Dropshipping can make you rich if you:
The amount of money you can make with dropshipping depends heavily on how well you can do internet marketing. Dropshippers typically sell products that are easily accessible to other Ecommerce sellers and even customers who look hard enough, so the distinguishing factor often is the marketing campaign that promotes the product. Dropshippers that can profitably implement digital marketing campaigns like paid advertising with Google Ads or social media marketing with TikTok videos can earn incredible sums with the business model.
For example, dropshipping guru Jordan Welch claims he was able to generate $350,000 in dropshipping sales over 4 months by using his marketing knowledge and video editing skills to create a viral advertisement.
In order to become rich with dropshipping, a dropshipper needs to build out efficient systems. This includes outsourcing low-level tasks to VAs and incorporating automation tools like AutoDS or Dropified that can automatically fulfill orders and update tracking numbers. Dropshippers that spend time performing low impact tasks like manually fulfilling product orders likely won’t have the time or energy to focus on scaling their business beyond 6-figures in sales. By building out systems, a dropshipper can focus on high-level tasks actually increase revenue like brand building, product research, and negotiating with suppliers.
Dropshippers should regularly test new product ideas to increase revenue potential. Even if a dropshipper finds a winning product that generates high income, that product isn’t likely to remain a winner for the long-run as consumer trends change often. Also, other dropshippers can use ad spy tools like Dropispy to find and copy profitable dropshipping products to saturate the marketplace. As such, successful dropshippers typically need to spread their revenue across multiple dropshipping products and always look for new product opportunities to adjust with market demands.
A dropshipper selling products from the puppet niche on Reddit claims to have scaled their dropshipping business to $67K/year in profit by adding 3-4 new products each year over approximately 3 years. Although this dropshipper certainly isn't rich yet, they were able to quit their job to focus on dropshipping and are on a trajectory to potentially become rich if they continue scaling with high-quality products.
Many find the best way to scale a dropshipping business to the point of becoming rich is to transition into a real brand that sells wholesale products, private label products, or by creating brand new products. These business models allow for much higher profit margins than dropshipping because they entail sourcing products in bulk rather than buying individual units. Transitioning a dropshipping operation into a real Ecommerce brand allows you to separate yourself from the competition because you can offer more unique products, faster shipping, and more competitive pricing, all of which can allow you to attract and retain more customers.
Local lead generation is an alternative online business model with the potential to make you rich that many people find preferable to dropshipping. Local lead generation entails creating simple websites that attract customers for local service businesses and selling the leads to real local service business owners for $500 to $3,000/month per website. You can scale a lead generation business by setting up multiple websites, allowing for the potential to make tens of thousands of dollars a month in profit by managing a few websites.
In the following article, we discuss further whether dropshipping can make you rich by talking about how much you can make from dropshipping and revealing the world’s richest dropshippers.
How much money can you make from dropshipping?
Dropshippers can make a 20% to 30% profit from every sale. This can generally mean a monthly earning of anywhere from $1,000 to $5,000 within the first year, depending on the size of your business. In a Quora thread, published author Juan Pasalagua wrote that earnings usually depend on several factors, such as:
Meanwhile, online business owner Ori Firouz pointed out that dropshipping earnings usually depends “on the effort and ad investment that you do.” He also added a screenshot of his company's monthly sales, which amounts to over $691,000.
Many brands use dropshipping as an additional revenue channel. Data from Analyzify shows that Ecommerce brands leveraging dropshipping can generate 50% more profits than relying solely on inventory they own.
Can Shopify dropshipping make you rich?
Shopify dropshipping can make you rich, as seen in the experiences of the dropshipping millionaires we mention below. While using Shopify is not a guaranteed way to be wealthy, some users have proven that it is possible to earn 6 to 7 figures through dropshipping.
Besides, Shopify is a popular and trusted platform used by ecommerce merchants in more than 175 countries across the world. In addition, statistics tell us that Shopify stores have made a total of over $700 billion in sales over the past 17 years.
Who are the world’s richest dropshippers?
The world’s richest dropshippers are Andreas Koenig & Alexander Pecka, Harry Coleman, Alex Philip, Cole Turner, and Sarah & Audrey.
1. Andreas Koenig & Alexander Pecka
Andreas Koenig and Alexander Pecka began with the goal of earning $1,000 a day. Their dropshipping journey began in 2018 when they built their first online store on Shopify. They started selling toothpaste dispensers and then placed ads on Facebook.
Eventually, the partners established their own pet dropshipping store and began earning $500,000 per month. Now they’re already making over $10 million a year.
2. Harry Coleman
In 2008, Harry Coleman made $5 million from his three stores on Shopify. He initially invested $500 to $800 in advertising to get his first sale, but it all eventually paid off. Today, he shares his dropshipping knowledge through the Beast of Ecom YouTube channel where he has over 71,000 subscribers. In addition, he also offers the Ecom Beast 2.0 online course.
3. Alex Philip
Alex Philip made headlines after becoming one of the world’s youngest and most successful dropshippers. When he was 11, he began selling Pokemon toys on his Amazon store. By age 15, he made more than $2 million by sourcing Alibaba products and then selling them on Shopify.
“For an hour before school I’ll spend time looking at all the big Instagram pages to see if any products are popping out at me so that I can jump on,” Alex said in an interview with Forbes. “School takes up most of the next nine hours of my day, and I listen well in class to compensate for the time I have to work on my business.”
