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The Ultimate Guide to Dropshipping (shopify.com)
310 points by allsop8184 on Mar 14, 2013 | hide | past | web | favorite | 55 comments



Out of curiosity, if drop shipping enabled you to quit your job in finance a few years back (http://ecommerce.shopify.com/guides/dropshipping/about-the-a... ) , why are you now 'giving away your secret sauce' by running a website dedicated to teach people how to setup "copycat" businesses?

Is it that the drop shipping business has gotten so competitive that there is more money in teaching people about it than the business itself, or were there other reasons?


I'll have to let Andrew, my co-author, speak on why he left the corporate world to start his ecommerce blog.

But I can share why I decided to write this. I noticed that most, if not all of the information on drop shipping is bullshit. The topic is riddled with scammers looking to rip you off.

A few months ago I published a guest post about drop shipping on my company blog. It was written by my co-author. It was very well received... seemed there were people out there starving for good information on getting a drop shipping business up and running.

I bought every print and ebook on the subject, read most articles I found online on the topic, and quickly realized that we could probably write something way better. So we did. I hope! :P Anwyays, that's it... just published it today and can't wait to get feedback on how to improve it. Once we polish it up a bit, I plan on releasing an eBook so people can read it on their Kindles and what not. If you read it Kitcar, I hope you enjoy!


That's admirable, but what about the answer to his question? You're giving away your secret sauce and introducing more competition into the market and lowering the barrier to entry.


Mark's co-author, Andrew, here. I just published a really length reply above, so hopefully that answers your question. In a nutshell, just like in business the biggest secret sauce is hard work and consistency - it's not like we're giving away the keys to the treasury where they print money!

With that being said, there are a lot of nuances to picking a good niche (especially in drop shipping where the competition can be fierce and margins low) and to operating a drop shipping business (as it can get logistically complex). Those are some of the things we're trying to shed more light on in the guide.


Co-author here, and a totally valid question! I started my blog about eCommerce / drop shipping for a number of reasons:

1) To expand my professional network and opportunities

I just finished co-writing a book with Shopify on drop shipping, which is something I never would have had the opportunity to do without the blog. It's allowed me to build credibility and expand my network.

Additionally, the blog allows me to reach out to really interesting people when I otherwise wouldn't be able to. For example, I recently interviewed Gary Vaynerchuk - something I never would have been to do without leveraging eCommerceFuel.

2) To connect with other eCommerce entrepreneurs

I've had the chance to connect with hundreds of other eCommerce merchants and share strategies and tips. I eventually hope to build a really vibrant community for small eCommerce merchants (as I think that's lacking online), and this is helping me accomplish that.

3) To eventually diversify my income stream with something new

Like all entrepreneurs, I think the desire to try new things is strong - especially after you've been doing the same thing for a while. I saw the blog as a way to create another income source that leveraged the experience I have.

While one of my eventual goals is to make money from the blog, my first priority is to keep the content extremely high quality, genuine, authentic and USEFUL. I wanted to give away a ton of useful information before I asked for anything in return.

Take the eBook on my site, for example. I spent 2 weeks solid writing it and I give it away for free. If you download it and don't think it's one of the better free resources you've come across online just let me know and I'll send you $20 via PayPal for wasting your time. :-)

4) To dispel the the idea of "easy money" online

You asked why I'm teaching people to setup "copycat" business, and I'd argue I'm doing nothing of the sort. 80% of success with any kind of business involves the execution and strategy - and not picking the perfect niche or having some "secret" sauce.

If Alexis Ohanian released a killer guide to programming in Python that doesn't mean someone is going to be able to create a Reddit copycat... ...at least one that will successfully compete with them. Also, just because someone is sharing their knowledge and/or tactics doesn't mean that their original project is no longer viable. It simply means they're interested in sharing their experience.

If building a profitable drop shipping business was an easy 48-hour project, I'd be less likely to share so publicly - you're right! But just like any business, it takes a lot of hard work. The knowledge is important, but the legwork is really what makes it difficult to implement.

