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How dropshipping works as a side hustle

As the popularity of side scams increases, people continue to look for ways to make a little extra cash. Some people produce songs for DJs, others do dog-sitting, and still others teach people how to make sourdough bread.

Another avenue for making money is selling items online, such as dropshipping. Sellers create an online store, but they don’t store the items they sell in a physical location. Instead, once the sale is made, they purchase the item from vendors, who ship it directly to a buyer.

“Dropshipping can be very profitable,” says Kathy Kristof, founder of Sidehusl.com. “It relieves you of all the back-office work. It allows you, as an entrepreneur, to spend more time developing your products, marketing them and selling them.”

“Their sales amounted to hundreds of thousands”

Kristof recently spoke with a couple who transitioned from selling LGBTQ-themed clothing at events to selling online via dropshipping. “You don’t know how many products are going to sell at an in-person event, so you invariably end up with too much or too little,” she says of what they found.

When they changed their business model, they were able to focus on building a community around their products, and “their sales hit hundreds of thousands.”

Challenges include competition and little control over a supplier

Many people who sell products through dropshipping do so on e-commerce platforms like Shopify. The site offers advice on how to get started, but warns that this type of business presents challenges.

One consideration is the high competition. Unless you make and sell your own original items, it will be difficult to find unique products that only you can offer. It can also make it more difficult to raise your prices. If other sellers offer the same product and you charge more, buyers will simply choose to buy from them.

Problems with a supplier, such as long shipping times, can make business difficult. Since you’re not the one storing and shipping the products, it’s harder to control what happens to them once the order is placed. Customers may not understand this, however, and a poor customer service experience means you won’t get regular business.

Try using tools like Facebook Audience Insights

If you’re considering dropshipping as a side hustle, Shopify suggests starting with finding a unique niche product. The site recommends using tools like Facebook Audience Insights and Google Trends to find out what people are looking for.

E-commerce is also seeing significant growth: U.S. retailer sales grew 14.2% between 2020 and 2021, according to the U.S. Census Bureau. And most of the work for this hustle is done up front, making it a potentially lucrative source of passive income.

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