If you are looking to start an online business, you will have probably seen a number of business options, including dropshipping, pop up in your search results. Right? And you probably would have read that you can make quite a bit of money from dropshipping goods. Well, you are right! But this can depend on which goods you choose to drop ship. So what exactly is dropshipping? How does dropshipping work? And how much money can you make with it? All very good questions you ask. Without further ado, I will answer your questions, plus many more to help you start a successful drop shipping business. It can become reality by following these 7 steps.
Is it Drop Shipping or Dropshipping?
My research to discover the correct spelling was met with confusion. It seems originally it was spelt as two words – drop shipping – but with continued it has become one word – dropshipping. For the purposes of this article, I am using the one word version.
What is Dropshipping?
Officially, dropshipping is a retail ‘fulfilment method’ where an online store doesn’t keep the products it sells in stock. How does that work you ask? Basically the seller finds a stockist and when an order comes in, the seller orders from the stockist who fulfils the order. And not having stock on hand means dropshipping has become a popular option for selling items online – with many making a good living.
How does Dropshipping Actually Work?
To tell you how dropshipping actually works, let’s look at an example – a floral dress. The floral dress I am selling on my website, I can buy for $10 from my supplier. I sell it for $50 on my e-commerce site. When an order comes in, the purchaser pays me $50. I then contact my supplier, pay $10 for the item and provide the supplier with my purchaser’s details. The supplier then packages and ships the floral dress to my purchaser. I have made $40. Sounds pretty good doesn’t it!
Advantages of Dropshipping
There are a number of advantages to selling products via dropshipping.
- Minimal capital is required to launch your online dropshipping business.
- As the entire business runs online, you can manage it from anywhere in the world. Perfect if you are, or aspiring to be, a digital nomad.
- You don’t need to worry about having a physical warehouse and stock, or packaging as your supplier will provide these.
- You can decide what products to sell and switch product lines if those you are selling, aren’t selling.
Disadvantages of Dropshipping
As with everything, there are disadvantages to dropshipping.
- You may have competitors to compete with. How will you get people to buy your products and not your competitors? Good marketing and product descriptions spouting why a customer needs the item, help greatly.
- Your supplier may be out of stock of a particular item, or there might be shipping delays.
Is Dropshipping Products Worth It?
If done right, and you have a product/s that people want, dropshipping can be extremely worth it. How can you tell which products might sell? If I had a crystal ball, I could answer this. Suppliers such as AliExpress have extensive data on what products sell and those that don’t, and every now and then, they release a list of which niches are selling. As with everything though, there are risks, but with dropshipping I have found them to be minimal. In saying minimal, I mean the amount of money I invested to set up my e-commerce store. It was essentially not much money. My time was minimal – though I did take a while to make decisions during the setting up process. But the profit I have made, so far, has far outweighed my initial investment.
How to Start a Dropshipping Business Step-By-Step
Here are the major steps to take to start a dropshipping business.
Step 1: Choose Your Dropshipping Niche
When you visit different online stores you will notice that most of them specialise in one type of product. For instance, female clothes, camping equipment, travel accessories, electrical equipment, bags, t-shirts, to name a few. When you specialise in one niche, visitors to your site will believe you are an expert in your area. This is what you want – to gain their confidence and then their dollars. Of course, you could sell all kinds of products on your new store, by putting items into categories and watching and analysing which products sell. However, it is often better to hone in on a particular niche and if they sell, fantastic. You could always add more products, if not you can change niches.
Things to consider when choosing your niche include choosing products with attractive profit margins. You could sell sporks for $5 that you can purchase from your supplier for $1, giving you a profit of $4, but you will need to sell a lot of sporks to make a good living. If you sell products with high profit margins, for instance, a picnic set for $50 that you can buy from your supplier for $10, your profit is $40. One of your aims as a dropshipper is to sell products to make the most profit with least effort. Also, being able to get your goods to the purchaser should be factored into your profit. The quicker you can get the goods to them, the better. This can help with repeat purchasers purchasing items regularly from you – and recommending your business to their friends and family. Express shipping options, such as ePacket, should therefore be considered and the cost factored in.
There are many niches out there so I suggest choosing a niche that you are passionate about. If you like to travel, why not sell travel gear? If you like clothes, why not sell clothes, but niche it down to specific clothes at first, such as floral dresses or t-shirts. If you like electronic goods why not sell them?
Step 2: Choose Dropshipping Products and Suppliers
Once you have chosen your niche, you need to find suppliers to supply products. To find suppliers, you will need to research to find the best supplier. I strongly suggest the way to do this is to google the products you would like to sell and see who sells them. This be can very time consuming, but worth your while when you find the right supplier.
Another way to find products and suppliers is to join large online marketplaces. These include, but are not limited to:
AliExpress is geared for Dropshipping and has plenty of information on its website advising how to do it, and even provides updates of popular niches that are selling at the time. It offers goods from hundreds of thousands of China-based manufacturers.
SaleHoo is an organisation of suppliers from around the world.
Spocket is an app designed for integration for online dropshipping stores with suppliers from Europe and the USA.
