![Drop Shipping Basics: What Is Drop Shipping And Why Is It A Great First Internet Business [LNIM194]](https://www.latenightim.com/wp-content/uploads/2020/03/Depositphotos_118004234_xl-2015-1080x675.jpg)
Curious about drop shipping but not sure how it works or whether it fits your business model? Mark breaks down the fundamentals of drop shipping, explains why it is a great model for beginners, and walks through the key criteria for selecting winning products.
What You'll Learn in This Episode
- Exactly how the drop shipping business model works step by step
- Why drop shipping is beginner-friendly compared to other business models
- The key criteria for selecting profitable drop shipping products
- Common challenges you will face and how to overcome them
- How to find reliable US-based drop shipping suppliers
Episode Summary
Mark considers affiliate marketing the best way for new business owners to get started online, but drop shipping is another excellent option that is actually quite compatible with affiliate marketing.
So what is drop shipping? Products are sent directly from your wholesaler or manufacturer to your customer. You never touch the product, hold inventory, or manage shipping logistics. This makes it an ideal model for beginners.
Here is how the process works:
- You advertise a product on your website
- A customer places an order and pays your retail price
- You purchase the product from your drop shipping supplier at a wholesale price
- The supplier ships the product directly to your customer
- You pocket the difference between your selling price and your costs
The appeal is clear: minimal upfront investment, no inventory risk, and the logistics of shipping are handled for you. But as with any business model, there are challenges to navigate.
Finding suppliers. It may seem daunting, but there are literally hundreds if not thousands of suppliers because drop shipping is an entire industry. Companies exist solely for the purpose of serving drop shippers.
Selecting the right products. This is where the real skill lies. Mark outlines four critical criteria:
- Demand: Are people actively searching for this product? Target people searching in Google or Microsoft search engines. Use keyword research tools to estimate search volume. You want products that thousands of people are searching for every month.
- Margin: The difference between your cost and your selling price must be large enough to cover advertising costs and still leave profit. For any business to be sustainable, you need the right margin.
- US-based suppliers: Find suppliers that ship from the United States so you can get products to customers in a couple of days. Long shipping times kill conversions and generate refund requests.
- Traffic strategy: Use search engines to match your offers with buyers. Google, Microsoft, and platforms like Shopify provide tools to drive targeted traffic to your store.
The entire drop shipping game is about identifying products, listing them in your store, managing ads, and making go-no-go decisions on a product-by-product basis. You test, you evaluate, you scale what works and cut what does not. It is a methodical process, and it is worth looking into.
Key Takeaways
- Drop shipping lets you sell physical products without holding inventory or managing shipping
- The model is beginner-friendly because you never touch the product
- Product selection is the most critical skill. Focus on demand, margin, US shipping, and traffic potential
- Use keyword research to verify that people are actively searching for the products you want to sell
- US-based suppliers with fast shipping are essential for customer satisfaction
- Success comes from systematic testing: keep winners, cut losers quickly
What's Changed Since This Episode
Mark recorded this episode in March 2020. The drop shipping industry has matured significantly since then. Shopify remains the dominant platform for drop shipping stores and has made the setup process even simpler with built-in integrations for product sourcing and advertising.
The shift toward US-based fulfillment that Mark recommended has become the industry standard. Platforms like Spocket, CJ Dropshipping (US warehouses), and Zendrop specialize in connecting drop shippers with US-based suppliers offering 2-5 day delivery times. The old model of shipping from China with 3-4 week delivery times is largely obsolete for serious sellers.
Google Shopping, which Mark discusses in the follow-up episode LNIM199, has become an even more important channel for drop shippers. Free product listings on Google Shopping, launched in 2020, give drop shippers organic visibility in addition to paid ads.
Competition has increased, making product research and niche selection more important than ever. Successful drop shippers in 2026 tend to focus on specific niches rather than general stores, and they invest more in brand building and customer experience to differentiate from competitors.
Resources Mentioned
Related Episodes
If you found this episode helpful, you might also enjoy:
- LNIM199 — Drop Shipping Update: My Recent eCommerce Adventure Using Google Shopping
- LNIM191 — Is It Too Late To Start Your Internet Business?
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