If you’ve found this article then it’s likely that you’ve seen all of the YouTube videos and articles promising big profits with a luxury lifestyle from dropshipping but just how true are these articles? Just how profitable is dropshipping? If the information is full of false hope and promises then what have these content creators got to gain out of giving misleading information? If they are living such a great life dropshipping with such big profits then why bother creating such content in the first place? Maybe it’s just to gloat? If you’ve read my dropshipping story then you will know that I’m no stranger when it comes to dropshipping, once running a large scale dropshipping business with a £1million turnover and still do dropship, but on a much smaller scale as my main priority now is my gardening and landscaping business. Here I am going to give you the absolute facts on just how profitable dropshipping is and how much you should realistically expect to earn.
Can you make a living dropshipping?
If your still getting to grips understanding what dropshipping is then you can read my full guide here. If you already have a good understanding and are now wondering if you can really make a living from dropshipping or if the whole idea is just a fairytale then you will be pleased to know that yes, you absolutely can make a living from dropshipping! But just like any other business, it takes a lot of time, dedication and hard work. One of the biggest problems running a dropshipping business is that you will struggle to compete on price, which means that you will need to list a lot of items to get your volume of sales to a point that you can make a living from dropshipping.
The reason that you will struggle to compete with price when selling your products online is that you aren’t a wholesaler, but you will be competing with wholesalers. You see, in order to get the best prices you need to purchase in bulk. The more you buy the more you save. Every time a product changes hands, each hand (or company) needs to make a profit in the process. Let’s say for example that you have a wholesaler that purchases the items in bulk and then sells those products on eBay, Amazon and their website for a profit and then decides to offer a dropshipping service on the side. Whether the wholesaler sells their items online or to you, they need to turn a profit. They may offer you a dicounted dropship price, cheaper than when they sell the product themselves, but it will still be a higher price to what they are paying for the product when purchasing in bulk. This means that as long as there are other sellers competing with the same product on the same marketplace that purchases in bulk, you will have a tough time trying to compete on price. This doesn’t mean that you can’t make any sales – You can!
With the above in mind, to be able to stay fairly competetive you are going to be making small profits. I aim to make 10 to 15% which might not sound bad but depending on what you sell, you are going to have to reach a high turnover of sales in order to make a living from dropshipping. Let’s say that you want to earn £3,000 per month to be able to quit your job and dropship on a full time basis – This means that you will need to turn over £20,000 – £30,000 in monthly sales in order to make your £3000 profit with a 10-15% profit margin.
You will need to take into account eBay and Amazon seller fees when working out your selling prices across the different marketplaces but if you end up way above a competitor’s selling price then don’t worry! You just need to be clever when it comes to selling your products. For example, let’s say that you have a Teddy bear for sale and it’s already listed for sale and titled ‘cute Teddy bear’ across multiple marketplaces. Well then you need to add additional keywords to the title. If a potential buyer searches ‘child’s soft toy’ then guess what – That ‘cute Teddy bear’ isn’t going to show up in search results. When trying to make a living from dropshipping you really need to make use of the allowed number of characters in a single title. In this example you could name the product “Cute Teddy bear soft toy baby child’s gift present”. If someone searches “baby soft toy gift” then your going to show up where your higher priced competitors won’t be! There are more ways to get more sales dropshipping which I will include in my next article. When written I’ll include a link here.
Can you get rich quick dropshipping?
I wish you could! But honestly, there is no way of getting rich quick from dropshipping. Even if you find a dropship supplier offering a data feed that allows you to import all products to a marketplace in one hit then you will make less sales than you would listing them individually by yourself due to the loss of additional keywords needed as written above.
The fact of the matter is that it takes approximately 5 minutes to list each item. This equates to just short of 100 items listed for sale in an 8 hour day. In a 20 working day month, you would have listed 2000 items on let’s say eBay. I’ll be the first to tell you that you need more then 2000 listed items to even make a living, so your definitely not making it rich from dropshipping in a month.
If you want to make anywhere from £1,000 to £2,000 per month and your selling cheaper items such as giftware then I would say that you need 4,000 items on eBay with an additional 4,000 mirrored items on Amazon which gives you a total of 8,000 items. Of you have enough time in the day around other work commitments to list 100 items then this will take you 4 months. Bearing in mind that eBay and Amazon take 3-5 working days to pay you then you will need a good capital to support the cashflow needed as you purchase the item but wait to get paid. If not then you will have to keep pausing your online stores until you get paid causing a delay with the speed of growth with your dropshipping business. I’ve written more about this in my article titled ‘how to start a dropshipping business‘.
The more expensive the products you have listed for sale, the further your 10-15% profit margin will get you. The smaller products means less profit per sale, but a higher turnover in sales. I’m not sure what your idea of rich is, but at my height my dropshipping business turned over £1000,000 with a 13% profit margin and therefore earning a net profit of £130,000 per year before business expenses. I had 15,000 products listed on ebay, Amazon and my website. That’s 45,000 individually listed items. I had 2 (sometimes 3) data input staff to help get me there however, so when you take staff wages and other business expenses into account I really wasn’t earning that well considering the high turnover. If you want my advice, work from home and dropship by yourself with no employees, it will take longer to list all of the products but once you do, you can just sit back and manage the stock levels of the items listed whilst keeping expenses to a minimum.
How long will it take to make a living dropshipping?
How long it takes to make a living dropshipping really depends on 2 things. How much time you have to list your items for sale on various marketplaces and how much capital you have to keep a healthy cashflow whilst your new dropshipping business grows.
As I’ve written above, and depending on what your selling, I would expect to earn approximately £1000 to £2000 per 8000 items listed for sale. By 8000 items what I really mean is 4000 items listed on eBay with the same 4000 items listed on Amazon as you get a feel for which marketplace has a better audience for your products. For example, when I sold kitchen equipment I would get 70% of my sales from Amazon but when I sold giftware 60% of my sales came from eBay. In an ideal world, you would sell more on your website as there are minimum seller fees (typically less than 1%) but this takes time and money (marketing) to grow. If you sell on both marketplaces, you may have buyers search your dropshipping business name and find your website. The more marketplaces you list your products for sale the better.
If £1000 to £2000 is what you need to quit your day job (bearing in mind it your sales will continue to grow) then listing 100 items per day will take you 4 months to make a living from running your own dropshipping business. If we break it down further, you should expect to earn £250 to £500 after the first month and continue to grow at the same rate month after month providing you have the cash flow to support this.
The reason I talk about cashflow so much is because this is essentially what killed my first dropshipping business. You can read my full story here. Depending on your start up capital will also depend on how fast you can grow your dropshipping business.
It wasn’t too long ago that you could start a dropshipping business with little to no money but this was when PayPal was used when selling on eBay since PayPal offered instant cash withdrawals with the money being in your bank in seconds.
When you sell a product online, you then need to pay the dropship supplier in order to get the order sent out to the customer. The problem nowadays is that eBay and Amazon typically take 3-5 working days to have the money transferred to your bank account which means that you will have to initially pay for the order out of your own start up capital and wait a few days to receive the funds with profit. Even if you have a healthy start up capital, quick growth can catch up with you.
Let’s say that you have £1000 in the bank and you sell, for example, £1500 worth of products in a day. It costs you £1000 to have the dropship supplier send the items to your customer so you’ve made £500 (minus seller fees etc) which is great, right? But it takes 3-5 working days to receive your funds with profit so you are going to be sitting with a £0 balance for a few days. What happens when you sell another £1500 worth of products the next day? That’s right! You can’t process the orders.
The only way around this with limited funds is to keep a close eye on the value of the products you have listed for sale and when enough sales brings you close to your limit it’s time to put your online shops and listed products on hold. There are holiday settings etc available to pause your shop which will allow you to wait to get paid before setting everything back to active. Since you will be getting paid with profit, you will be able to slowly but safely grow your dropshipping business. It will however, have an affect on how long it takes to start making a living from dropshipping.
With a healthy start up capital and enough time to list 100 items per day, you should expect to earn a living from dropshipping in or around 4 months.
How much money can I make dropshipping?
Now that we’ve established that dropshipping is in fact a profitable business venture you may be wondering how much money you can make dropshipping and the truth is, with enough time, dedication and hard work, you can make a lot of money dropshipping.
There are ofcourse some limitations as there are only so many hours in a day that you can work yourself. Finding dropship suppliers that offer live stock feeds or even offer an email service where you receive a notification as soon as an item runs out of stock will save you a huge amount of time compared to using suppliers that don’t. Saving time managing your stock inventory means having more time available to list new products for sale.
As well as the above, it takes time processing the orders. Approximately 20 per hour. Once your sales increase you could easily spend a good 2 or 3 hours processing the orders through your dropship supplier.
If listing items, managing stock and processing orders isn’t time consuming enough then there’s always messages to reply to as well as issues to resolve such as faulty products or even items that simply haven’t arrived which can take longer than processing the orders themselves. Oh and don’t forget about the time it takes to keep on top of your accounts!
Don’t let the above put you off though – I was earning a healthy £3000-£5000 per month before hiring my first member of staff in order to keep growing the dropshipping business. He would spend all day listing items whilst I spent my time on everything else.
The point is, how much you want to earn dropshipping depends on how much time, risk and effort your willing to put into it. Nowadays, the thought of earning £3000-£5000 per month working from home is more appealing than making £10,000 per month whilst worrying about additional expenses such as staff wages, office rent etc..
Just to give you an insight to how much you can earn dropshipping and how long it takes to make a living – My first dropshipping business which I started in my early twenties whilst extremely money hungry yet probably not actually being mature enough to manage a business of that size, turned over £1000,000. It took 4 years, 2 (sometimes 3) members of staff, an office and a warehouse to reach this figure. The net profit before company expenses was 13% which meant that my dropshipping business earned £130,000 in its forth and final year. Once you deduct the commercial rent, staff wages, accountantlcy fees and everything else I only earned £50,000 for myself. That doesn’t sound like alot from such a high turnover of sales but as long as you keep on top of everything then it’s easy work and my best years were in that office! You can read my full story here.