
Ask HN: How is drop shipping as an alternative source of income? - akritrime
So I am searching for something that would let me generate some income on the side. I recently came across the idea of drop shipping, but whenever I read something about it on the internet it feels like a too-good-to-be-true marketing pitch.
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HappyRobot
Reply All has a good episode this week that discusses drop shipping.
([https://www.gimletmedia.com/reply-all/117-the-worlds-most-
ex...](https://www.gimletmedia.com/reply-all/117-the-worlds-most-expensive-
free-watch#episode-player)). Seems to be based on this article -
[https://www.theatlantic.com/technology/archive/2018/01/the-s...](https://www.theatlantic.com/technology/archive/2018/01/the-
strange-brands-in-your-instagram-feed/550136/) Basically no one really knows
if there is money in drop shipping, but people are making money by teaching
people about it.

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geoffw8
As mentioned above. We're making money doing it.

I've long wondered why these guys are out there pitching their courses, right
now I just believe its a) because they see everyone else doing it b) its easy
money but really c) because their businesses are just on auto-pilot.

A lot of these guys have VA's who do a lot of the heavy lifting. I just think
they're getting bored and don't want to be forgotten on the conference
circuit.

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bthornbury
Dropshipping is viable but not nearly as easy as most make it out to be.

The main benefit of dropshipping is usually that you don't manage any
inventory, but prices and really anything but making the sale to the customer
is out of your control. Serious problems can arise when your customer's
expectations and your suppliers expectations (or failure to uphold thereof)
are mismatched.

Serious problems like this can lead to account terminations on amazon or other
platforms, forcing dropshippers without rock solid suppliers (and processes)
onto custom websites, or non-mainstream platforms.

To be able to manage a decently large store well, expect to invest hundreds of
hours in software and more in support. Just take it seriously with the long
term outlook and you're much more likely to succeed.

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dizzystar
You hit the nail on the head with this. Certain companies and "gurus" love to
promote the idea that you can make a cool mil by sitting on your ass and
dropshipping via Amazon.

What they don't tell you is that Amazon doesn't give two flying cares about
you as a seller. Send out a load of late shipments, get a few cases, and game
over. If you are just starting, Amazon is the very last place you want to sell
things.

Of course, if they were making a cool mil a month, they wouldn't be selling
courses at $299.

I have an Amazon store that I won't even use even though I'm allowed to sell
dresses (which is very difficult to get approved for). I haven't found a group
of suppliers I trust enough. If someone trustworthy has access to dresses and
wants to try being a supplier, feel free to send me an email (it's in my
profile).

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tomcam
I consult for a $23 million company that does millions in dropshipping. The
margins are slim because it’s an easy business to get into. Currently Amazon
fees eat up 30% off the top. It’s brutal.

A one-person shop can sometimes win for a short time by betting on a new
product, but once it gets a few dozen reviews on Amazon other people who know
how to type Alibaba.com will inevitably take over. And of course the Alibaba
vendors themselves aren’t stupid and are now becoming retailers.

~~~
WheelsAtLarge
I've sold books in Amazon and have often wondered how people make a living
selling books there. I've made a $9.00 book sale there and ended up getting
about $2+ after all their charges. I wasn't thrilled but since I had no other
place to sell it; It was better than nothing.

If you're a retail business you would have to get the books at a very low cost
plus you would need to do it in bulk for it to be worth the effort.

~~~
tomcam
Books are extremely cheap to buy in volume. Sellers rent cheap warehouse space
and store thousands of books at a time. The selling price of each book is
irrelevant. Often it is only one cent. Shipping for a book via Amazon’s
sharply discounted rate is about $2.50. They charge about $3.50 for shipping.
They make about $1 a book essentially using Amazon’s shipping fees in an
arbitrage scheme.

~~~
WheelsAtLarge
Good point, in the past, when we actually had bookstores. Book distributors
would ask for the book covers of unsold paperbacks rather than the whole book
when shipping it back. Their thinking being that it was cheaper to destroy the
book than to get the book back. I suspect that now distributors are happy to
get rid of what they can't sell and people are mostly happy to get rid,
cheaply, of any books they no longer want.

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muzani
Do you mean running a dropship or selling products with dropship managing
everything? I've done a bit of both.

Running dropship is lucrative but it's obviously very hard work, like farming
or running a restaurant. It's one of those things that can easily make you a
hundred thousand dollars a month, but after paying all the staff and costs,
you're left with a thousand dollars, and have to decide whether to scale up or
just do something else.

Running an ecommerce based on a dropship is also good. But you have to have
solid dropship partners, and it can cut quite deeply into profit margin. In
our case, we barely made any money on it, after other competitors. There are
also mom and pop stores who run the end to end without a dropship and can
afford to make enough money, while you struggle to keep afloat on the 1%
profit margin on top of dropship fees, tax, and online payment fees.

It's a super competitive field with a low entry barrier. Some illegal
immigrant who can't speak English or some dirt poor orphan would be willing to
put in 18 hours a day.

I find it to be a foolproof way to become a millionaire, but it doesn't go
much further than that and comes with a quality of life hit.

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nickthemagicman
It's just one part of an ecommerce business. Marketing imo is way more
crucial.

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WheelsAtLarge
True, I don't think people give marketing enough credit when starting a
business. Look at the P/L of most internet businesses and you'll see that
marketing and sales is the biggest expense.

A company's goal is to figure out how to market a product at a profit. It's
hard. Drop shipping is no different but there your margins are very thin.

What most ongoing companies do is to have a retail business in place with
actual products and use dropshipping to supplement it.

~~~
muzani
Marketing is the biggest expense for many companies because it returns money.
Like you won't spend a million dollars in marketing if you didn't get back 1.2
million.

It also cuts out from taxes, so most companies use long term marketing to
'stash money' for the future.

It's not really something worth discussing, one of those things that everyone
agrees is good, that everyone should max out where possible. (As long as the
business model is validated)

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WheelsAtLarge
You would think it's not worth discussing but I've seen many many posts on HN
of people building products, and not thinking of marketing, and then being
disappointed when no one uses it.

Marketing and sales is the lifeblood of a company yet many people think of it
as an afterthought to the product. I'm one that thinks that a marketing plan
should be developed at the embryonic stage of a company not after you have a
product.

That's why Amazon's Bezos makes everyone write out a press release as part of
a product pitch. He wants to make sure there's a compelling way to sell it to
people. "Press release," never start a product without it. :)

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geoffw8
Its no walk in the park, but we do pretty well with it. The thing I always say
to people about dropshipping is you're either making no money or lots of
money.

Finding a "winning" product is the hard part (0 revenue at this point), now
imagine that product has a margin of $10 (after acquisition cost), all you
have to do is find just 100 people to buy it to be making $1000 a day. Think
about that for a moment, only 100 people from the entirety of Facebook or
Instagram to be making $1000 a day profit.

We're small fry compared to some of the guys out there, there are people doing
6 figures a day. Some mid 6 figures.

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dizzystar
It's honestly one of the most difficult ways to make money that you can think
of. I've done it profitably, but that's only because I have a ton of
background in ecommerce.

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arenaninja
If drop shipping are among the most difficult ways to make money, I wonder
what you find easier? I think it's pretty high volume and low reward, but I
don't think it's very hard

