Top 3 Drop Shipping Business Models
Hey guys, Trevor here with eCommerce Paradise.
Today I want to talk to you about the different types of dropship in business models.
There are three different types of dropshipping business models that I've worked with, and I recommend them for you. They're all for different types of people and different parts of your journey as well.
If you're just getting started with dropshipping, you'll need a high limit credit card. If you don't have good credit or if you don't have a high credit card, my suggestion is to go out and get a partner who has.
One of the best business models to get started with, with drop shipping is low dollar drop shipping. This means anything between the 20 dollar to about one hundred and fifty dollars mark. Every order that goes through is going to be on average, around fifty dollars or so, and you'll be able to fulfill at least a few orders a day without going over your credit card limit. That's the goal.
When you place your order with the supplier, you'll need to pay them for the product and put it on a credit card before the item gets shipped to the customer. Then, you're going to get paid out to your bank account about three to five days later after the order is successfully delivered. There is about a week or two lag time between when your order gets paid for, when you pay for the order with the credit card, and when you get the money in your bank account. And then you have to pay the credit card off, which takes another couple of days. So you need a credit card that's going to be at least able to cover your average order value times, maybe three to five or maybe even 10 every single day. This depends on how much traffic you drive, how good you are at it, and how many orders you get. But it would help if you had enough credit.
I suggest trying to get a credit card without at least a thousand dollar credit limit if you plan on doing the load. The low dollar drop shipping method I'm going to talk to you about right now. So low dollar drop shipping with Shopify is the first one that I've used. And basically, the way it works is you find a product for sale on aliexpress.com, maybe using the Oberlo app, and you can find all different products, but you've got to find a niche. One particular type of product or maybe even just one product. But once you find that product, you put up a Shopify site, which is really simple. And once that Shopify site is that you run traffic to it through Facebook, advertising your YouTube videos or Craigslist ads or some other form of traffic.
Once you get some traffic, you should start to see some sales if you optimize your website for conversion rate. And once you get a sale, you can start placing the orders with your supplier, aliexpress.com. And that supplier will ship to your customer. You'll get paid out a few days later. And then you can pay off your credit card from there, and it goes like that. So that's a really, really good business model. And to get started, it's actually really simple and really cheap as well. Shopify is like 30 bucks a month. And, you know, Oberlo is free for the first 14 days. It's a small monthly fee after that. And Facebook ads are pretty cheap as well. Once you learn how to hone in on a really specific target market, there's a lot of great training tutorials out there, up with some links in the description to some resources for you if you want to get started with that model. So if you do have some credit or you have a business partner who has credit and maybe is a little bit older and has, you know, an established credit line and you have access to a credit card, that's five, ten thousand dollars and more, you can actually get started with high-dollar dropshiping.
High-dollar dropshipping is really cool because every single order, instead of making five to twenty-five dollars in profit, you'll make between fifty dollars to five hundred dollars in profit. So high dollar dropshipping is great. It's a bit riskier, of course, because you're shipping out expensive products that you're usually quite big in size. But every single order, you get a lot more profit. So if you do it right and cover your risks with insurance and coverage, you will definitely do very well with it. And it's the same methods to putting up a website. It's using Shopify. Use Shopify to set up a website. Stills cost the same to set up the website. And it's the same techniques to convert using conversion optimization techniques that I'll talk about in other videos.
Instead of using aliexpress.com to dropship, usually what you'll want to do is find a USA based supplier. Find a supplier based in the country that you're selling and so that you're shipping times are fast. And that's the key. You want to be able to ship fast to the customer. If they can receive it within a week, then that is fast, and they'll consider buying from you as opposed to somebody else who might take two to three weeks to get that product to them.
One of the main advantages you have over other websites is that you'll be a boutique online retailer. You can provide a boutique experience, hands on education, and authority that people are looking for on that particular product type. So if you sell drones, for example, you'll be able to be that drone specific website. You can teach them all about what drones are, how they work, the different types, and which one is best for their needs, which will then get them into your sales funnel. Hopefully, you may convert them into buying a drone from your store because you're the one who taught them. That's how that method works. And drones are usually in the range of, you know, five hundred to two or three thousand dollars at the most. I think there might even be more expensive ones, but they're very expensive. That's a great niche to start with if you want to start a niche with high drop shipping.
