How to Generate Passive Income in Dropshipping Business?

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Many people talk about how they make six-figure passive income by dropshipping products online. Some sell a few expensive items each month while others sell hundreds of inexpensive items. How much you make is dependent on your profit margins and your expenses. These are often overlooked.

Dropshipping can make you passively earn money. Dropshipping can be a passive income source. This is possible by choosing the right niche and target market, conducting market research, finding suppliers, and building an online shop.

Everyone is talking about passive income through dropshipping products online. Although I’ve been involved in ecommerce for more than 10 years, I have never used dropshipping services to make passive income. I’ve tried Printful print-on-demand services, and I love them. However, I have never dropshipped products from China using warehouse services based there like the “drop shipping gurus“.

This article will discuss the benefits, limitations, and possible solutions for dropshipping products. Although I’m an experienced eCommerce merchant, I’m a complete novice to dropshipping. This gives me a fresh perspective. Dropshipping is something I have personally reviewed. I will analyse the expenses and provide real advantages, limitations, and solutions.

What are your intentions for dropshipping?

Before we get into the details, let me talk about your plans to dropship with eCommerce basics. Dropshipping may seem like a quick way to make a lot of money.

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Dropshipping is a popular option for many people, especially beginners in the eCommerce industry. One of the most important reasons people dropship is to make passive income through YouTube.

While I was completing the research for this article by watching YouTube videos on dropshipping, I was bombarded daily with drop shipping ads.

  • It’s possible to start “Making lots of money” without having to work a lot.
  • “Here are my shortcuts for getting drop shipping data”
  • “I have people who spy upon Facebook ads to obtain secret data”
  • You can go from “$0 to $1,500 Passively in 3 Days”
  • This is the right place to start if you’re a poor bi*tch looking to make $1,000 today.
  • There is no risk in selling millions of dollars worth of products.

These (sometimes aggressively-worded) ads have people talking about “shortcuts” and making “lots money without working” with no risk. It is almost offensive. It is actually quite funny. However, if the ads are still running it is likely that they are working.

Dropshipping is a great option for those who are discouraged by YouTube’s “get rich quick!” messages. I won’t paint a picture that is more beautiful than it needs to be. This article is a review of drop shipping costs and ways to be a more authentic drop shipper.

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Understanding the basics of eCommerce

Dropshipping is a great way to learn about all the possibilities that eCommerce offers. Dropshipping is only one aspect of eCommerce.

What is eCommerce?

Many people ask me questions about basic eCommerce concepts on my YouTube channel Daniella.io. There is a lot of confusion about selling on your own website, on Amazon, or eBay. Also, the differences between flipping items online, printing-on-demand, and selling on social media.

What is eCommerce? eCommerce can be described as a broad term that refers to commerce conducted via the internet. eCommerce covers a range of online selling options, including through established marketplaces (like Amazon and eBay), your own website, or social media (ig. Dropshipping, print-on-demand, and Facebook Store are all examples of eCommerce. E-commerce can include selling physical products that need shipping and handling or digital products that can delivered via email.

The biggest problem is that many beginners don’t realize they can consolidate their eCommerce operations from one account. This section will explain what eCommerce is and how you can optimize your workflow.

Selling Items You Own

It is important to understand that you can either sell items you have physically or those you don’t physically own. These are your options. You can either sell physical or digital products. Let’s get started.

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Selling physical goods

Let’s suppose you have physical products you want to sell online. You can have physical products in any combination of the following (and many more).

  • You created art, jewelry, etc.
  • You sell things in your brick and mortar store
  • You can flip items you bought at garage sales
  • You have things around your home that you would like to turn

Selling digital goods

Digital products can also be yours. You could sell any digital product you download from your computer, as long as it does not violate anyone’s privacy. Let’s suppose you want to sell.

