Many young businessmen and even well-performing companies are starting dropshipping businesses for various reasons. According to Yaguara.co around 27% of businesses have embraced it as their primary work model.
This is mainly because it is easy to start and saves you from the hassles of owning a physical store. You will be surprised to know that the global dropshipping market valued at around $225.99 billion in 2022.
As of 2024, more than 33% of online stores are switching to this business model. If you also want to get started with it, this blog post will help you. Today, we will discuss everything you must know to start your business from scratch so that you can also make money by Dropshipping Business.
But first, let us learn a few things about it.
It is a retail business based on a fulfillment method. Here, the seller does not need to stock the products, rather, they have to purchase them from a third party and then ship them directly to the customer.
In dropshipping, you are not involved in the production but earn a commission by selling them at an increased price. This method of business is low-risk and inspires entrepreneurs with new opportunities.
Even if you do not have money for huge investments and start-ups, you can get started with this business model.
Given that, here is how it works:-
In a nutshell, a drop-shipping business is an eCommerce business model that allows sellers to sell products without keeping an inventory. Given that, here is how it works:-
- Customers place orders with retailers.
- The retailer processes the order and passes it on to the supplier.
- The supplier packages the order in their warehouse and ships it directly to the customer.
Mainly there are two common approaches to this:-
- The first is to seek more wholesale suppliers located in your region. You can do this by using a supplier database. Some of the most popular options include AliExpress, SaleHoo, and Worldwide Brands, etc.
- Secondly, you can use tools and apps that connect you and your store to other suppliers. Some of the most popular websites for this are DSers, ShipStation, Convictional, ShipRocket, Shippo, and Spocket.
Now, let us see how you can start this business if you have no money:-
You can start by following these steps:-
1. Do Product Research
To start a dropshipping business, you should conduct proper product research. Look for products that are high in demand and have low competition in the market.
Furthermore, dealing with trendy products can help grow your business faster.
2. Select A Reliable Drop-shipping Supplier
Now, you have to find a reliable supplier to ensure smooth business flow and sales.
One thing you should know is that payment to suppliers is only made after the customers have paid, putting extra responsibility on the supplier for stocking, packing, and shipping your products. This links to your business reputation as well.
3. Choose The Right E-commerce Platform
Moving forward, the next thing you have to do is choose the right e-commerce platform.
For this, you should look for several factors, such as the audience, features, controls, popularity, and more. These qualities will ensure that you follow smooth operations and secure a decent profit.
Generally, an ideal platform provides free plans, free downloads, or free trials for you to explore and test.
Given that, here are some options that you may consider:-
4. Create And Set Up A Store
Now, you have to create a website and set up your online store!
Firstly, you have to find a suitable domain name, followed by installing marketing and sales plugins and then launching the website.
Some popular eCommerce platforms which provide free domains and themes are:-
- Square Online
- Big Cartel
Given that, here is how you can set up your own online store:-
- Create a custom domain
You must come up with a custom domain name that displays and justifies your brand. Furthermore, it will make your business look more professional and unique.
- Add pages
Adding attractive and informative web pages can help you attract more customers. They generally include–the homepage, collection page, product page, and blog page.
- Pick a stunning theme
You should choose a theme that provides a modern layout, stunning colors, attractive font styles, and more.
You may check out ThemeForest and choose among thousands of dropshipping website themes.
- Use a dropshipping app
At last, you have to merge your website with a drop-shipping app to help you elevate your business.
5. Import Products To Your Store
The next step is to import products that are high in demand and low in competition. This part requires the most analysis and research.
You can import products to your website in two ways, namely:-
Manually importing is the traditional method that requires you to put in more effort.
Here, you have to search for products, copy their details, then paste them on the website. Though it is time-consuming, you get control over every product data.
It is the modern way of adding products to your website. Various tools, such as AutoDS, are available to search for products from different suppliers. After this, products are automatically added to the online store.
