I’ve been experimenting with dropshipping lately and so far, I’ve liked these projects a lot.
Based on my experience, I’ll be putting together a series of posts that discuss various dropshipping aspects.
The first thing I’d like to talk about is whether you should be setting up an Amazon dropshipping business, an eBay store or your own ecommerce website.
My opinion is that to be a successful dropshipper, you need to have your own website.
In this guide, I’ll try to answer several important questions, the first one being whether dropshipping is still worth giving a try to in the end of 2019 or 2020.
- Dropshipping Business Opportunities: Are They Still Worth Exploring in 2020?
- Setting Up an Amazon Dropshipping Business: Pros and Cons
- Starting a Dropshipping Business on eBay: The Good and the Bad
- eBay and Amazon Dropshipping Business Strengths and Weaknesses Summarized
- Why I Believe Launching Your Own Dropshipping Website Is the Way to Go
- What You Need to Launch Your Dropshipping Website
Dropshipping Business Opportunities: Are They Still Worth Exploring in 2020?
I believe that the dropshipping model will continue growing in the years to come because of the convenience that it provides. This doesn’t necessarily mean that getting started would be easy. After all, the field already has a relatively big number of well-established players.
In one of the coming guides, I will take a look at the different niches, different products and how to pinpoint the ones that can be potentially profitable.
This is the number one consideration for making your online shop stand out and bring in revenue.
Speaking in general terms, however, dropshipping is still worth giving a try to in 2020 and beyond. Whether you’d be setting up an Amazon dropshipping business or you’d be starting a dropshipping business on eBay, you should definitely explore the business model.
Let’s take a look at some numbers that shed a lot of light on the massive growth potential of this business model:
- The dropshipping fulfilment model is the one used by 33 percent of all online stores right now
- In 2017, dropshipping sales amounted to 85.1 billion dollars
- In the US alone, the retail ecommerce market is worth 220 billion dollars and it is expanding at a CAGR of 17 percent
- Dropshipping has been around for some time – back in 2012, dropshipping accounted for 34 percent of product sales on Amazon
You don’t need to be wondering how to start a dropshipping business. Just choose the right niche and the way in which you’re going to sell. You will not be dealing with the purchase of wholesale products, finding storage, shipping and returns. All of these facilitations make dropshipping super attractive and you’ll be surprised to find out just how many ecommerce websites employ the model.
Obviously, the above paragraph is a gross oversimplification. The aim is to simply give you an idea of how simple dropshipping is in comparison to launching a standard ecommerce website.
Which brings us to the big question we’re trying to answer today – which platform should you be using to sell products?
The three most prominent options include Amazon dropshipping, eBay dropshipping and launching your own website. Let’s check out the specifics of each.
Setting Up an Amazon Dropshipping Business: Pros and Cons
If you choose to pursue the easiest dropship business opportunities, Amazon and eBay will top the list.
The pros and cons of dropshipping on Amazon are numerous.
Some of the key advantages are:
- You don’t need to work on a website, start selling immediately: that’s an obvious advantage if you want to begin earning asap, isn’t it? Amazon gives you the platform required to immediately offer dropshipped products to the world. You’ll only have to take care of the descriptions, building your reputation and online market.
- It’s Amazon we’re talking about: does Amazon really need a presentation? It’s a massive marketplace with a well-established clientele. You get access to tools and to potential buyers that you’ll probably never ensure exposure to on your own.
- A very low risk way to start your business: while launching your own website is inexpensive, you will still need to spend some money on the setup. You’ll also have to handle marketing and SEO. Amazon provides a much more low-risk opportunity for setting up your dropshipping business. This is one of the ways to launch an online business without spending on it, which is an excellent idea for testing out the dropshipping concept.
- There’s a well-established Amazon dropshipping policy: you get pretty clear Amazon instructions about what you can and cannot do as a dropshipper on Amazon. These guidelines provide a lot of clarity and simplify the initial steps.
- All other benefits of dropshipping: dropshipping on any platform provides a ton of benefits. An Amazon dropshipping business makes it possible to sell just about any product under the sun. you will also be free from having to worry about fulfilment and the linked costs.
All of this is great but an Amazon dropshipping business isn’t without some weaknesses of its own:
- Waiting periods before getting paid: their platform, their rules. Amazon will hold your money for two weeks before you receive the payout. This means that you will not receive your income the moment someone buys a product. You will still be responsible for making the payment to the supplier and you’ll receive your compensation later on.
