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. (For more information on the downsides of dropshipping, check out my article, 7 Reasons to Rethink Dropshipping).
However, that does not mean you can’t make money dropshipping. Despite my reservations, I see a proper 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.
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What Is Dropshipping?
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 dropship 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 only purchase inventory 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.
Create A Dropshipping Niche
In order to be successful in an industry as large as eCommerce, it’s crucial to carve out a dropshipping niche for your brand. 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 contact and attract your potential customers.
Establishing a brand within a smaller community is the only way to set your business apart from the competition, especially if you choose to dropship most of your products. Use your brand to add perceived value to your products. Make customers want to buy from you because of what you stand for, not just what you sell. By creating a dropshipping niche, you’re drastically increasing the chances of success for your eCommerce business.
Another approach is to sell a mix of dropshipped and in-house products. In this method, you do not sell exclusively dropshipping products, but rather you use dropshipped products to flesh out your site. If you manufacture your own merchandise but need a couple of add-ons to make your store feel complete, this is an excellent way to go.
Dropshipping sparingly will help you maintain higher profit margins (on items you don’t dropship), while still saving time and providing you with a measure of ease in your fulfillment. In fact, however you choose to dropship, you should carefully examine dropshipping pricing strategies to make sure you’re optimizing your profit margins — AliDropship recommends sticking to a margin of 40-70% and provides a solid dropshipping formula for this purpose.
Find Reliable Dropshipping Suppliers
There are a few ways you can go about choosing a supplier (or suppliers) for your products. Methods will vary depending on whether you already know which products you’d like to sell. If you do, contact the manufacturers of those products to ask for a list of wholesalers. If there are multiple manufacturers, contact a few and see which wholesalers’ names keep coming up.
If you haven’t yet decided what to sell, you’ll have to take a different approach. The most common method is to take a look through AliExpress for products. AliExpress is a marketplace that lets you order products from many different manufacturers and wholesalers.
Once you’ve found a few products you’d like to sell, contact the dropshipping supplier. Make sure they have a good response time and solid customer service–if you choose to partner with them, you’ll likely need to call in now and then. In addition, you should order a few sample products from the supplier to test out the product quality and shipping speed.
If you don’t want to use AliExpress for your fulfillment, you have more options. You might take a look at the following options:
- 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.
For more, take a look at this article about AliExpress alternatives from A Better Lemonade Stand.
Create Your Own Product Content
Although most software programs allow you to automatically import product descriptions and images from your suppliers, I strongly advise against it. Creating your own product content takes more time, but will help establish your brand and add value to your products.
In addition, creating new images, descriptions, meta descriptions, and titles is much better for your dropshipping store’s SEO standing.
Integrate Your Software
Once you’ve settled on your products and suppliers, the next step is to integrate your software.
If you’re planning on dropshipping with Shopify (read our review), you’re in luck! Shopify integrates easily with many directories and shipping software solutions. Shopify dropshipping apps are readily available. In addition, Shopify actually offers a 45-minute dropshipping “webinar.” (I put quotes around the word webinar because, in reality, it’s just a 45-minute tutorial video that you have to enter contact information to access. There’s nothing wrong with that, but as you won’t be able to ask any questions during the video, the word ‘webinar’ isn’t particularly appropriate.)
If you use another popular shopping cart, you’ll likely still find a number of dropshipping software programs available in your apps marketplace. If none are available, talk to a web developer about what it would take to connect your software with a dropshipping solution, or consider placing your orders manually.
Continue Your Research
While we’ve provided a good start to your research here, the information we’ve presented in this article is far from comprehensive.
There are dozens of excellent comprehensive dropshipping guides out there for merchants who are serious about getting started. Hopefully, by now you know whether dropshipping is worth pursuing, and you can continue your research elsewhere. We recommend Shopify’s dropshipping guide as a starting point.
Read up and get that product moving!
See More Articles From Our Shipping Series
- Pick, Pack, and Ship: The Basics of Preparing eCommerce Shipments
- Simplify Your Shipping: Using Shipping Software to Your Advantage
- Smart Shipping: Using Shipping and Packing Strategies to Market Your Brand
- Learn to Delegate: What it Means to Outsource Your Fulfillment