If you’re an entrepreneur who wants to enter the ecommerce space but doesn’t have the resources to manage manufacturing, supply chains, and fulfilment, then drop shipping could be a great option for you and Starting a dropshipping website is surprisingly simple using this Ultimate guide How to Start Dropshipping Business.
As a drop shipper, you’re free from inventory management headaches. When your store sells an item, the order is sent to a third party (i.e., your supplier), who then ships it directly to the shopper. You don’t have to touch the product and you only pay for what you sell.
- What is dropshipping?
- Benefit of Dropshipping.
- Pitfalls of Dropshipping.
- who can start Dropshipping?
- How to Find Dropshipping Products to Sell.
- Dropshipping Mistakes During startup
- Finding The Right Dropshipping Supplier.
- How to Run and Grow Dropshipping Business?
- Examples Of Successful Dropshipping Store
- Frequently asked Question about Dropshipping
- Closing Summary.
What is dropshipping?
Dropshipping is the process of shipping goods directly to your customers from a third-party supplier or vendor, without having an inventory (like storing the goods at your physical business location).You don’t have to handle the product yourself or take care of shipping process.
Since you don’t need a lot of money or resources to get started with dropshipping, its popularity is on the rise.
Here’s an example of a normal business model without a dropshipper :
- Your business routinely orders products from a supplier to maintain the inventory on hand, often in Minimum Order Quantities (MOQs) to get a wholesale price
- Your business stores the products until a customer orders them.
- You process each customer’s order, package the goods and ship them to the customer yourself.
When a dropshipper is involved, the process looks a bit different:
- A customer orders products from your business or dropshipping store.
- You pass the order info to your wholesale dropshipping supplier
On receipt of the order, the dropshipper charges you a price for the product sold, usually wholesale plus a dropshipping fee. Then they package the goods and ship them directly to the customer. You do not need to store or package the goods yourself.
And it makes great business sense as you don’t have to keep any stock, any inventory, and neither worry about packaging and shipping. You get someone else to do all these things for you, while you make a decent profit.
In short, dropshipping is the act of selling a product on your website without actually handling its fulfillment and shipping.
Does that mean the dropshipping model is the right fit for you? The answer will vary depending on what your goals are and where your skills lie. Before start of this Ultimate guide to Dropshipping. let’s take a look at the pros and cons of dropshipping.
Benefit of Dropshipping.
The biggest reason why dropshipping has emerged as a lucrative business opportunity is that it doesn’t have a large entry barrier. Anyone with a small investment can start their dropshipping company. And there are plenty of helpful guides online to help you.
1. Minimum startup capital. If you’re just getting started, dropshipping lets you launch without investing a lot of money. Traditional retailers need to buy and store inventory in order to sell it to consumers. But if you’re using a dropshipper, you can offer a full catalogue of products with little overhead.
2. Less hassle involved. As mentioned above, you don’t have to deal with on-hand inventory, which means that you don’t have to handle packing or shipping either. This lets you focus your time and energy on marketing and growing your business.
3. Low Risk and flexibility . If you are unable to scale up or derive profit from your dropshipping business, you can close out anytime without any monetary loss and you don’t need to invest any penny to pay upfront to stock the products.
4. You can easily expand your offerings. If you want to expand your offerings, dropshipping is a great way to test new products with your audience and move to another product in case your current domain area doesn’t work out. This will allow you to truly see if they’re a market fit without having to invest in large amounts of expensive inventory up-front.
Pitfalls of Dropshipping.
1. Managing the logistics. The logistics for dropshipping can be hard to overcome as your business expands. If your dropshipping supplier relies on multiple warehouses, this will be even more of a challenge. Poor logistics management can lead to a subpar customer experience, due to improper tracking numbers, incorrect addresses and shipping delays.
2. The low barrier to entry. This sounds like a positive, and it is. But at the same time, because of the low barrier to entry, plenty of other people will be selling the same products. This makes it harder to stand out as a new business and means there’s stiff competition.
Remember, if a supplier dropshipping for you, they’ll dropship to anyone, and that makes it tough to stand out.
3. Lack of branding. If you’re an online-only store, the very first physical interaction you have with your customers is when they open their purchase. But if you’re dropshipping, you give up control over the packaging. That means no special touches or cute thank-you cards that can really make your store stand out.