- Amazon fees: there are fees you have to pay for using the platform. Thus, you’ll face problems if you try to sell low margin products. Alternatively, you’ll have to hike the price, which can reduce your ability to generate sales.
- You can’t sell products from other online retailers: Amazon doesn’t allow you to dropship products that come directly from a competing online retailer. Thus, if you’re thinking about selling AliExpress products, Amazon is not the platform for you. If you are ever found of violating the regulation, you will have your account terminated.
- Massive competition: I did check a random product manufactured in China on Amazon. It was being offered by dozens of entities. You’ll face some incredibly stiff competition and if you don’t have a well-established reputation already, you may find it impossible to build a sensible online presence.
- FBA builds credibility: fulfilment by Amazon (FBA) and seller fulfilment prime (SFP) are essential for growing your Amazon credibility. To use these, you could be buying bulk and using FBA but this way, things become more complicated.
Starting a Dropshipping Business on eBay: The Good and the Bad
Let’s take a look at the next possibility and another online retail giant – eBay,
Starting a dropshipping business on eBay is actually the method that many of the successful dropshippers employer in the very beginning (and are still relying on today).
Just like in the case of exploring the Amazon dropshipping business, let’s see what’s good and what’s bad about using eBay as your platform:
- Access to a massive audience: just like Amazon, eBay gives you access to a massive pool of potential customers that you may find impossible to attract on your own.
- Easy to get started: once again, the benefit is the same as in the case of Amazon. You don’t need to build your website and you don’t need to worry about SEO when getting started with dropshipping on eBay. Once you choose the niche and the products, you’re good to go.
- You can build an excellent reputation: eBay has a system in place to protect both buyers and sellers. Once a transaction is completed, a buyer can give you a positive or a negative rating. Positive ratings build your reputation quickly and increase the likelihood of generating more sales in the future.
Now for the negatives of eBay dropshipping:
- Even more serious competition than on Amazon: yep, things can get really fierce when you’re trying to start from scratch on this platform. Unless you discover a really cool and niche dropshipping supplier that only a few other sellers are relying on, there will be tens of people trying to sell the same stuff you’re attempting to market to potential clients.
- Selling limit: newbies on eBay are limited by a selling limit. This limit will apply to starting a dropshipping business on eBay and it can curb rapid growth in the beginning. The aim of this limit is to protect the eBay clients but the rule does work against you.
- The eBay fees: just like Amazon, eBay makes money because it gives you access to a developed and fully-functional platform. You will have to take the fees in consideration when determining product pricing policies.
- No customization for a higher degree of relevance: eBay gives you the tools and the graphics that everybody else has access to. There’s simply no opportunity for setting your business apart and making your products stand out.
eBay and Amazon Dropshipping Business Strengths and Weaknesses Summarized
So, let’s sum it up – Amazon and eBay are good platforms for dropshipping because they are well-established and they reach millions (billions???) of people across the globe. You don’t have to worry about any startup costs and you can test out dropshipping immediately.
On the downside, you have to pay fees and you have no control over the buyer experience.
I believe that the biggest advantage of starting a dropshipping business is the flexibility and the freedom. When you choose large platforms with their own rules for your sales, you are giving up some of the freedom.
Launching your own dropshipping website costs some money but ultimately, doing business on Amazon and eBay can prove to be more expensive in the long run.
Why I Believe Launching Your Own Dropshipping Website Is the Way to Go
Out of all dropship business opportunities, launching your own website is the choice that gives you the most freedom and the highest level of scalability.
Needless to say, this method of doing business has its pros and its cons. Let’s take a look at those before examining what it takes to put together an ecommerce website.
The benefits of launching your own dropshipping website include:
- Freedom and scalability: nobody can limit your ability to sell specific products, to add new items to your store and to reach the audience that’s best targeted. You have all the freedom in the world to build the business in the way you want to.
- Differentiating yourself and building a brand: a website is an important part of your online identity. It’s one of the branding components that can help you stand out. You will need time to make the brand recognizable but the results will be much better than in the case of using Amazon or eBay dropshipping.
- Many platforms to choose among: I’ll take a deeper look at this benefit in the next section but you have the freedom to choose the ecommerce platform you feel most comfortable with. You can build your website on WordPress, using WooCommerce, you can use Shopify or BigCommerce. These platforms give you access to powerful tools and they’re not incredibly expensive.