I completely understand your skepticism as the online business space is full of scams. But hopefully if you invest a few minutes reading our guide, and my blog (http://www.eCommerceFuel.com) you'll realize we're committed to publishing quality, useful content and not trying to rip people off.

Let me know if you have any questions - happy to answer them.


This is a great answer. I think it is important to note that all of the information you have provided is already available on the web, so you aren't really revealing super secret information. You have provided a very well written and properly structured guide for information which could have been gathered anyways. I went down the dropshipping information wormhole recently it was a super annoying process. You're guide has definitely helped provide a strong structure the information I gathered.

Thanks!


Thanks! You're right - most of the information is publicly available, and we just consolidated it into one spot. Some aspects are a bit harder to find publicly - like some of the tricker aspects of managing the logistics of operating a drop shipping business - but still not impossible to find. You just have to dig a bit deeper, or talk to someone with experience.


And... you touched a point which new people to dropshipping will hardly read somewhere else: that you take responsibility and accountability for your suppliers' mistakes. This happens all the time. I did some dropshipping in the past with suppliers in China. I can tell you it wasn't for those with faint hearts. Having customers calling/emailing you 10^2345 times a day to complain about the product they had received wrong, while it's not your fault, sucks big time. Back to the point, I'm glad you have made a note about this aspect in your website.


Hey Andrew, I didn't know you were on HN. I've been following your blog for a while now and I can vouch for you (for as much as that counts) to the community that you a) are very successful at what you do and b) are very helpful to others in the community.

This guy loves to share and I think it helps him succeed by knowing that he has to share what he's doing. It's a confidence-success loop.

And you're right about 'copycat' - just because you know the process doesn't mean you have the same niche or drive. That's like saying teaching MBAs is teaching a bunch of copycat to all run the same businesses.


Wow, thanks watershawl - really appreciate the vote of confidence. And thanks for reading as well!

The more you share what you're doing, the more it will ultimately end up coming back to help you out. Just look at Nathan Barry: his transparency has undoubtedly helped - not hurt - his blog, sales and reputation. I think it's a great model, and am trying to do something similar.


Great guide! Just one question, have you ever thought of setting something like a drop-shipping B2B service? There are a lot of services that are going into that direction (right at the core, that's why wholesellers make living with companies) and collaboration plattforms out there, but I think combining that with some dropshipping services would offer a great opportunity.


I appreciate you taking the time to write out such a thoughtful answer - thanks!


You're very welcome! I'd be wondering the the same kind of thing if I were you. :-)


I don't think drop shipping is really something where there are a small set of secrets an in crowd are operating on that anyone can come along and easily replicate. So I don't think more information is really going to effect current players that much.

Without reading the guide I would assume it doesn't tell you exactly which product you should sell and guarantees that you will be able to do a deal for someone to supply you that product. That is a large part of it, not really bigger though than any startup doing a key deal with another company.

From there you face many of the same challenges as any tech startup. Functioning and easy to use technology, effective and positive ROI marketing and great customer support.


Andrew Youderian's the real deal. I've been reading his blog for a while, here's his story:

http://www.ecommercefuel.com/my-corporate-escape-story/

http://www.pocketchanged.com/2012/08/14/online-business-secr...


Thanks sayemm!


Your guide looks really good, but you're definitely correct in your 1st paragraph: when I hear "guide to drop shipping" I immediately think back to the days of "MAKE THOUSANDS FROM HOME SELLING PRODUCTS ON EBAY" ... it has a bit of a snake-oil perception to me and I'm glad you addressed that right away.

My wife started an Instagram printing business (http://cheergram.com) a few months ago and it's going very well. All products are dropp-shipped from our partner lab so I know it can work.

I haven't finished the guide yet, but so far it looks really good.