4. Tight profit margins. It’s very difficult for small businesses to compete on price, and the nature of dropshipping means you aren’t selling a unique product. Make sure you are ready to invest in something that will differentiate your store, like great educational resources, strong copywriting, or building a unique niche market.
In general, you can expect a profit margin of 20-30% and a conversion rate of 2-3%. These metrics might change according to the industry and situation.
who can start Dropshipping?
The dropshipping model is a slow path to being successful and making huge profits. To put it simply, it’s a patient man’s game.
it’s a perfect business model for the following group of people:
1. Starting-level Entrepreneurs.
Dropshipping is a great business model to get introduced to the world of business and learn the tricks of the trade.Entry-level entrepreneurs will have to try hard to grasp new concepts in business However, since there’s nothing much at stake in the dropshipping business, they can afford to fail here.
For example, you could start an ecommerce website selling low-cost t-shirts to test your marketing chops. With such a low barrier to entry, it’s great practice for newbies of entrepreneurs.
2. Sellers With Multiple Product Niches.
If you sell an extensive range of products, dropshipping is an excellent option for you. In such a scenario, keeping stocks and inventories of a wide variety of products becomes very cost-intensive, and may not be sustainable in the long-term.
This holds true, especially if you plan to sell a range of products in the league of Target or Walmart. Going for a dropshipping model, in this case, can save you a lot of money by doing away with the need for maintaining stocks, inventories, and having shops or warehouses.
3. Low Budget Entrepreneurs.
When you want to make money, but don’t have money to invest right now. Due to tight budget and expensive renting warehouses or retail locations.
In this case, dropshipping is the perfect model. With no upfront investment in inventory, third party, or warehouses, one can start a dropshipping business with practically less investment strategy.
4. As Freelancer
As a Freelancer, If you’re in the pursuit of making money online, then dropshipping is a great option for you. You don’t have to buy an inventory or store products. Dropshipping is an excellent way to sell products without storing inventory and earning passive income for years to come.
A beginner might face some challenges at the beginning, like marketing the product, reaching potential suppliers, etc. However, once they get ropes of the business, dropshipping can turn out to be pretty lucrative.
How to Find Dropshipping Products to Sell.
Dropshipping is mostly based on impulse buying. You promote a product on social media, usually through Facebook Ads, and someone will purchase it if they liked the product. In fact, anything can sell if displayed properly.Successful Dropshipping equation calculated as
Successful Dropshipping = Impulse Buying + Buying Power + Trending Product
You only have to make the ad attractive and keep the price low. The attractive ad is the hook that will induce the viewers to buy the product. And, once they are interested, you tell them the price. The price should be low so they get sold on it instantly.
- Products that are under $10 and look cute or useful to the viewer. Examples include: Keychains, stuffed toys, jewelry, smartphone covers, pet products.
- Products that are rare to find. These include products that are usually not available on Amazon. As you will be selling most products to US based viewers. You should know that they will double check the price from Amazon or other known ecommerce stores. So, sell products that are rare to find online
- Products that are useful. Even if the price is a little high, if the products are useful i.e. you can show that through your product videos, then people will surely buy them.
What to Choose for Dropshipping: Niche or Trends?
For beginners, the best way to test several products at once is to go within a niche. But don’t go too deep. If you add all products on your store from a specific niche and if the niche doesn’t sell a lot on social media then the whole effort will go to waste.
So, keep a balance of trending products and niches.
Check out the list of the most profitable dropshipping niches in 2020. You can use these niches to take your dropshipping store to the next level. Simply find a niche from the list, pick the right products, and then market them to your targeted audience.
1. Power Tools
Power tools have been in consistent demand during the last five years. This niche tends to get some spikes during the (Black Friday) BFCM season as well. That’s why we have added it to the list of best dropshipping niches to consider in 2020.
2. Tech Supplies
The tech industry is getting bigger with each passing day. . The demand is ever-increasing because of innovative new products, that exceeds expectations during seasonal promotions. Check out some tech products that are in high demand in the dropshipping niche, and that’s why we have added them as part of the best dropshipping niches to sell in 2020.
