Like any other business model that claims to provide value, drop shipping has stirred up a debate between those who swear that it’s the business to be in, and those who passionately proclaim that it isn’t.

This controversy is a good sign because it indicates that people are keeping a close watch on drop shipping, keeping track of both its successes and disappointments, and providing us with a wealth of insights regarding this business model.

So is it possible to make money on drop shipping? Well, that depends.

If you have a set of power tools, would it be possible for you to build a house? It would probably depend on your knowledge and skill in using these tools. The same goes with drop shipping. On paper, drop shipping does indeed look like the perfect business to operate. No warehousing, no cash out, product deliveries taken care of, an extensive catalogue with no minimum quantity restriction are some of the advantages it offers.

On the other hand, you have no control over your inventory items and how quickly that item is re-stocked and shipped. And since the customers deal directly with you, you tend to take the blame for any mishaps.

Competition is also an issue, because other sellers will be selling items from the same drop shipper.

Given these pros and cons, making money on drop shipping boils down to how effectively you can exploit the advantages, and how you can offset the problem areas. Yes, it is possible to make money on drop shipping, but you have to work the business, and deal with the problems that crop up.

Tips for newbies wanting to make money with drop shipping

1. Start with drop shippers close to home rather than going international. It’s sooo much easier to iron out any problems when your drop shipper is working the same hours as you and speaks the same language!
2. Not sure what to sell? It’s best to start with something you’re interested in. If nothing comes to mind, you could do worse than clothing and apparel, which is the 5th most popular product purchased online.
3. eBay is a tough place to kick off your drop shipping business.  It’s very competitive and a number of drop shippers and wholesalers sell on eBay themselves. As you can imagine, it’s hard to compete against your own supplier! We recommend creating your own free ecommerce store (BuyItSellIt is good), or using Craigslist, Bonanzle, Amazon or any one of the auction sites we’ve recommend in previous posts.

Join SaleHoo today and get a copy of our exclusive Drop shipping Handbook!