Thanks so much. Part of the reason I decided to write this guide with my co-author Andrew is there's so much bullshit out there regarding drop shipping. It's really bad.... and if you go to Google to learn more about the topic I'm afraid most results are scams. I wanted to change that. Shopify was gracious enough to give me the time out of my regular duties to pursue this project and I'm really happy with how it turned out. Tell your wife Cheergram is awesome, and a huge congratulations for getting her drop shipping business up and running! Happy reading callmeed - I really hope you enjoy the rest of my guide! :)


That's great ... it's probably a good time to tackle this since people seem to be gravitating away from Ebay and toward more direct selling through social media, shopify, and all the recent "SELL ANYTHING WITH STRIPE" services we see here on HN.

If you have any specific questions or need quotes related to print/photo drop-shipping, let me know. I actually just got back from a big photo industry trade-show. Lots of interesting things going on.


Would love to get a PDF version of this. I'll make one once I get home but if someone beats me to it... ;)


I just launched the online version today so I haven't had time to make a PDF yet. But yes, I'll definitely get on that ASAP. Glad to hear you think that would be useful mrchess.



Instapaper- PDF print each page.

You'll have sub-par formatting, and will have to combine the PDFs yourself though.


Yeah, +1 on that idea. PDF would be really nice.


Great job! One typo in Chapter 3: "drop hipping" (though that would be a cool name for the official Shopify dance)


Haha drop hipping sounds awesome. I think I'll just keep that there as an easter egg. :-)


This is especially ironic considering shopify does not offer dropshipping. I've had multiple people inquire about dropshipping our products but we've never been able to make it work.


And they link to a specific inventory management system which is expensive and isn't tailored for drop shipping when there are other alternatives, at lower price, in the Shopify app store.


This guide has some great information. A dropship commerce store can be a great complement to a software company if you are able to integrate a company's products in with your software.

My wife and I develop a cattle management software called CattleMax and began operating two dropship e-commerce stores several years ago. Our stores help us offer customers a full solution (identification + weighing/measuring + management software) and also provide a nice supplement to our SaaS revenues.

Our first store, The Cattle Tags Store (CattleTags.com), sells cattle identification supplies including visual ear tags and RFID tags & readers. Our software is useless of the rancher hasn't identified his or her cattle, so good identification is important.

Our second store, The Cattle Scales Store (CattleScales.com), sells digital weigh scales designed for weighing livestock. It is a natural fit since our software can import weights from the scales and these scales also integrate with the RFID readers we sell at The Cattle Tags Store.

In the beginning, we were hesitant to create the stores but got through that hesitation by saying "OK we will try it out for a few months".


Dropshipping = Chargeback risk that you can't control.


The amount that you save on inventory and warehousing could offset that risk. Plus depending on your niche I would imagine that the risk varies.


I'm not entirely sure if it's still classified as dropshipping.

But I've been told that some postal services (e.g. NZ Post) are able to provide dropshipping like logistics for you.

e.g. You manufacture your product in China. The postal service will then manage logistics for you from factory to your customers.


okay, I've never heard the term "drop shipping" before and I read the entire intro page and I still have no idea what it is. I guess you plan to tell me in Chapter One, but that's a lot more commitment than I want to make when I have no idea what you're talking about.


Good feedback - we'll have to incorporate this into our 1st round of revisions.

Drop shipping is a fulfillment model where a merchant doesn't carry any inventory. Instead, they only purchase an item from a wholesaler when they receive an order from a customer. Then, they have that item shipped directly from the wholesale warehouse to the customer.

It allows a merchant to start a store without having to invest up-front in inventory, and without having to manage a warehouse.


So, now we have merchants with no store, no warehouse and no inventory... what exactly is left for the merchant to do?


Marketing, making the sales happen, etc. They wouldn't exist if they didn't do something useful.

It's like asking why affiliate marketing exists. It does and it's huge.


I suppose I was thinking about the wrong kind of product, I now realize it would be much more viable for one-time small purchases than it would be for repeated purchases or large purchases. (where the incentive to cut out the middleman would be powerful)


Find customers, take orders, provide customer service.


