Note: I originally published this post on Forbes.com and sharing with you here.
There are a million ways to make money and with the internet opening so many new doors for entrepreneurs, the opportunities are limitless... if you know where to look.
The term "dropshipping" often has a negative stigma attached to it, mostly due to folks trying to make a quick buck with no real business plan behind them. There are thousands of online stores selling cheap widgets and gadgets that are shipped directly from a factory in China, but that’s not what I want to share with you today.
What is dropshipping?
Dropshipping is simply a fulfillment method for getting the product to the customer after purchase.
For example, let’s say you have an online store selling 3D printers. Someone goes to your online store and places an order. You collect payment in full and order the 3D printer from the manufacturer for wholesale (because you’re an authorized dealer). The manufacturer then ships the 3D printer directly to your customer. You didn’t purchase the 3D printer until after you received the order so the financial risk is very low. You don’t have a warehouse full of merchandise, you don’t have a team of packers and fulfillers. You just email the order details to the manufacturer and thank the customer for their business.
High ticket dropshipping is a legitimate way to sell quality products to people shopping online in which product is shipped directly to them without you handling any of the fulfillment. This means you can do it from your laptop or smartphone or pretty much anywhere you can get internet service.
But how do we create the business to work without us?
There are a few things you need to do first to ensure the business has a high likelihood of success. Many businesses fail within the first ten years of operation, and online businesses are no different. But with the right preparation and work ethic, you have a favorable chance with almost zero financial investment. I say almost because you will spend a few hundred dollars to get launched and ready to sell.
Here are the steps you need to take in order to make a profitable online business flourish from anywhere in the world.
Get a business license.
Do your research and within an hour of searching online, you can have all the resources you need to obtain a legal operating license. You can file online to request an EIN (tax ID) from the IRS and in a few weeks, your business is legitimate. Having a registered business is important when you start contacting manufacturers because they cannot sign you up as an authorized dealer/reseller if you don't have a tax ID and business license.
Find a niche.
Find a niche that retails products for at least $1000 because the typical margins for dealers are around 25% off retail. If you sell a product at retail for $1000, your pre-tax profit is $250. If you sell a $10 widget and make $2.50, how many of those do you have to sell to make any sort of real money? Look for expensive products and research how many manufacturers there are making that product. You don’t want to start an online store relying on a single manufacturer. If they run out of stock, you run out of stock. So, the more manufacturers the better.
Build your online store.
Let’s say you settled on 3D printers and called up all the manufacturers and signed up as a dealer for most of them. Now you need a website to display these 3D printers. There are many platforms that make this very easy. Shopify is my favorite as it’s so easy to use and understand and you need no tech skills. You just drag and drop product images and add descriptions. You can build a website on Shopify in a weekend just by playing around with it or following YouTube video tutorials. Other platform options exist, like Wix, BigCommerce or WooCommerce. The important thing is to do your research before selecting one.
Find your audience.
Spend some time online researching 3D printers and discovering who buys 3D printers. Once you've determined which demographic is looking for and talking about 3D printers online, you can then design the store and write the product descriptions that most appeal to this customer base. These are your people now. You should build your business around offering value to them.
Acquire and grow your traffic.
People believe that once you have a website, people will just show up. That never happens. You need to be in front of people when they are actively looking for 3D printers online. But that's easier said than done. There are hundreds of different ways to get traffic to your new website, but to stick to the core concepts there are two main drivers of traffic: organic traffic and paid traffic.
Organic traffic is when people find your website naturally by searching online for a term like “Best 3D Printer” or something similar. Organic traffic is free and you should start from day one to work on creating helpful content like blog posts to educate people doing research about which 3D printers to buy and why. When you write an exceptional piece of content, the search engines like Google and Bing will take months to reward you for your helpful content. But slowly you should start to rank high on Google and people will begin landing on your website during their research. Organic traffic is free but it takes time to pay off.
Paid traffic as the name implies, costs you money. This is when you pay Google or Facebook to place ads in front of people that are online, hoping to attract them to your site. Paid traffic is a skill you’ll need to master to achieve success, otherwise, you’ll be spending a lot of money and have nothing to show for it.
Ideally, you can master both forms of getting traffic and $250 a sale. You won’t need to sell many units every month to make a nice living for yourself. I do this from my home office in southern Italy and my store is U.S.-based. If I can do it remotely in a different time zone, you can too.