  • An eBook
  • A game
  • Stock photos
  • Stock videos
  • Code
  • Software
  • A Course
  • Everything that can be downloaded

You don’t have to ship digital products online, making them a great opportunity for passive income. Selling digital products I made myself is my favorite way to earn passive income online. There is no shipping involved, and you can make money any time of the day. The digital product is automatically sent to the buyer when someone purchases from my online shop.

Selling things you don’t own

Shipping items is not necessary. This makes it easier to sell physical products online. Let’s now discuss things you don’t own. You can sell items that you don’t own, whether they are digital or physical.

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Selling physical goods

As we have seen with physical items, physical things you can sell online that you don’t own include drop-shipped or print-on demand products.

Affiliate Marketing

Affiliate marketing is another option. This involves promoting products you love and allowing them to affiliate with you. Affiliate marketing can be tracked in many ways. You can use a unique link, or coupon codes to track your earnings. If a product is sold, you receive a commission. This is a passive way to make money online by selling products that you don’t own.

Print-on-Demand

Print-on-Demand is similar to dropshipping. You connect your online store with a drop-shipping company that will fulfil orders and ship products. Print-on-demand allows you to upload your designs to existing products. Instead of buying the products in person and printing the shirts yourself then, the POD service does it all for you. This is a truly amazing opportunity. Print-on-demand allows you to sell many products, including hats and hoodies, sweaters and mugs as well as bags, phones cases, bags and other accessories.

Dropshipping

Dropshipping is the main topic of this article. We won’t get into too many details, but it is a way to sell products online and not have to manage physical inventory. Connecting your online store with a supplier’s warehouse will allow them to fulfill your orders directly and ship them to you. You want to make sales. They will pack and ship the products on your behalf.

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This article will be about dropshipping. Let’s now dive deeper into dropshipping. Let’s start by looking at the negatives to drop shipping. I have observed that not enough people address these issues.

Why I have Never Dropshipped before

Although I’ve been involved in e-commerce since the early 2000s, I have never drop-shipped products to Chinese suppliers in the same way that this passive income option is promoted on YouTube videos. Dropshipping is something I find fascinating. There are no inventory requirements, products can be shipped electronically, and there are cool automations that make selling online easier.

As a teenager, I used eBay to flip items for many years. I almost traded my time for cash until I began selling products passively (picking up the items in stores and then shipping them when they sold). I started dropshipping products and would go to stores to pick them up. Then, I would ship them to my clients.

I was able to control the quality and packaging of the product, as well as shipping costs and delivery times. This could have been automated further by connecting to the warehouse. I chose not to. These are the reasons I didn’t dropship products from a warehouse.

  • Quality Control: Products are not your responsibility. Dropshippers don’t actually buy the products. They test the products and make sure that the quality is consistent over time.
  • Margin: Because there are many middlemen your profit margins will be small.
  • Expenses While YouTubers are often talking about six-figure dropshipping incomes, few were talking about their expenses. These expenses can include platform fees, hosting fees and payment gateway fees as well as marketing expenses, integration fees and currency conversion rates.
  • Competition Dropshipping is competitive in all areas of business. However, dropshipping is highly competitive in terms of pricing and products. You need to do extensive market research before you decide which products to sell.
  • Traffic: You will need to pay traffic if your goal is to make “quick sales”.
  • Repeat customers: Drop shippers don’t care about building a community or product quality. The number of repeat customers is therefore low.
  • Customer Support:Customer service exists in dropshipping just like it does for any eCommerce store. This is often overlooked by people who promote dropshipping to make passive income streams. Dropshipping your products yourself does not allow you to control the sales process. If a customer has a question, and there is no tracking system with your supplier, they will need to be able to answer it. This can lead to more back-and forth, longer wait times for customers, and a lower quality customer experience. Negative reviews can also result.
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Below is a list of pros and cons to drop shipping. This is the method that most YouTubers and Gurus promote as a passive income source online. This is not applicable to people who build brands such as Startup Vitamins. (that also created Printable, which we love and use). This is about building a brand and a business. This article will address the negative aspects of YouTube videos that are not as often discussed. The table can be found at the end of this article and provides a summary of possible solutions.

