Why Dropshipping is Perfect for First-Time Entrepreneurs

Perfect

Career opportunities with great pay, benefits and perks are difficult to come by in the corporate world. That’s why we love  lifestyle business models and, more specifically, the world of ecommerce. The barrier for entry into the online marketplace has never been so little – and it is diminishing right before our eyes. In fact, it’s not all that uncommon for an “e-tailor” (one who runs an ecommerce site) to sell a wide variety of products without a single piece of inventory. Nothing in stock. Zero inventory, yet positive cash-flow from the very first sale.

How is that possible?

Dropshipping.

Drop Kick

No, not drop kick.

Drop ship!

Ingredients of a Lifestyle-Business

At the core of every lifestyle-business, and every 4 Hour Work Week, there exists a simple concept which allows the entrepreneur certain freedoms not enjoyed by those dreaming on a smaller scale. Something about your business, a certain j’ai ne se qua, makes it easier for you to live more of your life, with greater quality, than the typical entrepreneur or corporate employee. You work fewer hours, from nearly anywhere in the world.

So, what is this mysterious secret at the core of your business?

For many, that certain something is “dropshipping“.

And dropshipping is PERFECT for the first-time entrepreneur.

Definition

Dropshipping is essentially outsourcing the inventory and distribution elements of the retail sales cycle. For our ecommerce brethren, that means selling products without holding inventory, or shipping product – which also means getting paid before the product is ever purchased.

There are many ways to make your ecommerce business convenient for you, yet still wildly successful. The cash-flow positive nature of the dropshipping ecommerce store is certainly one such way.

Barriers for First-Time Entrepreneurs

First-time entrepreneurs have an inordinate number of obstacles in their way. Success is difficult enough for the seasoned pro. When you’re new, you just don’t know what you don’t know! That said, here are but a few barriers to entry in the ecommerce industry:

Barriers are made to be broken – and successful, first-time entrepreneurs, break them through excellent planning, due diligence, and a bit of elbow grease during the inception and startup phases. Just ask the ladies and gentleman in the entrepreneur sections of Reddit and Quora (but probably only believe half of what 50% of them are saying).

As I previously mentioned, you’re going to knock out more than one of these barriers just by implementing a successful dropshipping business model. The issues of inventory storage, product distribution and procurement are all but gone! Cash needs drop dramatically as well.

Is there any doubt that, with a bit of resourcefulness, one could feasibly start a dropshipping ecommerce site for less than $5,000? How about $2,500? Less?

Nay Sayers

Many, like Duran Inci, do not believe money can be made with a dropshipping model. His argument is that there is no business without inventory. Those in this school of thought generally believe there are too few reliable wholesalers, and too little margin for the majority of retailers, for a store owner to profit form dropshipping.

While this is food for thought, one needs to take this criticism in stride. If you’re not willing to do the hard work at the beginning (i.e. finding dependable manufacturers who will fulfill large orders quickly and cheaply), then Duran has a valid point. Then again, what project or business can succeed without some hard work and due diligence at the onset?

Now, there are some real opportunities which must not be ignored. Yes, “opportunities” is code for “problematic issues.” Answering these few questions will help get you off on the right foot.

For starters, do your products retail at a price which provides adequate margin for your business? What if you were to grow your staff at all – would prices from your wholesalers need to be negotiated downward somehow?

Also, is your dropshipper fully automated and integrated with your ecommerce platform? Integration can be costly (thousands of dollars) and the most compelling reason to start your ecommerce site with a dropship model is the small amount of cash required at the beginning of your project. Are you going to manually process 300 orders tomorrow if they come in tonight?

Dropshipping is Perfect for All Entrepreneurs, But Especially First-Timers!

The Entrepreneur

So, you’re the new guy (or gal) on the entrepreneurial block. Congratulations! You’re taking huge steps towards securing your family’s financial future. Let’s not make this mission any harder on ourselves than is absolutely necessary – do some due diligence to see how many of the barriers to success you can navigate around, under or over. Start today! You will likely find dropshipping to be a component to the early success of your business.

The truth is that any ecommerce site can benefit from incorporating at least SOME  dropshipping. And, in the case of the first-time entrepreneur, it’s hard to argue that dropshipping is anything other than perfect. Don’t you agree?

Whether you agree or not, I want to hear your experiences with dropshipping. Have you heard horror stories? Triumphant stories? Have you, yourself been party to the horror or triumph (or both)?

 

Published by

Joseph Yi

Since he was a freshman in college, Joseph has worked in several internet startup companies and has developed campaigns and digital strategies for Fortune 500 companies and brands including the Los Angeles Lakers, Manchester City FC, the Oakland Raiders, Sephora, and Whole Foods.

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