3. Lifestyle Niche
Most dropshippers are earning six-figure income by promoting lifestyle niche products. You can do the same. Get some attractive products that people like and then promote them with enticing ads. That’s how you will find the top dropshipping niches for profit in 2020.
4. Beauty and Health
Who doesn’t want to look beautiful? Beauty and age are two different sides of the same coin. The older you get, the weaker you become. That’s why we have added beauty products to our list of best niche products for dropshipping.
5. Drones And Accessories
As the demand for drones is rising, it is time to sell drones and their accessories online. You can sell a variety of drones and accessories on your dropshipping store ranging from remote-controlled drones, cameras, and mobile drones, to professional drones. Or you can go for a niche store in the drone category.
Please note that these niches are still too vague. You need to go even more sub-niche. For example, Fitness accessories & Shapewear & Yoga pants, compression pants and shorts, sports bra, and so on.
Dropshipping Mistakes During startup
1. Worrying About Shipping Costs.
It’s never productive to worry, though shipping costs can be a doozy. You will want to decide where your priorities lie in this area. Depending on where orders are coming from, shipping prices can range all over the board. Setting a flat rate can alleviate this stress, and usually evens out with time. This not only makes things easier for you, it’s straightforward and easy for customers as well.
2. Relying Too Much on Vendors.
A good many crises can arise by putting too much trust in a vendor. For example — If you only have one vendor, they could go out of business or raise their prices on you. They could run out of the items you expect them to provide. Then where would you be? This is why you should always have a backup. For your own insurance, it is wise to write up a contract with your vendors to ensure they are aware of your expectations. This will guarantee that all involved have agreed to uphold what you require.
3. Expecting Easy Money.
As we have already established, dropshipping provides a level of convenience that may appear to make your job a simpler one. Yet, you cannot forget how essential marketing your product is and all of the competition you will be coming up against. This requires research and the development of a unique approach that will make your product more appealing than everyone else’s.
4. Making Order Information Difficult to Access.
When you’re guaranteeing a quick and easy process for your customers, they’re going to want to see the evidence. Set up estimated ship dates based on location and require vendors to keep you updated on the order’s status so you can keep the customer informed. This way, you can monitor orders if you expect them to arrive later than planned and troubleshoot quickly.
5. Not Enough Brand Display.
With dropshipping, it can be hard to ensure your brand continues to be seen throughout the customer’s entire experience. You don’t want people to forget about you, so inserting your brand as many places as possible is key. To keep your name involved after shipping you can include branded packing slips, inserts and custom external packaging. It’s also not a bad idea to send a follow-up thank you note or a survey to remind them of you and show them you care about their experience at the same time.
6. Botching Order Changes and Cancellations.
People quite often click the wrong button, order an item by mistake, or simply end up changing their mind. When this occurs you want to be sure the customer is properly refunded or the adjustment is accurately made. If you aren’t paying close enough attention, the vendor may go ahead and ship the order and you will end up with a negative review you can’t get rid of. Be sure your vendor confirms they have made the change with you before you confirm anything with the customer. While they are waiting for confirmation, let them know you have received their request and are working on making the changes for them.
7. Mishandling Damaged or Lost Items — Plus Other Shipping Issues.
When a customer experiences a problem with their order, they are already unsatisfied with you. You want to be prepared to offer them a quick and easy solution, not fuel the fire. Creating a process for managing and handling order problems will assist in making the customer feel accommodated.
8. Return Complications.
If you don’t have a system set up for returns, things can get messy very fast. To avoid this, you and your vendor will need to establish a return policy. Customers will be waiting expectantly for their refund, and being unorganized on this front will not make them happy. They may also need instructions explaining how and where to return the item. Organizing a system for this will save both you and the customer a lot of confusion and irritation.
In conclusion, the customer’s experience is your main concern. Though inventory control and shipping are not your job, you should still be making sure everything is carried out well. With enough planning and proper management, all of these dropshipping mistakes can be avoided and your business will function more smoothly.
Finding The Right Dropshipping Supplier.
Dropshipping suppliers aren’t known for their ability to market themselves to their audience, so finding the right Dropship suppliers can be a difficult task.You need to know in advance that finding dropshipping suppliers for your business could take a while.
