Tom Cormier, Co-Founder of DropshippingUniversity.com
You may have seen videos online of people quitting their corporate jobs to pursue a dream of business success. One of the most popular forms these days revolves around a concept in e-commerce known as dropshipping.
Dropshipping is a business model that allows entrepreneurs to sell products to their customers without ever having to keep inventory on their own. In this growing niche, the retailer acts as an intermediary between buyer and supplier.
There are many advantages to this method. According to a dropshipping explainer for ecommerce company Shopify, the model allows entrepreneurs to take more risks with products. Since there is no effort to store the product, retailers can experiment with different products and product lines. Retailers are also not tied to any physical location, which means they can sell products to any market in the world as long as they can find a supplier who can supply that market.
However, there are also several pitfalls. The barrier to entry is quite low, meaning anyone who has saved enough money can enter the market, which increases competition and makes it harder to stand out. The margins are also low. Since the retailer neither stores nor owns the product, they have to pay the third party and collect a fraction of the selling price.
Tom Cormier, or eCom Tom as he is known, is a co-founder of Dropshipping University. Cormier, who graduated with a degree in chemical engineering in 2016, was looking for a way to make extra cash on his paycheck. “I thought I wanted some money on the side. And I think the only idea I kept coming up with was that I never wanted to work full time for a job.”
Cormier’s journey into dropshipping began with reselling old video games and eventually reselling cell phones – until an exchange went south and Cormier was robbed. The experience made Tom consider how he would make extra money.
eBay, Amazon, Facebook
In August 2017, Cormier bought an online dropshipping course and opened his first shop on eBay. His first sale came the next morning when he sold a $ 11 iPhone case for a profit of $ 1.
Cormier says it becomes harder to achieve success when the room gets crowded. In 2017, dropshipping was still a fairly new concept and there is a lot more competition today.
Platforms like Shopify, Amazon, and eBay are established sites that can make it difficult to stand out. Cormier calls the Facebook marketplace the “Wild West of Dropshipping” because it is still in the “initial phase”.
Cormier says he makes around $ 5,000 a month from his business, which equates to $ 60,000 a year. As a co-founder of Dropshipping University, he also teaches students how to get started and grow their business. “I have students who absolutely kill it like $ 40,000 in profit like the first two or three months,” he said.
For people interested in a dropshipping business, Cormier recommends starting on eBay for its reach and ease of use. “eBay brings in the traffic, you just have to sell the right items … eBay is what I would always say to start with because it’s beginner-friendly and easier.”
Dropshipping can be the first step into a much larger ecommerce business. Successful entrepreneurs may want to create their own online store and promote their products on social media. UK-based sportswear brand GymShark grew into a $ 500 million company using influencer marketing networks after starting out as a dropshipper.
Online pricing, tips for success
In Cormier’s education, students don’t learn how to buy ads or create a website because he believes the most important aspects of dropshipping are selling the items and finding reliable suppliers. “What I’ve always taught is that it’s about the articles, the pricing, and about showing up and doing the job every day,” he said.
A focus on niche products is a great way for retailers to differentiate themselves from the competition. A case study examined Dark Horse Marine, a niche supplier of stainless steel anchors. While about 10% of products are sold through dropshipping, the company says dropshipping offers several benefits, from testing new product lines to saving space by eliminating the need to store large, heavy items.
According to Cormier, there are two common misconceptions related to dropshipping. Some people consider it illegal because the seller doesn’t handle the product, but it’s the fact that dropshippers are the ultimate middlemen that allow them to start a business that can make a profit.
On the other hand, some people believe that opening an online store will turn them into success stories overnight. Cormier calls this “Shiny Object Syndrome”.
“It’s basically, ‘Oh, I just found out about dropshipping.’ They go along with everything. And then, like two weeks later, they see something else. “Oh, I’ll do Shopify dropshipping. … Now I’m doing Amazon FBA [fulfillment by Amazon]. … I’m going to do wholesale now. … and I turn cell phones over. … now I run an Instagram marketing agency. “