It seems that so many people in 2024 have figured out how to make some form of money online, especially in the ecommerce space. Dropshipping stands out as one of the more attractive business models with its hands-off fulfillment, low initial investment and potential to scale, but it can be hard to break down the process into understandable steps to figure out how exactly dropshippers make money.
This guide will share exactly how dropshippers make money and how you can do the same so you can join the group of new entrepreneurs cashing in on the golden opportunity of ecommerce.
How do Dropshippers Make Money?
Dropshippers make money by marketing a dropshipping supplier’s product on their own storefront and selling it for a higher price than they bought it for. The dropshipping supplier handles all aspects of fulfillment, including shipping, without the store owner needing to touch the product themselves, hence the term dropshipping. Additionally, dropshippers can make money from products without needing to buy them upfront and only purchase orders as they come in, making for efficient cash flow.
The dropshipper makes money from the profit margin after considering all costs. While it might seem odd that a customer will pay more for the dropshipper’s product, it makes sense considering the example that almost any product on Amazon can be purchased for less elsewhere, which opens up the opportunity for Amazon retail arbitrage. To sum up why a customer will pay more for a dropshipper’s product, it boils down to product choice, branding, trust and marketing efforts.
Let’s dive into how exactly you can join the group of profitable dropshippers who have mastered these areas.
How to Get Started as a Profitable Dropshipper
Not all dropshippers make money. In fact, many actually lose money–the ease of entry can make for a competitive market that requires ad spend to stand out and win customers over, and not all ad campaigns are profitable.
So if you want to actually make money as a dropshipper, here are some things to do that can give you the competitive edge you need:
1. Understand the market
The first thing you need to do is understand the market, which in dropshipping is incredibly dynamic. Some winning products have short time windows that are subject to fickle trends, while others are more evergreen in their demand.
While it’s possible to make good money from hot trending products, you’ll be dealing in a more competitive environment that will require a combination of good organic and paid marketing to turn a profit. These types of dropshipping opportunities also can be short lived, so if you want long-term term success, you should position yourself in a more stable area in the market and establish a brand presence.
2. Formally register your business
It’s possible to start dropshipping simply by going on a marketplace like Aliexpress to source products. Some people never set up a business because of the effort and cost it takes for a seemingly small return.
However, you should take the time to properly register your business as early as possible as this can give you advantages beyond the formality.
One of the main benefits you’ll get by formally registering your business is the fact that you’ll have more doors open for you to work with more suppliers as some of the more legitimate options will only do business with other registered businesses.
Setting up your business the right way will also make it easy when tax season comes around as you’ll have a dedicated business bank account that you can separate from your personal accounts.
Every professional, high-volume dropshipper has a business registered, so if it’s your goal to join their company, you should do the same.
Pro tip: Consider consulting with a business attorney or accountant who has specific experience with ecommerce owners so you can set up the business structure that’s ideal for your needs. This upfront investment will save you potential headaches and money down the line.
3. Find a winning product
Once you have a good grasp of the current market and demand for dropshipping products and have taken the steps to set up a business structure, you’re now ready to find your winning product
Your winning product selection is largely based on current market trends, but it’s not about jumping on the latest fad. Here’s how to approach product selection like a dropshipping pro:
Choose a good supplier
Not every supplier is made equal. The supplier you choose to partner with can be the determining factor that makes or breaks your business. When it comes to picking a supplier, the most important qualities include good and reliable communication channels, a quality product, and reasonable shipping timeframes.
Another important factor to consider when picking your supplier is the prices of their products. While you want competitive prices, be wary of deals that seem to be too good to be true as they often are.
Evaluate competition
Once you’ve identified a potential winner, scope out the current competition. Take note of the marketing methods they’re using, the price points, and how they appear to be winning over customers. See if there’s any weak point that you can improve, whether it’s a better price, higher quality, a more well-designed store or more effective marketing methods.
Do your best to figure out how much your competition is making as you can use this as both inspiration and a benchmark for what numbers you should strive to reach. A group connected with spy tools is a great way to access competitor information to make actionable decisions.
Remember that some form of competition is good as it proves that there is established demand for the product, so if you find that no one is selling your intended product, it’s likely because there isn’t a market for it.
Understand current and rising trends
Keep an eye on what’s hot, but be cautious as trends can be fleeting, so by the time you set up your store and find a good product the trend might be crowded and on its way out. The amount of competition you find is a good indicator of what stage the trend is in–if you see too many people marketing and selling the exact same gadget, it’s not worth selling it too unless you have a clear competitive advantage.
Rising trends are better to target. You can identify these also by evaluating the competition and the number and variety of products out there. If you can launch a similar product with a unique twist, such as a ceiling projector with a unique retro design, it’s possible to find yourself in a good position as a dropshipping store owner.
Order a sample
The last step to finalizing your winning product is to actually place an order yourself to understand exactly what the customer experience would be when they order from your store. Take note of the shipping time and if it’s as quoted, and when the product arrives, scrutinize everything just as a customer would. This includes checking the packaging in addition to the quality and functionality of the product itself.
Everything should arrive as expected or better, and if there are any issues, see if the supplier is understanding and willing to offer a solution in terms of a refund or a replacement. A good supplier will do their best to make sure that every single order satisfies the needs and wants of the customer.
4. Master marketing for your dropshipping store
Having a great product is just one piece of the puzzle for building a successful dropshipping store. Getting in front of the right people with effective marketing using multiple methods will allow you to find and win customers over. Here are methods you can use to master marketing so you can make as much money as possible as a dropshipper, which fall into two main categories, organic and paid:
Organic
With organic marketing, the goal is to leverage a free platform to reach an audience with content. The want to make this content viral so you can have maximum reach without needing to pay money for advertisements.
Popular platforms where you can push content to showcase your product and direct people to your store include Instagram, Facebook groups and TikTok, although in 2024 you’ll have to keep TikTok shop in mind as it is in some ways competing for attention with dropshipping stores.
Content marketing in the form of blog posts to get traffic from SEO is another potential way to gain brand recognition and customers organically.
It’s a good idea to also utilize email marketing as an extension of your organic marketing strategy–although you’ll often pay to use the software, you’ll be able to develop a relationship with your subscriber base that can become increasingly loyal and valuable over time. One of the most common methods that top dropsphippers use to get subscribers for their email list is with a coupon code that someone can get only by entering their email.
Paid
It’s better to resort to paid marketing efforts only after you’ve proven that your product matches an audience that you’re managing to reach and begin to convert with organic efforts. Once you’ve gained traction, it’s a good idea to invest in paid marketing, which includes running ads on platforms like TikTok, Facebook, and Snapchat. Remember to start small and split test while paying attention to important metrics like conversion rate and return on ad spend (ROAS) to ensure that you’re getting your money’s worth.
Influencer marketing can also prove to be a highly effective form of paid marketing in the dropshipping world, but consider learning the best practices surrounding how to find influencers before attempting this method.
5. Use tools
High-level dropshippers don’t do everything on their own, they effectively leverage the right tools to make their business and sourcing more efficient such as the following:
Automation tools
Dropshipping has many redundant tasks that can be automated to save you the hassle of having to do these tasks over and over again. Examples of such tools include those that handle product listing creation, order processing and an autoresponder that answers common questions.
Inventory management tools
While managing your dropshipping inventory is easier because you don’t have to physically manage and hold stock yourself, you can still run into issues as you are dependent on the stock of the supplier you’re working with. Tools that help you synchronize your inventory automatically with your suppliers can help to prevent customers from ordering out-of-stock products that can’t be fulfilled.
Customer service tools
While you want your customer service to be as personalized as possible, you can utilize tools like a chatbot for simple questions to address common concerns before needing to resort to reaching out to a human.
These tools are helpful to install earlier rather than later as you want to test their effectiveness while you still have the time to review their performance manually before your sales volume gets to the point of making quality control difficult.
Spy tools
Rather than do manual research on the market and competition, you can use spy tools that do this for you, finding relevant data surrounding sales volume, ad strategies, and alerts for new products being stocked.
Using these spy tools will give you actionable data that is otherwise hard to extract, and since some dropshippers don’t even know these exist, you can have an even greater edge. GoatSpy is an example of a tool you can use specifically for uncovering the performance of competitor Shopify stores in addition to new trending products.
6. Scale
Becoming a top dropshipper that makes tons of money is all about scaling to high levels of volume. This happens step-by-step, and while it’s possible to reach big numbers fairly quickly with a good ad strategy combined with a winning product, you’ll need to establish a certain level of consistency and predictability before you turn up the efforts or spending to get your business to the point of significant revenue and to keep it there.
