Is it possible to earn a high 6 figure income drop shipping?

If you are trying to earn a high 6 figure income, I assume you mean maybe $500,000.00 to $900,000.00 per year, you would have to have an extremely unique, high dollar value product or group of products to sell and have virtually zero competition to cut your selling prices or divert sales.

Do the simple math. To earn $500,000.00 per year from a retail e-commerce operation you would have to sell 5 times that amount, or maybe even 6–8 times that amount to get a net income that high since many drop ship items have notoriously low-profit margins. Drop ship suppliers do actually charge you for the convenience of handling the inventory and shipping for you and most are not cheap. So figure you are running an extremely low overhead drop ship operation and you sell $2.5 Million each year. If your product is selling for $100.00 each that would be 25,000 pieces sold per year or a little over 2000 per month or about 70 each day. Even with extensive automation of order processing that is a lot of work or someone to handle.

Here are some of the daily things that must be done on a regular basis:

  • Process orders and send them to your drop ship supplier. Easy enough to automate but still requiring some human intervention at times.
  • Make sure tracking numbers are sent from your supplier on a timely basis and relayed to your customers. Again, can be automated but you must make sure your orders are being shipped on time.
  • Make sure you review the on-hand inventory position and monitor supplier for any selling price changes so you can react on your website or selling platform.
  • Handle any customer service related correspondence, questions, and request for returns.
  • Normal business routines like accounting, looking for new products, looking for new suppliers, marketing, and advertising.

Handling 70 orders a day does not sound like a lot of work, but it does add up when it comes to your time involved. All of these take time and hiring someone to handle these for you will cut into your potential net income. Some things can be automated but again, not everything can be done with an app. I will use Amazon as an example since it is easy to look up data on their seller’s performance. Only 13% of sellers on Amazon sell between 1 Million and 10 million dollars worth of merchandise per year. Only 2% sell more than 10 million. The average order value on Amazon is only $47.00. Not a lot of sellers in that high income bracket you are looking for out of the millions that sell on Amazon.

So yes it could be done but will probably require a whole lot of luck, an extremely unique product, and a good staff to handle the day to day operations. Another point to keep in mind. If you can find products where you can sell 25,000 pieces each year, you would be much better off buying in bulk and handling the shipping yourself.

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