If you read any guides to make money from home or research your options for starting a business, drop shipping will usually come up. But just what is this work from home business option, and can you really make money from drop shipping?

Drop shipping, if you’re not sure, is a system where you promote the products of a manufacturer (your supplier), take the orders directly from the customer, then pass them on to the supplier to handle fulfilment. The manufacturer deals with packaging and shipping direct to your customer, so the product never actually passes through your hands.

How Do Drop Shippers Make Money Online?

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Owning and operating a physical store can cost a lot of money, with overheads to cover such as rent, renovations, heating, lighting and more. All of these costs are carried forward to the consumer in the form of higher prices. But an online store doesn’t have any of these overheads, so prices can stay low.

An online store requires zero capital as you do not keep an inventory of goods, all you need to deal with is the marketing and sales. The products are sent directly to the consumer from your supplier. All of which keeps the price customers pay much lower.

What does the drop shipping process look like?

Here is the process in a nutshell:

Generate sales by marketing products online
Accept a customer order
Take your profits from the sale price
Forward the order and the wholesale cost to the supplier
The source factory ships the products directly to your customer

Is Drop Shipping a Realistic Way to Make Money Online?

The benefits of this system are obvious: no need to keep an inventory of physical stock. Profits will also be substantially higher without the overheads of a physical shop. It is also easy to set up inexpensive, highly targeted or niche websites to promote diverse products.

It appears that drop shipping is a new thing, but actually it existed even before the internet did. Remember mail order catalogues? If you ever ordered a large item from a catalogue and were told it would ship directly from the factory with a longer delivery time, that was drop shipping.

These days many suppliers on Amazon or eBay use drop shipping, which is why it can take an age sometimes for a product to get to you!

Can You Really Make Money with Drop Shipping?

The short answer is yes. Every conceivable product is available from a drop shipping supplier willing to ship single units under your company’s name worldwide. All you need to do is pick an area of interest and pick your products.

This could be in any broad product area (electronics, clothing, toys, office supplies), but you would probably make more money by choosing a more unique niche to sell in. For example, a site selling sea fishing equipment or artificial flower supplies.

The biggest problem is that there are hundreds of online stores out there, so if you do not know how to promote your website effectively, you will probably be lost in the infinity of cyber space. Taking the time to set up your site well and to market the products and the site will pay dividends.

What Are the Challenges of Drop Shipping?

Of course, if people don’t see your site, you won’t earn much from it. This is why a niche helps. A niche site will show up in more searches online and target exactly what a specific market are looking for.

You also need to make sure that your site is easy to navigate and your payment system is straightforward and easy to use. You don’t want people to be prevented from purchasing your products because your system is too complicated.

For most online shoppers, the internet is a tool so they need the sites they use to be easy to use. If it is not, they will simply shop elsewhere. Once you have lost a potential online client, you won’t get them back so you must make sure your site is simple and user friendly.

So what are the pros and cons of drop shipping?

The drop shipping arrangement offers maximum flexibility and cost savings for you the seller. If a product does not sell well online, you can pull it instantly with zero cost or loss. And you can quickly replace it with a new product.

As setting up a page or mini-site is quick and easy, you can leave underperforming ones up online and take whatever orders trickle through. It may take off in the future, but for now you can move on to promoting other products with new images and marketing materials.

The manufacturer benefits from the relationship too, as they get a group of sellers actively marketing their products, at little or no cost.

How Do I Start Drop Shipping?

Search online for drop shipping suppliers and you will find thousands. Look for suppliers who give you a good trade price but always check they are legitimate. They will ask for tax information and will never charge you a sign-up fee or a membership.

There are unfortunately plenty of companies that claim to sell ‘drop ship licences’ which is a scam. Legitimate drop shippers and factory sources never charge you any fees, other than the actual cost price and shipping costs of the products you sell.

As a marketer you are looking for several key components in developing the drop ship relationship with a source factory or distributor:

High quality products
Guaranteed delivery
A clear return policy
High quality marketing materials (product images, sales copy, web graphics)
A good customer service department you can work with

Treasure Your Drop Shipping Customers

The actual source of the product will be invisible to the consumer. As the seller, you can then build up a database of customers that is owned and controlled by you. This has all the direct marketing advantages you need to keep selling to previous customers.