- Marketing and SEO freedom: if you have some knowledge and experience in the fields of marketing and SEO, building your own dropshipping website is the way to go.
- Pricing decision freedom: there will be no fees and additional charges that you have to pay each time you make a sale. Thus, you can ensure competitive product pricing to attract new customers and build a loyal clientele.
- It still is relatively inexpensive: a web-based business requires minimal investment in comparison to a brick-and-mortar store. Even if you pay for design and website development, you will still need a small sum to get started.
Launching a dropshipping business on your own, however, is not for everyone. Here are the downsides:
- A ton of hard work is required: when launching your own website, you don’t have access to the Amazon and the eBay marketing/SEO tools. You will have to write product descriptions, engage in promotion and do a stellar job in terms of customer relationship management. Dropshipping requires hard work and many of those who give up underestimate the effort required.
- No control over delivery and product quality: you have no control over product delivery – your dropshipping partner will be responsible for that. In the beginning, you also have no guarantees of product quality. Once you begin receiving feedback from your clients, you’ll have a much better idea of the products worth selling and the ones that miss the mark.
- There is a lot of competition: once again, there will be a ton of competition. You will need to differentiate your online store and create added value for your clients (through quality content creation or regular discount campaigns, for example).
- More time will be needed to start earning money: because you don’t have a huge retail platform behind your back, you will potentially need more time to start selling and making money.
What You Need to Launch Your Dropshipping Website
I will give you a more thorough overview of how to start a dropshipping business in one of the coming articles on the topic.
For the time being, we’ll take a look at the essentials you will need to acquire to put together your own website.
While an Amazon dropshipping business or selling stuff on eBay will be really inexpensive, there are limited expenses when it comes to launching your own ecommerce website.
You will have to spend money on several things.
The first one is the right domain. A good domain is a part of your branding efforts, which is why you have to dedicate some time to researching suitable names.
GoDaddy is one of the good choices for cheap domain name registration. Currently, you can get a .com domain for 4.99 dollars for the first year. A free month of the GoDaddy website builder is also included in the deal. You can check out available domains here.
If you choose a WordPress-based website, you’ll also need to spend some money on hosting. The large ecommerce platforms like BigCommerce and Shopify have hosting included in the cost of the monthly package.
WordPress, however, gives you access to the free of charge WooCommerce. WooCommerce is an ecommerce plugin that’s ideal for building all kinds of online shops. It works with many other WordPress plugins and add-ons, making it very easy to customize your online store.
I personally prefer BigCommerce and in my opinion, this platform offers the best price to quality ratio.
BigCommerce allows you to build your own online shop (a domain name will still be required) and you can use it to manage the multi-channel presence of your online business (on Facebook, Amazon, eBay, Instagram, other social channels).
The BigCommerce monthly packages start at 29.95 dollars per month. The package includes zero transactional fees, unlimited products, a branded online store, eBay and Amazon selling, responsive website design, marketing tools like discount coupons, professional reporting and analytics, the ability to launch a blog, SEO tools, third-party payment tool integration and many others.
Shopify packages start at 29 dollars per month and just like BigCommerce, the platform does offer free hosting. The other tools included in the least expensive package include unlimited products, a free SSL certificate, marketing tools, SEO tools, favorable online credit card rates and third-party payment service integration and access to the Shopify POS app.
Other essentials you should consider to set up your dropshipping website include:
- The right design theme
- Customizing the design template to address your specific needs
- SEO and copywriting services if you don’t have the knowledge or experience
- Special dropshipping plugins (these are usually premium and available for a monthly fee) that will make order management easier
- A marketing budget
- The cost of setting up a company if you already don’t have one (registration fees, administrative costs, etc.)
I believe that a few hundred dollars will be sufficient to launch your dropshipping website, which is a negligible investment for launching a business.
If you want to enjoy the freedom to grow and a lot of flexibility, launching a dropshipping website will be the way to go. Obviously, you can do that and also sell on eBay or Amazon. In the beginning, however, managing all of these channels may prove to be overwhelming. An Amazon dropshipping business or testing out eBay could give you the knowledge to move on to your website. Complete newbies and those who are somewhat reluctant to invest should absolutely give an Amazong dropshipping business or starting on eBay a try!
What do you think about the best dropshipping platform out there and do you agree with my opinion? Don’t hesitate to share your ideas and experiences with me in the comments below!