4. Cole Turner
Cole Turner first found out about dropshipping when he was 18 years old and he immediately jumped into running his own ecommerce business. Initially, he operated a general store and sold different products to a wide audience. He eventually moved to selling jewelry online and then scaled up his business by focusing on the niche and placing ads on Facebook. This move made him more than $75,000 in sales.
After only over a year, Cole has earned over $2.1 million worth of sales from March 2019 to May 2020.
5. Sarah and Audrey
French entrepreneurs Sarah, 25, and Audrey, 26, both had their own dropshipping businesses before deciding to band together in 2019. The two focused on boosting their brand through investing in product placements by working with Instagram influencers. As influencers helped promote their products online,
The strategy proved to be effective as they managed to earn more than $1 million in sales in a matter of weeks during the lockdowns. Today, Sarah and Audrey are known as the richest female dropshippers in the world.
How much do I need to start dropshipping?
You will need at least $100 to start a dropshipping business. As a business model, dropshipping has gained popularity because of its affordable startup costs. Business owners won’t have to spend on and store inventory to begin with.
To start your own dropshipping company, here are some steps and expenses you’ll need to make:
1. Researching suppliers and products to offer
Using Google can be a good way to find the best suppliers and winning product ideas for your online store. The best thing is you won't have to spend anything for this since researching online is free. As you compare your choices and read reviews, you can decide which options are most ideal. Eventually, you can invest on paid product research tools as you grow your dropship business.
2. Creating a logo
You can use free graphic design platforms to create your own logo and build your brand. Some of the best websites for logo creation are:
- Adobe Express (a free logo maker you can use for “AI-generated quality logos that can be shared across all your printed and digital platforms.”)
- Canva (a free graphic design platform, Canva allows you to make your own business logo in minutes using custom templates and its drag-and-drop tool.)
- Hatchful (a free online logo maker from Shopify that offers hundreds of logo templates.)
As an alternative, those with extra budget can check out premium plans of these software or hire professional graphic designers for better results.
3. Buying a domain name
Dropshippers can purchase a domain name for a cheap price. For example, Alibaba Cloud offers domain names for $10 per year. NameSilo sells $10.95 .com domain names while Domain.com pricing starts at $10.99 per year. These options can be ideal for those starting a dropshipping business for the first time.
4. Building your ecommerce store
You will need to sign up with established ecommerce platforms to build your business. For example, a basic Shopify membership costs $19 per month and is billed yearly. This plan includes an ecommerce website, blog, 24/7 support, manual order creation, marketing automation, and more.
Shopify also offers a free 14-day trial period for users who want to test the platform’s tools before making the purchase. So be sure to check out the free version to see if the software matches your business needs.
5. Marketing your business
Of course, you should also market your business to reach more of your target customers. You can advertise your dropshipping store by using pay-per-click platforms from Google Ads and Facebook Ads. Their PPC advertising options allow you to promote your brand among search engine and social media users. Depending on your budget, you can spend anywhere from $0.1 to $10 per click for your campaign. You can later increase your budget for ads as your business grows.
Is dropshipping a good side hustle?
Dropshipping can be a good side hustle, depending on your niche, products, and skill set. Take note, however, that the dropshipping business model is definitely not a get-rich-quick scheme. While others have achieved significant success in the industry, it is also worth noting that many fail and those who excel had to invest a lot of work and time in the process.
In a Reddit thread, a user pointed out that it’s important to “find a really good product that’s not overly saturated… then have a demographic that product would certainly appeal to.”
What are the disadvantages of dropshipping?
The disadvantages of dropshipping include low-quality products, a highly competitive market, and low profit margins.
Low-quality products
Ensuring product quality can be a challenge in drop shipping. Since you can’t personally check each item you sell, receiving low quality items can lead to disappointment for some of your customers. So it’s definitely important to work with the right supplier. Read customer reviews to see which sources are best for your business.
Highly competitive market
Competition can be tough in dropshipping. As a new dropshipper, you’ll have a hard time competing because most ecommerce businesses are selling the same products. If you can find unique products and niches that are low in competition and high in profit margin, you’ll have higher chances of succeeding when you start a dropshipping business.
Low profit margins
As mentioned, dropshippers can earn a profit of 20% to 30% from each sale. This means your average dropshipping income will depend on the quantity of your regular sales. You'll have to work hard on marketing your business in order to boost your profits.
Related Articles on Dropshipping
Conclusion: What is more profitable than dropshippping?
Lead generation is more profitable than dropshipping. Compared with dropshipping, the lead generation business model is easier to learn and operate. You won’t have to hunt for winning products all the time or deal with customer complaints about delayed shipments and other concerns. In short, you don’t need to be available around the clock to respond to messages from your buyers.
With lead generation, your focus is ranking a business website to the top of search engine results. Achieving this allows you to deliver organic traffic for your clients, which then translates into leads and customers for their business.
Competition is also not as tough as competing with hundreds (or thousands) of dropshipping stores online. Besides, ranking an area-specific keyword usually means you only need to compete with 20 to 30 local businesses in lead generation.
Today, I earn $52,000 per month as I rent out lead generation websites to my clients. Obviously, this is significantly higher than the average revenue of those running online dropshipping businesses. If you’re aiming to find a profitable passive income source, lead generation is significantly a better choice than dropshipping businesses.
