What Type Of Monthly Income Can Be Made With Dropshipping?

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YouTube is full of “dropshipping millionaires” who are flexing their lifestyles and encouraging their viewers to launch their own dropshipping business.

But there are also plenty of people out there who claim that dropshipping is dead and that getting into it is simply not worth it anymore.

So is it still possible to make money with dropshipping or should you stay away from it and do something else instead?

That’s exactly what we are going to discuss today…

Is Making Money With Dropshipping as Easy as YouTube Gurus Make it Out to Be?

If you watch a few videos about dropshipping on YouTube, the algorithm will start bombarding you with the dropshipping guru content.

You know what we are talking about young men in their 20s who are claiming to be dropshipping millionaires and want to teach you how to become one as well.

Considering the increasingly fantastical video titles and thumbnails in this niche, you’d be forgiven for thinking that these days everyone and their grandma has a Lamborghini that they bought with dropshipping money. 

But here’s what you need to understand: while these dropshipping gurus may or may not have successful e-commerce businesses, it’s probably safe to assume that their primary source of income is selling dropshipping courses.

Not to mention, given that quite a few of them have hundreds of thousands of subscribers on YouTube, they are probably also making money with ads, sponsorships, and affiliate partnerships. 

This means that these gurus have a financial incentive to paint a rosy picture of dropshipping and make you feel that you too can become a dropshipping millionaire in a short period of time.

While there’s no denying that this type of content can be both inspiring and entertaining, watching it can also lead to developing unrealistic expectations.

That’s why we want to start this article by discussing some of the problems with dropshipping that YouTube gurus tend to downplay:

Tons of Competition

Dropshipping is appealing because it has such a low barrier to entry.

However, if you can start a dropshipping business with very little money, so can everyone else.

That makes dropshipping extremely competitive: you might find yourself competing against hundreds or even thousands of online stores selling the exact same products as you.

Moreover, even if you can manage to stay ahead of the curve and discover winning products before anyone else, your competitors will probably catch on to it pretty soon and add those exact same products to their stores.

That’s why dropshipping gurus tend to keep their stores secret, assuming that those stores exist to begin with. With such a low barrier to entry, revealing what they sell would immediately lead to their niches getting flooded with copycats!

Low Profit Margins

Ecommerce in general has relatively low net profit margins that typically range between 10% and 30%.

It’s difficult to do better than that when you are selling physical products that need to be manufactured, warehoused, and shipped to the customers.

Additionally, some of those customers will inevitably decide to return the products that they bought.

In fact, according to the National Retail Federation, the average e-commerce return rate in 2023 was 17.6%.

Then there’s the issue of ads becoming more expensive over time. Whatever platform you are running ads on, you can expect the cost of those ads to increase in the future.

All e-commerce entrepreneurs have to deal with these problems, regardless of whether they sell dropshipped, white label, or private label products.

However, with dropshipping, maintaining healthy profit margins can be particularly challenging. Why?

When a myriad of online stores are selling the exact same products, it tends to lead to a “race to the bottom” dynamic where everyone starts competing on price.

You might find yourself in a situation where technically, you have a profitable online store but in reality, you are working yourself to death for so little money that you’d be better off getting a minimum-wage job at McDonald’s!

Slow Shipping

AliExpress, the most popular dropshipping marketplace in the world, is notorious for its horrendously slow shipping.

The average delivery time for its standard shipping is somewhere between 15 and 45 business days.

This is understandable given that the suppliers are primarily based in Asia while the customers are primarily based in Europe and North America.

However, those customers are used to buying stuff on Amazon and having it show up a few days later, so they might be confused as to why they have to wait ages for their purchases to arrive.

Ideally, if you intend to primarily target the American market, you want to source your products from suppliers that are based in the United States so that you can offer fast shipping. Our partner Zendrop can help you with that!

Lack of Control

With dropshipping, you don’t have control over the logistics but it’s your brand reputation that’s on the line.

After all, if someone buys the product from your online store, they are going to blame you if something goes wrong, not the supplier who messed up.

That can make building a respected e-commerce brand with a loyal customer base challenging.

Extreme Unpredictability

Finally, dropshipping tends to be extremely unpredictable:

• Your winning product might sell like crazy for a few months but then the interest in it may fizzle out.
• Your ad campaign might stop working because the ad prices increased and the campaign is no longer profitable.
• You might wake up one day and find yourself banned from the social media platform that you were running ads on.
• Your supplier might turn out to be sketchy. You may not even realize that they are scamming you until it’s too late.
• You might get blacklisted by payment processors because of something your supplier did.

…etc.

You can have what seemed to be a great year and then still find yourself in the red at the end of it because something, somewhere went wrong unexpectedly!

Is it Still Possible to Make Money With Dropshipping Or is Dropshipping Dead?

Now let’s discuss the “dropshipping is dead” doom and gloom.

People have been wailing about the supposed death of dropshipping since 2017 when this trend started:

However, we would argue that this whole concept doesn’t really make sense when you think about it.

The e-commerce industry has been growing steadily for at least a decade now. So how can one of its main fulfillment methods be “dead”?

What’s dead is throwing together an online store with Shopify, adding a bunch of random AliExpress products to it, and then running mediocre Facebook ads in hopes of making a ton of money.

It’s debatable whether this approach to dropshipping was ever viable to begin with, but if it was then it certainly isn’t anymore. Why?

Because the consumers are becoming more savvy, the ads are more expensive and the market is more competitive.

But is it still possible to make money with dropshipping?

We believe that it is.