Here are some tips on how to effectively scale your dropshipping business:
Find a winning marketing strategy and double down on it
Every highly profitable dropshipper has become an expert marketer. While there is a vast assortment of methods and strategies you can use to get eyeballs on your product, it’s best to test them all first and then figure out which method is most effective so you can put focused effort into that area. The pros know to cut out what isn’t working in favor for things that produce more results for the same or less effort.
Expand your product line
If you find one winning product, there’s a high chance that there is a similar product or complimentary accessory that your customers will also love. Stores that are branded to incorporate a specific niche, like cat toys or bedroom lighting equipment, are the easiest to seamlessly add products to.
Expanding your product line when you already have a good brand presence and customer loyalty gives you the highest likelihood of succeeding as you can launch new products to an audience that has already proven to convert.
Delegate and automate
At the beginning of your dropshipping days, it’ll be easy to operate as a one-man show, but the only way to maintain significant scale is to get yourself to the point of only working on what is most likely to move the needle for increased business and getting out of the trap of redundant work that can keep you stuck in small issues that you can automate or have someone else handle.
Creating standard operating procedures, or SOPs, will help you to efficiently train staff with easy-to-follow, foolproof steps so you can delegate tasks and work on your business, not in it.
Consider entering different regional markets
If something has been proven to work in one area at scale, there’s a high chance that you’ll see the same amount of success in different regions, especially if they have similar demographics.
This can start small by running target ads to the same demographic in a different but similar city, or if you feel you’ve reached a point of dominance in your country, you can launch a brand new version of the store that shares the same supplier and serves an entirely different country.
Expanding your global reach is a strategy that many top brands and franchises do that some dropshippers can also pull off, but keep in mind that you should only consider this if you are prepared with specific market knowledge of the region you are targeting and feel you can enter it with an advantage.
7. Seek mentorship
Every successful entrepreneur in any realm, including dropshipping, will probably tell you that they couldn’t have reached their current level without the help of someone who was further down the path of success.
In your early days, finding a mentor to work with one-on-one isn’t easy as a good one is either hard to reach or costs a significant amount. A good alternative is to seek YouTube for advice and case studies from top dropshippers where you can glean top tips for free with some time and effort.
Another option is to join a private, expert-led community that is already dedicated to dropshipping.
Whop is home to a variety pre-vetted communities that you can choose from, including those that are committed entirely to dropshipping. These private groups are also typically equipped with helpful tools and software in addition to tips from experts and fellow community members that will aid greatly in your dropshipping dreams.
How to Make Money on Shopify with Dropshipping
In recent years, Shopify has surged in popularity as a preferred platform to use for ecommerce store owners, particularly with dropshippers.
While it’s not the only platform you can choose to launch your dropshipping store on, Shopify’s widespread use has attracted tons of relevant tools and platform-specific advice that make it worth considering.
Here are a few tips on how you can use Shopify to make money as a drosphipper:
Pick a good theme
Shopify makes it easy to throw up a store with a pre-made theme complete with product pages, the full checkout flow in addition to order and payment processing. While there are many free themes to choose from, you need to make sure that your theme is simple to navigate and showcases your brand and product in the best light.
Consider using a premium theme or hiring a Shopify-savvy developer to make improvements on a free theme to make your store stand out and convert customers at a higher rate.
Nail your branding
In the world of dropshipping, two stores can be selling the exact same product from the same supplier with one of them making seven figures and the other struggling to turn a profit. Marketing strategies are a major ingredient in the recipe of the winning store, but equally important is the branding as even the best marketing can’t solve bad branding. Ecommerce purchases are based largely on trust and rapport, so make sure your brand looks professional and, most importantly, speaks to the customer and their needs and concerns in a genuine, empathetic fashion.
Consider taking inspiration in terms of design and brand voice from successful competition when launching your store that might have a unique and effective angle. With Shopify, this might mean choosing a similar theme and look as your competitor.
Integrate tools and apps
Shopify has built-in tools such as discount codes and abandoned cart recovery that you should learn about and take advantage of if you’re using them as your dropshipping platform.
In addition to their own tools, you can access Shopify’s app store, which has several apps like DSers and Oberlo that cater specifically to dropshippers.
