In recent years, there is a growing trend where people quit their 9-5 job to become online entrepreneurs. With dropshipping becoming one of the best ways to do it, many want to know what it’s all about, how it works and why it’s so popular.
There are good reasons why dropshipping is so hot these days. For one, it is the easiest type of business to run with little risk. Additionally, dropshipping does not require an initial investment or connections with a supplier.
Furthermore, with the right tools, dropshipping can become a passive income source, so you can attend to the things that matter in life.
All things considered, dropshipping is one of the quickest ways to quit the 9-5 grind and become free. It gives you the ability to make high profits, work on your own schedule and do so from anywhere in the world. The only things you need for success are a laptop, an internet connection, and the will to succeed.
In this article, we’ll discover what dropshipping is, how it works, and learn to maximize profits with automation.
What Is Dropshipping?
The concept of dropshipping can be explained in several ways. However, it usually refers to an online fulfillment method where sellers do not hold a physical inventory of products. Instead, they offer products for sale on a marketplace and place orders with suppliers on behalf of customers.
This is in large contrast to traditional sellers who purchase their stock in advance, placing them at a great disadvantage. Once they buy inventory, there is no going back; they must get rid of it even if it means doing so at a loss.
Furthermore, such sellers must invest in warehouses where they can store and ship products from. Coupled with an expensive payroll, traditional selling results in a high-risk business producing relatively low returns.
The Benefits Of The Dropshipping Explained
On the other hand, dropshippers get all the benefits of online selling without the downsides. No initial investment is required for inventory or a warehouse. Additionally, you won’t need any employees.
Furthermore, instead of paying for products first, you only pay for them after getting paid. First, the customer orders an item from you. Then, you order it from the supplier who sends it directly to the customer.
So you end up with low startup costs, and you can test as many products in your store at no risk to you. Worse case, just replace low-performing products with new ones.
As a result, you have full control over your business. You can work on any schedule, change your product offerings at will, and work from anywhere in the world. Fulfill orders, address customer concerns, and process returns. The profits follow.
How Dropshipping Works
Knowing the benefits of the dropshipping business model is good and fine, but it would be better to see how it works in the real world.
In general, the process of dropshipping consists of three simple steps. When done correctly and repeatedly, it can yield high profits. Let’s use as an example a customer purchasing a computer desk.
First, a customer buys the desk from you at a retail price of $150 and pays you for it on the spot.
Next, you order for the desk from one of your suppliers at a wholesale price of $100 and instruct them to send it directly to your customer.
Finally, your customer receives their item, and you end up with a clean profit of $50.
Yes, as simple as that!
Keep in mind that you’ll need to find trendy products to display in your store before you start selling. This is often the hardest part because it requires thorough research to identify your target audience and the niche that brings in the most sales.
While the general dropshipping steps are always the same, there is some variation between the different selling channels you use to sell products.
Let’s look at the three major platforms for dropshipping: eBay, Shopify, and Facebook Marketplace.
eBay is one of the most popular marketplaces globally, with close to 900 million monthly visitors. With such high organic traffic, it requires no initial marketing budget.
It is quite simple to start an account and list products on eBay. However, the platform initially subjects you to selling limits. Luckily, there are a few cool tricks to quickly raise your eBay selling limits, so you can scale your business and increase your earning potential.
Starting up an eBay dropshipping business does require some time-consuming work, including learning how to set up business policies. This is especially true for dropshipping, where business policies must match those of your suppliers one for one. However, once you’re set-up, selling and processing orders is as simple as it can get.
In contrast, Shopify has no selling limits, and thanks to its legal pages, does not require business policies set up.
Additionally, it is fully customizable. Consider this a DIY project where you get to design your store however you want and outfit it with a whole host of apps and features to increase sales. Shopify is designed specifically for online sellers, making it rather simple to set up a store.
However, there is hardly any organic traffic to a Shopify store. You’ll need to use free marketing techniques like Search Engine Optimization (SEO) or paid advertising. So compared with other channels, Shopify requires an initial marketing investment of time and money.
Check out AutoDS’s A-Z Shopify course, where you’ll learn everything you need to know about starting a dropshipping Shopify business that works and earns profits.
Unlike eBay and Shopify, Facebook Marketplace is an untapped selling channel with little to no competition and tons of free organic traffic (and sales). While previously Facebook Marketplace was used as a local exchange for used goods, it is fast becoming one of the best places for dropshipping.
To begin with, Facebook Marketplace has the lowest startup and overall operational costs of any selling channel. There are no monthly selling fees, and you only get charged %5 or $0.40 per sale (whichever is lower).
Additionally, thanks to the high volume of daily traffic, there is no need for investment in marketing. Furthermore, you can boost your listings by adding them to local buy and sell groups or converting them into ads.