Note: The table below can be found at the end with Negatives vs. Solutions. Continue reading to find out how to overcome these limitations.

It is not easy to build websites or eCommerce stores. Your website and online store must be promoted via paid or organic marketing. Let’s take a look at drop shipping and how it is promoted online. We’ll also discuss expenses to help you better understand how to calculate profit margins.

Dropshipping: The Unspeakable Truth [Warning]

Dropshipping is a passive income stream that requires hours of hard work. No matter how hard you try, building a passive income stream that is profitable takes effort, dedication, and skill. This article is not designed to help you get rich fast. You can open YouTube, type “Make Millions Dropshipping”, and then watch the videos.

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If you are serious about your business, we will show you how to build a passive drop-shipping company. Dropshipping is not an “easy way to make money”, but a business venture. We are not going to be discussing return on investment or showing you the actual cost of dropshipping, their profit margins or customer acquisition costs. This article will cover them all so that you don’t end up with $10,000 after spending $9,999.

Niche Selection [Target Market]

You should select a topic that is relevant to your audience before you start a dropshipping website. While you may be able to sell items you don’t care about, your audience will still benefit from your product. However, your profit margins will be low. We discuss this further below. You won’t be building a brand and providing value to your customers if you don’t care about what you sell. Take the time to research and select the right niche.

How to Choose the Right Niche for You

It is crucial to choose the right niche. Also known as target market or audience, this is important. It is crucial to narrow down your niche so that you can focus on a small, but more valuable, audience. This is the key to running a successful dropshipping store. Drop shippers don’t know enough about their customers or how to build a brand. This means that they are less likely to get repeat business from the same people.

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Passion

You should choose something that you are passionate about or very interested in. You will become bored if you choose a niche you don’t like or that doesn’t offer any value to your customers. It is possible that you will not know what your customers need. Pricing is the key to your success. They won’t buy from your listing or online store if they can find the exact same product cheaper elsewhere. To better understand the reasons, please refer to the section below about calculating profit margins.

Popular

You must have enough people to market to your niche. Targeting people who like miniature dollhouse furniture made from oak wood in Alaska may not be a good idea.

However, your reasons for limiting yourself geographically or on the basis of gender should be clear. White water rafting can be done by men and women alike, but fitness has its own niches and is more for women than men. Avoid niches that are too saturated. It is difficult to enter the health and fitness niche if you don’t find an underserved segment.

Monetizable

You should ensure that your market segment is monetizable. It may not be the right niche if you can’t sell anything to the target audience. To get market validation, search for topics and products in your niche on Google Trends. You can also check to see if other publications, magazines, shops, or websites target the same niches. You will need to be better than the competition.

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Concurrence

Pay attention to the competition in your niche. You may find it more difficult to write about topics like personal finance, fitness, or medical topics. Many online marketers speak of using multiple SEO (Search Engine Optimization), with some being more difficult than others. This article will discuss how to approach this. has more information about niche selection, SEO, YMYL, and EAT. Below, we will discuss how this applies to dropshipping.

Product Selection & Market Research

Drop shippers don’t know anything about the products that they sell, and may not even care to see them. This article might not be right for you if your goal is to make quick money. If you are looking for a more stable passive income, then keep reading.

How to Choose Products to Buy

It can seem daunting to choose products to sell online based on their pricing. Dropshippers may promote selling products that are ‘impulse-buy’, while others will tell listeners to only sell high-ticket items. We believe there are more to choosing products than just price. We will first discuss your interests, then customer intention, pricing, and finally how we can help.

Your interests

Once you have chosen your target market, keep this in mind as you make the decision about what to sell to them. These should be your first consideration before you consider pricing.

  • What do they like most?
  • What do they really need?
  • Is it really that they hate?
  • Is there something they are having a problem with?
  • What product could solve this problem?
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These are just a few of the things you should consider before dropshipping a product.

