3 Tips for Dropshipping With No Startup Capital

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Today I’m going to teach you how to create an AliExpress dropshipping business using your own online store. This method of dropshipping with no startup capital requires that you have your own online store like a WooCommerce store. It’s not suitable if you are only selling on Amazon and eBay. And I’m going to explain why that is later in this tutorial.

Also, I will show you how to earn extra income with the help of a WordPress plugin called AliPartnership.

If you don’t have your online store, creating one is really, really easy. In fact, I have a tutorial which shows you how to do this step by step using WooCommerce.

Alternatively, if you’re new to WordPress and if you’d like to skip the learning curve, you can try our tutorial about how to open a dropshipping store using Shopify and Oberlo.

I’m also going to be revealing a real-life case study of someone who was already doing this in earning over four thousand dollars a month in pure profit. And I think you’re going to be surprised at just how easy all of this is.

So let’s jump straight into it.

What is AliExpress & Why You Should Use AliExpress for Your Dropshipping Business?

If you haven’t heard about AliExpress, it is a website where Chinese suppliers will dropship your items individually to international customers. As a result there are lots of items on there that are really, really cheap.

What you need to do is you need to go to AliExpress and locate good quality items. You can then relist them in your own online store to sell. And because the items are so cheap to start with, it gives you a ton of leeway to put your own price on it and to put a big mark upon it.

Case Study: AliExpress for Dropshipping with No Startup Capital

I’m going to show you a real-life example of someone who is currently doing this and earning over four thousand dollars a month. And I’ll show you the steps they’re taking to do it.

So, this here is the Harry Potter Store.

3 Tips for Dropshipping With No Startup Capital – Case Study

Overview of the Harry Potter Store for our Case Study

This is owned by a man named Ian who has been very generous and offered up a store as an open case study or how to build an AliExpress drop shipping site.

Now, you would think from just looking at Harry Potter Store here that it is a really professional web site. And it is a professional website. But it’s actually secretly an AliExpress dropshipping site.

So, what I’m going to show you is the prices that he’s able to charge for the items of these sales. And then I’m going to take you to AliExpress and show you the exact items that he is dropshipping in the prices that he has so that you can see how much money there is to be made.

Let’s start. I will go over here to Magic Wands and we’ll pick an item from the list to go check out. Let’s go here and let’s check out Ron Weasley’s Magical Harry Potter Wands. I’m just going to copy that.

Ron Weasley's Magical Harry Potter Wand

Ron Weasley’s Magical Wand as Product Example

Now I’m going to come back to over here to AlliExpress.

This here, if you’ve never seen AliExpress, this is what it looks like. This is where you find cheap Chinese dropshippers for your online store.

AliExpress Home Page

AliExpress Home Page

Let’s go to the search bar where we’re searching for ‘Ron Weasley Magical Wand’. And we’re going to do a search for that.

All right, so we can immediately see the exact wand that he is dropshipping. He is dropshipping this one.

The Same Product on AliExpress

The Same Product on AliExpress

We’ll go and we’ll open up a listing and see how much he is really paying for it.

You can see that you can purchase it for $9.64 plus free shipping.

Different Product Price

Different Product Price

If we go and switch back to Harry Potter Store and we’ll open up the listing that Harry Potter Store has for this exact wand, we can see that he is charging $23.99. But we can also see that this exact wand is selling on AliExpress for $9.64.

The Product on Our Case Study Site

The Product on Our Case Study Site

So, all he needs to do when someone comes and purchases one of these wands from him is to come to AliExpress to the supplier and purchase this item and get it sent to his customer.

That is literally all that he is doing. And he is making over a thousand dollars a month in profit from this.

Let’s go and check out how much money he is making.

His check out is with PayPal. So we’ll type in $23.99 into this PayPal calculator and we’ll calculate the fees.

PayPal Fee Calculator Resluts

PayPal Fee Calculator Resluts

So, there is a total of $1 in fees when someone purchases this item from him. Which means that he is left for $22.99 at the end of the sale.

