Understanding the Building Blocks of Dropshipping Business
In the introductory post I promised to talk about the dropshipping business model. Before you begin your dropshipping business, the very first thing that you need to do is understand the building blocks of this business, that is, the basic foundation on which you’re going to build this fabulous business. I call those the essentials.
Essential #1 is the business model or how you will make money. Clearly, you need to understand what this whole business model is about and how it’s going to actually make you money and build your very exciting business. In the section, I’m going to show you exactly how that works.
Essential #2 two is all about setting up your free Shopify account. Now, if you’ve never heard of Shopify, don’t worry. It’s basically the software, or the platform that we’re going to use to build out your fantastic store.
The great thing about Shopify, and one of the reasons why it really has become almost the market leader, is that it is so easy to use. It’s super simple. You don’t need any technical knowledge. It’s basically point and click and dare I say, even fun to use. You’re going to really enjoy building out your Shopify store.
Essential #3 is all about understanding your Shopify account. In this essential, I will show you, I’ll give you a very high-level view of your Shopify account so that you are very much at ease and really understand the power, and how simple this software is to use.
Those are the three essentials. Those are essential building blocks and they’re all coming up in the next three sections. If you’re ready let’s dive into essential number one.
The Business Model to Understand What Dropshipping is
As I said before, essential #1 is the business model or how you will make money. What I want you to do here is just to understand the high-level concepts of what this business is all about.
The first thing we’re going to do is build out your ecommerce store (represented with a t-shirt on the top left of the image). We’re going to do that with that software Shopify. You’re going to see how this all evolves. If you’ve never done anything like this before, you might be thinking, “Oh my goodness, how am I going to possibly build out my own ecommerce store?” You’re going to see how simple and fun it is to do.
Now, once we’ve built that store, we’re going to have basically a store, which is initially this empty. That’s what your store is going to look like in the beginning. Then we need to start stocking it with items so that people can come and buy them. But we’re not going to stop them with physical items. We’re going to stock them with just pictures and text, much like any store that you might see out there on the Internet.
But where are we actually going to get our physical items from when people buy them from our store? This is where an amazing website called AliExpress.com (our supplier) comes in. I will give you a bunch of other suppliers later in the course. AliExpress is a huge. It’s absolutely a massive website with millions of products on it. The reason it’s so interesting is that the prices are so attractive. Let me show you how this is going to work.
For example, as illustrated in Figure 1.2, let’s just imagine that we have found a t-shirt on AliExpress for $3. Hold on a second. I want to say straight away that this business model is not about selling t-shirts. You can sell t-shirts if you want, but what I really want to emphasize is you can sell absolutely anything. This example is going to be about t-shirts, but please understand, you can sell anything you want.
So, assuming we found a t-shirt on AliExpress for $3. What we’re going to do is take the images so the images of the t-shirt and its description and put them on our site. The only thing we’re going to change is the price. I’m going to put it on our site for $20. I think you can probably already start to see how we’re going to make money.
Now, we’ve got our store with one product in it. The more products you have in your store the more your potential to earn more. When I started my dropshipping business with the E-commerce Empire Academy, I opened my store with only 15 products. Now, I have thousands of products and a big store.
Of course, eventually we’ll have many items, but for the moment we’ve just got one item. The next step, therefore, is to find somebody, of course, to buy it from our store. So, let’s imagine we have a customer shown in the middle of figure 1.2, wandering around in the wilderness.
What we want to do is to target that customer. We want to find customers who will buy t-shirts in this example. That’s a big part of what I’m going to teach you as well. I’m going to show you how you can laser target the right people so that they will come to your store to buy your products.
So, assuming we found the perfect customer who will come to the store to buy the item from our site, in this case, the t-shirt for $20. Once he’s bought that from our store, we now have $20 in our hands.
Now, if you cast your mind back just a few minutes, I also said that we weren’t going to stock the store with any physical products, simply images and text. So, at this point in time, we’re not able to send him the t-shirt that he just bought because we don’t hold any stock. This is where our suppliers such as AliExpress comes in.
Although this customer bought the item from our site for $20, we then go over to AliExpress and buy it for $3. We will ask the supplier over on AliExpress to send the item directly to the customer. Not to us, not to anybody else, but directly to the customer. That process of sending it from AliExpress directly to the customer is called dropshipping.
When the customer receives that item, he is very happy. Now, with that in mind, let’s have a think about what that actually means from a business perspective. Let’s see how that makes us money. Now, I want to draw your attention to a few things shown on the lower right side of Figure 1.2. We have sold the t-shirt for $20 on our site. We then went over to AliExpress and bought it for $3.
Now, I told you I was going to teach you how to find those ideal customers and bring them to your site, and that’s going to involve a certain amount of advertising. So, let’s imagine that we spent $2 on paid advertising to get that customer to our site. Free advertising can also work of course. That leaves us with a profit of $15.
That’s just for one transaction. We can repeat this process over and over again. I really hope that you can now see in that simple example exactly why this whole model of Shopify, AliExpress and dropshipping is super powerful. Just to help you further understand why this is so exciting, let’s have a look at the advantages. There are numerous advantages, but I’m just going to pull out the main ones.
Over on the lower left corner of Figure 1.2, I listed out some of the advantages. The first one is that you never have to own any stock. When somebody buys it from your site, the item will be sent directly from the supplier on AliExpress to the customer. You never own any stock. That means you don’t need a garage full of t shirts waiting to sell. No products you don’t need to fill up your apartment with.
Another great thing is that you get the money up front. When we sold that t-shirt on our site for $20, we immediately had that money. Then we went over to AliExpress and bought it for $3 and immediately made a profit of $15 after taking off advertising. So, by getting the money up front, we don’t have a cash flow problem. On the other hand, many businesses require an enormous upfront investment, like thousands of dollars perhaps. But here you don’t need that.