Your Passion

Drop shipping a product should be a simple task. You need to know the basics of the product, its features, benefits, and what the problem is. You will lose interest in the product and not be able to provide any value. If they can find the exact same product on a cheaper website, why would someone buy from your online listing?

Evergreen

Products that are considered to be evergreen can still be bought in a few years. You can see that in two to three years, the most recent tablet or cell phone is obsolete. Pay attention to the tech niche. You will need to constantly update your content and your sales offering if you sell products that are no longer relevant in the future. This will make your income source less passive. If you write about gardening, for instance, your techniques may not change much in the future. Your offerings will then be more passive.

Trending / Popular

You might also wish to sell items that are trending or popular. You can find out this information by going to Google Trends, and searching for the product you are interested in. A product that has an upward trend is likely to be popular. Compare the product with other products in the same search to compare their performance.

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Pay attention to seasonality

If you notice a lot of valleys and dips when you do your Google Trends search, it is likely that your product has seasonality. This means you will likely have fewer sales during certain times of the year and more at other times. It’s not necessarily a good thing or a bad thing. However, it is something you should keep in mind if your goal is to create a passive income stream.

Pricing Models & Customer Intent

Many YouTube videos will tell you how to make money selling “impulse-purchase” products or high-ticket items. But what is missing is the intention of the person giving you the money. It is important to think about the customer’s journey and why they are looking at your listings. Is the customer just looking for information on products online? Are they looking for products to research? Or are they planning on making a purchase right now?

Impulse Purchases

Low-priced products are the most popular impulse purchase. These products are what dropshippers love to focus on as they are easy sales. The “Wolf Mug” is one of the most popular “impulse-buy” products. You can see it in YouTube videos. This is a low-cost product that people bought because they thought it was cool.

What usually happens is that someone views a Facebook ad for an inexpensive “impulse purchase” product and makes the purchase. Most people will buy them because they are inexpensive, usually between $5 and $25. This is a great way to make easy sales and is popularized by dropshippers via YouTube. Facebook ads are often used to sell impulse-type products because people don’t have the intention to buy. They weren’t looking to buy a Wolf Mug on Facebook, but rather to check out what their friends were doing.

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Dropshippers don’t talk about the costs associated with selling products this way. Facebook ads cost customers $18 to acquire ( source). If you don’t have the skills to market Facebook ads or are willing to learn them, your chances of making a profit on your sales will be slim. Selling products below the $18 threshold will result in little or no profit. You could sell an impulse product at $25 or more but also consider your ongoing costs.

Below are some of the costs we cover: monthly platform fees, ongoing flat and flat recurring fees as well as facebook ad and payment processing fees and integration fees. Before you jump into selling “impulse products”, consider your return of investment.

High-Ticket Purchases

Dropship is very appealing to high-ticket buyers because you can make more money. You don’t need to sell 200 Wolf Mugs for $20 each when you can sell one kayak for $4,000!

Buyer intent is what most people don’t consider. You can see YouTube videos that discuss the negatives of high-ticket products. They are more difficult to sell, have higher customer support and require trust to make sales. This is not something someone would buy impulsively so they are more likely to research. These videos show large objects. Many people talk about selling furniture, kayaks, and couches. It doesn’t necessarily have to be a large product to sell. Even if the product is small or inexpensive, customer support issues are likely to arise.

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The good news about high-ticket products is that you can get a higher return on your investment if your ad spending remains at $18 to acquire customers via Facebook ads. Your ad spend for this product will likely be higher because it isn’t an impulse-purchase product. When they are just browsing Facebook, people don’t have the desire to purchase things. You won’t sell as many high-end items because people will be looking for cheaper alternatives.

How can you decide what to sell online? Do not focus on the price. You should be focusing more on creating value for people and building a reputation. If you keep customer intent in your head, you’ll be able to focus more on what is important than how many products you need to sell to make $10,000 per monthly. Let’s take a look at what you can do to compete with your competition, while putting customers first.