That means that considering that he is paying just nine $9.64 per item and someone purchase it from him. But he is making a cool 13 dollars in profit. Actually, more than 13 dollars in profit from every sale. So that’s pretty cool.

Let’s switch back to Harry Potter Store and take a look at his listing and see the nifty things that he does to be able to get the price that he does from every customer when it comes and through his store.

We can see that he’s done a lot of things right.

  • Sense of Urgency. He has created a sense of urgency by saying that there are only 16 left in stock.
  • Buyer Protection. He’s got the buyer protection emblem there, so that people know that they can get a full refund if they don’t get their order. Which helps them to have more trust and to be more likely to purchase from Harry Potter Store.
  • Free Shipping. He has free shipping worldwide which of course as we know it’s not really free because of the fact that he’s just, he’s already getting free shipping from AliExpress anyway, and he’s just charging a massive markup. But you would be surprised of the fact that buyers really love free shipping. And it’s a really great way to increase your conversions.
  • Checkout with PayPal. He’s got checkout with PayPal and people trust PayPal.
  • McAfee Secure Logo. He’s got the McAfee secure emblem up at the top there on his website.
  • Payment Methods. And if we scroll down the site, we can see that he’s got other ways in which he’s added other trust emblems such as the Payment Methods emblem.
Customer Involvement

Customer Involvement

You could definitely add those to your website. Because if you’re accepting payments through PayPal, then you can accept those different types of payment methods as well, because obviously PayPal accepts credit cards.

And of course he’s gone ahead and created lots of other pages on his website such as a Shipping, Delivering, Refund Policy and a Privacy Policy, and Terms & Conditions to increase trust with people that come to the site looking to purchase items.

 

Shipping, Delivering, Refund Policy and a Privacy Policy, and Terms & Conditions

Shipping, Delivering, Refund Policy and a Privacy Policy, and Terms & Conditions

He’s also on social media which once again creates a relationship between him and potential buyers.

So these are the ways that he has been able to add value to what was a $9.64 Magical Wand that he is able to then sell for $23.99 in his store. And it is seriously that simple guys.

All he is doing at sourcing his items from AliExpress and then re-listing them in his own store. He is only a thousand dollars a month for Harry Potter Store. Actually, over a thousand dollars a month and he has a portfolio of websites just like this one that it earning him over $4,000 a month. There’s absolutely no reason why you can’t do this too. And that’s it. It’s really simple.

This is a great method for people who don’t have much startup money, but they want to start a drop shipping business.

Get Paid Immediately with Premier or Business PayPal Account

If you set up a store following the step-by-step instructions that I outlined in my recent tutorial, then you will be able to be paid immediately from the customer as long as you have a Verified Premier or Business PayPal account.

  • No Startup Capital Required. This makes it a great option in for people that don’t have access to a big pool of startup money or a credit card which is necessary if you want to start a drop shipping business on Amazon.

Cons of Using Amazon for Dropshipping

  • You Need Startup Capital. Amazon have implemented a 14-day period whereby they will hold the money that the customer pays you. This means that you need to have money to buy the item for the customer in advance and then you will receive the payment later.

I know that there are many people who haven’t been able to dropship on Amazon because of this. So I thought that this would be a great ultimate business plan for them.

3 Tips for Your AliExpress Dropshipping Business

Now, I’ve got three big tips to help you in your AliExpress dropshipping business.

Tip 1: Take Advantage of the AliExpress Affiliate Program.

For those of you that don’t know, an affiliate program is when a store offers you the opportunity to recommend their store or products to other customers. They will give you a unique URL to do this.

The store then tracks customers who purchase an item after clicking on your unique URL. If they do purchase something, you get a commission for their purchase.

AliExpress have their own version of an affiliate program that different sellers are optionally allowed to go enter. And then each seller will offer their own commission rates. These commission rates can be huge. They can be up to 50% of the sale price.

So here’s how you take advantage of it.

  • Every time a customer purchases an item from you in your store, you then go to AliExpress and order the item for the customer using your unique affiliate URL.

