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The Advanced Guide To How To Start A Dropshipping Business

Do you want to start a dropshipping business but still have some questions not answered yet? This article covers 45 most asked questions about this business.

We will review the dropshipping industry in its different aspects and provide you with the information you need to get the maximum of its opportunities.

Moreover, towards the end of this blog post, we will show some alternatives to business to help you make the right choice.

So let’s go straight to the point: 

What Is A Dropshipping Business?

A dropshipping business differs from the traditional one because a seller doesn’t keep inventories of the products he wants or is willing to sell.

To get started with this order fulfillment method as a dropshipper, you will purchase your inventory from the manufacturer or wholesale, who will keep the products on your behalf.

You will act as a middleman between customers and suppliers who will ship the items directly to clients on your behalf.

a dropshipping business

What Is The Difference Between Dropshipping and eCommerce?

The difference between the two business models is that eCommerce requires a client to visit the seller’s online store, select the products he likes, add them to the cart, and purchase.

A seller will then pack the items, label them with the client’s shipping address and give them to a shipping company for delivery.

As for dropshipping, it is another eCommerce business model that doesn’t require sellers to hold inventories on their own, as outlined in the first question.

How Big Is Dropshiping Market?

A report from Grand View Research shows that by the end of the year 2018, the estimated value of the dropshipping market was $102.2 billion in the US.

Moreover, this market share was expected to increase by nearly 30% in 2025, meaning that this industry is a must consider if you want to start a profitable business online.

The eCommerce industry has snowballed in the last years, and it has significantly impacted the emergence of the dropshipping business model in the US and wordwide.

How Safe is Dropshipping? 

Dropshipping is a safe business model that can earn you lots of money, especially since it doesn’t require you to hold inventories and significant capital to get started.

However, being safe doesn’t mean this business is a get-rich scheme, contrary to some online malicious people pretend. Such people want to take advantage of newbies.

So, it will help if you take the time to learn this business from a reliable source, master its ins and outs from scratch, and make the maximum of it.

Is Dropshipping Profitable?

Of course, dropshipping is a profitable business that can help you make a decent living if you know how to maximize its opportunities.

It is as profitable as affiliate marketing because both businesses don’t require to deal with inventories and the related fees.

However, you will still need capital to start a dropshipping business, unlike affiliate marketing, whose barriers to entry are low.

You need only to succeed as an affiliate marketer: time, patience, and commitment because profits are not immediate.

If this industry interests you, you can use this link to start learning affiliate marketing from a reliable source.

Is Dropshipping Saturated?

Not all! Avoid falling into the traps of some people found here and there online and on Youtube pretending that dropshipping is a dead business, not worth it again.

Most of these people want to attract you into their hypes supposed to earn you lots of money in no time, but believe me, such shortcuts don’t exist.

So, dropshipping is still alive, has too many years to continue thriving,  and can help you make good money from your home’s comfort, provided that you know how to leverage its potential.

how does dropshipping business work?

Is Dropshipping Passive Income?

This is another of the most asked questions by people who want to enter this business. So the answer is Yes, and I will show you why.

Indeed, as said previously, dropshipping and affiliate marketing are the most profitable passive income sources you will ever find.

You can, for example, start with the Spocket marketplace that features plenty of trending products in different niches.

First, pick your preferred niche and products; next, start promoting them to your target market. The more sales you will generate, the more money you will make.

However, remember that you need to have some online selling skills to make these businesses work for you.

At What Age Can You Start Dropshipping? 

Like any other business, the legal minimum age to start dropshipping is 18, but you can still do it early if your parents consent.

Before subscribing to an eCommerce platform or making purchases online, you must have a credit card, and this is where your parents can help if you are under 18.

You will see some success stories from young people who earn lots of money online, but they are not too many. 

What License Do You Need To Dropship?

It will all depend on the country or state you reside in and the platform you deal with.

For example, if you are in California, you will need a standard business license from this state before getting into dropshipping, unless you accept not to sell restricted products.

