If you’ve ever had that dream to start your own dropshipping store because like a lot of people you can see the huge profit potential that comes with it. After all, according to Macrotends Amazon earned over $152 billion in 2020 alone. However, as a drop shipper, you may not make as much as you think.
Drop shippers earn between 20% and 30% money from each sale they make. The remaining money from the gross sales goes to buy the product from your supplier, advertising cost, and another overhead cost.
While Dropshippers do have some disadvantages and hidden costs that you will need to worry about, you can still make some serious money if you use the tips and tricks that are in this article.
How Much Do Dropshippers Make on Average?
Let’s take a look at three different options that can give different income levels. While digging around online I found several great examples of different dropshipping businesses from the lowly beginner to the drop shipping master.
- First, Kate makes $32,000 a month by selling anime products along with jewelry and clothing. You can read her story here.
- Travis has made over 1 million dollars in two years selling furniture online. You can read his full story here.
- Irwin went from zero to $1 million in 12 months by selling products from Oberlo. You can read the full story here.
Luck doesn’t have anything to do with it, but instead, it comes down to what they were selling, and how they marketed their business.
The trick is finding quality suppliers in your niche that will give you good deals and work with your business.
Additionally, most sales are exaggerated as you see below. There are two different types of earnings that workers fill in, and you need to know the difference before you decide to become a drop shipper.
How Much Do Dropshippers Actually Make?
Most drop shippers make around 20% of their gross sales or 20% of their profit. If your friend says that they have earned $10,000 dollars from their dropshipping business, then around $2,000 of that is profit.
The rest of the money goes towards purchasing and storing the extra project, advertising themselves as a drop shipping company, running the website and platform, and the costs of running the business itself.
More money goes into maintaining the business than most people realize, so whenever you see the gross sales of a drop shipper, take 20% of that and you will be able to calculate the profit.
Of course, you could make more or less of your gross income, and it will be dependent on several factors. Here are some of the things that you will need to look out for when it comes to starting your own dropshipping business.
What Determines How Much You Can Make?
Some of the things that can change the amount of money that you make include the following tips.
1. Go With a Specific Niche
The first thing is the niche that you select because you don’t want to pick a massive list of products that you are proficient in dropshipping in. You will need to make sure that you can store, purchase, and ship these items.
You don’t want to deal with everything under the sun. Instead, if you focus on one niche of items, you can understand your budget a bit more.
For example, if you are only shipping deck furniture, then you know how much shipping those items can cost.
You can also plan your budget around buying these items in bulk and have some sort of a bulk order plan whenever the dropshipping orders come in.
The stronger your niche is, the easier the purchasing and shipping process will be, and the more money you will make.
You should focus on a niche with a lot of purchasing power that people are always going to buy. Because customers are going to order from your parent company and then they will come to you.
Do some research into your niche and look at its longevity, and then you can make your selection.
2. The Price Of The Product
A higher-priced product isn’t going to be sold as much as a lower-priced product, although when the bigger items are sold, then you can receive a much higher profit.
This also means less work overall because the big orders come in less and less as time goes on.
Lower-priced orders for smaller items come in much more frequently, which means more constant money, but also more work.
3. Shipping Costs
Larger products are going to cost a lot more to ship, and that cost will start to eat into your budget.
If you are shipping a lot of big products, your wallet will suffer as you deal with getting the packages to their proper owners.
The costs can also make bigger companies much more lucrative because those companies include the cost.
Make sure to keep the shipping costs low as you continue working with your products. Most of your shipping costs will be determined by how far away you are sending the product.
If you are looking at overseas shipping or shipping across long miles, that changes the shipping costs that you will deal with.
If you want to be a good drop shipping business, then people need to know that you exist.
That comes from advertising which can cost a lot. While minor google ads can cost a little bit, traditional advertising for your business (such as flyers, banners, trucks, etc) can cost a pretty penny if you are not careful.
Advertising can put you in the red even while you are using advertising to get yourself out of the red, so you need to make sure that you are spending your advertising money in a smart way.
Plus, you need to track the engagement of your audience with your ads to make sure that the advertisements are bringing in customers for you.
5. Web Cost
Finally, the cost of the web platform you use is going to take something out of your budget. If you use a platform like Shopify or purchase product images, then that is a monthly or annual cost that will be drained from your card.
Consider your hosting platform and what it will cost you, as well as any costs that will happen when the website expands.
There’s a lot of thought that goes into all of this, and for good reason. Nearly every single cent that you are making as a drop shipper is earmarked to go to someone and keep your business running.
You need to know what you are spending so you can figure out how much profit you have and that your expenditures do not outweigh your budget.
Where To Get Started As a Dropshipper?
If you feel confident that you understand that the question of “how much do drop shippers make a year?” is a loaded question that can change. Still, if you want to become a drop shipper, then you need help to get things started.
If you want to get started in the right way, then you need to find some help. One of the best resources that I’ve used is to use Dropship Lifestyle. I’m personally not an affiliate with this company but I do own their course.
It comes with different courses, a Youtube channel, and a blog that comes with all sorts of resources that can get you started as a drop shipper. You can start a semi-automated dropshipping business with one of the world’s best eCommerce Courses.
Dropship Lifestyle allows you to create a niche and find top-tier supplies in your approved niche. They provide everything you need to have your drop ship website ranked up and going from day 1.
They also provide a community of over 12,000 followers to ask questions and work with the various successful drop shippers on the platform.
Being a drop shipper is difficult, and it doesn’t make as much profit as other jobs do, but if you do the best job available and learn some tips and tricks, you can make a good profit.
Being a drop shipper is a good side hustle to have, especially if you partner with a very large business that has several orders.
Make sure to pick a niche with plenty of large and small orders to have some variety, and keep an eye on your budget to make sure that you aren’t spending more than you need to be.
You don’t want to get in the red while you are trying to make some money! It takes quite a while to get started and ready to be a good drop shipper, but once you get into your groove you can start to make some good money.