Most of the better tools and apps come at a cost, so make sure you can quickly justify their investment so you can keep your cashflow healthy and positive.
Is it Possible to Make Money Dropshipping on Amazon?
Amazon’s total dominance in ecommerce and high-converting, massive customer base has many wondering whether or not it’s possible to use their platform to make money dropshipping.
However, the first thing to know is that if you do intend to dropship on Amazon, their policies surrounding it are quite strict. According to their policy page, dropshipping is not allowed unless it’s clear to the customer when they buy the product that you’re the seller of record, with no traces of a third party being involved.
This can be difficult as there could be packing slips, labels or invoices that mention your supplier, so you need to work with a supplier that is willing to ensure that they leave no trace of their involvement while making your company and its branding apparent in each sale of your product, which is something that can be hard to pull off.
Since dropshipping is so difficult on Amazon, many go with the alternative of Fulfillment by Amazon (FBA), a method that shares similarities to dropshipping as it’s possible to get to the point of not seeing or handling the inventory at all, delegating everything in that realm to your supplier and Amazon.
In general, Amazon is notorious for its fickle rules and policies that suspend or ban sellers, so whether you try dropshipping or FBA, you should consider seeking expert advice while doing so.
Become a Profitable Dropshipper with Whop
Ready to learn more about making money with ecommerce and dropshipping? You’re in the right place.
In addition to our blog which is full of relevant and actionable information for ecommerce owners of all levels, we’re home to the highest quality private, niche-specific communities that help you win in the game of online money making, including those that are dedicated solely to dropshipping success.
With an assortment of pre-vetted groups including those that are Whop verified and highly reviewed, joining one will give you the guidance, tools, and resources to help you make money as a dropshipper all in one convenient place.
Head over to our marketplace today to check out all the dropshipping groups currently available, and best of luck on your entrepreneurial journey.
FAQs
How long does it take to make money dropshipping?
You can make money dropshipping as soon as you start gaining consistent sales that exceed your initial set up and ongoing maintenance costs, which can be relatively low as with dropshipping there’s no need to order inventory upfront before selling it. Thus, you can make money faster as a dropshipper compared to other ecommerce business models, with some dropshipper turning profits in their first month, but the speed at which you turn profitable will largely depend on your niche, marketing strategy, and how quickly and efficiently you can optimize your operations.
Can I start a dropshipping business with a low budget?
Dropshipping is well known to have some of the lowest associated startup costs in the world of ecommerce, so it’s not only possible to start a dropshipping business with a low budget, it’s the norm. You can further cut your costs by using free store themes with cheap ongoing maintenance, organic marketing methods, and handling as much work as you can yourself without outsourcing to staff. So, remember to start small and reinvest profits to scale gradually to keep your budget low.
What kind of income can I expect as a dropshipper?
Income as a dropshipper is known to have a huge variance, with some making a few hundred dollars a month as a side hustle and others that have scaled their business to impressive seven-figure levels. Your expected income will be dependent on several factors, including your goals, commitment, product choice, marketing methods, and ability to create and handle scale.
How can I make money dropshipping from home?
Dropshipping by nature is already an ideal choice if you want to make money from the comfort of your home, but there are some things that you can do to make it an even better environment for doing so. The most important thing to do would be to set up a dedicated workplace, ideally with a whiteboard so you can approach your work professionally and keep all your thoughts in one place. From there, all you need to make money as a dropshipper is an internet connection, a laptop, and the right resources and mindset.
Is it possible to lose money dropshipping?
Some dropshippers lose money overall, and generally speaking, you should expect to do the same in the early stages of your business as you should set aside money for proper setup and testing different strategies, including ads. Running ads is the fastest way that you can lose money as a dropshipper if you continue to run ad campaigns with a negative ROAS. To avoid losing money in the long run, focus on organic marketing methods while slowly testing paid methods before scaling while always keeping a close eye on performance metrics.
What is high-ticket dropshipping?
While the majority of dropshippers are known to sell budget-friendly items, some of those choose to sell more expensive items. The latter group is categorized as high-ticket dropshippers, with a rough ticket price of at least $200 per item, with some selling items for thousands of dollars. High-ticket dropshipping has the potential to have less competition and yield far higher profits, however, in order to succeed, you need to be a pro at building a strong, trustworthy brand with superior customer service to justify your higher price point.
