How to Start a Dropshipping Business

Dropshipping business is a popular e-commerce retail fulfillment method today. It has gained a lot of interest from aspiring entrepreneurs, online sellers, and freelancers who want to make money online within the comfort of their homes. It has also attracted established businesses and companies in either venturing into another marketing strategy or offering their service as product suppliers.

Dropshipping is an easy business venture to learn because it doesn’t require huge capital to put up your online store. Unlike traditional online reselling, which eats up your time and effort in handling the inventory of your products, dropshipping won’t give you the hassle of packaging and delivering your customer’s orders.

How Dropshipping Business Works

Dropshipping has three components, namely: the customer, retailer (you), and supplier or manufacturer. In dropshipping, the customers will place their order and purchase from your online store. As the retailer, you will receive their order details, including the payment for the product, shipping address, and shipping costs.

Then, you will forward the order details to your supplier. You will pay the customer’s product at a wholesale price, and the supplier will be the one to fulfill the shipment. They will pack it up using your brand, ship it and deliver it to your customer’s doorstep.

Dropshipping business has blown up because the main role of dropshippers is to market their products and optimize their e-commerce website. Dropshipping allows entrepreneurs to rebrand their products, and it sets them free from operational costs.

As an aspiring dropshipper, you will not keep your items which makes it convenient because you won’t have to maintain a huge space at home or invest in a secure warehouse to store your products.

The downside of this setup is you have no control over your inventory, but you still have to deal with customer complaints in case problems arise. You will handle the refund and replacement process in case your supplier delivers a wrong, damaged or defective item. It means that you will highly rely on your supplier’s efficiency in delivering the correct product at the right time.

Given these pros and cons, how prepared and committed are you to start a dropshipping business?

Check your Commitment to the Business

Check on yourself first if you will be committed to dropshipping in the long run. Just like other traditional businesses out there that require focus and commitment, in dropshipping, you will also exert so much time, effort, and energy if you want your business to grow.

If you are a student or a full-time mom who wants to venture into dropshipping, make sure that your studies or mommy duties won’t interfere with the needs of your customers.

If you are an employee who works 9-to-5, make sure that you will set proper expectations with your customers regarding your availability. If they have to sit for hours and wait for your reply about a product inquiry, they might turn around and look for another retailer instead.

Be fully committed to selling and marketing your products and improving the customer experience because these are the only ways that you can thrive in dropshipping.

Here are five steps that you should consider and follow if you want to start a dropshipping business from scratch.

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1. Choose a Niche that Your Customers Actually Need
2. Do a Competitor Analysis
3. Find a reliable supplier
4. Build your E-Commerce Website
5. Market Your Products and Optimize your Website

 

1. Choose a Niche that Your Customers Actually Need

If you have decided that you can devote your time and energy to dropshipping, it’s time to choose what products to sell. As a beginner, you must have been advised to sell products close to your heart. This pertains to items associated with your passion, interests, and hobbies.

For example, if you’re a make-up enthusiast, you can try selling beauty and skincare products. If you’re an athlete, you can sell sportswear or gym equipment.

It is easier to decide on your niche when you already have prior knowledge about your products. However, experts recommend that you should out of the box and go for what people are actually buying at the moment.

If you consider what your customers need more than what you want to sell, you’re likely to survive the competition. Some of the most profitable niches in dropshipping today are beauty and cosmetics, home and kitchen, outdoor and patio, arts and crafts, pet accessories, car parts and accessories, food and groceries, gadgets and electronics, and office supplies.

If you will observe, these niches focus on the universal need of people to survive and feel good about themselves. They also showcase products that will make their life easier. So, if you’re going to choose a niche, consider how regular your customers will use the products from your category.

You can even examine your daily needs at home. How often do you buy soap and shampoo? How often do you change your window curtains and when do you need to buy a new one? Do you need to buy a new gadget or phone accessory every two to three months? The items that you often see around you could be the things that your customers need regularly.

To avoid choosing the wrong niche, read my blog post about the Top Reasons for Failures in Business.

2. Do a Competitor Analysis

After deciding on your niche, your next step could be sitting in front of your laptop and putting up your online store on Shopify. Hold up, don’t jump right into it until you check how your competitors are performing in the market.

Building your online store and randomly importing products and descriptions from your supplier’s website won’t take you any further. You need to step up for you to get noticed, and one effective way to stand out is to research your competitors and see how they’re doing.

One simple way to do this is to go to Google Search. Type the name or keywords of a popular product under your niche and click on Shopping. From there, you will see the top-performing online stores or companies that offer the same product. The first page will indicate that these stores rank higher than the rest, and it’s possible that they offer the best quality, affordable prices, and excellent services on that certain product.