If you live in another state or outside the United States, it will help if you check the requirements in the matter as stated by the competent authorities.

However, most eCommerce platforms don’t require a business license. Once you have a website, you can open an account and follow the indicated process to start your business. 

Do Dropshippers Pay VAT?

First of all, the role of a retailer or merchant when it comes to VAT is to collect these taxes from customers. VAT is included in the purchase price.

Once a seller has collected these taxes, he must reverse them to the fiscal authority according to the rules governing them in the country the sales have occurred.

So the short answer to this question is that as a dropshipper, paying VAT or not will depend on where your supplier is located or reside.

It will also help if you consult with your accountant or financial adviser for more information and clarifications about the topic.

How Many Hours Do Dropshippers Work?

There is no typical answer to this question because many factors enter into action when managing this type of business.

According to a specific survey, dropshop owners spend between two to eight hours a day running and managing their online stores.

It will all depend on the size of your business, the ressources at your disposal, and the effort you want to put in to make it successful. 

Do Dropshippers Pay Taxes?

Of course, you must pay taxes as a dropshipper as you would do for any other business. Otherwise, you will incur huge risks.

It depends on where your business is located, as each country has its fiscal law. Ensure always to understand the law applicable in your country and how they can impact your business.  

You can read this article that reviews the best free tax preparation software in the US and choose the most appropriate if you don’t have one yet. 

Do You Need An EIN To Dropship? 

The need for an Employee Identification Number (EIN) or not as a dropshiper depends on your business type.

You don’t need an EIN if you do this business as a sole proprietor. The law allows you to pay your tax return based on the realized profits.

However, if you have a dropshipping LLC, corporation, or partnership dropshipping business, you must request an EIN to operate legally.  

EIN for dropshipping

Is Dropshipping A Pyramid Scheme? 

Some people also ask if dropshipping is a multi-level marketing or pyramid scheme, but it is not.

If you are new to pyramid schemes, they are unsustainable business models in which people invest money and invite others to do the same without offering authentic products or services.

Afterward, the MLM owners use the collected money to pay members some revenues until the business becomes unsustainable and collapses.

On the other hand, dropshipping is legal, sustainable, and profitable as long as you know how to leverage it.

Can You Start Dropshipping With No Money? 

Dropshipping is one of the most convenient, affordable, and low-risk eCommerce businesses, but there is no way to get into it without money.

So, if you are an online entrepreneur and this business interests you, you will need your own capital or borrow it from financing institutions.

If, for example, you live in the United States, you can use an online platform like Fundera that allows business owners to apply for many types of loans and grants in one place.

Fundera is free to use; the owners will not charge you a penny. They serve as middlemen between the borrower and the lending financial institution.

How To Find A Dropship Supplier?

You can use many online platforms to find suppliers of high-quality in-demand products in the United States, the European Union countries, and worldwide.

Spocket, Inventory Source, and many others are among the top eCommerce dropshipping software.

Both platforms are popular US-based, allowing users to partner with the suppliers of the best products, but Spocket is less expensive than Inventory Source.

However, if you need suppliers from the US and European countries, we recommend using Spocket. You can read the Spocket review to learn more about this platform. 

Can Dropshipping Be A Side Hussle?

Of course, dropshipping is a good side hustle for many reasons.

  • Dropshipping has been a legal business model since the 1960s, and popular brands like Wish, Gymshark, Wayfair, Wish, and Zappos use it.
  • It doesn’t require holding inventories. Droppshipers rely on suppliers to deliver the sold items directly to their customers.
  • You don’t need huge upfront capital to start this business.
  • This business is profitable currently, but it is also expected to keep rising in the coming years.
  • Dropshipping platforms like Shopify, Oberlo, Spocket, Inventory Source, etc., will do the heavy-lifting work and help you find top suppliers.
  • Unlike affiliate marketing which takes longer to get results, dropshipping can be profitable in less time if you have the budget to promote your business, but it is not a get-rich-quick scheme.
  • Moreover, this business allows you to work from anywhere, including your home’s comfort.

