Dropship business model allows running your e-commerce store from any point of the globe. You can reside outside the USA (and it is not a secret that e-commerce market #1 is in the US) and setup relations with US merchants, some Chinese wholesalers and someone else to dropship your orders to the US/ any other country customers.
It is a more difficult task to find US merchants that dropship internationally, but as far as I know more and more dropship merchants do it covering the markets of English speaking and other countries: UK, Canada, Australia, etc…
So, if you come from outside the USA remember that you can setup dropship business as well. You will need to go through the same stages:
- carefully review case studies on our website to better grasp those things you should focus on and errors to avoid
- setup relations with reliable and true dropship merchant that will provide you with good products selection at competitive prices
- build an e-commerce store (but it is advisable to test some products with eBay market first)
- market it building a database of return customers and good flow of new traffic coming through search engines, e-mail marketing, link building, etc
Below you find our latest case study of an international dropship business sample:
Aromazing.com: Unique eCommerce store selling designer fragrances
Annual sales over $30,000 – Custom built shopping cart worth thousands – Professionally designed
• URL: www.aromazing.com
• Established: Sat Jun 30 2007
• Uniques/Month: 6,000
• Page views/month: 150,000
• Monthly Revenue: 3,000
• Google Pagerank: 4
Some background information about Aromazing
Aromazing is an eCommerce website selling designer fragrances. All the large brands in perfumes & colognes: Ralph Lauren, Dior, Calvin Klein, Armani and hundreds more. Opened in July 2007, Aromazing was a huge hit; we started off smaller, only accepting PayPal. In Nov 07, I added a merchant account and re-optimized the website for the Christmas season. Since its opening 10 months ago, Aromazing reeled almost $30,000 USD in sales. Things cooled down the last few months as I stopped advertising. We already have over 500 loyal customers, many who have / will shop again and an extensive email list of almost 400 interested prospects. Aromazing has quickly become one of the top fragrance websites due to its attractive and inviting design, competitive prices and top-notch service.
Because I don’t live in the states, I cannot buy inventory and ship out everything as is usually done. I rely on dropshipping companies to ship all the products to my customers [almost all in the USA]. I receive orders, then purchase from the dropshipper at “wholesale” prices which then ships the products. My profit is the slim margin between sale price and the dropshippers fees.
Dropshipping is NOT a good solution, because of the HIGH costs of the dropshipping company which leaves very little profit. I strongly recommend the buyer buys inventory and ship our products from his/her home. This will decrease inventory costs by as much as 60%, sky rocketing profit! Something I wanted to do very much, but couldn’t due to geographical distances. Due to this, I will also include profit figures assuming you buy inventory, so you can realistically predict future profits.
By shipping products yourself, that $25 and $75 can be reversed, meaning you would have made $75 profit, not $25 as with dropshipping.
Buyer will receive dropshipping contacts and some contacts I have for buying wholesale from China.
Reason for selling
National military service is mandatory for all Israelis over the age of 18. I’m recruiting to the army in a few months and won’t have the necessary time that Aromazing deserves, hence need to sell. Aromazing has been my pet project for a few years already and I would never sell if I had any other choice.
The last few months I’ve cut advertising (since Feb 08) but before that I was advertising on the following shopping caparison websites: Shopzilla, Shopping.com, PriceGrabber, Yahoo Shopping and Froogle. Aromazing has established accounts with all those sites with good reviews on all of them. Through the admin center of the website, you can automatically generate product feeds for these websites. All accounts would be transferred to new owner. I have spent approx $9,000 on advertising throughout the sites life.
I have spent much time and money into acquiring customer details. Aromazing has over 500 satisfied customers, and a newsletter email list of over 300, all of which are emailed every week or two with coupons. This alone generates new sales without any advertising costs. The thing with eCommerce, it’s really hard to profit on one sale from any customer, due to high advertising costs. The way to profit is to wait for customers to purchase again.
The thing with fragrances is, it takes most people over a year to finish a bottle of perfume/cologne, so repeat business usually only happens on the long-term. The customers are happy, most of them bought half a year ago, meaning the next half year will bring in amazing repeat purchases without doing anything (except sending promotional emails every few weeks).
Only 6% of Aromazing customers have re-purchased so far. And an expected percentage is like 50-60%. So you can expect around 275 new orders in the next half year. Which is over $13,000 in sales = $3,000 in profit! Even more if you stop using the dropshipper.
I’m recruiting in a few months, so I have some time to help the new buyer transfer and get everything managed. After those few months, I’ll still be semi-available for anything by email.
I have a merchant account with Chase Paymentech, the buyer would be needed to open a new one for this. If he/she decides to continue with Chase, I can personally call them and let them know it’s a transfer. The fees are: $10 per month, and 2.2% + 20 cents on each transaction. I have never had any problems from them and they deposit money into my bank account within 3 days.
Time Required to Run
It only takes me 1-2 hours per week at the current situation [dropshipping]. Just receive orders, order from dropshipper, send emails and manage the advertising. By buying wholesale and shipping, it would take longer, probably 1-2 hours a day.
Payment should be made through wire-transfer, using Escrow.com
Aromazing is a quality business, and for someone who lives in the USA with a bit of time on his/her hands, it can be turned into something HUGE. Let me point out that there’s no real limit for advertising, by investing more, you can get more sales, as simple as that. Before bidding, please browse the website to see the true value.
Since its opening 10 months ago, Aromazing reeled in almost $30,000 USD in sales.