How To Start A Dropshipping Business
Dropshipping is a hot topic in eCommerce. The dropshipping business model attracts hundreds of merchants with the shiny appeal of minimal work and easy profits. Dropshipping webinars and ebooks have continued to perpetuate the idea that dropshipping is the newest way to GET RICH QUICK! while working from the comfort of your own home.
Unfortunately, dropshipping is nowhere near the perfect business model those eCommerce experts promote. In fact, at times it can be a very risky way to fulfill orders for your online store, with low profit margins, less control over customer service, and steep competition.
However, that doesn’t mean you can’t make money dropshipping. There is a place for this particular shipping technique in an eCommerce business, particularly for online stores that have a strong niche presence but want low start-up costs. Wondering how to start a dropshipping business? Read on for more details.
Table of Contents
What Is A Dropshipping Business?
Dropshipping is a fulfillment method that allows merchants to sell online without warehousing or shipping their products. Sellers who dropship never store inventory. Rather, they partner with wholesalers and manufacturers to fulfill individual orders as customers place them.
So how does dropshipping work? A typical order in the dropshipping model happens like this:
- A customer places an order on the merchant’s website
- The merchant sends that order to a supplier
- The supplier picks, packs, and ships the product to the customer
This method of fulfillment keeps initial investment and overhead low because it allows merchants to purchase inventory only after they have received payments from their customers. The downside? It also tends to keep profit margins low as the industry is highly competitive. Nevertheless, dropshipping can be helpful when it’s done well. Keep reading to learn the best methods for implementing dropshipping in your online store.
How Does Running A Dropshipping Business Work?
Like all sales models, dropshipping involves three main players: the business owner (that’s you), someone to supply items for you to sell (a manufacturer or wholesaler), and customers who want to buy what you’re offering.
Pick Your Products and Partners
Start by identifying the products you would like to sell online. If you haven’t yet decided what to sell, a good place to start is AliExpress. It’s a marketplace that lets you order and resell products from many different manufacturers and wholesalers. Even if you ultimately decide not to work with AliExpress, browsing the site is a great way to gain a sense of what kinds of products are available for dropshipping and what kinds of prices you should expect to pay. On the other hand, if you already know some specific products you want to sell, find a supplier that is willing to work with you and be a trustworthy partner in your dropshipping business.
You can find other options, too. Here are a few to consider:
- Oberlo: Oberlo is particularly useful for merchants interested in Shopify dropshipping. It is a dropshipping directory designed to integrate exclusively with the Shopify admin. You can use the integration to find products and import them into your store automatically. You can also automate your order transferring process.
- Doba: Doba is another directory. Access over 100 dropshipping suppliers for a monthly fee, and import products directly into your store.
- Printful: Printful is great for merchants who sell screen printed items, especially T-shirts. You order, they print and ship.
Identify Your Target Audience
Once you have items to sell, you need to focus on the other half of your dropshipping business: the customers you want to sell to. To succeed in an industry as large as eCommerce, it’s crucial to carve out a dropshipping niche for yourself. Identify a target demographic for your online business and build your dropshipping website with that audience in mind. Find out what they value, what they purchase, how they speak, and where they congregate. Then, use that information to better connect with and attract your potential customers.
Clarify Your Role
A lot of advice to aspiring dropshippers focuses on the supposed effortlessness of the whole scheme. All you have to do is choose a supplier, find customers, and let the market work its magic! Well, not quite. Anyone who has ever run a successful business can tell you that taking it only rarely delivers exactly the results you’re hoping for. As the owner of a dropshipping business, you need to wear a few “hats” on the job. Make sure your skills and your level of willingness are up to these tasks. The only thing you won’t be doing is creating the products and putting them in the mail; those tasks are up to your supplier partners and the rest is up to you!
- Marketing expert
- SEO strategist
- Customer service
- Shipping tracker
- Quality control
How Much Money Do I Need To Get Started With Dropshipping?
The best part about starting a dropshipping business, and the factor that makes dropshipping so attractive to so many, is its low start-up costs. Because operating a dropshipping business will not require you to order or hold any inventory, you won’t need to make a big initial investment before you can start soliciting sales. Once a customer orders an item from your website, you pass on that order — and the payment the customer made to you — to your dropshipping supplier.
You won’t have to pay rent or hire any staff, at least not yet. In fact, the list of unavoidable expenditures is pretty small, so money should not be a barrier as you plan to enter the dropshipping business. Make sure to factor in the cost of a business license, so that you’re able to legally resell items acquired from a wholesaler or manufacturer. Make sure that your technology is up-to-date. And while you can do a lot to get out the word about your new website, you may quickly decide to spend some money to advertise on social media sites. Fortunately, that’s not a requirement, and you can scale your advertising approach to fit your budget, increasing it as your sales grow.
