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Drop Shipping: The Simple Business

The Millionaire Mentor Guide to Passive Income with Drop Shipping

Drop shipping is an e-business concept which could allow you to generate mostly passive income once you are able to get your platform or e-commerce store up and running. 

The idea guiding drop shipping is really simple: you establish a contact with a wholesale supplier of a selected type of niche specific goods, next you arrange a deal whereby the wholesaler is responsible for storing item inventory, packing and shipping items and risking capital related to these on-going costs.

Now, in essence, your business will be geared around marketing and selling products but you will not be responsible for purchasing, stocking or shipping them. You will need to pay your wholesale supplier a small fee for each item sold. This typically amounts to $2-$5 per item. It makes good business sense to plan your drop shipping around products which are:

  • Organized in Highly Specialized Niches: To be most successful with your drop shipping business, you will want to work with very specific products in deep, niche specific product categories.
  • Offer High Profit Margins: You may not sell tons of these products but when you do, the profit margin on each sale will be high.
  • Unlikely to experience high levels of competition: Given the drop shipping fees, you will want to use to above two classifications to ensure that you are one of the only providers selling a given item.

If this sounds like a potentially exciting idea to you given what you already know about digital marketing, then keep on reading to learn about how you can set up a successful drop shipping platform in just a few easy steps.

Locate Your Supplier

First and foremost, you will need to establish a relationship with a firm that can supply the products you hope to sell. Furthermore, you will want to choose one that you can rely on and trust to fulfill orders in a timely fashion.

Some places to look for a drop shipping wholesaler could include local yellow pages directories if the item you hope to sell is produced near the geographical location where you live or on a sales platform such as Oberlo,  Shopify, SaleHoo, Amazon, or EBay. 

Once you have narrowed down your selection, ask your prospective wholesaler the following questions to get a better sense of if they will be able to meet your needs and help you to advance your global drop shipping operation:

  • How long does it typically take for an order to be dispatched for shipping?
  • What shipping methods or carriers do they offer?
  • How do they approach quality control to ensure only effective products are sold?
  • Do they offer guarantees or warranties about the things they ship out?
  • Will they allow you to use their product photos or preexisting copy?

As you gain the answers to these questions, you will have a better sense of if you have chosen a reliable wholesale operation which will help you to advance your prospective drop shipping brand.

Select the Best and Most Profitable Products

At this stage of the game, you will want to conduct market research to ensure you have chosen a niche specific product range with high profit margins and which will not experience high levels of competition across the sales platform you are utilizing.

  • Utilize a platform like SaleHoo Market Research Lab. With a service like this, you can conduct keyword searches and gain a wealth of insight into how a given product is being listed on top sales [platforms such as Amazon or EBay. One downside to this approach is that it is only available with a SaleHoo membership but nonetheless, if you are interested in learning about how a given product or range of products is selling internationally, this could be tremendously beneficial.
  • Utilize a platform like EBay.
  • Go to eBay.com.
  • Click ‘advanced search’.
  • Check the ‘completed listings’ box.
  • Enter your keywords and category and hit the search button
  • Now scroll through around 5 pages of listings and count the number of successful listings (listed in green), compared to the unsuccessful ones (listed in red).
  • When you find an item which sells 60% (or more) this is a really positive sign that this item sells very well.

If your selected products do not seem to sell very well according to your market research, it might be a sign to select other, more niche specific products or try conducting your keyword research using different phrases or keywords.

Establish a Tax ID

Not all sales platforms will require that you have a tax ID in place before beginning your drop shipping business, but many wholesale suppliers will require one to begin working with you. You will need to research these things in relation to the state in which you live.

Some US states such as  Alaska, Delaware, Montana, New Hampshire and Oregon do not require sales tax IDs. Be sure to let your wholesale supplier know where you will be setting up your business so that you can ensure you are meeting all the legal requirements for that state or part of the world.

Applying for a tax ID is typically very easy and straightforward. To get the best info relative to your situation, google geographic region specific search queries such as “tax id” + “California”.

Choose a Sales Platform

Some of the best options for sales platforms depending on the specific products and niches you select to work with could include:

  • EBay
  • Amazon
  • Bonanza
  • SaleHoo

There are benefits and disadvantages to each of these. You will need to do the research regarding your niche and make the selection that will best allow you to keep profit margins and competition law.

Choosing to create your own ecommerce site on SaleHoo or Shopify will require slightly more time investment upfront but could allow you to better define yourself as a provider within your given niche and without having to deal with the competition of other providers as you will encounter when utilizing an auction site.

That being said, the auction sites have the benefit of already having established regular traffic from buyers who trust the platforms. Additionally, because these services are very well established across the internet, they are able to offer perks which the other ecommerce related platforms cannot.

At the end of the day, you will need to take the time to decide which route is most advantageous for the type of drop shipping operation you are hoping to build.

Manage Your Sales Listings

When drop shipping, one of the most important aspects of establishing a successful business venture relates to how you choose to list your products and their descriptions. Take the time to create engaging copy which will reach out specifically to the target market which is at the core of the niche you are hoping to break into. Conduct research into websites and blogs which discuss this niche as well as in competitors who are selling similar items related to this category.

Drop shipping orders typically work like this:

  • After you have chosen your products and established a relationship with your wholesaler, you will then list them on your chosen sales platform. 
  • Once a product has sold, you collect the money and place an order with your supplier.
  • The wholesale supplier will then fulfill your order.
  • Eventually you will get a sense of which products in your range are the most successful and you can modify your approaches with this knowledge in mind.

Good Luck with building your Drop Shipping Empire!

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Jason Stone

Jason Stone is widely known by celebrities and almost 2 million people around the world as @Millionaire_Mentor on Instagram. Stone has successfully launched multiple 6 and 7 figure Instagram and Internet platforms and is becoming a well known social media influencer and marketer.

Known for his e-commerce success in the automotive industry in his early years with Treadstone Performance Engineering, Inc., Jason is a mechanical engineer, real estate investor, car enthusiast, and startup investor. Jason has Co-founded the Impact Billions Movement and also created Gentlemen’s Mafia Instagram network which culminates relationships and success among the thousands of its members worldwide and utilizes his experience and passion as a motivator, mentor, teacher, and social media influencer to help others create success.

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2 Comments

  1. You can use WooDropship with combination of woocommerce. Shopify is paid whereas woocommerce is free. Woodropship is the Oberlo for Woocommerce. Wocommerce is much more cheap and customizable than Shopify. I personally shifted to woocommerce from Shopify. Hope this helps. http://www.woodropship.com

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