Hello, everybody. Anton Kraly here and welcome back to the eCommerce Lifestyle Podcast. This is our bi-weekly show where we have new episodes every single Monday and Thursday morning that are all designed to help e-commerce store owners to increase their revenue, automate their operations and become the authority in their niche.
Now, in today's episode, I'm going to be answering a very specific question. And that question is, is dropshipping furniture worth it? Yes, yes it is. You can build a very real business and make a lot of money, even though the products are large, they are heavy, and they're what a lot of people will consider extremely competitive. With that being said, there are plenty of people that I know doing millions and millions and millions of dollars in revenue with furniture, and there are many companies that I follow that argue in billions. So yes, it's definitely possible to make money dropshipping furniture. Yes, it's worth it, but if you're considering getting into this niche, there are some things you need to know. That's what I want to cover in today's podcast.
Now, the first thing you need to know to have the best chances of success if you want to dropship furniture is to niche down. When I say niche down, I mean, don't just say, "I'm going to build a furniture store." I mean, pick a specific type of furniture that you want to sell. An example that comes to mind right away is the store Design Within Reach, DWR. Yes, they have stores all over the country. I think all over the world. They also have a big online presence and they make a lot of money selling furniture, but they're not selling some fabric sofa for $800, and also selling some futon for 100 bucks, and then selling some metal folding chairs that people can use for outdoor events or conferences. No, they specifically sell authentic modern classic furniture, and that makes them a lot of money. They have their niche. They've niched down within the furniture market. That's what you want to do if you want to dropship furniture, whether that be outdoor furniture, whether that be modern office furniture, whether that be ergonomic furniture or bamboo or teak furniture. Whatever it may be, you want to pick the type that you're going to sell and your job is then to become the authority site and the authority store for that niche.
Now, the next thing you need to know if you're considering dropshipping furniture is that you need to be selling in a niche where it is unique. What do I mean by unique? I mean, something that is hard for people to typically get locally. Now at the time I'm recording this, I'm actually in the sitting mode of a standing desk, and this is a very unique product. I have bought many of these over the years for our Austin Texas office and for our North Carolina office and for my home offices. So I bought plenty of these and I've always bought them online, even though I could get in my car, drive five minutes down the block to the local staples and they might have a standup desk and stock. In fact, they did, last time I went in there. The problem was they had one that was maybe 30 inches wide and it sucked. I just did not at all want that standing desk.
So because there are different colors, there's different sizes, there's different options and how much weight it can hold, how high or low they can go. There's different color variations. That is something that's unique that drives buyers online. So if you're thinking of selling furniture, have something that is unique, that people can't get in their car drive five minutes and pick it up at a store. You want something that drives people to the internet and eventually to your store to purchase. Something that people have to go online for.
Now, the next thing that is extremely important if you are considering dropshipping furniture is calculating your potential profits. Reason being, we offer free shipping on all of our stores, even the ones where we sell very expensive products like furniture and shipping is expensive. And just because it's free, doesn't mean no one pays. We cover that cost. So we need enough margin every time we get a sale to make sure there's profit leftover. The way that I like to calculate profit margins before I even enter a niche, I still do this during my research phase, is to look at the average selling price of products within that niche.
Let's just say I was looking into fabric sofas or sofas in general, and I was on Google. I'm doing my research and I see that there are a majority of sofas that sell for about $1,000. That's the price that the online stores sell them for. And then maybe I see, there's also another class of fabric sofas, maybe on the futon level that typically sell for about $400 per item. That would be the average order value of that segment of the niche. Well, what I do automatically from there is calculate what my average wholesale cost would be. That means my cost to the supplier for the product. Basically your COGS, your cost of goods sold. Now you want this to be no more than half of what you would sell the products for, which again is map.
So for a $1,000 product, my wholesale cost would most likely be $500 or less. For a $400 product, my wholesale costs would most likely be $200 or less. All you have to do here is subtract that average selling price, minus that wholesale cost, to see what your gross margin would look like. And for something like the $1,000 product, that would be about $500 that it leaves you with. And for the $400 product, again, that lower quality sofa in this example, the potential profit gross margin would be about $200.
And you might think, "Well, they both sound great," but remember, that's just gross margin. There are still expenses that come out of this. And the biggest one is going to be shipping, because like I just mentioned, we offer free shipping on our stores. And you're probably aware of this, but shipping carriers don't care what you sell a product for, how much you got for that product. They care how big it is and how much it weighs. And most likely if there are sofas, in this example, that are 1,400, but they're close to the same size, that shipping cost is going to be almost identical.
So let's just plug in 150 bucks here as an example, and say that these were both about the same size and they both cost $150 to ship. That would mean on the one that you sold for $1,000, you would now be left with 350, a 35% margin that you would then take out cost of advertising for, and also any other expenses in your business. And then you would have the one that you sold for 400, where you would be left with only $50 and basically have no money to even run ads with. And the reason I think this is so important to share is because even if you were thinking, "Okay, I want to sell furniture." Then you thought, "Okay, I'll want to sell sofas," you still need to look at the margins within sofas to make sure the ones that you choose to sell in the right price range are the ones that actually leave you with margin. The ones you can actually make money with.
It's not as easy as just saying, yeah, dropship furniture. You're going to make money no matter what. It's about doing your research upfront, which as you might know, is something I go heavy on inside of the Drop Ship Blueprint, which is our e-commerce coaching company. By the way, if you're not a member of that yet, I will link up to a free training below this podcast. It's called dropshipwebinar.com, and that should definitely help you out.
Finally, the next thing you should consider if you want to dropship furniture, which again is a great idea if you do your research. Is to see how much competition there already is on Google Shopping, because competition, you might know this if you follow the podcast, it occurs at the product level, not the niche level. So what I'm going to do is link up a video I recorded on this topic. I'll link it up below this podcast. Click it, watch that video, and it should help you gauge the competition within your sub-niche of furniture to make sure you have one of the many, many winners there.
That's going to do it for this episode guys. As always, I hope you got value. If you did, do me a favor, leave a review over on Apple Podcasts. Means a lot and I read all of them. And again, if you're listening to this and you are not yet a member of my coaching program, go to dropshipwebinar.com, where you can get a free training from me, you can get a list of 237 profitable product ideas for 2021, and you can get a special offer on the Drop Ship Blueprint, my e-commerce program that was voted best e-commerce course by Shopify.
That's it for today, guys. Thank you. I appreciate you. And I'll talk to you on Thursday for a brand new episode of the eCommerce Lifestyle Podcast. See you everybody.