How To Start A Dropshipping Business in 5 Steps
Ready to get started? You can start your dropshipping business by taking just a few simple steps.
Step 1: Create A Business Plan
It’s not enough to simply hope your dropshipping business succeeds. You need a plan to get there. Decide what products you want to resell, pick a supplier, identify your target audience, and plan how you will reach that audience and convince them to buy from you. Outline your budget, too. How much do you have to spend on advertising? What margins will your suppliers give you, and how much over the price you pay do you expect to be able to sell items for? After all, your profit comes from the difference between the price you pay and the amount you can resell for.
Step 2: Test Your Supplier
Once you have found a supplier, test their products and shipping services. Although your customers will order from you in the normal way, you will be outsourcing quite a bit of your customer service to your supplier. You won’t have a lot of control over things that matter, like product quality and on-time shipping, but you will definitely be the first to hear from the customer if something goes wrong. Place an order or two with your supplier, just to make sure they will be a good representative for you. If you feel satisfied with what you receive and how quickly it arrives, you can feel confident that your customers will feel the same.
Step 3: Set Up Shop
Here’s a big decision to make: Should you set up an independent website, perhaps using a do-it-yourself website builder like Wix? Or should you use a fully hosted eCommerce platform, such as Shopify or Etsy? Setting up your own site takes more time, but you’ll avoid paying fees to the site host. Of course, if you opt for a hosted site, you will gain access to a huge existing customer base. Weigh the options, test each, adjust your business plan as necessary, and get started.
Step 4: Write Product Descriptions
You picked great products to sell. Now it’s time to sell them. What makes them the best items available? Why should people want to buy them from you? Use clear, descriptive words to grab customers’ interest. Of course, you could just pull product descriptions from some catalog online. But it’s worth your time to use those basic descriptions as a starting place and punch them up with your own words, aimed squarely at your target customer. You’ve got to build your brand the way you want it. Make sure you’ve got quality images to post, too. You may be able to find and use some stock photos. Or, if you order some samples, you can dust off your photography skills and create your own images.
Google likes original content. In addition to building your brand the right way, when you create new images, descriptions, meta descriptions, and titles, you boost your dropshipping store’s SEO standing.
Step 5: Find Some Customers
Remember back in Step 1, where you outlined your budget? This is the time to revisit those numbers. If you have the money, you can create an advertising campaign on Facebook or Google that allows you to target your ads toward those you think are most likely to buy from you. You can succeed with a lower budget, too, although you may see your business grow more slowly in that case. Use free accounts on various social media platforms, including Twitter, Facebook, Instagram, SnapChat, YouTube, and more to pique potential customers’ interest and drive traffic to your sales site.
Tips For Running A Successful Dropshipping Business
Ready to launch your site? Great! As soon as it’s up and running, you can sit back and start adding up your profits!
Well, not actually.
While you’re waiting for customers to come to you, you’ve got more work to do.
Integrate Your Software
If you’re planning on dropshipping with an established eCommerce platform, like Shopify or BigCommerce, you’ll probably find it easy to integrate with many directories and add third-party apps. A service like Oberlo will let you import a variety of products into your Shopify store. If you’re using a Wix website, you can easily link to Modalyst.com and import a range of products to your store. Start by looking in your apps marketplace to see what dropshipping software programs are available on the host site you use.
Invite Customer Feedback
Don’t let the initial sale both begin and end the relationship with your customers. Especially because you’re not going to be the one shipping orders to them, you need to make sure that they’re satisfied with their purchase. Check in with them after their order was scheduled to arrive. Did it get there on time? Did it arrive in good condition and does it appear as promised in your advertising? If customers encounter problems with their orders, it’s up to you to work with the supplier to make it right. After a successful sale, invite customers to post a review on your website or to tag your business in their social media posts. Those are free strategies you can use to build your brand and grow your business through repeat sales to satisfied customers.
Keep Learning and Growing
While it’s best to start small when you launch a dropshipping business, once you find your market and start making sales, don’t hesitate to add a few new products or a new supplier partner to the mix. You may be able to learn from customers’ feedback what additional items would sell well from your site. Just work on expanding your eCommerce niche and building your brand, rather than adding an unrelated product line, for example.
Getting Started With Dropshipping
As far as starting a business goes, dropshipping is a relatively low cost, low-risk option. The overhead is minimal and it doesn’t take a big investment as far as time, either. That’s not to say it’s easy and that anyone can succeed with a dropshipping business without even really trying.
However, if you’ve done your homework and understand the pros and the cons — you should read about the downsides of dropshipping, too — don’t be afraid to jump in. Who knows, if you make a solid, realistic plan and choose your products and partners wisely, your dropshipping business could end up being one of the success stories.