Dropshipping – Here’s How to Get Started and Be Profitable

What is Drop Shipping?

The number of digital buyers is expected to increase to 2.41 billion by 2021, from 1.52 billion in 2016. Consequently, retail e-commerce sales will also increase. If you want to start an online business, now is the time.

But a lot of aspiring e-commerce entrepreneurs can't start a business because of the lack of resources. They don't have the capital, labor, warehouse, and shipping capabilities. If you're one of them, you should try dropshipping. In this article, we'll take a look at what is dropshipping business, along with a how-to dropshipping guide to help you get started.

Dropshipping is a form of retail business where a seller accepts customer orders but doesn't own, store, or ship the products. However, the answer to what is dropshipping can be a bit tricky.

Let's understand this concept with a quick example. Imagine that you're a salesperson specializing in selling furniture. You want to start your own furniture business, but you don't have the resources. You don't have the labor and capital to manufacture furniture. And you don't have the space to store your products. So, instead of selling your furniture, you partner with other furniture sellers. You agree to market and sell their products, and in return, they'll give you a cut from their profits.

Remember that you'll be responsible for the entire buyer's journey ranging from awareness to purchase. You'll invest all the time and resources required to market and advertise the products. When a consumer agrees to buy, you'll inform the original seller to ship the product to the customer. So, instead of manufacturing, owning, and shipping the product, you only do the customer acquisition part. Once the customer is ready to purchase, the original seller takes over. When this process happens online, we call it dropshipping.

Dropshipping works similarly to affiliate marketing, with only one difference...

How Does Drop Shipping Work?

Let's go back to the furniture example. You want to start a furniture e-commerce store, but you don't have the resources – capital, labor, warehouse, etc. So, you find an e-commerce store that sells furniture online.

You set up your store, list the products, and start marketing the products. When a customer purchases a product from your store, the original seller will receive the information. The seller will fulfill the order, and you'll receive your commission. You'll be responsible for customer acquisition, marketing, advertising, and whatever else it takes to turn a prospect into a customer.

All in all, you're selling for someone else, and in return, the seller will give you a cut from their profits. Dropshipping works similarly to affiliate marketing, with only one difference. In dropshipping, you can influence the product price, and thus, your profits. In affiliate marketing, you have to sell at a specified price.

Now that you've understood what is dropshipping let's talk about how to start a dropshipping business.

How to Start Dropshipping

Here's a quick how-to dropshipping guide to setting up your dropshipping store.

Pick a Niche

First things first, pick a niche for your dropshipping business. You can also start a general store if you want, but niche-based stores have historically been more successful. You can pick any niche you want. It can be fashion, electronics, home decor, jewelry, etc. Picking the right niche is important if you want to build a sustainable business out of your store. When you choose a niche and become an authority in it, you can create a drop-shipping brand.

When selecting a niche, keep an eye on the demand and profits. Ideally, product categories in high demand have low profits, and vice versa. Besides, popular niches are also very competitive. So, find a balance between competition and popularity.

A report from Oberlo suggested that Women’s Clothing and Accessories has been the most popular dropshipping niche, with an average ranking of 1.7.

Competitor Dropshipping Analysis

The second step is to conduct a thorough competitor analysis. Many drop shippers make the mistake of selecting a niche or product with no competition. That's a red flag because zero competition means the product isn't in any demand.

Competition is not a bad thing. It's healthy, provided that you know how to utilize it. When starting a dropshipping business, create a list of competitors.

Don't mention giants like Amazon or Walmart in your list, as it's impossible to compete with them. Look for smaller stores and keep an eye on them. See what products they sell and what marketing strategies they use.

Select a Supplier

There are a plethora of suppliers out there. But partnering with the wrong supplier can be detrimental for your dropshipping business. Besides, most suppliers operate from overseas locations, so communicating with them is not easy.

It is, therefore, essential to do proper research before committing to a supplier. Alibaba, Spocket, SaleHoo, and Doba are some of the renowned dropshipping suppliers.

Build Your Website

Now, it's time to take your dropshipping business live. Develop your e-commerce drop shipping website. Platforms like Shopify allow you to create an e-commerce drop shipping website without any prerequisite technical skills. But if you want your store to look more professional and unique, you can hire a Shopify developer.

Besides, setting up a Shopify store also includes listing products, adding payment methods, product pages, and more. So, it's a wiser move to hire an e-commerce development company if you're not a developer.

Develop a Customer Acquisition Plan

You may have a beautiful website, high-demand products, and the best supplier in the world. But if you don't have customers, there's no point in any of it. So, one of the most crucial how to drop shipping steps is to create a customer acquisition plan. You can do so in several ways.

You can start an ad campaign on Facebook or Google. Google usually has expensive ad bids, so Facebook is likely a more affordable option. You can also start a blog, do SEO, and generate organic traffic. You can also collect email addresses and send product offers via email. In all, there's no right or wrong way of acquiring customers. Try different methods and stick to what works for you.

Dropshipping is an exciting business. You don't need any product or inventory. You can run a business and earn profits by selling someone else's products. However, dropshipping is not easy to start. The number of dropshipping stores is on the rise, and so is the competition. It is a serious business that requires strategy, planning, effort, and patience.