This way not only will you make money from the profit margin that you have put on the item. But you will also make extra money and affiliate commissions. And this can add up to hundreds of dollars.

Use the AliPartnership Plugin for Extra Earnings

The owner of the site from our case study is doing this. And in addition to earning thousands of dollars each month from the profit that he gets from selling all the items in his store, he is also earning hundreds of dollars in extra commission as well.

He has created a plugin called AliPartnership that makes it easy.

To get AliPartnership for yourself, simply click on the link. And that link is funnily enough an affiliate link. But the only reason that I put it there is because of the fact that I do genuinely, honestly believe in the product. Because I know that it is making thousands of dollars every year.

Tip 2: Do NOT Include a Packing Slip, Pricing, Invoice or Samples

My second tip then is that when you purchase an item from an AliExpress supplier that you include a note asking them to not include

  • an invoice or a packing slip
  • pricing or samples with the order

Most AliExpress suppliers are experienced dropshippers. They are aware that there are people regularly dropshipping their products. As a result, they do not include these items as standard practice.

But occasionally stores will do this. And as a dropshipper that is not ideal. Because you don’t want your customer to know your original source and the price that you paid.

The reason for this is because you want the customer to come back to you to purchase more items and not your original supplier. If they know they can get it for cheaper elsewhere, they’ll go there.

Why Blind Dropshipping is Good For Your Business?

And this is called Blind Dropshipping. It’s when a supplier does not include any branding, so that the buyer does not know the original source of the item.

Again, most AliExpress suppliers will blindly dropship by default. But it’s best to be safe and include a note asking them to do so just in case.

Tip 3: Avoid Items that Infringe on Copyrights.

My third tip would be to be careful to avoid products that could potentially be infringing upon copyrights. I am using Harry Potter Store as my example in this tutorial because Ian has been generous enough to offer it up as a public case study. But it’s not a niche that I would normally recommend that you get into. Because of the fact that the suppliers that he is buying his items from are unlikely to be licensed to sell Harry Potter products.

  • Avoid Selling Branded Merchandise from China. That is why you should avoid selling merchandise that is branded from China. Because they are probably not licensed to sell it. If the original copyright holders find you, they can shut you down. It is short term easy money, but it has no future.
  • Focus on Long-term, Legitimate Niches and Products. I would recommend that you instead focus upon some of the legitimate products that will give you income into the future.

So, those are my three big tips to help you when doing AliExpress drop shipping.

But I’m not completely finished. I want to address the point that I made earlier about the fact that it is not suitable to use AliExpress dropshippers when selling on Amazon.

Using AliExpress dDropshippers for Selling on Amazon

If you’re a long time reader of our site, you know that in the past I have recommended that you don’t use Chinese suppliers as dropshippers. Which probably makes this article really confusing, because here I am recommending that you use Chinese suppliers for your own drop shipping store.

Well let me explain.

In the past I was talking about finding drop shippers for Amazon. It is not suitable to use the AliExpress dropshippers for an Amazon store. But it is suitable to use them for your own online store.

And there are two reasons for this.

  • Price Competition

The first reason is price competition. On Amazon your potential customers can easily compare your prices to your competitors’ prices.

If your pricing is not competitive, then they will buy from your competitors. This means in that if you’re selling an item that has a lot of sellers, it’s very easy for the price of the item to get driven really low.

That’s why we recommend that when dropshipping on Amazon that you find your own products to sell that are in low competition niches.

But the thing is that when you’re doing AliExpress dropshipping on Amazon, there are tons of competitors. Because of the fact that the barrier to entry is very low. That means that there are lots of other sellers out there who are driving the prices down making it very difficult to make any profit at all.

Let’s take the Golden Snitch necklace which is currently selling on Harry Potter Store for $12.99.

Golden Snitch Necklace Price on Harry Potter Store

Golden Snitch Necklace Price on Harry Potter Store

Ian, is only paying $1.06 for it. So, he is making a nice $11.93 profit on it before PayPal fees.

Golden Snitch necklace Price on AliExpress

Golden Snitch necklace Price on AliExpress

Now let’s compare that to Amazon. On Amazon the same necklace currently has lots of sellers. The biggest seller is selling it for $5.98.

