An Overview Of Drop Shipping

Dec 18, 2013, Income, Online Marketing

Are you taking a closer look at the opportunity with drop shipping, online & retail arbitrage? Is it really possible to earn a significant amount of money selling things on eBay and Amazon using a drop shipping model like what’s taught by many in the internet marketing space? Read on to find out my point of view…

I was reluctant at first, hesitant to jump into the world of drop shipping, retail & online arbitrage, thinking it may just be another quick-money opportunity out there that may earn you a few hundred extra bucks before the opportunity gets completely saturated by thousands of other Internet Marketers.

But, I finally realized the real potential, jumped in quietly on my own without telling anyone, applied what I learned from a few top sellers offering training on what they do, and I was surprised at just how much I began to make within my first few days!

So, let’s cover the details of the business models of drop shipping, retail & online arbitrage, the potential market you can claim a piece of, and why you might want to jump in on the action quickly.

What Is Drop Shipping? …Drop Shipping Basics:

Drop Shipping - DS DominationQuite a few online marketers and people in the ‘home biz’ or ‘make money online’ space are talking about things like drop shipping, starting Shopify stores, etc., but seem to be confused about what drop shipping actually is.

Basically, when drop shipping, the retailer (person/company making the sale) never handles the product, but has the product shipped directly from the wholesaler to the customer.

Many sellers do this through online sites such as Amazon and eBay. Often, those sellers will list a new item on eBay, and then purchase the product from their source/wholesaler and ship it directly to the purchaser or highest bidder. The seller then profits the difference, or markup, between the selling price and their wholesale purchasing price, minus any selling and merchant feeds incurred from selling on eBay.

You can buy an item on Amazon, for instance, mark it as a gift so your purchase price isn’t listed on an invoice inside the box, and ship it to your customer who bought the item on eBay.

The really great advantage to drop shipping is that you can sell items without having to worry about the inventory, handling, and shipping of the item…just make the sale and then purchase the product and ship to customer.

Now, at this point, if you’re like me when I first heard about this, you’re asking…

“If you’re marking up the price of the item and listing it on eBay, why would people buy the product from you on eBay when they could get it cheaper somewhere else online?”

…Great question. Like I said, I had that question myself and that held me up from thinking it was a viable long-term opportunity…until I realized the people buying on eBay are buying there for a couple of reasons:

1.) Not aware of being able to shop around other places – they know eBay and are comfortable there and familiar with it, they don’t know a lot about the Internet and being able to find items at so many other places.

2.) The convenience – Many wealthy people don’t want to spend their precious time price checking and looking for the lowest rates possible. They value their time, so when they see something they like, they want to just click BUY and be done. Doing so on eBay works well for them. They see an item like what they’re looking for, click buy, and they’re out of there back to what they were doing.

My business partner Kristian, explains the concept well in this short 90 second video:

What About Saturation? Won’t eBay Get Overrun And The Method Won’t Work?

So…now you see the potential for you to be the middle man, between the person on eBay wanting the product, and the wholesaler/retailer selling the product. You can simply list an item for sale on eBay that you can buy elsewhere, but people on eBay will buy it from you.

Mob Of People Market Saturation…BUT, if it works so well, and it’s so simple, and many home business entrepreneurs are doing it, you’re now thinking, “Won’t the opportunity get saturated?”

Honestly, it can get saturated in some areas…the products that all the newbies gravitate towards on sites like Amazon…things you look around your house and quickly pick out; the Keurig coffee makers, for example. Tons of people will list those, compete with each other, and end up reducing profit margins to make the sale.

But if you’re good at researching products, diving deeper into sites online that supply products, you’ll find millions of opportunities to sell products on eBay that not much other competition is picking up on.

Here’s a few stats to show you the tremendous size of the marketplace on eBay.

  • In 2012 eBay sales were $75.3 billion
  • Every 5 seconds a cell phone is sold on eBay
  • Every 6 seconds a pair of shoes is sold on eBay
  • Every 49 minutes a Ford Mustang is sold on eBay
  • There are 112 million+ active buyers and sellers worldwide on eBay
  • Every day there are 250 million + queries to the eBay search engine
  • There are 400 million + live global listings on eBay
  • There are 2+ billion page views each day on eBay

Online Shopping Is BIG…Add to that the stats for Amazon, and all of the other sources to find products online, and you’ll see that it would take millions of people using this business model before it’s even a ‘blip on the radar’ of saturation.