6. Promote And Market Your Business
Business promotion, branding, and social media–all play an important role in marketing your business. Launching a fantastic ad campaign can help you reach more customers and drive profit.
Note: You may follow similar steps to start dropshipping on Shopify.
Finding the right products requires extensive research. If you do not have a fixed niche! You can search for trending products by analyzing the best sellers on your supplier’s website.
Furthermore, you may visit the following websites to find the best products:-
- AutoDS winning products hub
- Sell The Trend
- Niche Scraper
- AliExpress Dropshipping Center
There are many online marketplaces where you can look for a supplier. However, you must contact the one with good ratings and reviews to prevent any complexities later on. Given that, look for the following while searching for a supplier:-
- Good Shipping, Return & Payment Policies
- Worldwide Warehouses
- Product Range
- Product Quality
- Positive Reviews
- Customer Service
Here are some websites where you can find experienced and reliable partners:-
- Sunrise Wholesale
- Inventory Source
- Worldwide Brands
You must use proper marketing strategies for scaling your store. For this, use proper strategies, services, and tools. Given that, here is what you can do:-
- Add customer reviews to your website
- Build strategies for retargeting customers
- Focus on content marketing
- Use email advertising/marketing
- Use social media promotions
- Run a giveaway
- Consider video marketing
Some services for marketing your store are:-
- PPC ads
- Email marketing
- Influencer marketing
- TikTok videos
Generally, the profit margin for a dropshipping business ranges from 15% to 20%. However, this is highly dependable based on the products’ average cost and your chosen field.
Dropshippers can expect around $1,000 and $5,000 per month. For example, if someone is shipping one single item for $10, then they may earn at least $3 commission–resulting in 20% to 30% profit per sale.
The remaining amount goes to the supplier, shipping fees, host websites, and marketing.
Amazon dropshipping or Fulfillment by Amazon (FBA) is a service that offers fast and reliable order fulfillment to every seller.
Here, Amazon looks after the storage, picking, loading, and shipping of the products. This allows sellers to look after other business aspects.
This fully automated service is a part of Amazon’s Supply Chain by Amazon. Through this, sellers can send products to Amazon’s global network of fulfillment centers.
Furthermore, you can use FBA while even connecting your store to eCommerce platforms other than Amazon.
Sellers may even upgrade to prime services and offer their customers free two-day shipping.
Given that, here is how sellers can use FBA:-
- Sign up for an Amazon selling account
- Select a selling plan
- Register the account in FBA
- Create new listings or restore existing listings to FBA
To register for FBA, sellers can:
- Visit the Gear icon in Seller Central
- Click on Account info
To help you be successful in this business model, here are some tips:-
1. Import Best Seller Products
Dropshipping is a safe business model that protects you from many financial losses, such as expenses of a physical store, rent, stock, and more.
However, you should choose and import the best seller products in the market with high demand and low competition. For this, invest time in product research across different platforms and determine how they are doing in the market.
2. Invest In Brand Promotion
Digital Marketing improves brand awareness, drives more traffic, increases sales, and ultimately generates more profit.
For this, you can look for paid subscription tools that can help you in multiple areas–such as analysis, keyword research, marketing, and more.
3. Interact With Your Customers
Nobody wishes to purchase from a website or brand that does not respond. And it is natural and obvious!
If you do not reply or connect with your customers, they will start cutting you off. This can negatively impact your business–resulting in low customer count. Furthermore, this can give your company a bad online reputation.
Interact with your customers by providing shopper services, feedback, responses, social media, etc.
4. Automate Your Dropshipping Store
Automation is probably the best way through which you can scale your store. It is a game changer for beginners as it automates most of the work, reduces errors, and frees up time.
Given that, here are some tools that you can use:-
- Automizely dropshipping app
- Inventory Source
You should have some basic skills for starting this business with no to low investment:-
Sales Focused Copywriting Skills
Copywriting and content writing skills are necessary for writing product descriptions, introductions, web page content, and more. Good quality content can persuade visitors to your website and convert them into loyal customers.
