E-COMMERCE ENTREPRENEURSHIP: How to make six figures selling products online through dropshipping

E-COMMERCE ENTREPRENEURSHIP: How to make six figures selling products online through dropshipping
Samantha Lee/Business Insider
  • E-commerce is a growing sector of retail, as well as a burgeoning market for individuals looking to make money by selling products online.
  • Dropshipping is a form of e-commerce selling in which the seller doesn't have to invest in inventory, so the start-up costs are low.
  • Dropshipping can be done from anywhere, as a side-hustle or a full-time career.
  • Business Insider has spoken to and vetted various e-commerce experts to put together a list of resources for people interested in starting dropshipping, or growing their existing business.

E-commerce is bigger than ever and it's only getting bigger. Today, it's not uncommon to shop on Instagram or buy products from companies you've never heard of directly off your phone. These trends aren't just good news for retail companies, they've also created an exploding market for individuals looking to make money through e-commerce, either as a side gig or full-time job.

Many entrepreneurs use a product fulfillment method called "dropshipping" where they don't have to invest in inventory in order to sell items online. Dropshipping successfully can lead to six-figure sales - in fact, Business Insider has spoken with sellers who have sold more than $1 million of a single product.

So what exactly is dropshipping?

Dropshipping is a fulfillment method for online sales. It means the seller doesn't hold any inventory and essentially acts as a middleman between the customer and the supplier or manufacturer.
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The role of the seller - or dropshipper - is to market retail products and find potential buyers. First, they create an online store for the product (many dropshippers use Shopify to do this), and then they design ads and buy ad placements on social media platforms.

When a product is sold, it gets shipped straight from the supplier to the customer. Often, dropshippers work with suppliers in China through wholesale marketplaces like Alibaba. Because the seller doesn't have to spend money on inventory, they can run their business from anywhere and the startup costs are relatively low. To start selling a product, dropshippers need to pay for a Shopify subscription, as well as for the product ads they run on Facebook or Google that drive shoppers back to their Shopify store.

E-COMMERCE ENTREPRENEURSHIP: How to make six figures selling products online through dropshipping
Samantha Lee/Business Insider
There are tons of dropshipping tutorial videos on YouTube. But some dropship "mentors" out there make more money from selling courses than they do from actual dropshipping - and use YouTube content to portray a false sense of success. Luckily, Business Insider has interviewed and vetted dropshippers and industry experts to give our readers only the most trusted, useful information on the topic.
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Below are some resources that guide e-commerce entrepreneurs through everything from setting up a store and scaling their business to the overall global impact of dropshipping.

This is how dropshipping works, its advantages, and how to set up your own store

Kamil Sattar began dropshipping in 2017 using Shopify to set up online stores and sell products. Sattar recommends focusing on selling one product and making your store and branding look legitimate, because today's consumer has high standards for professionality when shopping online. Using additional apps and tools to automate aspects of your business, like a customer service bot, can improve reach and help you move more products. Read more: A 21-year-old is 'dripping in dropshipping money,' selling $1.7 million in products on Shopify this year. He shares his biggest tips for making e-commerce work for you.
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Here's how to identify a winning product and make it go viral

Dropshippers thrive by finding "niches," or categories of products, that are popular with consumers - like home goods, loungewear, or baby products. Brothers Steve and Evan Tan explain how to get in on a trend or niche early, which can lead to a product going viral and bringing in big money.

Read more: Two brothers spotted a toy hamster in China and figured out how to make it a viral hit in the US, sparking over $1 million in sales. Here's the inside story of how it happened.

Why working with vetted suppliers can improve customer experience

Many dropshippers source their products on wholesale sites based in China, like Alibaba and AliExpress. Often these suppliers have long ship times and no return policy, which can lead to frustrated customers. Saba Mohebpour created an online wholesale marketplace called Spocket that includes US and European based suppliers, all of which are vetted for reliability, to help dropshippers improve their customer experience.
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Read more: How dropshipping marketplace Spocket vets suppliers to help entrepreneurs gain repeat customers and compete with Amazon

Advice on smartly scaling your business from side hustle to full-time gig

Many dropshippers operate as solo entrepreneurs, which can limit the amount of stores they're able to operate. Steve and Evan Tan grew their company to more than 400 employees since they began dropshipping in 2016, and recommend investing in team members as a part of a plan to scale. If you try to scale without the infrastructure, it can lead to issues with everything from supplier communications to shipping to answering customer emails.

Read more: This dropshipping duo sold $12 million in goods during their first full year in business. Here's what they say about scaling from a side hustle to a money-making machine.
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Why dropshipping products you're passionate about can help with long term success

Moving from niche to niche is one way to dropship, but e-commerce and marketing expert Neil Patel says that focusing on one category you're really passionate about is better in the long run. Patel says that becoming an expert in your category and creating useful content and thought leadership requires emotional investment, and can help you establish a real presence.

Read more: An e-commerce mentor shares his top 5 strategies for sustaining a dropshipping career

Why major retailers are also adopting dropshipping

Dropshipping isn't just a method used by e-commerce entrepreneurs, it's also become a crucial method for big-name retailers to expand their online inventory. When retailers like Nordstrom and Kohl's create these deals with suppliers, the supplier gets the benefit of broader reach through the retailer's site, and the retailer doesn't have to buy inventory or use up warehouse space. An expert explains the pros and cons of these relationships.
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Read more: At least 40% of retailers use dropshipping to expand their online inventory and compete with Amazon - and those numbers will only grow, experts say

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