Dropshipping Within The USA

[RockyRambo]

Hey everyone,

A question here for anyone who is dropshipping using local suppliers (aka not aliexpress).

Im looking to start a dropshipping store using US suppliers, selling to US customers but running it from outside the US as a non US resident.

Ive spent the last month researching all my tax obligations and doing my best to figure out the numbers before throwing my backpack over the fence, incorporating, and getting stuck into it however there's one area im still unsure about.

My biggest concern is that the profit margins will be too slim to work with and i can't get access to wholesaler prices until after ive incorporated and can provide them with an EIN.

Ive been working with the rough estimation that my product cost + shipping will be about 50% of what i can sell the product for (with the rest being adspend and profit) but would love to hear from someone who is currently using US suppliers (not aliexpress) who could give me a rough ratio of their product wholesale cost to product sale price.

Im planning that in the long run i'll have a decent sized email list i can market to, SEO traffic and possibly setup my own private label/fulfillment which will all help increase my profit margin.

Also more of a general question to anyone running a locally fulfilled ecom store (not aliexpress), does my business plan sound reasonable - it will be a niche store selling toddler products and accessories - i sometimes wonder if new stores can compete with Amazon and already established stores in established niches (especially in regards to SEO) - any thoughts?

Thank you everyone

 

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[jpanarra]

FYI,

I'm only saying this because I was in the same shoes as you about a year and half ago. You're not going to exactly find greener grass with dropshipping. It's a oversaturated market based on the barrier to entry, It's easy to build and almost everyone is doing it.

You'll be better off reading through the threads Biophase and Walter Hay made on here about importing and exporting and selling them online. It'll be a bigger captial start up but you won't waste too much time and money once the ball gets rolling.

JP

 

[RockyRambo]

Thanks JP,

Do you mind sharing a bit more about your experience, you've hooked my interest. Did you end up actually dropshipping or just researched?
What sort of product costroduct sale ratio were you getting?

From my experience so far the shopify+aliexpress dropshipping has almost zero barrier to entry but dealing with actual legitimate US wholesalers is a different story, as you'll need to form an llc or ccorp, get an EIN and any relevant Sellers certificates before you can sell their products. This would be straight forward as a US resident but foreigners would also need a US bank account which you can only get in person in a US bank (or Atlas Stripe which isnt cheap). So i think the barriers to entry are there for non US residents definately but no real barriers for a US resident.

Ill do a search and check out some their posts, thanks!

 

[ZeroTo100]

FYI,

I'm only saying this because I was in the same shoes as you about a year and half ago. You're not going to exactly find greener grass with dropshipping. It's a oversaturated market based on the barrier to entry, It's easy to build and almost everyone is doing it.

You'll be better off reading through the threads Biophase and Walter Hay made on here about importing and exporting and selling them online. It'll be a bigger captial start up but you won't waste too much time and money once the ball gets rolling.

JP

I do agree that the gentleman mentioned in you’re post will greatly help, however; look at the big money sites for sale on brokerages like EF...Tell me what you see? Look at sites sold too...

People think it’s dead. HA - they want that kind of sentiment out there. Don’t be discouraged...just do something.

You can build a dropship site, scale it with paid ads, and sell it for 7 figures. Profit 4K a month, sell it for 100k plus.

Good luck!

 

[jpanarra]

I do agree that the gentleman mentioned in you’re post will greatly help, however; look at the big money sites for sale on brokerages like EF...Tell me what you see? Look at sites sold too...

People think it’s dead. HA - they want that kind of sentiment out there. Don’t be discouraged...just do something.

You can build a dropship site, scale it with paid ads, and sell it for 7 figures. Profit 4K a month, sell it for 100k plus.

Good luck!

I did 3 dropship websites, my first one was back in 2014 selling awesome hipster designs, I used shopify and printiful to start with. I was able to fund this by using kickstarter and rasing 3k and send out a number of shirts. The campaign went well, i pushed for a high quality material and was selling them at 35$ apiece and the profit margin after marketing and shipping costs was only floating around 3-5%. The volume was not there for great turnover and I made the decision to put more money into the ads and actually went into debt before I decided to shut down the site.

The other two were similar, one was in the camping niche and the other was candle molds. The one thing you'll notice is when you put something out and you gain traction. Other competitors will take notice and the ones that have flexibility/captial will attach themselves to the keywords you've been using and undercut your pricing. So if you don't have a brand following you will eventually be pushed out of the space.


I never said that dropshipping is dead, there's still money to be made in that space but niche markets have been getting saturated and the margins can get difficult to get the growth most people desire. Your numbers is being a bit too optimistic, to be able to pull those numbers you're gnna have to put down 1-2k into ads per month and maintain a high level of standards when it comes down to the conversion rates. It takes awhile to get to that point without capital, if you're planning to bootstrap it expect 2-3 years before you even can think about putting that much into ads.

 

[ChrisV]

I do agree that the gentleman mentioned in you’re post will greatly help, however; look at the big money sites for sale on brokerages like EF...Tell me what you see? Look at sites sold too...

People think it’s dead. HA - they want that kind of sentiment out there. Don’t be discouraged...just do something.

You can build a dropship site, scale it with paid ads, and sell it for 7 figures. Profit 4K a month, sell it for 100k plus.

Good luck!

I’m pretty sure it is oversaturated. People love the idea of not having to do shit. They put up an eBay listing and just fwd the info to some company in China and they ship it out. Problem is, that company in China can just pay some employee $1.70/hr to list that stuff on eBay rather than building you a 100k business.

I may be wrong, and would actually love to be.... but as far a I know drop shipping was beaten to death in like..... 2006.

 

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[ZeroTo100]

I’m pretty sure it is oversaturated. People love the idea of not having to do sh*t. They put up an eBay listing and just fwd the info to some company in China and they ship it out. Problem is, that company in China can just pay some employee $1.70/hr to list that stuff on eBay rather than building you a 100k business.

I may be wrong, and would actually love to be.... but as far a I know drop shipping was beaten to death in like..... 2006.

I agree with part of what you’re saying, however; more businesses are using dropship methods than you think. I’m not talking about dropshipping from alibaba and Shopify.

There’s also a lot of good uses for it such as testing the market by adding new products on your site, etc. I also think it’s a good starting point for breaking into Econm.

You can say the same for lead gen and every other business model - nothing truly dies.