Content Marketing Skills and SEO
For successful brand promotion, Content Marketing Skills and SEO are essential. A properly strategized plan can attract, grow, and engage your target audience–ultimately increasing sales.
Focus on creating high-quality content, including blog posts, videos, infographics, and more, to get positive responses on your website.
Basic Data Analysis Skills
If you have basic data analysis skills and knowledge, you can track website performance, measure campaign results, understand your brand position, and make informed decisions.
Various tools such as SEMrush, Ahref, Moz Pro, and more are available in the market that provide advanced features.
Basic Web Design Skills
Web design skills are necessary to craft an easy-to-navigate website. For this, you should choose layout and designs optimized for conversion.
If your website is clean, visually appealing, with images, clears calls to action, and delivers easy-to-understand messages, it can positively impact your dropshipping business.
Basic Graphic Design Skills
Basic knowledge about graphic design can help you choose the best for your website.
You can learn various tools such as Canva or Adobe Photoshop for designing images.
A report by cloudways.com revealed that up to 90% of dropshipping businesses fail because they lack focus on adding value for the customers. Given that, here are some alternatives to this business model:-
- Affiliate marketing
- White labeling or private labeling
- Print on demand
- In-house fulfillment
- Sell digital products
- Sell handcrafted goods
- Private label
- Online freelancing
Now, at last, let us quickly discuss some of its pros and cons:-
1. Save time and effort
Dropshipping is best for beginners as it does not require you to buy or rent a space, set up a real store, hire employees, and more.
Moreover, you can keep track of your sales by using automation tools. You can connect with vendors through Skype, Viber, or email.
2. Minimize risks
Drop-shipping saves you from stocking a warehouse, which costs a lot of money and investment. Not to forget, maintaining a warehouse increases the risk of debt and loans.
3. Start with low-cost
One of the major benefits of this business model is that you can start it with no to low investment.
Furthermore, in dropshipping, you only pay suppliers after the customers have made the payment from their end. This saves you from shipping as well as packaging charges.
1. Depends on suppliers
Dropshipping is highly dependent on suppliers (that is why you have to choose a reliable one).
They are responsible for product storage, packaging, and delivery. However, drop shippers cannot inspect the items before customers receive them. Still, they have to take full responsibility for any default in the product.
2. Limited Improvement in product quality
Since drop-shippers are not the ones handling products directly, it limits their ability to improve and personalize the quality of the products.
Furthermore, it limits the creation of any unique selling features (USPs).
3. Highly Competitive
The dropshipping industry has become highly competitive over the last few years.
The latest report given by Google Trends Statics reveals that dropshipping searches have tripled over the last 5 years or so.
Dropshipping has become very popular over the last few years. This is because it is easy to set up and saves you from the extra expenses of maintaining a warehouse, stocking, inventory, and more.
There are many platforms, such as Fulfillment by Amazon (FBA) and Shopify, where you can kickstart your journey. So, save your time and effort and start this business model today.
You Can Also Read:
- What Is Dropshipping?
Dropshipping is a retail business model where the seller or a drop shipper does not stock the product but rather purchases it from a third party and then ships it directly to the customer.
- How To Start Dropshipping?
You can start this business model by following these steps:-
- Product Research
- Select A Reliable Dropshipping Supplier
- Choose The Right E-commerce Platform
- Create And Set Up A Store
- Import Products To Your Store
- Promote And Market Your Business
- How Does Dropshipping Work?
The dropshipping business is based on a relationship between a customer-facing store and the supplier of any product. Here, the customer places an order with you (drop shipper), which you get delivered by the supplier.
- How Profitable Is Dropshipping?
Dropshipping is highly dependent on various factors, including the type of product, popularity of the eCommerce platform, nature of the supplier, and more. The owner of IdleShopper, Noah Wickham, said that his store generates an average of 40% gross profit and 20% net profit.