What Percentage Of Dropshippers Are Successful? 

Answering this question is not as easy as you may think because many factors come into play when it comes to the success or failure of a dropshipping business.

Your success will depend on whether you have a website to promote the chosen products, the target market, how you manage your inventories, etc.

We have shown the platforms you can use to find the best suppliers. Spocket is recommended if you want to sell quality products from the US and European Union countries.

However, Inventory Source is more significant and works with US Direct, which features directories of millions of high-end products, especially if you live in the US.

Why Do Most Dropshippers Fail?

According to specific statistics, 90 percent of dropshippers fail. We will summarize the leading causes of such a high failure rate below.

i) Niche selection: Be wise enough when selecting a dropshipping niche and suppliers. If, for example, you target US or European Union markets, the Spocket sofware is the most recommended.

ii) Expecting fast results – You must be patient enough to build a sustainable dropship business. It is not a get-rich scheme, unlike what some online malicious people pretend.

iii) Lack of resources: This business doesn’t require a lot of investment, but you will still need some money to make it work (advertising, paying the used platform to use, maintaining yiur website, etc.).

iv) Lack of support – The provided support can also impact the success or failure of yiur business.

v) Shiping delay: This factor can also influence the failure and success of a dropshipping business, but there are also some other reasons.

dropshippiers failure

Can You Dropship From Random Websites?

We do not recommend using random websites when operating this business. Instead, you must find directories of top dropshipping suppliers and choose the most appropriate.

It is where platforms like Inventory Source, Syncee, CJdropshipping, US Direct, Printful, Dropcommerce, Dripshipper, etc., come into play.  

What Are The Advantages Of Dropshipping?

This business offers many benefits, including low startup costs, as already outlined. You don’t need to hold inventories and support the related management fees.

Many people fail because they want quick profits, while dropshipping is scalable, over time business. It requires patience if you’re going to build a sustainable business.

Other dropshipping benefits are a wide array of high-quality products to promote, the flexibility to operate anywhere, etc.

However, this business also has some challenges, as outlined in the following question.

What Are The Disadvantages Of Dropshipping? 

As a dropship retailer, you will rely on the suppliers of your products while being accountable to your customers.

If, for example, your supplier doesn’t execute clients’ orders as promised or on time, you can pay fines due to customer complaints.

Thus, you must be careful to select and partner with experienced suppliers. Avoid adventurers who can harm your business. 

Another challenge this business face is the high level of competition. It will help if you first learn its ins and outs to make the most of it. 

Is Dropshipping A Full-time Job?

It will all depend on your making money goals, how fast you want to reach them, and the resources (money and time) you devote to your business.

Some people start dropshipping on a part-time basis and keep doing their regular jobs as the primary source of income.

When this business starts becoming profitable, and they feel the need to scale it, they shift from part-time and devote themselves entirely.

So, to make things easier, it will depend on whether you want to do this business as the primary resource of your income. The more time you devote to it, the more you will succeed.

What Is Reverse Dropshipping?

If you opt for the reverse dropshipping model, you will source high-quality products from countries that import them and sell the items in countries that export them.

If you ship products from Japan, Korea, or any other country and use the reverse dropshipping model, you will source those products outside of those countries and ship or sell them.

This type of business offers many benefits such as high-profit margin, facing less competition, easy return process, ability to scale your transactions, and lots more.

How To Pick Dropshipping Products?

The first step is to choose a niche you are interested in and the market to address (the target audience).

Once done, you will find suppliers of top-rated products your market segment or public needs.

It will help if you consider both steps seriously as they will significantly impact your dropshipping business’s success or failure.

Take the time to research suppliers of high-quality products your segment market needs while being less competitive.

How Much Should You Charge For Dropshipping? 