It is effortless to start dropshipping on Facebook. Just log into your account, create a listing and start importing products to the Facebook Marketplace.
Finally, there is no need to set up business policies or legal pages; Facebook already has its own set of Commerce Policies. Just make sure to pick suppliers that can abide by the rules and expectations.
How To Profit With Dropshipping Automation
Did you pick a selling channel? Great! You’re one step closer to managing your own eCommerce business.
Nevertheless, as you start selling, you’ll also notice that running a dropshipping business can be time-consuming.
For one, you’ll need to import listings from your suppliers one at a time. Once listed, you’ll have to keep refreshing product pages to monitor for price and stock changes. Finally, each order that comes in needs to be fulfilled manually.
Ultimately, these burdensome activities limit you from growing and expanding your business. And while you’re at it, the chances for your store to become a passive income source diminish.
This is where automation comes into the picture to save the day. Imagine if a platform can take care of all the time-consuming tasks, so you’re free to research more products or spend time with those you love?
At AutoDS, we’re dedicated to making this dream a reality for dropshippers. Our all-in-one dropshipping platform does the hard work for you.
Here are just some of the great features that automate your business:
Quick Product Importing
Importing products manually can take 10-20 minutes per product (and more, depending on what selling platform you’re selling on). Now, imagine wanting to have a store with 100 products, or 1,000, or even 10,000. How much time would it take to add those products?
What if we told you it could take you less than a minute to import any number of products with business automation?
AutoDS saves you time by allowing you to import products at lightning speeds. You can get this done in one of three ways: One-click importing, bulk upload using a CSV file (you’re gonna love this one!), and uploading with the AutoDS Finder.
First, make sure to download and install the Chrome AutoDS Dropshipping Helper Extension. It makes all of these options possible.
This feature allows you to import any individual hot product with one click. Because it works with any of our twenty-five supported suppliers, it gives you access to millions of products.
Using one-click importing is as simple as it gets. As soon as you arrive at the desired product page, click on ‘Import to AutoDS.’
With this single click, the extension gathers all images, descriptions, titles, and variants and uploads the product directly to the drafts page.
From there, you can optimize any of the information before uploading it to your store. For example, you may want to modify the title for better SEO keywords so that more people find it on eBay.
Bulk Upload Using A CSV File
Since plenty of our success comes from testing products, it’s always better to upload multiple products at a time and see which ones sell. The more products we test, the quicker we find out which niche or category is our true profit maker.
That’s why the bulk uploader is so great. It allows us to scrape and upload hundreds, thousands, and even tens of thousands of products in a few clicks.
To illustrate, say you found a page of wine openers from Target that you want to list on your store. Simply click on the AutoDS button on the bottom right, and hit ‘Extract.’
A list of product IDs populates in the box. Now, click on ‘Export as CSV.’ All of the products get saved in a dedicated CSV file on your computer.
Finally, on AutoDS, click ‘Add Products’ and choose ‘Upload CSV.’ Drag and drop the file you created before. Click ‘Add as Draft,’ and all of the products upload directly to the drafts page.
Not everyone has time to conduct their own product research. That’s why AutoDS has a feature that finds products and uploads them all in one place. You don’t have to go to your supplier websites!
To use this feature, click ‘Add Products’ on the AutoDS platform and then select ‘AutoDS Finder.’ Choose the level of popularity you want to search for. The hotter the product, the more credits it uses up.
Once you choose the number of products, either add them as a draft or upload them directly to your store.
Price and Stock Monitoring
No one wants to dropship a product, only to find out that the supplier raised the price or ran out of stock. After all, we are here to profit, and if the price goes up and we didn’t know, we may end up selling the item at a loss.
To make matters worse, if a supplier runs out of stock without our knowledge, we won’t honor customer orders, putting our entire business at risk.
It would be nearly impossible to stay on top of price and stock changes constantly. That’s why we need a more automated system.
AutoDS’s proven software monitors your price and stock 24/7. When changes occur to stock, the program updates your stores instantly.
Similarly, if the supplier raises the price, AutoDS ensures that you keep your profit margins by adjusting the price accordingly.
You can find both features in your Store settings.
The good news is that AutoDS automatically enables price monitoring by creating a default break-even setting for each supplier. For example, if you’re dropshipping from Amazon to eBay, the system adds the selling fees of your supplier plus a given amount of profit.
Then, regardless of price changes on products, you’ll always keep your original profit settings.
However, you may adjust your pricing settings as you see fit. The point is you never have to worry about losing money on your products again. For example, if your supplier changes the price of a product, your break-even settings maintain your profits by keeping them at a fixed percentage.
Since we are not holding any inventory, it is crucial to have a way to track our suppliers’ inventory in real-time. That’s where AutoDS’s scanners come into play. As soon as a product’s available quantity falls below a set threshold, it is marked ‘out of stock’ in your store.
