Dropshipping is a low-risk business model that enables the seller to accept customers’ orders but does not keep the goods sold in stock.
In this article, you’ll learn how to start a dropshipping business, how to find the right dropshipping products and suppliers, and everything else you need to know to start and run a dropshipping business.
How to Start an Online Dropshipping Business and Run It Successfully
Learn here how to launch an online dropshipping business and run this type of business successfully.
Dropshipping Business Model
Dropshipping is a type of business model that enables a company to operate without controlling inventory, owning a warehouse to store its products, or even having to ship its products to its customers.
Online dropshipping business is an increasingly profitable option right now. You will find many questions and answers about dropshipping when researching how to start a dropshipping business.
Dropshipping could be the most profitable business model ever because you are not responsible for shipping and manufacturing products.
Dropshipping business is a low-risk business model. When it comes to startup costs, you only pay for the products that you sell to the paying customers.
Don’t be overburdened with product manufacturing cost, inventory carry, unsold inventory maintenance costs, personnel cost for product packaging and shipping.
Through drop shipping, you will be able to sell products to customers, set your own product pricing, and market your own brand. You don’t even need to pay for inventory for it to be sold to an actual customer.
It’s a great entry to entrepreneurship as you can start your own dropshipping business during your evenings and weekends. You will require day-to-day work when it comes to processing orders. However, most of the order processing steps are automatic and require a click of a button.
How Easy and Profitable is Dropshipping?
In a dropshipping business model, a customer places an order for products in the retailer’s online store. The retailer collaborates with a dropship supplier who manufactures and/or stores the products, packs the products, and ships them directly to the retailer’s customer, on behalf of the retailer.
Usually, profit margins for dropshipping can range from 15% to 45%. However, the profit margins for consumer durables and luxury goods (for example, electronics, jewelry, etc.) can generate a profit margin of up to 100%.
It’s about finding the right niche and the right supplier while entering a market that is already overly saturated.
A good way to ensure higher margins could be to source directly from the manufacturer rather than the wholesaler/supplier, thus effectively cutting out the middleman.
Once the business starts and gains a little bit of momentum, it can quickly turn into a money-making machine that requires minimal input.
If you want to start a dropshipping business, you have to know that starting a dropshipping business is a great first step in entrepreneurship.
The profits can be earned quickly once you find the right suppliers. You can calculate your winnings to ensure that you are on the right path to success with our dedicated profit margin formula.
If you’re ready to take on the work, you can build a successful brand. The dropshipping business opportunities are endless, you just need to take the first step.
Now, you’ll learn how to start a dropshipping business, how to find the right dropshipping business ideas, and everything else you need to know to start dropshipping.
How to Start a Successful Online Dropshipping Business in 7 Steps?
It doesn’t take a lot of startup capital to launch a dropshipping business, it just takes a tremendous amount of hard work.
If you are ready to start a successful dropshipping business that can compete with retail giants, follow the 7 detailed tips below.
1. Know Your Target Market and Niche
The truth is, what you sell matters. You should take some time to find the best dropshipping business ideas. Most people tell you how to start a dropshipping business to pick a niche that interests them. But that’s only half the truth. It is about a mixture of profit and passion, leaning towards profit. The truth is, the best dropshipping business ideas are usually profitable. It’s easier to be motivated when you’re actually making money.
Google Trends is great for knowing if a niche is in an uptrend or downtrend. However, it alone is not sufficient to determine whether or not a suitable niche is viable. Some niches may be on an uptrend but not have enough search volume to ensure their popularity.
You can use Ubersuggest’s keyword tool. This tool will help you understand the potential of your business ideas in dropshipping, and give you additional ideas for the future.
Browse popular sites within your niche. For example, if you visit a website for fashion retailers, they will often organize their store in trend categories. This helps you understand which trends to add to your store right now. You can also browse through the best-selling products in the store to help you find the best-selling products.
Check the order volume for the products. Inside Oberlo, you can browse products based on order volume to help you understand how popular the product really is.
Don’t rule out dropshipping business ideas if they’re not as high as other products, because these products can be newer.
It is important to understand the demographics such as the physical/geographic location, income segment, etc. of your audience in order to know the size of your audience, where are most of them and how you can meet your dropshipping products.
2. Find the Right Dropshipping Products
To have a successful e-business you must find the right products to sell, but when it comes to dropshipping, finding the right product is probably the most important aspect of your business.
There is almost no way to be sure which products are absolutely ‘perfect’ for your dropshipping business model, however, having a shortlist of product ideas that you are sure to sell (based on facts, numbers, and hard research) is a good way to start deciding which products to ultimately sell.
Fitness, fashion, jewelry, beauty, tech, purses, and backpacks are some of the evergreen niches we keep seeing the best online stores coming in and succeeding. Spend some time researching different dropshipping business ideas.
Here is a set of criteria that can help determine if a product is suitable for dropshipping:
Retail price: When it comes to dropshipping, the retail price and the wholesale price matter. Find the balanced price rate that works for you and your customers’ expectations.
Size and Weight: Packaging and shipping costs vary between different products based on the amount of packaging material required and the effort (manual effort or machine effort) required to ship the product.
In this sense, getting smaller and lighter items is the cheapest dropshipper and gives you the largest profit margin. Larger products can also be shipped with a relatively large profit margin, but starting with a smaller size is better.
Sell related products: Selling related product groups is a great way to give your customers more value and encourage them to buy more every time they place an order. Think about products that you could sell together that serve a related niche.
For example, if you sell artboards, it might make sense for you to sell canvases, paintbrushes, and other art supplies as well.
Durability: If the products and goods you sell are either disposable and/or renewable, there is a higher chance that your customers will place repeated orders, thus increasing your sales.
Many retailers set up subscription options for their customers ensuring that there are always repeat purchases. You can make this offer more attractive to your customers by providing a discount to your subscribers.
Turnover rate: Consider the turnover of the products you sell (the rate at which the product is changed, updated, discounted, etc.). As a retailer who sells products on an online store, much of your work will come from product photography and the copy/content that you post about the products. These are time-consuming and likely to cost you as well.
So, if you’re selling products that change constantly in short periods of time, you’ll have to keep switching over the content and update everything.
3. Conduct a Competitive Market Analysis
Once you have decided what to sell, you now need to educate yourself about who your competitors are, what they are selling, and how they sell their products. There are many ways to do this.
Enter the name of a product you want to sell on Google and do a quick search to see who appears above. The top 10 results on Google or any other search engine will give you a good indication of your competitors in a particular site.
If you sell products in a different location than where you are, you can use third-party tools to collect data.
You can use tools like SEMRush or Ahref to get information about search results on various sites around the world.
Search through Alexa, Compete.com, or SimilarWeb to find niche competitors who might not appear highly in public search results. These websites will give a summary of the websites you are looking for including their social media profiles, any ads they make, information about the audience and traffic for their website, and a list of competitors for this business.
Find social media trends. You can come up with the dropshipping business ideas by doing a competitor analysis. You can browse the Facebook ads within the niche social media pages of the best brands. How many followers do they have? How do they market their brand? How much engagement is their brand getting? What can you do differently to stand against them? What are they doing right and should you copy that?
Find out what your competitors are doing and what’s best for them by using BuzzSumo so you can repeat. This tool will uncover platform insights, identify passionate influencers and give you insight into what content is getting the most social shares so you can find inspiration for new blog ideas. Signing up for competitors’ newsletters can keep you informed about their content if they share blog content in this way.
4. Find Dropshipping Suppliers and Wholesalers
The dropshipping business model is entirely based on the supplier doing their job well and carrying out orders on schedule and efficiently. So, choosing the right supplier is very necessary. If the supplier/seller gets something wrong, you and your business are responsible, so the key is to find someone who sticks to the plan and is open to communication with any issues.
It can be easy to find a good dropshipping supplier with Oberlo. You can search for products and choose suppliers from the list of results. On the Oberlo platform, you can see reviews, ratings, and how long the resource has been on the platform, for each supplier and this should influence your decision on which supplier you choose.
When you have a list of 5 or 6 potential suppliers to choose from, you can go to the next step of contacting those suppliers with important questions such as minimum order quantities and shipping times.
The best way to decide now is to place a sample order with your potential suppliers for a product and compare the results. Compare e-commerce shipping times, product quality, and packaging as the decision is made, keeping your customer in mind and what they expect of you when placing the order.
5. Build a Dropshipping Business Store
Building a dropshipping e-commerce business store is a great first step into entrepreneurship. You have to create a great website to link you and your customers.
Here are some tips that can help you create a dropshipping website the right way:
Choose the best Domain Name: Your domain name matters, especially if it’s building a long-term brand. You can use free business name generators to help you simplify the process.
Always get your top-level domain, no matter what. If you want your niche as a keyword, make sure it’s as broad as beauty, jewelry, and fashion rather than very specific, so you don’t need to change your domain name. Also, avoid using your name as your store’s domain.
If you sell your business at any time, you can legally use the rights related to your name.
Sign up for Shopify: Shopify is the most comprehensive e-commerce platform on the market. With new features, tools, resources, and apps added regularly, you’ll find it easy to use and manage your business on the platform. Plus, if you encounter any problem, you can reach a Shopify expert who will personally guide you through any of the steps for free.
Use stylish and responsive themes: Choose easy to navigate and clean and overall a great starter theme for free for those on a tight budget. Appearances can change over time. At first, while you are just testing free themes. Once you start earning some money, you can invest it in buying a new theme for a better store design.