Here are a few steps that you can take to ensure that you find the right one:
Once you’ve decided on the products that you would like to sell, research which dropshipping suppliers are out there, and which ones suit your needs best. You might need tochoose whether to go with a domestic or overseas supplier depending on the number of suppliers in your chosen product niche. When you’re selecting suppliers you’ll need to dive deep into raw material sourcing, delivery times, and service potential.
2. Contact Suppliers
Talk to the dropshipping supplier that suits your needs and start a relationship with them. Talking to them allows you to ask questions about the service that they provide. They may even provide you with contact information from some of their current customers so you can get first-hand experience of working with the supplier before committing to them.Maintaining a good relationship with your dropshipping suppliers from the very start means that when you start doing business together you’ll have trust. This will make it easier to get questions answered quickly, and disputes resolved straight away. After all, you’re on the same team.
3. Order Samples from the Supplier
Once you’ve chosen your top two or three suppliers to do business with, order samples from them yourself. Test their quality of service, delivery times, packaging, and other supplier-related questions that you may have so you are entirely happy with the choice you make. Ordering samples from a dropship supplier is an essential part of selecting suppliers as it will allow you to witness first-hand how your customers will experience your store.
4. Order From the Competition
If one of your competitors is using the same supplier as you then you can find out how the supplier packages their products and offers their services, like custom labeling. If your competitor uses other suppliers you can order from them to get an idea of the level to service you need to provide to rank in line with the competition.
5. Find the Right Supplier for Your Business
When you’re selecting suppliers, many can seem great when you look at their reviews and the products that they offer, but once you dig into the business they may not suit your audience. This could be because of the raw materials they use, the way they do business, or how they deal with returns. Be sure to talk to suppliers and get to know how they do business before you commit to working with them. Although you can choose not to use a supplier after issues arise, the damage might have already been done and your brand could have been harmed.
6. Dropshipping Suppliers to Avoid
It is hard to know which dropship suppliers to choose but there are some tell-tale signs that a supplier is to be avoided at all costs. Apart from bad reviews, negative feedback, and cheap quantity products, there are other factors that can anticipate a bad dropshipping supplier.
If a dropship supplier insists on monthly or ongoing fees to do business with them this is a bad sign. Ongoing fees could mean a supplier is part of a directory as opposed to a single supplier.
It is normal to have pre-order fees that increase slightly depending on size or complexity of an order, or decrease with bulk ordering. The research will highlight suppliers that charge higher than normal pre-order fees, which you want to stay away from.
Minimum order size is another thing to keep in mind when choosing a dropship supplier. Most of the time a supplier is willing to charge the minimum order fee and fulfill orders as they come in. This means that if a supplier’s minimum order size is 200, you must pay for the 200 units upfront but the supplier will fulfill the orders as they come from your online store. Suppliers that refuse to do this should be avoided as they are more suited for dropshipping wholesale.
How to Run and Grow Dropshipping Business?
We’ve covered a bunch of information so far on this Ultimate guide to Dropshipping., discussing everything from the fundamentals of dropshipping to the intricacies of picking a niche and running your business. By now, you should have enough of a foundation to confidently get started researching and launching your own dropshipping business.
In time, you have to focus on issues like marketing, SEO,Inventory management ,visibility, product quality, refunding and exchange, long term perspective,customer support, and much more.
Let’s go deep down here:
1. Marketing Your Dropshipping Store.
With a lot of competition out there, the need for effective marketing is very pressing.
Rather than waiting for your target audience to find your dropshipping store, it’s better to market your product in front of them.
You need to do thorough research on the domain area you are trying to cater to and do segmentation of the population based on behavior, psychographics, geography, and demography.
Once you identify the correct segment, you have to concertedly target the population, and carry out various activities, like:
- Customer engagement
- Brand building
- Image building
- Creating and highlighting product value
You can use plenty of channels to market your dropshipping store, including:
Social Media Promotion:
Promote your store on social media channels like Facebook, Instagram, Pinterest, etc. Here’s a list of some of the best social media management apps that can help you promote your dropshipping store effectively. You can also run Ads on social media channels and reach influencers related your niche to get your target audience right into their personal social media feeds.
It is one of the most effective forms of marketing. Email marketing allows you to engage your customers by sending out welcome emails and other forms of follow-up emails. Other than this, you can also keep them in the loop about things like sales, discounts, price changes, etc.