This is not some loophole that, if enough people are exploiting it, will get shut down. This is participating in the same thing that has been going on since the beginning of humanity – commerce. The only way the drop shipping model gets saturated is if people stop buying and selling altogether…and you and I know that’s not happening!

My Personal 2014 Income Goals:

6-Figure Income with DS DominationEvery year around this time, around the Christmas & New Year holidays, my wife Tiffany and I go through financials, preparing year end statements and charts to analyze the year that has past and also spend time planning out the next year.

It’s good to take a step back, analyze what’s been working, what’s not working, what trends we see happening in the marketplace, and plan out what I’ll do in the next year to increase our income and capitalize on opportunities.

Sometimes, that means I put my head down and keep focusing on what I’m doing. Other times it requires casting aside things that are holding me back, or no longer plowing lots of energy into things that have hit their peak and are now fading. And sometimes, it means I need to go in a new direction and build up a new stream of income.

This year I’m focusing on a few things that will be added income streams for us:

  • I plan on earning $100,000+ with drop shipping and training from DS Domination, and using the automation software DSD provides
  • Earning at least $50,000 from Facebook Pages and small niches developed from those pages that I can market to
  • Improving a niche site I already have, but finishing a Kindle book to compliment the site and offer to that niche. This should be an extra $50,000 in income from this niche alone.

I’ve already begun writing my eBook that fits in with my niche website, I just need to get back to it and finish it. And I’ve already got Facebook Pages built, just need to keep increasing the fan base (Likes) and their engagement.

I’ve already listed items and made about $200 profit my first week listing and selling items. That may not sound like a lot to you, but I did that with only a few hours getting everything set up and then some time getting the products ordered, along with doing everything else I do online. Or perhaps that $200 sounds like a lot and it’s just what you need right now…that’s fine too, this program will show you what to do to start making money right away with this system.

But I’m already on track to building this up to a $300/day profits income stream.

My Review & Thoughts On Drop Shipping (*Dec 2016 Update)

After originally creating this post shortly after I began drop shipping in 2014, I went on to make tens of thousands of dollars in profit from drop shipping in 2015 and the first part of 2016. Admittedly, not the 6-figures that I had as a goal, but thankfully some other areas of my business picked up the difference.

Amazon was where I sold the most items through drop shipping, but earlier this year they changed their position on drop shipping in their Terms of Service. They’re totally fine with the drop shipping model, but they now require that the package delivered to your customer doesn’t have any other companies name or logo on the invoice/packing slip than you or your seller/company name on Amazon.

So if I was selling an item on Amazon, and buying it from Overstock, having it shipped to the customer, I could technically no longer do that. I know many sellers who still are, with no problems, but I chose to avoid the issue altogether by no longer drop shipping.

Early in 2016, I moved the physical product sales part of my business over to Online & Retail Arbitrage, where I would buy products at a discount or wholesale both online and in retail stores, ship them into Amazon warehouses, and sell them through Amazon FBA (fulfillment by Amazon). That worked great for a while, but it too came with obstacles to overcome; namely increased competition that drove selling prices down, and Amazon’s change of long-term storage fees that made it unprofitable to keep items in their warehouses for longer than 6 months.

Today, I still highly recommend drop shipping and arbitrage to some people, if selling physical products fits their skills, interests, and personality, even with the obstacles and road blocks along the way, it can be a profitable venture for many.

Personally, it didn’t fulfill my passions, and took time away from me being able to focus on other areas of my business that I thoroughly enjoy.

Overall, drop shipping can be a great way to start earning some extra cash, with little investment, and you can find a lot of great training online to teach you how to do it, but my focus and how I can help you best lies elsewhere in creating a simple online “lifestyle business” that doesn’t require you to do anything with physical products…simply build a list of people you can help (in some niche, interest, passion, topic, etc.), build a relationship with that list of followers, and sell them what you have to offer through digital courses, coaching, membership sites, private FB groups, etc.

I hope this review of drop shipping was helpful for you! Let me know in the comments if you have any questions!

Live Life On YOUR Terms,

Brent Wehmeyer

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