The Hard Truth About Dropshipping - Mistakes, Losses and Learning to Adapt

If you read part one, First Time Dropshipping? Here's My Honest Experience & Lessons Learned, I talked about the challenges I faced getting my business off the ground, from registering the business and finding a supplier to finally getting those first products listed for sale.

In this article, I'm diving deeper into some of those struggles and the steps I had to take to overcome them. At this stage, the biggest problems I was facing were losing money on a good number of orders and having to cancel way too many because the supplier ran out of stock. On top of that, I was still stuck manually listing every item, which slowed me down even more, though not nearly as painful as the pricing and inventory issues.

Challenge #4 | Dealing with the Losses

There's nothing worse than getting an order and thinking, "Alright, this product costs me $30, I just sold it for $50, I made a nice profit!" Then reality hits. The selling fees take $7.50, and shipping comes in at $16 because the item weighs about twelve pounds and is large. You start doing the math, $50 minus $30 for the product, minus $7.50 for fees, minus $16 for shipping, and then it hits you: "Wait… did this order just *cost* me money?!"

"Wait… did this order just *cost* me money?!"

Figuring out a solid pricing strategy wasn't easy. There were so many moving parts, weight, size, shipping zones, platform fees, that no single formula could fit every situation. Eventually, I came up with a plan. I grabbed a pen and drew out a giant grid on paper. The vertical axis listed price ranges, and the horizontal one listed product weights. From there, I could estimate how much to add to my cost so I could price items on eBay without taking a loss. Looking back, I can laugh at it now, that system had plenty of flaws, but at the time, I really thought I'd cracked the code.

Challenge #5 | Solving the Out Of Stock Problem

It was time to finally deal with the dreaded out-of-stock problem. Manually checking products just wasn't going to cut it anymore, by the time I made it halfway through the list, some of the earlier ones were already out of stock again. After trying a bunch of methods that didn't work, I decided to build something myself.

I created a small program that let me download the supplier's inventory file and paste all the SKUs into my tool. Then I'd download a list of my active eBay SKUs and paste that in, too. My program compared both lists and gave me two results: SKUs that were new and SKUs that were no longer available. Just like that, I had my out-of-stock list. What once took me five painful days could now be done in about two hours. It wasn't perfect, but it was a massive improvement.

Feeling confident, I started adding products back to eBay manually again, this time more carefully. I got around 300 products listed, and over the next 30 days, I had about 100 orders. Only two had to be canceled for being out of stock, and I took small losses on four others due to price changes I hadn't caught. Those items had been on sale when I listed them, but once the discounts ended, my prices no longer covered my costs. Lesson learned.

At that point, I realized I needed a better way to keep up with constant price changes. I started searching for software that could help and discovered two tools eBay offered back then, Turbo Lister and eBay Blackthorne. I tried both, and while Turbo Lister was simple, Blackthorne had far more advanced features, so that's what I went with. Using it, I was finally able to import my supplier's spreadsheet directly into the software and quickly list products in bulk. Within days, I had all 800 products up on eBay, and sales started rolling in fast.

For the next few months, my profits were steady. The more I learned, the more I realized growth meant adding more suppliers. I found two new electronics distributors and integrated their products into Blackthorne. Right away, my sales shot up again. I was completely hooked, I knew then and there this business model was something I'd be a part of for life. Within six months of using Blackthorne, my profits went from a few thousand a month to over thirty thousand a month, consistently. My life was changing fast. I went from barely scraping by to finally being able to enjoy life and afford the things I'd always wanted.

That success lasted a good eight years or so. Then, the market started shifting. Competition online was heating up, major brands began selling directly to customers, and platforms like Amazon were exploding in popularity, quickly surpassing eBay. My sales began to slow down, but I was still making more than I ever could at a regular job. Then one day, I got an email from eBay that changed everything: they were discontinuing eBay Blackthorne. It would no longer be supported or functional. My entire business depended on that software, and I had no idea what I was going to do next.

Challenge #6 | Adapting After eBay Blackthorne Was Discontinued

For years before eBay Blackthorne was shut down, I had dreamed of having my own website. I kept seeing new online stores popping up everywhere and wanted to be part of that wave. At the time, eBay offered a service called ProStores. I can't remember the exact details, but it was either included with my store subscription or came at a low cost. I spent around 20 hours tinkering with it over a couple of weeks, but I could never get it to do what I wanted. Eventually, I hired a company to build and design the site for me. They charged me around $7,500, a huge investment for me at the time.

Months went by before they finally finished it, and even then, it never worked properly. Back then, I thought they were building something complex, but looking back now, the amount of work they did should have only taken a few days at most. It ended up being a complete waste of $7,500. I eventually gave up on it and moved on. But when I got the notice that eBay was shutting down Blackthorne, I knew right then that it was time, I was finally going to build my own website, and this time, I'd do it right.

By this point, Google had become the go-to search engine for everything. So I turned to Google to research website options. Shopify wasn't really a major player yet, but I looked into several other platforms. Most of them were either missing key features, too expensive, or so complex that you practically needed to hire an agency just to maintain them.

I'd always been a bit of a techie, programming was something I loved as a kid, but I hadn't really kept up with it over the years. Still, I figured, "Why not? I learned fast back then; I can do it again." So I started looking for an open-source platform that I could host and customize myself. That search led me to several names you may recognize: OpenCart, WooCommerce, PrestaShop, and Magento.

My goal wasn't just to build a simple website, I wanted to create something that could *replace* eBay Blackthorne entirely. One of my biggest frustrations with Blackthorne was how slow it became once I reached around 40,000 active products. Anything close to that number made the software almost unusable. Every open-source platform I found seemed like it could potentially solve that problem, or at least give me the control I needed to try.

"I wanted to create something that could *replace* eBay Blackthorne entirely!"

I started with OpenCart, but after reviewing all its available modules, I realized it wasn't going to work. There wasn't even a proper import tool to get all my supplier products loaded. Then I tested WooCommerce, but its database used flat tables, which made handling large catalogs (over 50,000 products) extremely difficult, and my goal was to reach *millions* eventually. PrestaShop had similar limitations. Then I found Magento.

Magento looked like exactly what I'd been searching for. It had a massive community, tons of available modules, and best of all, it was open source, meaning I could fully own it, customize it, and expand it however I needed. So, that's where I started. Since my focus was still electronics, I began planning an electronics store. I searched for a theme I liked, mapped out every feature I wanted, and hunted down the right extensions to make it all work.

It took me about eight months, but I finally put it all together. My own website, fully operational and connected to my suppliers. Thanks to all the available extensions (and some of my own coding), I was able to automatically import products, sync with eBay, and even automate pricing and stock updates. The automation system I built back then could handle about 60,000 products in around 30 minutes, which felt lightning-fast compared to how things used to be. To put that in perspective, the evolved version of that system today can process millions of products in mere seconds. But that's a story for later in this series.

Next Post In Series

I hope you have enjoyed this post and maybe even picked up a thing or two. In the next post I will be going over the following topics:

• The Whole Website Experience
• A Better Plan
• Realization

Share: