When doing a simple search for ‘dropshipping’ on Google or Youtube you will see results full of get rich quick promises. With so much false information online, I can only assume that the majority of these people advertising these services are more interested in getting a high volume of views in return for higher advertising revenue or are simply selling a coaching service. If you’ve read my full story when it comes to running a dropshipping business then you will know that I’m no stranger to the world of e-commerce. I am going to tell you the absolute truth as to whether or not you can actually get rich quick from dropshipping or even get rich at all as well as how long you should realistically expect to earn money from running a dropshipping business.
Is dropshipping a get rich quick scheme?
In short and straight to the point, you absolutely can not get rich quick from dropshipping although this also depends on how much money you think is ‘rich’. For the most part, it’s a no. To put things into perspective, I once had a dropshipping business with a £1million turnover with a 13% net profit mark up which meant I made approximately £130,000 per year. This wouldn’t have been a bad wage if I didn’t have staff, an office and a small warehouse to pay for.
The great thing about running a dropshipping business is that you don’t actually need all of these things but being young and inpatient I employed the staff to help list the items for sale on eBay, Amazon and my website as well as having a warehouse for when I shipped across Europe. If I sold a product overseas then I would have the item shipped to me via next day delivery where I would remove the shipping label, put on a new one and have the courier come and collect it later on the same day. The only reason I done this was to reduce my VAT bill each quarter since you wouldn’t have to pay VAT on items sold across Europe (you could still claim back the VAT on purchases made in the UK) although I am not sure on the rules since Brexit.
To get to this £130,000 profit I had 15,000 item slisted on eBay, Amazon and my website. That’s 45,000 total listed items! My team would individually list approximately 150 items each per day whilst also finding time to check stock levels. When doing the maths it would take you (individual) 300 days to get to this level of sales. So a year’s worth of work to make a yearly income of £130,000 doesn’t sound bad but the chances are that you will have other work commitments meaning that you will be lucky to list half of this amount online around working a full time job and even if you did have the time, you will suffer from cash flow issues which I will get more into below.
Why does cash flow stop dropshipping from being a get rich quick scheme?
Let’s be honest, one of the biggest advantages of running a dropshipping business is that there are low upfront costs which for the most part, attracts those of us with little start up funds. The fact of the matter is that the more capital (start up funds) you have to start your dropshipping business, the faster you will be able to grow it.
The problem with all selling platforms is that it’s going to take an average of 2-5 working days to get paid. Let’s say that you start dropshipping with £500 to purchase your products from your chosen supplier, as soon as you reach sales of £500 (cost price) within a day or 2, you will have used your total £500 and have nothing left in the bank to purchase more items as you carry on selling. Even if you have made sales of £700 (£200 profit), you won’t get that money for another few days which means what happens when the next day comes and you make no sales? You will have no money to purchase the items from your chosen dropship supplier! In fact, the only way around this is to pause your online stores until you do get paid. For this reason, you can only grow as fast as your cashflow (bank balance) allows you to.
Can you get rich from dropshipping over time?
So we have established that the biggest reasons you can’t get rich quick from dropshipping is due to 2 main factors which include the time it takes to list your items for sale across your chosen selling platforms and the fact that you can only grow as fast as your cash flow allows but is it possible to get rich from running a dropshipping business at all? I am not sure what income you need to class yourself as ‘rich’ but there are still some limits in place, especially if you plan on only ever running the business by yourself with no employees.
Using the above information as an example, let’s say that you want to reach a monthly income of approximately £10,000, equal to £120,000 per year. I wouldn’t say that this is rich but it’s certainly a healthy income for 1 person working from home. To reach this goal, you would need to list 15,000 products on eBay, Amazon and your website giving a total of 45,000 listings. Of course, this number can vary quite significantly depending on the value of your products and the products you are selling. To give you an idea, I was specializing in the commercial kitchen equipment industry with an average order value of £300.
Let’s say that I was in a position where I could start this business full time then it would take me approximately 1 year to list all of the items for sale. In theory, providing that you can keep finding reputable dropship suppliers then you should be able to grow your dropshipping business year after year. If you grew your turnover at the same rate each year then in 5 years that £10,000 could be £50,000 per month. I don’t know about you but that’s certainly a rich income in my books. But. And it’s a big ‘but’. You certainly won’t be able to grow or run a business to this size by yourself!
The reason why you can’t grow a dropship business to this size without help is because of the the time it takes to maintain your business. It will consume all of the time needed to keep listing new products. Every time you make a sale, you have to process the order. Every time you process an order you need to create an invoice. Everytime you create an invoice you need to make a record of the invoice both for the sale and purchase on your accounting software. The more sales you get the more returns and other issues you will have to deal with. With all of this in mind, you can certainly make a healthy income from dropshipping but to get rich you are certainly going to need help getting there.
My overall thoughts on getting rich quick from dropshipping
Yes you can get rich by running a dropshipping business but can you do it quickly? Unfortunately not. Treat your new business venture the same as any other and grow it steadily and always within your cashflow limits. If you grow too fast and outside of your cash flow limits then your new business will unfortunately collapse.
If your thinking about starting a new business in the world of dropshipping then due to the reasons above, I wouldn’t recommend quitting your day job just yet. Start your new venture on the side of other work commitments until such a time that you have a healthy enough bank balance and income to justify leaving your current job. For more advice on starting your own business then I’ve written a ‘how to start your own dropship business here. For more help and advice, I have a full category of dropshipping articles you can read here.