Can You Make Money Dropshipping With Shopify?

The biggest problem with many business owners who decide that they’re going to dropship is that they forget indirect costs. These are things like the website costs, the cost of Shopify apps and marketing costs. This is because with dropshipping the cost of the product is nicely wrapped into one single amount set by the manufacturer/wholesaler.

That means that when dropshippers try to create a business, they look at making a profit on the products not on the business as a whole by forgetting the indirect costs. This can lead to small or no profits at all.

This is avoidable however.

There are two elements to a product that you must ensure are present for a product to be sold via dropshipping: a good profit margin and demand. Without these two, you won’t make money via dropshipping. So, what do we mean by these two elements?

This is where there is a significant demand for a product that you can expect customers to buy the product in quantity. You’re talking about one or two sales per day, ideally, but at least a three or four a week. Using AliExpress and Oberlo, you can see the demand for products by the number of the products sold. Those with higher numbers show that there is a demand for a product.

Something that helps with demand is offering customer reviews for the product. This can be found on AliExpress and you can import their reviews into your website to build customer confidence and trust into your store.

This is the more challenging element when it comes to your dropshipping business. You should look at selling products that you can generate a profit margin of about 40-50% on. For instance, if a wholesaler sells the product for $5, you should sell for between $9 and $10. This gives you enough profit on the sale to cover other costs across your website. Anything less than 40% and profit margins need to have a very high demand to make a decent profit.

Of course you can always adjust these levels to suit your business. For instance, you can improve demand through adjusting pricing, but that could affect your profit margins. But you might find you get more profit overall through a slight adjustment.