Many sellers see dropshipping as the perfect ecommerce business model and it’s not hard to see why. You don’t have to purchase stock in advance, have a warehouse or even ship orders. In theory, all you have to do is find products, list them for sale and send the orders to your suppliers. Sounds like the ideal business, right?
Well, in reality, it’s a lot tougher to build a successful business using dropshipping than sellers think. The process might seem simple, but there’s a lot of challenges. Unless you’re highly efficient it can be very easy to make mistakes.
To find out what it takes to build a successful dropshipping business we spoke to Connor Gillivan, who has sold over $25 million of products using dropshipping. Connor has been running ecommerce businesses since 2009 and is also the co-founder of ecommerce outsourcing company FreeeUp.
We talked about the reality of dropshipping, the methods that Connor used to build his business and whether using the same approach could still be successful on Amazon today.
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What dropshipping is really like
There has always been a stigma surrounding dropshipping that it’s a “get rich quick” business model. There are a lot of websites out there saying they’ll teach people how to make stacks of money using dropshipping.
When Connor started his business, he kept the information he’d seen in the back of his mind. But, he also knew that starting a business is always difficult, regardless of the model, and that nothing was going to be easy.
What Connor learned was that dropshipping is like any other ecommerce business model. It doesn’t matter whether you’re wholesaling, private labeling or dropshipping, there’s a lot that goes into it. There’s plenty of moving parts and you need to become an expert at dropshipping in order to succeed.
It’s not just a case of spending an hour here, and an hour there and making a quick profit. You really need to get into the operations of:
- Developing supplier relationships.
- Making sure the product is delivered to customers quickly and accurately.
- Providing great customer service when it’s needed.
There’s a lot of steps and it’s a difficult business to master. But, Connor believes it is one that is totally manageable if you take the time to learn it.
The business model that made $25 million in sales
When Connor got into dropshipping, he didn’t really know anything about the business. He and his business partner were interested by the Amazon marketplace and started buying and selling textbooks at first. But, once they learned about dropshipping, they were really intrigued by the whole idea of never having to touch the products.
Over the years, they created systems and processes that would help them build strong relationships with suppliers. That was the key to their success.
The first step was to find suitable brands, reach out to them and talk to their wholesale department. They would explain that they had:
- A great reputation on Amazon
- Robust systems to process orders
- A strong team handling customer service
Their goal was to prove that they were reputable and could be trusted to sell that company’s products on Amazon.
They were primarily interested in US suppliers who already had a good brand for their product. This resulted in them working with a lot of manufacturers that sold toys, baby products, home goods and sporting equipment.
In essence, the strategy was to seek out a lot of suppliers that other dropshippers weren’t using, and list a lot of products. Then they would slowly eliminate the products that weren’t selling and keep the products that were.
Will the same strategy work today?
This method worked out really well for Connor back in 2010, as Amazon was growing its marketplace and there were far fewer third-party sellers. A lot of brands didn’t understand what Amazon was bringing to the ecommerce space, and they needed educating. Connor’s business really tapped into that, approaching brands to help them sell more online through Amazon.
There are still dropshipping opportunities today. But there are more sellers to compete with and fewer brands whose products aren’t already selling on Amazon. The best route now, Connor says, is to start with product research instead of supplier research. Find ASINs you can really focus on and push hard to build sales, while also looking for similar products.
He recommends looking for products with high bestseller rankings but fewer than five sellers. This indicates that if you can create a good relationship with a supplier to dropship this product, then there is room for you to become the top seller. Once you have one successful product, repeat the process to find others with the same potential.