Dropshippers don’t fix the pricing of their products randomly. Below are the essential factors to consider.

First, you must know the expenses incurred by your business or forecast them for the coming months, including unexpected costs.

These expenses typically include the costs related to advertising, shipping, website fees, the fees charged by the used platform, salaries, etc.

Other criteria to consider are your competitors’ pricing, the percentage discounts you plan to offer to your clients, your profit margins, etc.

Is Shopify Dropshipping Worth It?

The quick answer is Yes. Shopify has been one of the leaders of the dropshipping industry since 2006. It has helped many individuals succeed in this business and continues to do so.

This eCommerce platform is as good and efficient as Bigcommerce, Magento, OpenCart, and WooCommerce.

You can use it to open an online store. It has a clean, easy-to-understand, and user-friendly interface.

However, several users say that BigCommerce is better than Shopify regarding features designed for sales and making your business more profitable.

build a dropshipping business with BigCommerce

How Much Does The Average Dropshipping Store Make?

This is another question many people who want to get into this business ask, but it is not easy to answer accurately.

Your success will depend on many factors, including your experience in online marketing, the used adverting methods, and the effort you put in to build your business.

If you have a budget to use PPC ads and know how to leverage this method, you can use Google ads, Microsoft ads, and ads from social media networks like Facebook. They all produce quick results.

You may also consider using content marketing, but this method takes a long time to produce significant results. It requires persistence and patience.

Some dropshippers earn an excellent monthly income to live comfortably, while others make a few hundred dollars or nothing.  

Is Dropshipping On eBay Worth It?

According to Statistica, more than 180 million individuals used the eBay marketplace in the fourth quarter of 2020 to purchase the products likely to satisfy their needs.

Such a high number of clients makes eBay one of the most popular retail platforms in the US, even if it is still behind others like Amazon.

So, the answer to whether eBay is ideal for dropshipping is yes. It will depend on the platform you want to use, as the industry has many.

Can You Use Amazon To Dropship?

Yes, nothing prevents you from building a sustainable dropship business around Amazon.

This popular online marketplace has helped many people worldwide become successful dropshippers.

Amazon’s marketplace is so huge that it has more than 300 million active users, and the figure keeps increasing. Moreover, this platform processes over $280 billion in sales a year.

So ensure to abide by Amazon policies or rules if you want to use it. Otherwise, they will suspend and close your account.

What Does FBA Mean In Shipping?

Once you apply to become a seller on Amazon and this platform approves your request, it will grant you a solution called FBA or Fulfillment by Amazon.

This solution will enable you to use Amazon’s different warehouses to select, store and ship the products you sell through the Amazon marketplace.

FBA is so poweful that if you leverage it at your best, it will enable you to build a profitable eCommerce business without investing huge money in staff and storage facilities.

Does Alibaba Allow Dropshipping? 

Owned by three marketplaces from China, the Alibaba group features directories where you can find almost every product.

Alibaba will enable you to contact manufacturers or wholesalers of the products you want to promote and negotiate the lowest prices possible.

You can also ask manufacturers to grant permission to buy private label products as long as you have the required money.

Alibaba dropshipping

Is AliExpress Good For Dropshipping?

This Chinese-based marketplace has been in the dropshipping industry since 2010. It has a directory of more than 100 million products from which you can source the ones you want to sell.

You can especially use AliExpress as a dropshipper beginner without a lot of money to make bulk orders. It allows ordering quantities of all budgets.

AliExpress is also 100% free. The owners will not charge you monthly fees to access top suppliers, unlike other marketplaces like Doba, Worldwide Brands, etc.

Will AllyExpress Steal Your Credit Card?

Some people also ask if it is safe to use their credit or debit cards on AliExpress. We can ensure you that this platform is secure, don’t worry about using it when needed.

AliExpress has been one of the eCommerce industry leaders since 2009 and has more than 500 million users.

So, if you are a retailer or consumer who wants to use this platform to sell or buy quality products mainly from Asian manufacturers, don’t hesitate to use your credit or debit card. It will be safe.

