1 year old dropshipping shopify store.

by a searcher from Symbiosis International University

7 months ago

Hello - I'm currently looking at a dropshipping store that is 1 year old and has 36% profit margin. I'm hoping someone here can help me with drop shipping specific due diligence checklists. They are asking 2x profit. Given the longevity of the business, I'm not sure how to evaluate this. Thoughts?

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searcher from Queen's University

I would not pay more than a 1X for a dropshipping company. Lots of people stated the various reasons before (low barrier to entry, at the mercy of supplier, no IP, marketing costs are high, etc). I will add that it requires a certain marketing skillset and a willingness to try and test new marketing strategies regularly. Contrary to what's being said out there on the internet. these are not passive at all and require constant tweaking of marketing approaches to continue to work. What works well for 2 to 3 months will stop working as algorithms changes, channels get saturated, cost of acquisition changes, competition moves in, etc.

On the flip side, I have seen and worked with folks that have been able to turn dropshipping products into real brands and make a lot of money selling them down the road. But not all dropshipping products have that potential. It requires a product where you can make improvements so that you can differentiate and where you create add on products to keep selling more to the same base of customers. My suggestion, if you really like the business and the product, then just start dropshipping it yourself. You'll learn a ton that way.

7 months ago | like reply | 0 likes

admin from Massachusetts Institute of Technology - MIT Sloan School of Management

^Searchfunder member‌ have also commented on Drop Shipping & Shopify and might be able to provide additional insights.

7 months ago | like reply | 0 likes

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