You can also use the WooCommerce WordPress plugin to design your eCommerce dropshipping website.
Install Oberlo if you use Shopify: This allows you to find products online that you can sell on the same day. Through Oberlo, you will be able to find products at a number of popular outlets.
You should target 10-25 products when getting started because it can be difficult to write product descriptions for much more than that.
6. Market Your Dropshipping Store
So at this point, you’ve found your product and built your store. You’re all set to start dropshipping merchandise and make your own throne online! it’s time to market your dropshipping item as if there’s no tomorrow. This is a critical step in your dropshipping business plan. So don’t keep making adjustments to your store design and pretend you are making improvements. Don’t be afraid to put yourself out there.
Building a company is usually something that is only the beginning, but running it on a daily basis is a completely different game.
There are many different aspects of running a business, even if it is a dropshipping company, that you should consider as a retailer: marketing, refunds, returns, exchanges, inventory, fulfillment, customer support, and more. So dive into these different aspects of running a dropshipping business. One of the best feelings is getting your first sale!
Raising the pace of growth is an inexpensive but very effective way to launch creative marketing campaigns online. Some examples of a growth hack include redirecting old campaigns and appearing as a guest post for a popular website. Most of this mainly includes content marketing.
If you are just a beginner, you likely have a very limited budget. Here are some best digital marketing ideas you can use to sell your products.
Grow Your Social Media Presence: One of the most effective ways to promote, advertise, acquire customers and distribute content is through social media, so it is not surprising that social platforms are also used for digital marketing.
Facebook, for example, has more than 1.7 billion daily active users from different walks of life and this diversity makes it very attractive to digital marketers.
One thing to remember is that content is the key. No matter how big the platform is or how cool the product you’re selling, that’s nothing without great content backing it up.
Use Email Marketing Services: This is one of the most underrated tools in the digital marketer toolkit.
Email marketing can be used to keep your customers informed of any major changes in the company: price changes, sales, discounts, etc.
Get More Customers with Pay Per Click (PPC) Ads: Many social media channels allow PPC ads, for example, Facebook ads. This is a typical digital marketing move in which money is traded for visits to the ad buyer’s website.
You need to keep your budget low at first to be able to afford the experience. You don’t even know which product is selling at this point. Create multiple ads to find out which product is the best selling. When it comes to targeting, create a global ad but remove Canada, Australia, the United States, and the United Kingdom, as that will keep your ad costs lower. As your business grows, or if you have a larger budget, you can create separate ads for those 4 countries.
Google Ads is another very popular digital advertising platform that is attractive due to the Google Analytics tool which can help marketers generate facts and figures reports with ease.
Retarget an audience with dynamic ads: If you are on a really tight budget, you may consider ad retargeting because it enables you to remind your customers of your products and services after they leave your website without buying and allows you to show your visitors the relevant ads when they visit other sites. This ad works great if you have a store with a lot of traffic.
You’re probably marketing for free on Pinterest and getting loads of traffic from there. Maybe you have written a blog post on your website, social media and now people share your blog post for free. With ad retargeting, you take that free traffic and are more likely to convert into a paying customer.
Use influencer marketing: Influencer marketing is a digital marketing strategy that businesses use to promote their products and services by collaborating with social media users (and organizations) and bloggers who have a purported expert level of knowledge or social influence in their field.
To be a successful dropshipping business owner, it requires you to be a little bit expensive in the beginning. If you can’t pay influencers their rates, trust me that’s fine, you can offer them an affiliate commission instead. Why is this a good thing? I know it’s the hard way that sometimes a specific effect isn’t even transformed into reality. It’s almost like a shot in the dark. If you pay an affiliate fee for each sale, you lower the risk of your dropshipping business and it’s up to the influencer to convert the sale.
Additionally, you’ll get some photos that will help increase your social proof of your brand. If the influencer had real followers, they could potentially make a lot more money as an affiliate than they would have if they had a flat rate. Hence, giving them a chance to earn more money.
7. Analyze Your Business Performance
Once you spend the time building your website, branding and marketing and knowing how to start a dropshipping business, you can start analyzing the results of your hard work. You may find that some marketing activities are massively successful while others are not so much. Or, you can look at your rates against competitors and see if you can change things a little to make things more competitive.
You can use tools like Google Search Console or Analytics to evaluate your internet traffic to ensure that the traffic is increasing and not decreasing.
If you use third-party tools for email marketing or social media reporting, set up weekly or monthly automatic reports so that you are reminded to analyze this information regularly. Even a quick snapshot of the data from a tool can be enough to determine if a campaign is running or not.
Overall, the most important part of a successful online eCommerce store is testing and optimization in order to increase your online revenue. This ensures that your website will not fall behind best practices and keeps you one step ahead of your competitors as well.