Is Alibaba Or AliExpress Better For Dropshipping?

Both online marketplaces are Chinese-based and feature millions of products you can select, promote to your target audience and make good money.

However, despite this similarity, there is a difference between the two. Alibaba is appropriate for businesses that make bulk orders.

As for AliExpress, it provides dropshippers with products at retail prices. This platform will enable you to order any quantity. It doesn’t require a minimum order.

So, if, for example, you need to order directly from manufacturers or buy private labels with logos or custom designs, use Alibaba.

On the other hand, you can use AliExpress to order pre-made products with few or no customization options.

Which Is Better DHgate Vs. Alibaba?

Both eCommerce marketplaces are from China and work similarly by connecting manufacturers to buyers of their products.

You can use them to order large quantities of products directly from manufacturers or large wholesalers.

Does Walmart Allow Dropshipping?

Yes, you can use Walmart to start and run a dropshipping business, but it works differently as other eCommerce marketplaces like Amazon, eBay, etc.

Instead of using the usual dropshipping model, Walmart requires retailers to order items and have them shipped to them.

Once you receive your items, you will send them to your customers, meaning that you will not benefit from the standard dropshipping strategy.

Walmart dropshipping

What Percentage Of eCommerce Is Dropshiping? 

We cannot answer this question accurately because we don’t have any reliable statistics yet.

By the end of 2021, sales from the eCommerce industry were estimated to be 2.14 billion.

Besides, the world’s population was 7.9 billion at the end of the same year, and about 27.2 percent of this population shops online.

So, eCommerce in general and dropshipping in particular has the potential to help you make a good living as long as you know how to leverage these opportunities.

How To Learn Dropshipping?

Now that you understand what dropshipping business is, how it works, how to source quality items, etc., it is time to see how you can learn it.

There are many free and paid educational ressources you can use to learn this industry. It depends on your level of knowledge and how you want to scale this business.

So, ensure to research and choose an online drop-shipping course for dummies or the specialized one, depending on what suits your needs best.

You can find these courses on online learning platforms like Udemy, but there are also many other providers.

What Are Alternatives To Dropshipping?

There are many other ways to make money online, depending on each individual’s goals and how he intends to achieve them.

You can, for example:

  • Become an online freelancer specializing in designs, podcast editing, writing, etc.
  • Build a website, blog about various topics that interest your public, and sell ads on your site.
  • Provide different types of online courses through the platforms like Udemy.
  • Offer consultation and coaching services.
  • Learn affiliate marketing and leverage its numerous make-money-online opportunities.
  • And lots more. 

I started learning affiliate marketing in 2018, and this industry is now my primary source of income. So what is the preferred online make money method, would you ask me?

However, the journey was not easy, unlike some online malicious people pretend. It takes time to learn and master this industry’s ins and outs.

The best of affiliate marketing is that nothing will prevent you from making a full-time monthly income when you are on the right track.

Moreover, it doesn’t require a considerable investment, but you will need time to make it work.

A platform like Wealthy Affiliate will teach you affiliate marketing from scratch until you become a seasoned online marketer.

Wealthy Affiliate has been the leader of affiliate marketing since 2005 and has helped thousands of people worldwide to become free financially working from their home’s comfort.

You can open a free account now and start the first ten lessons for free to see how this platform works. The owners don’t members a penny to get started. 

Final Thoughts

Allow me to end this article that answers the most asked questions on how to start a dropshipping business.

We did our best to provide you with the necessary information to decide if this business is for you or not.

Moreover, we have provided you with some alternatives to dropshipping, including online freelancing, affiliate marketing, etc.

You can, for example, use Wealthy Affiliate to learn how to write quality content. You will then use your knowledge to freelance on Fiverr, Upwork, etc.

Thank you for reading this blog post. You can ask questions or leave a comment at the bottom of this page. I will get back to you as soon as possible.

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