Dropshipping and E-commerce: Weighing the Pros and Cons for Success

Let’s take a deeper look at the difficulty of drop shipping!

• Passive income streams usually require a lot of initial work and may require constant attention, so it’s not entirely “passive”.
• Often, adverts make drop shipping out to be the easiest thing in the world; however, it usually ends up taking up as much of your time as a ‘normal’ hustle would.
• Use your current idle assets and passions to create a passive income stream.

Drop Shipping/E-Commerce

Advertised as the easiest thing in the world! All you have to do is figure out what people already want and offer it online at a considerable markup, get the manufacturer to send it to the customer, and keep the profits (without dealing with a warehouse, staff, shipping labels and returns)! 

What’s our "Proof"?: The many YouTube ads showing dropshipping entrepreneurs pulling down gazillions and driving fast cars... and looking after their mums, who raised them single-handedly in public housing etc. Clue: If it seems too good to be true, it probably is. 

Now, that’s not to say that nobody has ever made a fortune through drop shipping. To be fair, the key facts mentioned are somewhat correct: it is a legitimate business with no inventory capital and expenses or logistical headaches to worry about. 

However, there remain the tasks of: 

• Finding a product that people actually want, which is not quite as easy as "jumping on Google Trends". Trends come and go, so perhaps more ‘evergreen’ products are better choices.
• Finding a profitably priced supplier with low shipping costs
• Finding reasonably priced subscription-based e-commerce and drop shipping platforms
• Earning the trust and building relationships with customers

The key questions you need to ask yourself are: 

a) How much will it cost to acquire the customer (on Facebook, Google etc.)? 

b) Whether you will be able to keep the customer without spending loads more on marketing every time 

If You Can’t Already Tell by Now, This Is No Easy Income!

“Side” hustle is the term advertised, but we see it more as a proper hustle.

Meanwhile, as a dropshipping merchant, you may also have little to no control over the quality assurance of the shipped product or the customer experience, including dealing with returns and complaints. 

There is also another risk: even if the customer experience is good, you could still lose your customer since they are now directly known to the shipper, who would be delighted to keep all your profits to themselves! 

In addition, unless you have an exclusive deal with your supplier, you risk losing business to competitors who could be selling the same product as you. When you're just starting, you may not have the experience or resources to compete with competitors.

All of this could come after some potentially enormous marketing expenses that you have taken on, all for the benefit of the supplier from purchase number two onwards!

Fraudulent Behaviour 

In an analysis of 125,000 Shopify stores, consumer protection firm Fakespot found over 25,000 stores to engage in some form of fraudulent activity. Activities included:

• Counterfeit products
• Buying fake reviews
• Privacy leaks

The analysis notes that most fraudulent merchants are China-based merchants posing as merchants based in the US. 

The bottom line is that if you get all the points mentioned above right, this could be a decent source of income once it's set up correctly. 

Other Ideas:

PASSIVE INCOME IDEAS: DROP SHIPPING. COMPLETED. ✅

Sources:

1. https://www.shopify.co.uk/blog/what-is-dropshipping 
2. https://www.vox.com/the-goods/22763901/drop-shipping-explained
   
3. Header photo from Unsplash