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Dropshipping is not a new concept. Many people (including myself) have been dropshipping on sites such as eBay for years.
Before that, people drop shipped via catalogs or newspapers ads. In other words, the business model is old and stale.
Shrinking profit margins may have made traditional dropshipping untenable for new hustlers but it’s not the only option.
Tim Ferris notes that he had huge success when he simply decided to do the opposite of what everyone else was doing. In this case, we can turn dropshipping on its head and try reverse dropshipping!
The Basis Of Dropshipping
In a traditional dropshipping business you make money by either buying items in bulk, or creating convenience. Here’s how it works:
- You find a supplier for a product you want to sell
- You markup the price on the product and list that product for sale on your own site or a platform such as eBay
- When someone purchases the product, you use the money from the sale to purchase the product from the supplier
- The supplier ships the product directly to the customer
- You pocket the difference in cost
The key is to find a supplier that offers prices low enough that you can mark them up and still profit. It’s also beneficial if you can find a supplier that doesn’t always have a ton of people using them to dropship or you’ll end up in a race to the bottom as your profits dwindle.
So how can we beat this method with reverse dropshipping?
How Reverse Dropshipping Works
Instead of focussing on sourcing low-cost products to resell, reverse dropshipping emphasizes selling expensive or high-quality products to areas where they would not typically be available.
In short, it’s mastery of the supply chain rather than sourcing.
Traditional dropshipping typically involves getting products from a country that thrives on exports (eg. China). Reverse dropshipping, on the other hand, takes utilizes products from a country that is traditionally an importing country (such as the U.S.).
So, in short, reverse drop shipping is simply dropshipping from western countries to Asian countries.
Reverse Dropshipping Example
Several years ago I was selling a custom motorcycle that I built. The guy who bought it had actually already sold it. He had marketed my motorcycle in Mexico and had sold it for a healthy profit. Now he just had to deliver it. Although he performed the delivery himself, he stocked no inventory and was selling high ticket items to an unexpected country.
The Keys To Making Money Reverse Dropshipping
Whether you’re going to do traditional drop shipping or reverse drop shipping the process is the same:
- Identify a product that you can sell for profit
- Create a store or identify a platform that caters to your desired clientele
- Use advertising or other methods to drive traffic and earn sales
- Order fulfillment
However, reverse dropshipping has a few special considerations that, if observed, will make it much more likely that you’re successful.
Have an “in” or an understanding of the place you’re selling to.
If you’re trying to market and sell luxury products to people in a country that you’ve never visited, you’re going to have a hard time. Not only will you struggle to identify the types of products that would be likely to sell, but you also won’t understand delivery, customer service, etc.
Building a brand is the key to success.
Reverse dropshipping is great because, instead of utilizing eBay or Amazon as a marketplace, you can use them as suppliers. To encourage buyers to purchase from your site instead of secondary marketplaces, build a brand. If you master the ability to communicate with your buyers and make them feel like they are getting a premium experience they will be much more likely to return.
Price in Customs/Import Fees
If you’re sending products overseas, the buyer will likely have to pay a significant import fee. This is likely to decrease your sale drastically if you don’t consider the extra costs that will be incurred.
If your profit margins don’t allow you to accommodate for the buyer paying extra fees, at least be knowledgeable on the subject so you can respond to questions from the buyer, particularly if your supplier is shipping to a place they’re not familiar with.
Learn & Observe Business Practices In Your Target Country
If you want your business to last for very long, learn how to do business in another country.
Some countries have surprising and strict laws about imports, types of products that can be sold, etc.
For example, we drop-ship Louis Vuitton bags from Japan as it is illegal to sell fakes there.
If you don’t observe laws, expect unhappy customers when your products are delivered or you’re shut down entirely.
As with any business, the key to succeeding in reverse dropshipping is tenacity and perseverance. If you decided to get into the reverse dropshipping game you’ll enjoy much lower competition (but also higher barriers to entry) than with traditional drop shipping. Persist and succeed! Good luck!