You should always have a written agreement with the source factory or supplier that you own the customer. They should agree in writing not to solicit your customers in any way. This is essential as your customer mailing list is your most important asset. If they refuse, find another supplier who will.

If you are an online marketer interested in offering high profit products for sale, either on a pre-existing website or in a new niche market, and without extensive development time or inventory costs, then drop shipping is for you.

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How Nickia makes money online drop shipping with amazon

A while ago, I interviewed Nickia Walker who makes at least $8,000 a month drop shipping with Amazon. From working in retail to finally becoming her own boss drop shipping with Amazon, this is Nickia's incredible story about making money drop shipping.

Can you please tell us a little about yourself and your work?

I always knew I wanted a business but just didn't know what at a very young age. After trying various businesses, I would give up as they didn't work and I did not make any money. After working in retail for 10 years, in 2014, I got a job at a dealership and was excited for a while because I was making more money.

One day, I was on Facebook and saw someone teaching the business I do now which is Amazon DropShipping.

Of course, I was nervous, as well as scared of taking a risk but I did it anyway because I am determined of being my own boss. Within two days I got my first ever sale and that's when I truly believed in this method.

I have been doing this business now for three years, currently, run a site on thrivewithamazn.com and have a Youtube channel Thrive with Amazn with weekly new content and live in-person events with a online course coming out soon.This business has truly changed my life and saved me. I am now debt-free and happier because of it.

What inspired you to get into this career?

I had heard of drops shipping before and tried drop shipping on eBay as well. However, I think where I was in my life at the time I just wasn't ready to take a risk and give it my all. The security of getting a steady pay check made me hold back. I was essentially staying within my comfort zone and not challenging myself.

The turning point was in 2016 when I lost my job.

Only then did I understand and realize that although a business is a risk, a job is definitely not secure. As an employee, you're at the mercy of your employer. I was determined to be my own boss when I saw this opportunity and thought it wouldn't hurt to try.

I withdrew my last savings and took the plunge. And that is how I got into drop shipping on Amazon.

How much money do you make per month?

On average I make $6000- 8000 USD, since I am Canada it usually converts to $10,000 Canadian. This type of business is very performance based so the more items you list the more money you make, the sky is really the limit in this niche especially if you hire people to help you.

What obstacles did you encounter along the way?

When I first started, I sometimes ran out of Capital Money, which is money used to place the orders.

A lot of times I would have to put the store on vacation mode which is basically turning off the store. When your store starts getting really busy, it was very frustrating as I started growing but could not keep up with the order.

My advice is to start where you are with $500-$1000 but have a plan in terms of how you're going to grow in order to keep up with orders you get on Amazon. People sometimes disregard this, however, having great customer service is very important drop shipping on Amazon because it will save your store from negative feedbacks or potential claims.

Knowing how to speak to a customer and how to treat them when an order goes wrong will make all the difference. Most drop shipper choose not to treat their customers in the best way possible and then wonder why their stores are the way it is or the experience is not the best

Bottom line is, always treat your customers really well and resolve issues that may arise as it will make all the difference in the world.

What advice would you give to someone wanting to do what you do making money online?

Take the plunge and just do it.

Every business is not easy, though I believe drop shipping on Amazon is one of the best ways to start out and succeed and then branch off into other things. If you are going to start an Amazon store give it your all, don't look back and move forward.

Don't worry about what is happening now. Do the work necessary to see results in the future.

In your opinion, what are the three core skills needed for this side hustle?

Patience, persistence and consistency!

Based on what I’ve seen, most people fail due to their lacking of persistence. In the beginning of starting your store on Amazon, you're not going to get hundreds of orders.You're going to maybe get a few orders every few days starting out, so you really need to look pass that and continue to list daily in order to reap results later on.

Having patience is also very important in this industry just because everything takes time and that’s in any business. You have to have patience in order to see results. And in the beginning, your mind is going to have concerns such as: why are you wasting your time? Are you sure it's going to work? That's why having patience and believing in yourself will really bring you far.

The last one I would say is consistency so the reason why people say drop shipping doesn't work or there's no money in it is that a lot of times people just give up in the beginning. This is a niche where you have to stick with it for at least three months to see results.