Golden Snitch Necklace Price on Amazon

Golden Snitch Necklace Price on Amazon

And even more backbreaking is that they are selling it through the Amazon FBA program which means that they are able to offer free two-day shipping using a Prime Account.

Let’s say you wanted to dropship the item into price match while offering free shipping like they are. As a promerchant you’ll be paying $1.40 in fees making a tiny $3.52 cents and profit.

Total Profit

Total Profit

And keep in mind you’d also be having to pay for the Pro Merchant account which is $39.99 a month.

As you can see pricing for AliExpress items on Amazon is cutthroat. The reason why Ian is able to charge $12.99 for this necklace in his own store is because the fact that when a potential customer enters his store they cannot easily see his competitors pricing. And this is why the prices on Amazon tend to be a lot lower than retail pricing. Because when you walk into a retail store that is the only price that you see.

When you walk into a sporting store you only see that the cheapest cell phone arm band selling is available for $20.

Cell Phone Arm Band Price on a Dropshipping Site

Cell Phone Arm Band Price on a Dropshipping Site

Unlike on Amazon where potential customers could easily see competing smartphone arm bands for $5.

Cell Phone Arm Band Price on a Amazon

Cell Phone Arm Band Price on a Amazon

So, that is why it is suitable to dropship items using AliExpress in your own online store. Because of the fact that when customers enter your store they cannot easily see your competitors prices.

  • Shippimg Times & Setting Expectations

And the second reason why it is not suitable to dropship items using AliExpress to Amazon is because of shipping times.

There are a lot of sellers out there who are importing items from AliExpress and then shipping them into the Amazon FBA program. They are making little to no profit and are doing this to boost their feedback scores.

This is evidenced by the Golden Snitch necklace I discussed earlier. They are paying $4.56 and they fulfill their order. When you minus the cost of the necklace which is $1.60 they are making just $0.36 in profit. And it probably cost some more than $0.36 to prep and send the item into the Amazon FBA warehouse anyway.

They are basically making no profit per sale potentially even making a loss just so that they can build up their feedback.

And there are lots of other sellers out there offering rock-bottom prices while offering local shipping times.

Unfortunately, this means that you cannot compete with them while trying to make a decent profit margin. Because no one is going to buy from you.

Think about it. Would you buy from a seller who was offering two-day shipping or would you buy from a seller that’s offering 2 to 4 weeks?

But of course the reason why Ian is able to charge $12.99 plus several weeks in shipping time is because when a customer enters his store they cannot easily compare his shipping times to his competitors.

He sets the expectation. They cannot see that his competitors are offering free two-day shipping. All they see is his shipping option.

It’s a Lot Easier Getting Away with Shipping Times from Chinese Suppliers

That’s why it’s a lot easier to get away with the long shipping times from Chinese suppliers when you’re selling in your own online store.

This is not to say that selling on Amazon is bad. In fact, it’s amazing. You just need to be using local USA based dropshippers.

Amazon is a fantastic place to sell especially if you don’t have any technical skills. And plus they have already got a huge pool of buyers already for you. But if you’re willing to put in the time and effort to create your own online store and promote it, this can be an amazingly profitable opportunity for you. And ideally if you’ve got time, the best thing to do would be to do both.

Thanks for reading. If you really like this article I’d appreciate it if you gave it a thumbs up and if you haven’t already leave us a comment.

And if you’re interested in getting AliPartnership for yourself, the plugin that Ian uses to make hundreds of dollars a month, then be sure to check it out.

And if you would like to sell on Amazon using local USA-based dropshippers, then you should be sure to check out our articles on how to make thousands a month by dropshipping.

It is our mission to help everyone start and grow their own business. That is why we’ve created a simple tutorial here which shows how anyone, yes even you, can make thousands each and every month with dropshipping with no startup capital. Even if you don’t have startup capital. And best of all – we’re giving away this tutorial for free. And yes, we really mean absolutely free.

Anu Jones

Content creator at wpbackend.com

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