A few years ago, I started an e-commerce store that allowed me to earn extra income in a fairly passive manner. Getting the business off the ground required time and effort, but it didn't cost me any money.
And within a month or two, I was earning money in my sleep. As a therapist, I was used to the 'billable hour.' Earning money at all hours of the day without putting in any extra effort seemed magical.
I chose to sell fine jewelry. I knew the markup on jewelry is high--often more than 100%. Yet, the shipping cost is low since jewelry doesn't weigh much. I could beat the prices offered by brick and mortar stores who had to pay rent and cover the costs of employees.
With a little research, I learned how to obtain a jeweler's license and I opened an account with a reputable wholesaler. From there, I chose the products I wanted to sell, named the company, and launched a website.
In the years since then, I've learned that there's value not in just selling products, but also in selling the online store. Once the e-commerce store shows consistent income, I sell the company.
But it's a strange phenomenon--I'm not actually selling any inventory. Basically, I'm selling a pre-made website and the inside scoop on how to operate a drop-ship business.
If you've ever dreamed of having passive income or creating a side hustle without any startup cost, here's how you can start your own drop-ship e-commerce store.
1. Choose a niche product.
There's a lot of competition when you're selling products online. And you're probably never going to outrank the big box stores in search engines for popular products like baby strollers or TVs. You also won't be able to beat their prices.
It's important to find a niche market. Whether you sell purple pens or you offer monkey-themed furniture, specialize in something. Choose products you're interested in learning about, talking about, and writing about because you're going to need plenty of knowledge about the products you're selling.
2. Research wholesalers.
The joy of a drop-ship business is that it doesn't require any inventory. The wholesaler ships direct to the customer at whatever markup you choose.
But, it's important to find a reputable wholesale company who keeps products in stock and ships orders to customers on time. Your business will only be as good as the wholesale company you choose so do plenty of research to find one that suits your needs.
3. Create a website.
Buy your domain name and create your website. Although you can hire someone to do it for you, learning how to build your own website is best.
You may need to make changes to your website down the road on short notice (if your wholesaler runs out of stock on an item or you want to run a sale on a moment's notice because a current event puts your product in the news). And you'll save a lot of money and hassle if you can make those changes yourself.
Your wholesaler will most likely supply you with images of your products. Create detailed product descriptions so buyers know exactly what they're purchasing. The more accurate your description, the fewer returns you'll have.
4. Choose a shopping cart.
Your shopping plays a big role in how many sales you'll actually get. A cluttered cart with too many options isn't good for sales.
While there are some good free shopping carts, most of them have limitations. Some only allow you to list a certain number of products and others don't allow for coupon codes.
Look for a shopping cart that has features most helpful to your business. One that will suggest similar products to buyers, for example, can greatly increase sales. The shopping cart is the heart of your new business so choose carefully.
5. Decide how to offer customer service.
No matter how well you describe your products or how clearly you spell out your policies, customers will have questions. So you'll need to decide how you will offer customer service.
You can simply set up an email address and respond to customers yourself whenever you can. You could also offer a phone number for people to call with questions. A phone number can help you appear more reputable, but that means you need someone available to take calls. A virtual assistant may be the best option.
Another option is to offer a live chat on your site. Many customers are shy about calling, but eager to chat online. A virtual assistant may be able to assist you with this as well, unless you happen to be a freelancer who works from home and can answer chat questions during regular business hours.
6. Figure out how to deal with returns.
Customers are more likely to buy your products if you accept returns. Returns can be a little more complicated when you're drop-shipping items however.
Some wholesalers allow customers to return items to them directly. Then, the wholesaler refunds you and you refund the customer. Other wholesalers will only accept returns from you.
So you may need to get returned items shipped to you. Then, you might hold onto the product and ship it to the next customer who orders it, or you could ship it back to the wholesaler for your refund.
You'll need to decide if you want to use your home address or get a post office box if you're going to advertise the return shipping address.
7. Consider selling on a variety of sites.
You don't have to limit yourself to your own website. Adding your products to eBay, Amazon, or other marketplaces within your niche can often double or triple your revenue.
But before you do so, make sure your wholesaler is able to consistently deliver quality products on time. Otherwise, you'll receive bad reviews and your accounts may get suspended.
8. Market your products.
Just because you build a website and offer products for a lower price than your competition doesn't mean people will find you. You need to find a way to market yourself so you people know your e-commerce site exists.
Create a blog on your e-commerce site. Open social media accounts in your company's name and post interesting content. Offer giveaways and special promotions to your followers. Start a newsletter. There are many ways to attract customers and you'll need to find the strategies that work best for your products.
If you offer a very specific product that people are likely searching for online, you might find it's worth the effort to use Google ads. But you'll need to keep a careful eye on your marketing efforts to ensure that you're earning a good return on your investment.
9. Update your products and website as needed.
It's important to keep updating your products and website. Add new products so customers keep coming back.
Make sure your pictures and product descriptions are accurate. If you receive complaints or concerns about specific products frequently, consider removing that product from your page.
You Can Do It
Creating an e-commerce store requires a fair amount of time. But, with little to no upfront costs, it can be profitable fast.
And if I can do it, i bet you can too. I'm a social worker turned author without any tech background. I just had to believe I could do it. Within a few months, I was earning more from my online store than I was earning in my day job.
I must say, there's something inherently satisfying about waking up to an inbox full of orders and knowing you just earned money in your sleep.