Do you want to sell products or open an online store, but you don’t have the money to buy a bunch of inventory?
I hear ya. Let me tell you a story – it’ll be short, I promise.
Back in the early oughts, a friend and I made a plan to start a business together. We were both really excited, but she had to get some ducks in a row first.
I didn’t want to standby, staring at her and tapping my foot, so I looked around for something that would let me get some business experience in the meantime.
I wanted something that I could start, work on, and then shut down when she was ready.
What I found was dropshipping.
Dropshipping is basically an online store that doesn’t keep any of its products in stock. If you’re an old fogie like me you might remember when everybody got excited about the “just in time” concept of inventory – where you stock something just in time for a customer to buy it. That’s the idea here.
How does it work?
First, you find great products that you like from a dropshipping supplier. These are usually wholesalers or manufacturers.
You sign up for their dropshipping service, and they’ll send you:
- the cost for each product
- a picture of the product
- some form of product description
Then you list the products on eBay or Amazon, or create your own store using Shopify.
After a customer places an order for one of your products, you’ll order it from the dropshipping supplier. The supplier will then package and ship the product directly to the customer.
What does the supplier handle?
What do you handle?
- Listing products online
- Getting sales
- Customer service
What’s the catch?
There are several things you need to think about before pursuing this hustle.
- You’ll need to fully set up a business, including getting an EIN (Employer Identification Number), a State Sales Tax ID, and a business checking account. Suppliers will ask for your sales tax ID so you can purchase items at the wholesale rate.
- There are some fake suppliers out there. Be sure to fully research any supplier that you’re considering.
- You will need to handle customer service, including returns and back orders. You’ll need to be able to handle when someone is disappointed because a product is on back order, or when they received the wrong product, or the product was damaged on the way, even when you have zero control over all of those things. If customer service isn’t your thing, then you’ll need to hire someone to handle that, or find a different side hustle.
Pros: Zero inventory, works for introverts and extroverts, scalable, flexible number of hours, flexible time of day, can be fulltime or part-time
Cons: Zero control over inventory, time to pack, time to ship, you need to be comfortable with customer service or can hire someone who is comfortable with it
Shopify has a free guide to dropshipping: https://www.shopify.com/guides/dropshipping
Or, if you would like a class, consider this one: https://www.dropshiplifestyle.com/
Are you wondering how my story turned out?
I made some money with dropshipping, but I had real issues with the customer service side. I didn’t like having to tell a customer that they wouldn’t get a product on time because I couldn’t get it from the supplier.
My plan was to start buying and stocking inventory, and just offering a limited number of products, but things in my personal life intervened (this is an ongoing theme for me) and I closed the business. I did only start it to get some experience after all, and I’d learned a lot by that time.
Oh, and my friend that was going to start a business with me? She never reached a point where she was ready to start, so I was glad that I started something on my own.