Pricing Competition

Dropshipping is not the best way to go if you are entering a bidding battle. You will likely lose if your primary strategy is to have the lowest price. Dropshipping is not the best way to get into a price war. To make a profit, there will always be someone who is willing to lower their margins. It may not be another drop shipper but the wholesaler.

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Ecwid’s blog has a great article about how to avoid price wars with your competitor. The article was so popular that I made an audio version for Ecwid. The article can be viewed here or listened to below.

To summarize quickly, the article states that you must get to know your customers and focus on the key benefits and features your product offers. You also need to identify the most effective product positioning for your target market. This will allow you to improve customer experience and streamline operations in order to better serve clients.

This is wildly contrary what most YouTube videos on drop shipping say. Many people will tell you that it is possible to make a quick buck. While that is one way, you will most likely encounter the problem of pricing. What then? You may have noticed how many times I have mentioned “customers” or “providing value” throughout this article. This is because you must first give value to someone before making money.

We will dive into building an eCommerce store in the next section. Shopify is another option that is completely contrary to what drop shippers use. I will explain why. Shopify will not be used to dropship online. There are many reasons Shopify is not recommended by me. We will discuss them in the next section.

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Locating a Supplier

If the supplier you are interested in working with is not listed, you might need custom development to be able to connect to their warehouse. Although this is possible sometimes, it may not always be possible. However, there will be development fees.

  • Dropshipp.io
  • Doba Dropshipping
  • Inventory Source
  • Wholesale2B

Choose from any of the above suppliers that offer easy-to-install Ecwid apps. Go to Ecwid’s control panel and click Apps. Next, search for dropshippers you are interested in. The opinions expressed in this table are mine and should not be interpreted as a recommendation to choose a dropshipper. Do your research before you decide to partner with a dropshipper. Also, make sure that you agree to their terms and conditions.

Quick Ecwid FAQs

Ecwid can be used with Alibaba Ecwid does not currently offer integration with Alibaba for dropshipping.

Ecwid can be used with Oberlo. Ecwid doesn’t offer integration with Oberlo for dropshipping products online. Oberlo is designed for Shopify users who wish to dropship their products using Shopify. Ecwid is a better option and may be cheaper in the long-term.

Important Obligations

Dropshipping online is a business that requires you to follow a few rules. A privacy policy and a return policy are two of the most important rules. It is also important to indicate where the products were shipped from. Your online store should clearly state the shipping time estimates so clients can trust them. Customers will be very upset if you claim that the item will arrive in five days from the USA, but it takes 45 days from China. Selling on Amazon or eBay requires that you specify the actual shipping address. For any questions regarding legalities, consult a lawyer in your area.

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Conclusion

The most important thing I learned while researching and writing this article (9,500+ words) is that I have a completely different perspective on drop shipping than those who promote it as a way to make passive income online. Apart from the fact that Ecwid is my preferred platform over Shopify, dropshipping is still a viable option for beginners to make six-figure passive income streams. Many don’t discuss their expenses which can be quite high. It’s a good way to grab people’s attention. We do the exact same thing at Beginners passive income! But your customer is the most important thing to remember when creating an eCommerce passive income stream.

You won’t sell many eBooks if you have an ebook you believe is great but there isn’t a market for it. You will never get any return on your investment if you try to persuade people to click on your ads for products they don’t need. You will likely give up on creating passive income streams if you don’t realize that it takes effort, time and skill. You will likely find yourself in a price war with your competitor if you don’t provide value to people first.

Dropshipping is a business, not a quick way to make money. This will help you have a different outlook when selling online. Before you start, do your due diligence.

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All of my eCommerce ventures have been treated like businesses, which is why I see dropshipping from a different perspective. I look forward to trying this out over the next few years and giving you an update. Because you should be there for the long-term, not just short-term gains.