You can also use various email marketing software tools like mailchimp, Aweber, icontact, hubspot email marketing software and many more that can run automated email campaigns and produce in-depth analytics reports.
As mentioned above, you can run paid ad campaigns to promote your dropshipping store directly in your target audience’s feed. From social media ads to Google Ads, there are plenty of options available out there.
2. Focus on Search Engine optimization
SEO stands for search engine optimization, and in simplest terms, the result of good SEO is higher rankings when a person enters related keywords into a search engine. The aim here is to increase organic traffic to your site, i.e. traffic that you acquire without the use of paid advertising. It is an amazing strategy for gaining visibility for your brand and ultimately increasing sales without having to rely so heavily on doling out money for a large marketing budget.
SEO is actually used for several different types of content searches including photo, video, news, and even academic papers. With dropshipping ecommerce on the rise as an increasingly popular business model, knowing how to use SEO correctly can be a crucial element of setting yourself apart from competition.
Improve Your SEO Rankings with Unique Images
For boosting rank in SEO, creating unique image by taking your own original product photos will might take a bit of extra work in the beginning, this will really help you improve your dropshipping SEO rankings. You’ll be able to distinguish your products from other merchants who are selling the same dropshipped items as you while also avoiding duplicate content.
If, for whatever reason, you can’t take your own pictures, download the product images from the data feed. Next, rename them so that they describe the product in the image, and upload them to your database and server.
Keep in mind that the way you name your images is important. If you sell black medium-sized and large black T-shirt , you don’t want to confuse the search engines if they’re both called black T-shirt on your ecommerce site
Add Alt Tags to Your Images
On the topic of images, the next actionable step in this focus on SEO is to make your alt tag reflective of the image name. This is one of the things that many search engines use to decide what an image is about and when to show it to a searcher
Optimize Your Image Titles
Another key to learning how to use SEO successfully is adding image titles and captions. These should be similar or exactly the same as the image name and alt tag if you decide to use them. The title attribute should be included in the title=”insert title here” section of the HTML.
Become a Master of Product Descriptions
The product descriptions you import, if left unchanged, are also considered duplicate content. This is one of the more important things you’ll want to fix. As we have established already, having unique and useful content on your pages will set you apart from your competitors. To improve your dropshipping SEO, consider rewriting both your long and short product descriptions.
Avoid Using Duplicate Content
Duplicate content refers to when two websites have the same content and in few cases the same exact code.
Since dropshippers don’t normally hold inventory, they rely heavily on data feeds provided by other stores, warehouses, and manufacturers. These feeds are the XML feeds and spreadsheets that supply product and inventory to their stores.
Because the content, images, descriptions, and everything else within the feed goes to every site using it, the content isn’t ‘unique.’ Being that it’s not unique, the websites created with them end up with a problems sometimes referred to as ‘duplicate content.’
Therefore, search engines have a hard time knowing which one to rank above the others. Data feed sites rarely achieve good SEO rankings if they use the feed provided (duplicate) content.
Display Your Product Specs
In dropshipping SEO, if your products have specs that come with a data feed, find a unique way to display or talk about the specs rather than merely copy-pasting the information.
3. Maintaining Inventory.
While the dropship business model doesn’t require you to store inventory, it’s a good practice to keep a tab on the inventory of the suppliers’ warehouse since you’ll be selling their products under your brand name.
The good news is that numerous advanced inventory management software and multi-warehouse dropshipping management software tools are available on the internet to help you manage and track the inventory easily.
Warehouse dropshipping management software like Ecomdash has revolutionized the automation software market for dropshippers with multiple order fulfillment centers.
Keeping track of your inventory with a tool like inFlow Inventory can help you:
- Avoid unpleasant surprises after a customer places an order (that could have been avoided if the information was available that it was out of stock)
- Helps you make re-orders in time
- Helps in improved two-way communication with customer
4. Product Exchange And Refund Policy
Product exchange and refund policy is a game changer point of the dropshipping business that can make or break your business.
With the popularity of social media, communication is no longer a challenge. However, in the case of online retailing, positive word-of-mouth marketing can do wonders for your business, but negative word-of-mouth can prove to be detrimental.
If you want to earn the goodwill of your customer, then make sure to take prompt action any time a customer requests for product exchange or refund.
