Fashion · Retail

Has anyone been successful with a 100% Dropship Model?

Lisa Falcone Rock Star Marketer available for company poised for growth

August 23rd, 2015

I have been thinking about spending some of my free time purchasing a Shopify store and then hooking it up with fashion items sourced from a dropshipping provider https://modalyst.co/   I see this as a potential side stream of income and a way to involve myself in something that I enjoy.

But, with anything, I don't want to invest the money if it won't produce an ROI (say, at least a couple of hundred per month, on average, in the first 6 months)

Does anyone have knowledge of or experience with a 100% dropshipping fashion etail store?  Do you know of anyone successful in it?  And how can one ensure a greater likelihood of success in running an etail store carrying 100% dropshipped products (...good marketing: content, SEO, targeting, etc)? 

Lastly, if you know anyone who is running their own e-tail dropship business, I would certainly appreciate the introduction! 

Thank you in advance for your insight!

Lisa

Chavous Camp

August 24th, 2015

I would tend to agree with Anton.

I _DO_ have some experience with drop shipping in the US.  I have worked with several drop shippers over the years, one of which I was a shareholder in. It was hunting/fishing/outdoor & clothing store.  It failed, though that was as much caused by the primary founder (and ceo) as it was anything else.

The biggest issue: The margins the distributors give you are just too small until you are large enough to actually make a difference.  Check your disty's pricing vs, say, Amazon.  You may find your margins are so slim, it isn't worth it.... unless your VALUE proposition is so good - either because you are fitting a niche or providing a product they can't get elsewhere, etc - that customers will pay an extra few dollars to do business with you.  That's REALLY tough.

The second biggest issue: returns.  They will PLAGUE you.  Your distributor will probably not want to deal with them directly - they will expect YOU to handle that.  You will then have to sort through them, decide which ones you can return to the disty as new and which you have to keep and try to sell at a discount later.  Unfortunately, in the mean time, you have to eat that cash.  Oh, and the shipping, because your customers will likely expect you to eat the return shipping...

Third issue: Credit Card Discount Fees - this really ties in to #1, because the margins are so small, but discount fees hit you when you get money, and they may hit you again when you issue a refund.  They will get their money "coming and going," so you have to have enough markup to cover all of it.

Despite all of this, is it doable? YES

Just make sure you have an EXCELLENT value proposition for your customers.... niche, something else spectacular, etc.  

Without a compelling value proposition, I'd say "NO not worth it, your ROI just won't be there."

Frank Corsi

August 23rd, 2015

Hi Lisa, 
Ive never run a dropship website myself, but I have built websites for clients over the years who did attempt this method of an online business. I would have to say that of the clients who tried this, only a few had success. It does take a big amount of marketing to get the website to generate sales. 
If you are a good online marketer then give it a try.
Also have you seen the new 3D internet?
My company is building a platform now for 3D Storefront websites, it may be a bit ahead of the curve. We feel it may be the future of online shopping, and may just be that edge you need to stand out from the other drop ship websites selling the same products.


Anton Yakovlev Founder of four successful businesses on two continents who can help you do the same

August 23rd, 2015

I do not have that experience in US, but I have a lot of in Russia. And in my opinion you cannot rely on dropshipping alone. You still have to have some positions which really beat the market. They attract people to you, give you the traffic and customers' love, and then you can sell the dropshipping items.