Try clicking on the product links one by one and analyze how these competitors market the item. Look at how they write the product description, set the price, present the image of the item and respond to customer queries and reviews. Reviews are extremely important because you will see from here that the best stores score 4-5 stars. It means that they are the ones you can imitate or get inspiration from.

You can also use free online tools like SemRush and Ahref in doing your keyword research and competitor analysis. After finding out who your competitors are, list down the strong points that you can copy from them and list down the weak points that you can improve on your own as well.

Competitor analysis will save you time from numerous experimentations of marketing strategies that work best for your products. You will have an overview of the effective marketing styles based on your competitors’ performances alone.

 

3. Find a reliable supplier

A reliable supplier or manufacturer is everything; they can make or break your business. You need to find a supplier that can provide high-quality products and respond to queries on time, and can commit to shipping and delivery dates.

In finding the right supplier, do not only depend on the most popular ones. Consider a supplier that is accessible or near to your area. This way, your customers won’t have to wait for lengthy shipping and delivery time estimates.

As a beginner, find a supplier that offers low and affordable wholesale prices and shipping costs. Look for one that’s within your budget and won’t hurt the shipping fees of your products.

Outsource and research suppliers from reliable B2B marketplaces like Alibaba. After making a list of your prospects, research each of them and read or listen to their performance reviews; much better if you can find reviews coming from experienced dropshippers.

Once you’ve narrowed down your list of suppliers, contact them and ask the details about their services. Inquire about their response speed, tools, and technology.

Since you will not handle the inventory or keep the physical items, purchase a few samples of their products so you can try them yourself and see if they’re of good quality. Most importantly, check their history and reviews from previous customers.

Do they ship packages on time? Do they deliver the exact item on the product page? Do they frequently deliver wrong, defective, or damaged items? Do their couriers treat customers right upon delivery? Ask these questions to yourself first before dealing with your chosen supplier so your services and revenues will flow efficiently.

4. Build your E-Commerce Website

Now, it’s time to create your e-commerce website. First, you have to identify what business structure you’re going to pursue. Dropshipping has three business structures, namely: sole proprietorship, limited liability company (LLC), and C Corporation.

In a sole proprietorship, you will run the dropshipping business alone, yet it doesn’t offer any liability protection if you ever had a problem with or get sued by a customer for some reason.

In LLC, you’re going to set up your e-commerce website as a business entity. This uses the tax freeway and gives you more liability protection than a sole proprietorship. Meanwhile, in C Corporation, it offers you maximum liability protection, but it requires a huge investment, and its tax filing is doubled compared to the first two structures.

After deciding the business structure, you will proceed to build the website. You can either join an e-commerce marketplace like Amazon or eBay. Or you can create your own website using an e-commerce platform like Shopify or BigCommerce.

In terms of independence, building your website through an e-commerce platform is better than the marketplace. If you join Amazon or eBay, you will have to follow their terms of service, and you will also pay for every sale you make. Whereas in using Shopify or BigCommerce, you can create your own brand, and it maximizes your product functionality as well.

If you want to build your e-commerce website on Shopify, visit this Shopify link to start your 14-day free trial and create your online store.

Select a theme and customize your online store. Then, you can start importing your products from your supplier’s website and add catchy product descriptions. You will also have to set up a payment processor and domain name. For more convenience, you can also use the Oberlo app made by Shopify.

Dropshipping apps like Oberlo let you add products from various suppliers into your shop to fuel your product offering. You can either dropship a whole product or dropship an individual item within a set.

Read my blog post about How to build your own website to learn more about how to build your E-Commerce website.

 

5. Market Your Products and Optimize your Website

Your consistency in marketing your products will determine the success of your dropshipping business. Time will be your biggest investment in dropshipping because you’ll need to bring your products to your target market through different platforms, including emails and social media.

Applying the strong points that you’ve learned from the competitor analysis, you can try these ways in marketing your products.

• Social Media. Social media is an effective way to gain organic traffic to your e-commerce website. If you have a Facebook, Twitter, Instagram, Reddit, or Tiktok account, you can regularly post your products on these platforms and link them to your website. Social media has an immense audience that you can reach and can turn into potential customers.
• Facebook and Google Ads. If you have the budget, you can boost your products by using Facebook and Google ads. It will give your target market an overview of your products and website in less than a minute.
• Email Marketing. Gather your customer’s emails upon ordering your products and start sending them email sequences. Give them updates about your latest products, sales, discounts, and other relevant content to your website.
• SEO Marketing. In every type of marketing strategy that you apply, always consider Search Engine Optimization (SEO) so your shop can rank higher in keyword searches on Google or YouTube. SEO uses keywords and tags in ranking your website among search engines and social media platforms.

What’s Next?

Now that you have read all the steps, it’s time to decide whether you want to pursue dropshipping or not. Every business venture is a risk, but so is staying stagnant in a place where you no longer grow. Take the next step, and you might be surprised at how dropshipping could change your life.