Mustache and Dropshipping?

[goldenace1982]

Hello All

I am fairly new active member of this group buy a passive observer for a bit (couple months). I have started making a few shifts in my quest for financial independence.   As of late I am looking into i creasing my cash flow to help support my aging parents, as it seemed fair since they gave up their retirement savings to send me to college!!

I have been investing in real estate for a couple years, and things have been cooling off a lit here in Wisconsin,  so I am looking for a business to i crease their cash flow, ideally to $10k per month (they have many dr. bills and debt), but to begin with, perhaps 2 - 3 k per month to cover their mortgage.

In my quest for a cashflow business, i discovered ecommerce,  although not new, drop shipping in ecommerce seems to have been doing well.  I recently stumbled upon consultants that would stand up an ecommerce "store" for intial seed money, yielding in $1k cash flow per month in 3-6 mos guaranteed.  The intial seed would be $7k.

I was wondering if anyone has experienced drop ship ecommerce and provide some i sight into risk and confidence in some cashflow numbers or how i could proceed further with this opportunity?

[Maenad]

I don't, but you're correct to be cautious. A lot of times once "consultants" like the ones you describe are on the scene, the actual money-making opportunities are gone, and they're no better than a scam. Maybe head over to the Entrepreneurship forum here and look around for some ideas!

[ketchup]

If I could magically set up a $1k/mo cashflow business for $7k upfront, I wouldn't ask people for $7k.  I'd put myself $700k in debt and make $100k/mo for myself. 

What does this guy gain from having access to your capital?  Smells like BS to me.

[socaso]

I've done a lot of research on this and you can do this yourself. The thing is the demand for certain products ebbs and flows and if someone sets you up with a website selling, say, sunglasses then if the demand for that product falls you will find yourself with a website that is no longer generating the cash flow. Shopify has TONS of tools and isn't very expensive. You can build your website, select your products and manage your shipments from it. Very easy.

A word of advice, I would order whatever items you are considering selling and have them sent to you before you put them in your store. That way you can see how long it takes and whether the quality is worth it. If you sell a bunch of crap you won't get repeat customers and that is where the money is. I ordered several items we were considering back when I was thinking about the drop shipper thing and although the quality wasn't awful they were MUCH smaller than I had anticipated.

[Michael in ABQ]

The normal multiplier for buying a legitimate e-commerce business is around 3 - 3.5x. So if you wanted to buy a business generating $12,000 a year in profit (not sales) it will probably cost you around $40,000. Someone offering you a business that will supposedly generate $12,000 a year for $7,000 is a scam, plain and simple. That's equivalent to a 0.58x multiplier which is less than a fifth of the market rate.

If you have money to invest flippa.com has websites and e-commerce businesses for sale. Be forewarned that at a lower price point it might be a business that only sells a single product on Amazon or is a relatively new drop shipper.

If you want to start from scratch I would recommend doing a lot of reading and listening to podcasts. You need to find a niche, find supplies, setup a website, and market the products you're selling.

EcomCrew.com - podcast and website
The Amazing Seller - podcast
eCommerceFuel - podcast, website, and private forum

[nikity]

you should stop listen to consultants,find some good products to dropship, find some decent dropshipping partners, get some help with building the website, and I would suggest to invest your funds to SEO instead of paid ads. look for a decent SEO agency, that they can rank your website for some keywords and the cash will start to come.

[HuerswaNaserta]

Do you need help?

[Krolik]

With dropshippers you have no control over order fulfillment. If you are lucky they will ship on time and accept returns. But the customer will blame YOU on any delays, etc.
Starting from scratch with eCommerce website nowadays without ton of $$$ available for marketing, positioning, etc is a very risky business. Your most likely choice as selling channel is Amazon. But you will compete with hundreds of sellers selling same widget from same drop shipper. In this situation you can only only compete on price making your margins super thin.

Good luck with whatever you decide.

Disclaimer: we ran our own ecommerce website and were selling on Amazon in early 2000. It was a great adventure and a ton of lessons learned but it was a side business. Times have changed and eCommerce is a ruled by few big players now.