Everyone in the supply chain (manufacturer --> wholesaler --> retailer) specializes in their own area.

It's mentioned in the guide that wholesalers are often terrible at SEO and website design.

Hence the room in the market for niche retailers who dominate their own long tail keyword terms (SEO), offer a great sales experience (well designed site) who can identify products that are possible to resell profitably.


sell


"Dropshipping is a retail fulfillment method where a store doesn't keep the products it sells in stock. Instead, when a store sells a product, it purchases the item from a third party and has it shipped directly to the customer. As a result, the merchant never sees or handles the product."

First paragraph after the introduction. I mean, this paragraph could probably be written in a gazillion different ways but to me this pretty much explains what Drop Shipping is..

Edit: It seems that this paragraph was added later. :)


Really good feedback, thank you. We will add a quick definition in the introduction page.


As a manufacturer who drops hips for online sellers, this is a pretty god guide (jewelry)


Embarrassing number of typos made on train home yesterday. Can't fix now, but good reminder to proofread when tired.


There's a typo on this page[0]:

"per-order drop hipping fee"

[0] http://ecommerce.shopify.com/guides/dropshipping/finding-sup...


I just read the section of your guide about finding suppliers. So you recommend supplier marketplaces like Doba? I've heard alot of strong opinions either way on them. Is the pricing you can get there really competitive? Most of their clients appear to be really small mom-and-pop online stores.


DOBA's interface can be convenient because they integrate seamlessly with big suppliers, but they have a limited number of end-suppliers and the service is more expensive. So while I'm sure some people have used them successfully, I think starting from scratch there are more compelling options. I've never used them, however, so I can't speak from personal experience.

If you can find and work directly with your suppliers, that's preferable. Next best is going with a directory like World Wide Brands if you're struggling to find suppliers or need a solid brainstorming tool. Instead of serving as the go-between, they simply connect you directly to suppliers via their listings. Additionally, they'll have a larger selection of smaller niche suppliers which is where I see people have the most success with drop shipping. I've used WWB for years and they're a good source for legitimate wholesaler suppliers.

Full disclosure: I've been interviewed / posted on the DOBA-affiliated blog to promote eCommerceFuel.com as they have a well-known blog in the drop shipping space.


I work at a Wholesale supplier and he pretty much nailed the 3 points regarding the Google searches.


Is right supplier best kept secret in dropshipping?

It would be nice if you can provide at least one supplier for any product you wish, this would give us fair idea about suppliers.


Does anyone have any experience with pixmania-pro drop shipping? I am specifically looking for a merchant that sell automated vacuum cleaners. (iRobot / Samsung)


Very awesome. Might be worth adding ecommhub.com in there somewhere - makes life a hell of a lot easier for a drop-shipper :)


Thanks for the mention :) I'm Kurt, founder of eCommHub. I think it was an editorial mistake, so hopefully we'll get included in the guide soon.

Just to give others some background, we started as a Shopify app a few years ago, so our whole platform is built around dropshipping (with Shopify). eCommHub helps with automating the inventory management and order processing, which can otherwise be quite manual and tedious. Some of our clients are automating as many as 5,000+ orders per DAY through Shopify using eCommHub.

Anyway, this truly is the ultimate guide on drop shipping, so congrats to Mark and Andrew for putting together such a great resource!

Here's our app listing if you're interested in checking out more: http://apps.shopify.com/ecommhub or http://ecommhub.com


Agreed! I love eCommHub, and use them for one of my sites. Kurt and the team over there are great and have built a solid service. Hopefully we can get them included.


Could you make it into a kindle book please? 9.99 looks like a good price to me. Thanks.


Gonna burn karma here but... I read the title as "The Ultimate Guide to Dropshitting" and realized I have a great new name for 2HWW-inspired fly-by-night fulfillment companies :)




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