You’ll never have to worry about updating your store’s inventory again. Like pricing, you can customize your stock threshold and automation in your store settings.
When stock levels on the supplier side fall below your Minimum product quantity, AutoDS marks it out of stock. For example, if you set your minimum to five, as soon as the supplier has less than five left, AutoDS marks it out of stock in your store.
You don’t need to change any settings for rare situations where you want to turn off price or stock monitoring. Instead, when adding products, you can turn off automation for price stock or orders respectively.
Fulfilled By AutoDS Service
As orders start coming in, you’ll need a quick way to process them with your suppliers. Doing it manually can end up stacking up orders, creating a backlog, and causing delays at the cost of your seller ratings.
AutoDS has a solution for that called Fulfilled by AutoDS. This system processes orders for you instantaneously, keeping your customers satisfied. This means that every step of an order from the moment it gets placed until the customer receives it is automated!
To sign up for this service, go to the ‘Plans & Add Ons’ of your settings and enable the Order Automation plan. Then, head over to your store settings, and under the ‘Orders’ tab, checkmark both automatic ordering options. The first enables fulfillment by AutoDS, and the second, automatic ordering.
You can also choose to leave ‘Automatic orders’ off. This way, when orders come in, AutoDS won’t automatically place the order with your supplier. Instead, it leaves the order as ‘Pending’ and awaits your approval. Once approved, the order moves along as usual.
How Dropshipping With Fulfilled By AutoDS Works
Once you’ve signed up and enabled automation settings, you’ll need to load funds into your account balance. AutoDS uses these funds to place orders on your behalf with suppliers.
As a final step, add order credits to your AutoDS account. Now the system is all geared up to take care of your orders.
As customers begin to buy products, AutoDS processes each order and adds them to your orders page. Then, assuming you are using full automation, the system makes an order with the supplier.
The coolest part is watching orders move through the chain of events as AutoDS automatically updates the order status for you labeling it ‘ordered,’ ‘shipped,’ and ‘delivered.’
You might be wondering how to handle tracking updates when orders are shipped. After all, updating customers with a tracking number gives them the confidence that their order is on the way and allows them to track the package in real-time.
Manually sending tracking for each order might sound like a solution. However, this takes more of our much-needed time and leaves room for human error (for example, sending the wrong tracking information on an order).
This is yet another reason why Fulfilled by AutoDS is your best companion for dropshipping. The platform retrieves a tracking number as soon as an order ships. Then, it updates tracking both on AutoDS and your online store (e.g., Shopify). As a result, the customer gets notified immediately when tracking is available.
Those without full automation need to complete each of these steps manually, so it isn’t recommended.
As a bonus, the AutoDS converts AMZL tracking numbers to Bluecare Express. This is helpful because, unlike Amazon tracking, Bluecare Express gains the trust of your customers by giving them updates with each status change.
Part of every retail operation includes returns, and you’ll want a quick and easy way to process them, so you don’t get bogged down.
Fulfilled by AutoDS offers automatic returns to solve this problem, which allows you to retrieve a return label in one click.
It works as follows: each order’s status can be changed to ‘Request Return’ on the orders page. Within 24 hours of making this change, AutoDS retrieves a return label for you. Then, you can download the label and send it to the customer via AutoDS or directly from your store.
Great customer service is the backbone of every successful business. Therefore, AutoDS offers a dedicated page where you can manage all customer interactions.
Instead of going back and forth between your stores and your business platform, all customer service issues are managed in one place for all stores. This includes cancelations, returns, and refunds.
Accordingly, this integration lets you reply to customers on this screen, regardless of which selling channel they are messaging you from.
Even with automation, running a dropshipping business requires you to engage in routine tasks and maintenance of the business. The added workload can take up precious time. For example, customer service, sending return labels, or responding to emails.
Hiring a virtual assistant can help close the gap between the automated portions of your store and those that aren’t. And with AutoDS, it is simpler than ever.
All you need to do is grant your virtual assistants access to your account. Not to worry, you have full control over their access privileges so that none of your dropshipping assets are in jeopardy.
Get Ready For Takeoff
And that, my friends, is how dropshipping works in a nutshell.
Wondering why you haven’t started dropshipping earlier? That’s alright. It’s never too late to get started! With a growing demand globally for online products, there is room for you to hop in and start earning the big bucks.
New and trendy products are hitting the market, waiting to be dropshipped by sellers like you. Furthermore, the addition of Facebook into the mix of dropshipping selling channels is a game-changer. So if anything, now is a better time than ever to open a dropshipping business.
You don’t need to go anywhere else to begin. From informative courses to excellent blog articles, you have all the information you need right here on AutoDS.
Start by checking out these gems on beginning dropshipping: