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Is drop shipping a profitable business ?

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VentureVoyager

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RazorCut

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Buying from manufacturers and distributors in your home country and having them ship to your customers.

This can work well if you do the leg work, find suitable manufacturers or distributors and have the necessary marketing skills. I know of one person who has a deal with a ladder manufacturer. He sells their products and they drop ship them for him.

He can market them better than they can themselves so it works well for both parties as they get to sell more product and his business is pretty much automated. It is basically a form or affiliate marketing which I know MJ is not a fan of but I cannot see a problem business wise as it can work out well for all concerned.
 

Sanj Modha

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Why do you not suggest dropshipping if it worked for you?

There's nothing stopping your competitors: Warren Buffet calls it building "The Moat".

When you brand a successful product, you build a loyal customer base. No dropshippers can touch you.
 

illmasterj

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Today I operate an automotive website that generates affiliate commissions. I can't track all sales, but on a low month it's selling around $14k worth of parts (of which I see a very small commission).

Automotive isn't a simple industry to hold a large amount of stock. Compatibility means lots of different SKUs. At this point of time I cannot afford/do not want to hold inventory.

So my current plan is to continue building a brand, website traffic and get the revenue up significantly ($50k month minimum, ideally $100k), then transition to dropshipping. This way when pitching wholesalers/distributors I can (almost) guarantee I will make them a good amount of revenue in my first month instead of wasting their time for 6-12 months as I ramp up sales.

This actually seems possible in the automotive/machinery industry as few shops can afford to hold stock anyway. The industry is kind of built on dropshipping.

I know business is experiential - you learn these things by doing. But I also know there are some very experienced ecommerce business owners on here, many of which have an interest in cars, so I'm assuming some of you have done this/are doing it now. If anyone has pointers/advice on how to get accounts with US-based distributors, serious warnings about what to avoid or how to please the distributors, I welcome the feedback!
 
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Kevin88660

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The problem isn't about drop shipping.

The issue is about being in a business that have little entry barrier. Too much competition and margin erosion.

In comparison of full CENTS framework MJ teach you how to build a business with sustainable profitability. That is the game MJ advocates playing.

This does not mean that business with low barrier of entry is necessarily bad. It is just a different game. You have to identify the trend quickly and make as much as possible within the first two years. By the time when everyone is jumping into it you are looking for the next thing.
 

Kal-El1998

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Just like anything else, I think it can be profitable. However, the area that seems to stop a lot of newbies at it (including myself) was finances. Drop shipping can be pretty capital intensive. That's why I opted for lead generation instead. Much cheaper and honestly more profitable imo.
 

jpanarra

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Low cost, low barrier to entry, so there is a lot of competition from other people that are crowding this space as time goes on. You'll be better off trying to sell 'how to make dropship stores' videos instead of building a dropship store.

Today in 2021 its risky since you have to spend money on ads. I had ceased my store because my ad spend was more than my revenue from those pages.

I still have my sites but revenue has dropped to near 0. Other people might have better experiences than I did but I wanted to share what I experienced myself.
 
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Bernardo De Mach

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Low cost, low barrier to entry, so there is a lot of competition from other people that are crowding this space as time goes on. You'll be better off trying to sell 'how to make dropship stores' videos instead of building a dropship store.

Today in 2021 its risky since you have to spend money on ads. I had ceased my store because my ad spend was more than my revenue from those pages.

I still have my sites but revenue has dropped to near 0. Other people might have better experiences than I did but I wanted to share what I experienced myself.
What about adding sales funnels? would that make it easier?
 

jpanarra

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Sir,

Sales funnels are feasible but they have to be maintained and pampered to keep it optimal. It also fails the 'C' aspect in CENTS because you have little control of SEO without being on top of it.

For the efforts i put in my dropshipping sites, i would've been better off importing things from china and selling it on facebook marketplace.

Now im not saying its impossible to be profitable and get to a certian level where it can sustain itself but that would have to include hiring in people to manage the websites.

Jason P.
 

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