enough to invest so much in marketing.

      So I would say that for a drop shipper, marketing skills is the most important skill to have.

      Hope this clarifies.

      Best,
      Lu Wee

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