In the main traffic method, you'll be driving people to your website from Google product listing ads instead of Facebook ads. Google AdWords is the platform which those are based on in AdWords is pretty easy to figure out. And what happens is when someone types the search into Google, the pictures they show up at the top are called the shopping ads. And those are product listing ads. You can't drive product listing ads unless you are an eCommerce site. It's specifically for eCommerce sites. They're quite expensive sometimes maybe up to a dollar per click on certain niches in certain products. Depending on the competition, it might not work out to be cost-effective unless you have a very expensive product to sell. But if you do have the expensive products and sell thousand dollars, you're up, and you're making, you know, two to four hundred dollars per item purchased from your site, then it's definitely worth the expense. It drives very targeted traffic because people are prequalified before they show up to your store, which is cool. They have already seen the picture. So they like the way it looks. They've seen the price. So they know, they either had no they can afford it or are interested in buying it at that price on their credit card. And they like the name of your store. So it qualifies them on many levels as a potential buyer.
Now your job is much more important with the sales cycle, with the sales funnel when it comes to high dollar drop-shipping because the buying cycle is longer. More likely than not, people will not buy it the first time they go to your website. They're going to do a lot more research because it's an expensive item. So what you need to do is capture their email address, capture the cookie on their computer and capture their Facebook with pixel. Basically you can retarget to them through email, Google dynamic retargeting ads, which are the little banners you see on the websites across the Web and through Facebook. Retargeting ads and Instagram be targeting ads as well. There are many other ways to drive traffic back to your site as well. But those are the main paid advertising methods that I use. I think it's good that you understand the buying cycle process. That the more times you touch somebody with your marketing message, the more time they'll trust you and your store and come back and buy from you later on. So you have to set the whole sales funnel up for that to work.
Of course, it's a little bit more work, but it's well worth it for those really high commissions guys. Those are the two main dropship in business models I like those the most. You have your own website and it's on Shopify, which is very easy to use platform, and it's an asset that you can sell later on to somebody else.
On this third business model, is a little bit different. It has its own risks and separate rewards. But it's also a very well known and very used business model. It's called a low dollar drop shipping through eBay. The method of fulfillment is actually price arbitrage. The reason it's called is you're not actually buying from a wholesale supplier. You're buying from another retailer online. So people could go to that retailer and get the product for less price than they would buy from you on eBay. They trust eBay so much that they shop on there so often that they don't want to shop around very much. And it's easier for them, and they don't mind paying a little extra to buy directly through eBay and then having to go around to all these other sites and try to find that item for cheaper across the Web. Maybe they have an account established on eBay, and they don't want to take the time or the effort to establish accounts and other Web sites. There are many other reasons people buy on eBay. Still, you can actually take an item off of a website like Home Depot or many other websites like that, that are online retailers. Wal-Mart is one of them. Amazon is another one.
Take that product listed on eBay at a percentage above what it's offered for on that on that other website. So maybe the market is 20 to 40 percent, depending on how much competition there is for that particular product on eBay. And you can definitely get sales I.
I've been doing this in the past, and it worked really well. Now, the point for this is right around 50 to one hundred dollars for sale price, sometimes a hundred and fifty dollars, sometimes a little bit more, depending on the competition. But the cool thing is that as you buy through retailers, you can sign it for cashback programs. And when you ramp this up, you really scale it up. You can get cash back from the credit card that you used to place the order with. And you can get cash back from cashback programs that are basically affiliate programs that are affiliated with the online retailer, seeing a double cashback on every single item in order that you place using this business model, which is really sweet. And that cashback will also help you pay for some of the automation tools because this particular business model uses eBay, which is a huge Web site.
The secret to success with this one is volume. You need to put thousands of product listeners up on eBay to see enough sales to make a decent living. I have a friend that's doing it, and he has 13000 product listings up on eBay right now. He mentioned the tools that he uses, which I've used in the past as well and recommend are hydra lister and skugrid.com.
Those two tools used together can list like crazy to eBay, and then still grid. It automatically updates the inventory and the price on all your eBay listings so you can make quite a bit of money. But it's not using, suppliers, wholesale suppliers. So you need to be wary of that fact and understand that things do change quite a bit. In the retail world, a lot more than a change in the wholesale where things still change in the wholesale world with suppliers, you know, they might update products from season to season and whatnot. But things change a lot in the retail world even more often than not.
Those are the three dropship business models I know, use, and recommend. If you are trying to get started now, I hope that makes sense to you. If you have questions about any particular one, definitely comment below and ask me. I'm happy to help.
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eCommerce Paradise was created by Trevor Fenner of Seattle, Washington in 2015 to help you, the entrepreneur, to start and scale your own eCommerce business. Trevor owns multiple 7-figure eCommerce stores and is a digital nomad, traveling the world while working remotely with the help of his team of virtual assistants from around the world. Trevor is currently located in Bali, Indonesia, and is a passionate skateboarder, surfer, scuba diver, photographer, environmentalist, outdoorsman, fitness and tattoo enthusiast.
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