When we started importing 30 years ago it was tough getting the cash together. We had to go to banks, we have been paying credit cards, we went to get our own house, mortgage, etc If you want to create a full time online importing business, sell on eBay or Amazon or on your own website or all three, you need to pre-purchase inventory upfront. On average, for an online import business to make $1000 profit per week after all the expenses most sellers invest around $36,000 pre-purchasing inventory.
The reason it cost so much is you need to order the inventory from China, Malaysia, Vietnam or wherever, pay deposit, wait for your items to be manufactured as most manufacturers don’t keep the items in stock. Then have the items shipped through freight forwarding in their country, say China then have the items shipped to your country, then clear customs, then you can list them on your marketplace, eBay, Amazon, website or all three.
Then after your items are sold you put the money in the bank and repeat the cycle. This procedure of course is called a stock-turn and you want to aim for 90 days per stock-turn. That’s the time when you first place the order from the supplier until the time when you sell the last item. Like all cash flows, what has stopped from all importers from being able to scale up they simply ran out of cash or they’re not willing to invest more cash so they can’t pre-purchase more inventory.
Normally to double a profit of an importing business, you need to double the amount of inventory and this is where dropshipping comes on its own and why more and more sellers and traditional bricks and mortar sellers are turning in to the dropshipping model. With dropshipping you don’t have to purchase any inventory upfront which means you’re always cash flow positive and you can build a business to any size no matter what your personal cash flow is like and you can start building a business straight away.
Bottom-line with dropshipping is you can list as many items as you like. When the supplier has the item, you can simply list it without the need to pre-purchase it first. For everybody who is not prepared to invest cash up front, pre-purchasing inventory, dropshipping can be solution then later on when you’re ready, you can start importing your own top-selling items, you can start importing you top-selling items then product label them.