Handling customer complaints and product exchange and refund policies reflect the culture of the company and how much they prioritize their customers.
Providing a high level of satisfaction to customers here can result in improved Customer Lifetime Value (CLV) as well as the generation of new customers.
However, refunding dropshipped products is a bit different than a traditional ecommerce site.
Here, you’ll have to collaborate with the supplier to successfully collect the product from the customer and then issue an exchange or refund.
These points are by no means a comprehensive insight into what you must do to run a dropshipping business. But following them will help you tremendously in setting up and running a successful dropshipping business.
5.Impressive Customer Support.
Rising income levels and massive competition across all forms of businesses, there has been a standardization with respect to the product and service they provide.
One of the differentiating factors is expected to be excellent customer support.
Some of the common platforms you can use to provide exceptional customer service are:
- Social media platforms
- Live chats
A 24/7 help-desk is also an aspect that you should look into as your business continues to mature.
Examples Of Successful Dropshipping Store
There are more than thousand examples of successful online Dropshipping stores for you to take inspiration from.
Each of these businesses carved their own way to success. And, for each of them, success meant different things. Their successes vary from executing excellent store ideas to having high-end clients like Ben Affleck to earning multimillion-dollar investments and six-figure revenues. Hopefully they’ll get you inspired about your own online business.
In Ultimate guide to Dropshipping here is the list of best Dropshipping Stores 2020 to generate ideas for your ecommerce store.
Kylie Jenner is now officially the youngest billionaire. It all happened when she started her online make up brand Kylie Cosmetics on Shopify.
Kylie Cosmetics launched a couple of years ago with a “lip kit,” and now it has been a $900 million worth of makeup.
Maybe most of the people do not find it a story to take inspiration (as she belongs to a family who is famous for being famous). However, from an entrepreneurial mindset, we have to look into the actions that she has done right because running a successful ecommerce business needs much more than being famous.
- She took the consultancy of her mother Kris Jenner (a businessperson) who handles the management of all of her businesses and owns 10% of shares
- Kylie Jenner is famous for her superficial lips that helped her to gain the 190+ million social media followers. The product she introduced “Lip Kit” instantly managed to gather the attention in her community and hit bullseyes in the relevancy area.
Key Take away
- Never hesitate to take the consultancy in anything you do not have the expertise.
- Create an active community then introduce the relevant product.
Started by two University graduates in 2002 in Boston, Massachusetts who didn’t have the luxury of deep pockets like their rivals, Wayfair turned out to be a huge success.
Over time, they understood the dropshipping model, and eventually started making around 25% to 35% profits year-on-year and quickly became one of the most acclaimed dropshippers.
Today, they boast of more than 10 million items in offerings, and over 14000 suppliers. In 2018,.
Key Take away
- They want you to feel like every item is perfect match for your home
- If it’s not the right fit, they will help you get it sorted and have you on your way
GymShark is a UK based fitness brand that manufactures and sells fitness apparel and accessories.
Started in 2012 in the garage of their founder Ban Francis and now it has become of the most famous fitness brand having over 3.3 million followers on Instagram from 131 countries.
What did they do?
GymShark goes with the strategy to make the community and engage with relevant content.
Key Take away
- Do not underestimate the power of blogging – it provides value to your customer.
If you think typography and minimalistic design cannot help in building a brand, then you must take some lessons from Jeff Sheldon, the founder of Ugmonk, an online t-shirt and lifestyle product.
Ugmonk was started as a side hustle for Jeff that became a lifestyle brand over the years By leaning on the community and business connections he made during those first two years, Jeff took Ugmonk from a screen-printing side gig to an eCommerce lifestyle brand doing $5 million in annual revenue.
The moto of the company is to provide high-quality unique items with modern aesthetic designs.
The store is operating in over 60 countries and shipped hundreds and thousands of products so far.
According to Jeff, the manufacturers played the most significant role in the success of Ugmonk. He suggested finding the suppliers who are passionate to work on your project, guide you, and provide the best quality items.
To market the store, he outreached to be featured on blogging websites related to t-shirts and design. That’s where the Ugmonk got recognition and become one of the best Shopify stores to take inspiration.
- Find reliable suppliers and manufacturers to source your product.
- Focus on true fans and Participate in the Community.
