A dropshipping business is a business model where you don’t hold any inventory of the products you sell to your customers. You display on your online store (ecommerce site) or via social media your products and a customer purchase from your store at retail price. Then, you forward the customer order to your supplier or manufacturer, at a wholesale price.
Your supplier will process the order and ship the product directly to the customer under. The supplier does the shipping under your business name while you earn the profit margin. But you will set up the online retail store, handle the marketing, and customer support.
Starting a dropshipping business is one of the easiest ways you can make money online and is quite different from affiliate marketing. Many people around the world are making five-, six-, and seven-figure incomes from drop shipping and you can do the same.
Traditional retail and eCommerce businesses is quite different from dropshipping business. Therefore, it is important you need to understand how the dropshipping business model works.
How Does Dropshipping Business Works;
a) The retailer does not keep goods in stock.
b) Customers purchase products from your online retail store
c) The manufacturer or supplier ships the product to the customer under your business name.
d) You don’t invest a lot of money upfront; it requires minimal investment.
e) You earn the profit margin similar to traditional retail business models
This article will show you how to start a dropshipping business:
Choosing a Product Niche
A niche is a specific aspect of a market. For example, female shoe is a popular niche in female fashion market. It is even better for your niche to be more specific. Choosing a niche is the first step in dropshipping business.
The rising popularity of the business can make finding niches that aren’t already saturated hard. But new products are emerging every week, so there is almost an endless opportunity for you. Choosing your niche is very important; success or failure starts here. You stand more chances to succeed in a niche that is not saturated than one that is saturated with known brands.
Some guidelines to help you choose a niche that will make you money:
Tap into your passions and interests: You have unique knowledge of the products and trends in those markets that can help you identify a viable niche.
Your own problems: If you have a problem in your life then it’s highly likely that others will have the same problem. Then identify a product that solves that problem, you might have uncovered a great dropshipping niche.
Competition Research: Is the niche you’re interested in over-saturated? Is there any competitive advantage you can exploit? Maybe find that the niche you’re most interested in joining is the one that nearly everyone is already into. Avoid the bandwagon.
Niche profitability: The objective of every business is to make money. Therefore, you need to check the profitability of every niche and product idea that you come up with. Work towards a profit margin of at least 40% after shipping costs, and seller fees.
The perfect dropshipping product is generally:
- Not dominated by major brands
- Small and lightweight
- Retails for between $15 and $200 (ecommerce “sweet spot”)
Use Market Research Tools (like SaleHoo Labs) find how much competition there is for each product, based on:
- How many people are selling it on Amazon, Aliexpress and eBay
- The average retail price of each product
- The sell-rate of each product
- Trusted suppliers of the product
Find a Dropship Supplier
Finding a reliable supplier is crucial and difficult aspect of starting a dropshipping business.
You depend on suppliers to keep your product in stock, to sustain product quality, and to ship orders to your customers in a timely manner. Your most important business partner is your supplier.
Qualities to Look for in a Dropship Supplier
Must be a dropshipper: Not all product suppliers offer dropshipping as a service. Some are simply wholesalers or manufacturers.
Experience and helpful staff: Look out for a supplier with years of experience in dropshipping. Ensure the supplier is reliable at all times because suppliers shoulder a lot of responsibility with dropshipping.
Lower order fees: It’s quite normal for dropship suppliers to charge a small fee for their services. Moreover, they hold the stock and organize packaging and shipping for you. These fees should only a few dollars ($2 to $5 usually)
Fast and reliable shipping: Most dropship suppliers are located in China so you can’t expect overnight shipping. However, make sure your customers will get their items as fast as possible. One-two weeks is acceptable for dropshipping. To avoid negative customer feedback don’t exceed this time frame.
Quality products and photos: Always request for product reviews or samples for quality check before committing to a supplier. The product supplier should have high quality images for your product listings.
Select a Selling Platform
The next step after deciding on a product (s) and supplier is a place to start selling to make money.
The choice of a selling platform or online marketplace is very important to the success of your business. When it comes to selling platforms, you will decide whether to start on an established platform or your own independent online store.
When starting out most dropshippers use a online marketplace like Amazon or eBay for the following reasons.
1. Setting up an account and selling on these platforms is easy
2. They command huge amounts of traffic (potential customers)
3. These platforms are trusted by customers
4. You have a very good opportunity to make money
Build Your Own Online Store
Creating your own online store should be your ultimate long-term plan for making money and building a business online. You can easily create an ecommerce online store on WordPress with WooCommerce plugin that adds ecommerce functionality to your website.
The final step in setting up a dropshipping business is crafting a good marketing strategy, to attract customers to your store. Digital media marketing strategy is very important at this stage for customer acquisition. Social media marketing like Facebook ads are proving to be very effective and cheap. Other forms of paid ads are google ad, LinkedIn ad, twitter ad etc. You can as well take the free organic path to grow your clientele base.
To operate more efficiently and make more sales, find a way to be better and smarter than your competition.
1. Identify the competition
2. Analyse their product listings
3. Read customer reviews
4. Absorb as much information as possible when you’re starting a dropshipping business. Perfect places to look for ideas to improve on what your competition is doing are product listings and reviews of top sellers in your niche.