The other thing that I mentioned a few times now that you’re going to see as we now progress, is that there are no technical skills required. Shopify is super easy, super point and click. I’m really, excited about showing you that in the upcoming video tutorials.
You also don’t need any prior knowledge of ecommerce. If you’re reading this and you’re thinking, goodness me, I feel like I should at least have some sort of business knowledge or perhaps done this before or something like that. You really, really don’t.
Literally anybody with enough determination, of course, can do this. Taking action is also very important. So, if you’ve got that determination, and you’re willing to take action, then absolutely without any prior knowledge of ecommerce whatsoever, you can build out a fantastic business.
Now, the next thing, which I think you can probably already see as well, is that it’s very easily scalable. It really is literally up to you how fast and how big you want to grow this business.
You might be thinking, I just want to make an extra $1,000 a month part time. Maybe you’ve got a full-time job, and you just want to do a little bit of part time stuff and you want to make $1,000 a month.
You might also be thinking, well, actually that’s not enough. I want to go bigger than that. I want to go to perhaps all the way up to 100 K a year or maybe even beyond. All right. These are all possible with this model. It has the scalability baked in, and it’s really just entirely up to you your determination as to how far you want to take it.
Then lastly, this is highly profitable and you can run it from anywhere, even part time. You could in the long term certainly build a full-time business out of this. Many of my students have done so. But you can also do it part time if you got a 9 to 5 job.
If you have a job and you just want to try to fit this business model in and grow it while working your own job, you can totally do that, and you can run it from anywhere. I’ve been in ecommerce for well over 20 years and I run my business from home and all kinds of various locations. It is totally transportable. If you want to, you can live that kind of internet lifestyle as it’s sometimes referred to.
This model allows you that, and I repeat, it is basically entirely up to you as to how far you want to take this, your determination and your ability to take action.
Now, let’s just take a step back just to finish this lesson because I know there’s an awful lot of information there, especially if you’ve never seen anything like this before or if you’re feeling a little bit kind of overwhelmed.
First of all, I want you to know that’s totally normal. Okay? Often when we start new processes like this, we feel overwhelmed. So don’t in any way feel that’s a bad thing. Just take your time. If you found this a little bit confusing or even if you’ve absolutely got it 100%, it’s a great idea just to watch the videos again or maybe two or three times until you really start to get the concepts.
Now with that said, you don’t need to understand every single detail of what I’m talking about here. As we go through this playbook, it’s going to become clearer and clearer and you’re going to get more and more excited about what this business model has to offer. So, I say huge congratulations in taking this first step on what is going to be a very exciting journey.
I love teaching this model because it really is amazing. In the next chapter, you’re going to see a link which I want you to click on because it’s going to be the very first step in setting up your very first Shopify store. The great news is you will then have a 14-day no obligation free trial. So, there really is no reason whatsoever not to get started. Are you ready? If yes, move on to the next chapter!
Your Link to 14-Day Free Shopify Account
This is about to get very exciting! But before we can progress any further, simply click on the following link to access Shopify’s 14-day free trial web page. https://shopify.com. If you are an existing store owner, you can boost your sales by adding the latest trending products to your shop from SellTheTrends (a very good alternative to AliExpress).
Setting up Your Free Shopify Account
Once you’ve completed the step, you should arrive on the Shopify web page where you can create your free trial account. Now, go straight below to watch a step by step video tutorial on what dropshipping is with Shopify, and how to build your first Shopify store.
There it is in just a few clicks and at absolutely zero cost, your very first Shopify store! You now have an incredibly powerful piece of software at your fingertips to build your incredible business.
Now, if you’re probably looking at your store’s back office, especially if you’ve never seen Shopify before, thinking, oh my goodness, what’s all this about? You might feel a little bit overwhelmed at this stage, and that’s absolutely normal. Absolutely fine. That’s why you’ve got this book. We’re here now to help you understand this product. This is not complicated, okay?
You don’t need any prior technical skills. You don’t need any fancy software, knowledge or anything like that. You’re going to see how easy this is to use. It’s all point and click. It really is an incredible product.
Now, with that in mind, I’m going to show you in the next tutorial a high-level overview of Shopify, just so that you kind of appreciate how it works. You will start to build that confidence, and start to feel that, yes, you really can do this. So, move on to the next lesson.
Understanding your Shopify Account
Now, it’s time to put a warm blanket around you, okay? I want to get you feeling comfortable with Shopify so that you can see how powerful and easy it is to use. Now, just before we do that, here’s just a few points that I’d like to point out at this stage.
First of all, please note down the password that you used when you set up your Shopify store. Because if you’re anything like me, you’re probably going to lose it. I’m sure you’re more organized than I am, but nevertheless, please note it down.
Second thing is, it’s a great idea to bookmark your store, so you can come back to it easily whenever you need to. And thirdly, there are some things you must have seen on the bottom right corner of your Shopify back office/end. Things like these:
Your trial just started.
Select a plan.
Also, you’ve probably received an email from Shopify by now, which probably also prompts you to select a plan. Now, what I want to make clear immediately is you do not need to select a plan at this stage.
You have 14 days of this free trial for me to show you how to build your fantastic business. We are in no rush here. We have plenty of time. I’ve got all kinds of amazing stuff I want to show you. With that in mind, let’s get going.
I hope by now you’re starting to understand what dropshipping really is. I also hope you feel a little bit more familiar with Shopify. All right. I know in the video you’ve seen only a high-level overview, but I hope you start to see that actually this isn’t that difficult. It really is all point and click.
You really can build out a fantastic business and that’s exactly what we’re going to start doing in my next post.