Frequently asked Question about Dropshipping
Here are some quick answers to the most frequently asked questions:
Q 1. How does the dropshipping model work?
As already mentioned in this Ultimate guide to Dropshipping., Dropshipping is a business model where you can sell your products online, without having to stock, supply, distribute, or deliver the product yourself.
Dropshipping requires you to act like a mediator between the consumer and the supplier.
It’s simple! The customer puts an order at your store, then you forward that order to the supplier, and finally, the supplier delivers the order straightaway to your customer. Your role as a drop shipper is to focus on marketing and promoting the product, while the supplier fulfills the entire supply chain cycle, including maintaining the inventory, packaging, shipment, etc.
Q 2. What are the benefits of dropshipping?
Dropshipping is a profitable business model. The best part is that you don’t require massive capital or spend money on things like inventory management, warehouse rent, and shop rent, among others.
You can expect a profit margin of 20-30% and a conversion rate of 2-3% as we already read in this Ultimate guide to Dropshipping. These metrics might change according to the industry and situation.
Q 3. How to start and run a dropshipping business?
To start your dropshipping business, you can follow a step-by-step process:
- Decide what type of product(s) you want to sell.
- Partner with a supplier.
- Register with dropshipping sites like Amazon or eBay
- build your own website using Shopify or Woocommerce
- Market your dropshipping store
- Promote using social media platforms and paid ads
Q 4. What is the minimum investment needed to start with dropshipping?
Not much but minimum would be $40 (monthly Shopify charge+domain) since you don’t require any shop, and you won’t hold any stock, you don’t need a substantial investment at the start.
Q 5. Can I sell globally?
Yes, you can. The beauty of dropshipping is that since it’s online, you can target the entire global target. Your customers could be from anywhere in the world.
Q 6. Can I use multiple channels for selling?
Of course, you can. In fact, it’s highly recommended to sell your products across multiple channels, such as eBay, Amazon, etc.
Q 7. What is the profit margin that I can expect from dropshipping?
The margin primarily depends on the cost of the items that you sell, and the volume of items sold. However, on average, you can expect to make a profit of anywhere around 15% to 20%.
Q 8. Do I need to pay taxes?
Taxes are subject to the local governance of the areas that you will deliver to. Usually, you are required to pay taxes for international delivery.
Q 9. How can I promote my website?
There are several ways to promote your website. You can buy advertisements on websites, ecommerce stores, and social media platforms. You can also buy YouTube advertisements, get involved in customer engagement on social media platforms, conduct webinars, and more.
Q 10. How can I select the suppliers?
While choosing your suppliers, look for Shipping policy with fastest delivery service, tech-savvy, has an in-house team of experienced sales representatives, and has the reputation of providing top quality products. Make sure to look at online reviews and rating before selecting suppliers.
Q 11. Should I use my own online dropshipping store, or should I rent someone else’s space?
At the start, you can rent shop space on sites like Amazon, eBay, and Alibaba. But if you are looking to scale-up and build your own brand, it’s better to have your own online store. You have greater control over the user interface and display of your products and can boost your brand image accordingly.
Q 12. Should I work alone or hire assistants?
At the start, when the business is small, you can work alone. However, as the business starts to expand, it will get difficult for you to manage all aspects of the business. Keeping expansion in mind, hiring assistants for specific roles is recommended. You can hire virtual assistants from websites like Upwork, Fiverr, Guru, and more.
This article gives you an in-depth insight into the entire dropshipping business model. As outlined, it is not for someone who is looking to make money very fast and exit.
Sure, dropshipping seems like easy money. You just have to act as a link between the customer and the wholesaler/supplier, and take a cut for yourself. However, when you consider all the cons, challenges, effort, attention, and work, dropshipping doesn’t sound as easy.
You need to stick to your business plan to make it work, and then gain the benefits.
With no initial outlay, rent or cost of inventory, dropshipping can provide the perfect environment for someone to test their business acumen, try out their new products, and gauge the product viability and market scenario.
An excellent option for entry-level entrepreneurs and budget businessmen, dropshipping is also a very safe platform. Even if you fail, you don’t stand to lose a lot of money. On the other hand, the process helps you gain precious business insight and market knowledge.
I hope the article was useful and will spur you on to starting your first dropshipping business.