And here’s how…

How to Get Ahead of the Competition and Make Money With Dropshipping

Drop the “Get Rich Quick” Mindset

If you go into e-commerce with the hope of making a ton of money in a short period of time, you will almost certainly quit after a few months.

In fact, this is probably the most common reason why people fail at dropshipping: they start out with extremely unrealistic expectations, then get disillusioned and give up.

And honestly, we don’t blame them because, in our view, the dropshipping gurus set them up to fail by creating those unrealistic expectations to begin with.

But you are reading this article so you don’t have that excuse. Ultimately, the “get rich quick” mindset is a loser mindset. You need to drop it ASAP if you want to succeed in business!

Have a Long-Term Business Strategy

Consider broadening your time horizon to a decade. Why?

Because that is enough time to build an e-commerce business, grow it to seven figures in revenue, and potentially sell it for a life-changing amount of money.

You also want to create a long-term business strategy that can help you get to that seven-figure milestone.

Generally speaking, you should probably:

1. Start with dropshipping because it’s the least risky option.
2. Switch to white label so that you can take control of the logistics.
3. Switch to private label so that you can offer unique products that are not available anywhere else.

We recommend this approach because private label is the apex of e-commerce: once you start selling your own products, your company becomes a legitimate brand in the eyes of your peers, potential investors, and potential buyers.

The transition from dropshipping from white label to private label will probably take years. You should expect it to be a long and challenging journey filled with all kinds of obstacles.

However, once it’s complete, you will be able to command a much higher price should you ever decide to sell your business!

Learn to Create Irresistible Offers

Anyone can sell dropshipped products.

That’s why if you want to get ahead of your competition, you need to learn how to create irresistible offers. But what does that mean?

Here’s an example:

Our co-founder Russell Brunson used to have a supplement company.

At one point, he was selling his supplements at $67 per bottle while his competitors were selling the exact same supplements for $19.95 per bottle.

Needless to say, Russell was making way more money than them. So what allowed him to charge more than 3x the price?

Well, while his competitors were selling those supplements as products, Russell created an offer instead.

Here’s how he explains it:

Use the Cart Funnel to Grow Your Store

We would argue that when it comes to growing an e-commerce business, the greatest challenge is converting new store visitors into paying customers. Why?

Because when someone clicks on your ad, goes to your store, and sees a whole bunch of different products, it can make them feel overwhelmed.

And what do people do when they feel overwhelmed? They hit the back button in their browser, leave and never come back.

It’s the paradox of choice phenomenon where the more options you present to someone, the more difficult it is for them to make a decision.

That’s why the best way to grow your online store is to create a cart funnel for your most popular product and then drive traffic to it with paid ads.

You can watch this video if you want to learn more:

Sell Digital Products

Selling digital products can help you increase your customer lifetime value, improve your net profit margins, and generate more revenue.

You can create an inexpensive digital product, build a sales funnel for it, and then cross sell physical products.

Say, if you have an outdoor gear and clothing store, you can create a $7 eBook for beginner hikers, then cross sell them hiking shoes, clothes, and equipment.

You can also create inexpensive digital products that teach customers how to best utilize specific physical products.

Say, if you sell travel backpacks, you can cross sell video guides on how to customize them, make the most out of their storage space, and keep them clean while traveling.

You can also use digital products to create irresistible offers.

For example, if you have a fitness equipment store, you can create offers that include not just the equipment itself but also video tutorials on how to use it and customizable workout programs that customers can print out and follow.

Say, you could create an offer that includes a grip strengthener + finger strengthener + power ball + video tutorials + a customizable forearms, wrists, and fingers workout program.

Utilize Email Marketing

When a new customer orders something from your online store, they have to provide their email address so that you can send them their receipt and order tracking details.

This gives you an opportunity to ask them if they want to receive emails from you. We recommend launching a weekly newsletter because that will give you an excuse to email them every week.

If they check that box, you can use email marketing to build trust, stay top of mind with them, and let them know about the offers that they might be interested in.

This can help you drastically increase your customer lifetime value!

Build Traffic-Generating Assets

Make sure to allocate some resources to building traffic-generating assets such as:

• A social media following
• A YouTube channel
• A TikTok channel

Having these traffic-generating assets will help you diversify your traffic sources and reduce your reliance on paid ads, which will make your business more robust.

So What Type of Monthly Income Can be Made With Dropshipping?

The sky is the limit.

There are dropshipping stores out there that generate seven figures in annual revenue.

If we assume a net profit margin of 10%, then $1,000,000 in annual revenue would leave you with $100,000 in annual net profit.

That $100,000 in annual net profit works out to around $8,333 monthly net profit.

Of course, that’s just an example to illustrate how the numbers might look like once your store is bringing in that kind of revenue.

Also, we would argue that thinking in terms of monthly income is not optimal for entrepreneurs. Why?

Because it’s normal for revenue to fluctuate from month to month depending on various factors it makes much more sense to focus on annual net profit aka annual income instead.

We recommend setting an annual income goal and then calculating how much revenue you’d need to generate every year to reach that goal assuming a 10% net profit margin.

As your business grows, you should be able to improve your profit margins, but 10% net profit is a good starting number to use in your initial calculations.

Build Your Dropshipping Store With ClickFunnels + Zendrop!

Our software, ClickFunnels, includes everything you need to launch, manage, and grow an e-commerce business.

Moreover, our partnership with one of the leading dropshipping apps Zendrop makes it easy for you to find reliable US-based suppliers and add their products to your online store.

Building an e-commerce business has never been easier if you are serious about it and have a long-term mindset!

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So we understand if you take what we say about it with a grain of salt.

Fortunately, we have a free 14-day trial, so you don’t have to take our word for it.

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