Printful is a print-on-demand company allowing customisation of designs for clothing, particularly t-shirts and hoodies.
Step 3: Decide on your Dropshipping Store Platform
Now you know your niche, have chosen products and suppliers, it is time to build your online e-commerce website to start dropshipping. Now if you are not a techie, like me, there are online platforms that are easy to set up and use. And most of them allow you to easily integrate products from your suppliers, such as AliExpress. You will need to do a little research here to decide which platform to use. Platforms include, but are not limited to:
Wix – best for small online stores
Shopify – best for larger online stores
Squarespace – best value for money
You could start a store on platforms such as eBay, Facebook or Amazon. Another option is to have a website and use Woocommerce.
If you are confused after doing your research for the right e-commerce platform, and feel you are not ‘techie’ enough to set it up, consider finding someone to do it for you. There are plenty of great e-commerce store builders out there. You could find a local website designer to help you or try platforms such as Fivver. Fivver can link you to the appropriate tech person.
Step 4: Decide on a Name
While choosing your store platform, consider a name for your store. Ensure the name is available and not in use by someone else. Ensure the name is available not only for your store name, but is available to register as a business name and is available on social media platforms. You don’t want to be confused with any other business. Maybe have a logo designed. Again, you could find someone on Fivver to design one for you. Get these legalities sorted before launching your store.
Step 5: Setting up your Store
You have your niche, suppliers, the appropriate store platform and you are ready to set up your store and add products. So what do you do first? After following the instructions from your platform to upload products to your store, and before you go live, I would ensure you have a number of static pages. These include:
- ‘Contact Us’. Customers often have questions which they want answered before and after their purchase. Make it easy for them to contact you. Have an email and chat system in place. Maybe include a phone number. However, as your store is online, and people from anywhere in the world can buy, you may want to keep email as your main contact method.
- ‘About Us’. You will be amazed at how many times people read the About Us section on a website. When money is involved, people like to know who they are buying from. Give visitors to your site the information they would want to know – about you and your brand, the history behind your brand, the people behind you, and most importantly information about your product.
- ‘FAQ’. Customers can ask the same questions over and over again, so have a frequently asked questions (FAQ) page to help your customers get the answers straight away. Having the answers on your store will help to reduce enquiries and save time answering them.
- ’Shipping’. When you buy something online you will want to know how long until it arrives. Therefore, information about how long it takes to ship the item, the cost involved and whether you supply a tracking number is very important to your customers.
- ‘Refunds and Returns’. People don’t expect to be disappointed with their purchase, but if they are and they want to return it, you will need a refund and return policy in place. Advise people what your policy is. Yes, you do take returns and provide refunds or whether you exchange the product or provide a credit note.
- ‘Product pages’. Once you have the above pages all set up, sort out your product pages. Depending on the number of products you may want to sort the products into categories. For instance, if you are selling dresses, you might want to have categories of summer dresses, wool dresses, formal dresses, etc. – I think you get the drift.
- ‘Order Page’. Once customers have chosen their product to purchase you need to send them directly to an order page where they can put in their shipping details and payment details.
These are the major pages you need for your store. Once you have them, run a test. Make a purchase to ensure everything is working the way you want it to. Then launch your store into the marketplace.
Step 6: Promote Your Dropshipping Store
Having a store doesn’t mean people will be able to find it. You will need to promote it. Here are some ways to do that:
- Have good SEO (Search Engine Optimisation) for your store. SEO is about using keywords that potential visitors to your site might search for to find what they are looking for. For instance, if I am looking for a summer floral dress to wear to a party. I might search for ‘pink summer floral dress’ – these are the keywords you should use.
- Social Media. Social media is great to promote your products. Maybe concentrate on one social media platform at a time and monitor the results. The best platforms seem to be Facebook, Pinterest, Instagram and Twitter.
- Blogs. Provide additional information about your products in a blog post. You could write product reviews which hopefully will become buying guides for potential customers. For instance, write a buying guide on ‘the best summer floral dresses’ where you could review 5 or so dresses that all have a ‘buy now’ link taking customers to the order and payment form.
- Email Marketing. Definitely build an email list where you can send out helpful articles about products or information on upcoming sales. Automate the emails with email marketing platforms such as MailChimp or Mailerite.
- Paid Ads. If you have the budget you could consider paid ads on platforms such as Facebook and/or Google Adwords.
- Word of Mouth. Get the word out there by telling family and friends to share to others about your new venture. Any promotion helps.
Step 7: Monitor, Analyse and Adjust your Dropshipping Business
Now your dropshipping business is up and running, you should be monitoring, analysing and adjusting your dropshipping business. This is where a spreadsheet can come in handy. Monitor your sales and see which product/s are selling and which aren’t. Those that aren’t could be deleted from your range and new products replace them. For those products that are selling, similar products could be introduced. And don’t forget to promote them.
These are the 7 basic steps to setting up a dropshipping business. Hopefully, in the not to distant future, you will be making plenty of money from your new venture. I would love to hear about your success in the comments below.
Sharyn McCullum has travelled all her life thanks to her dad who worked for an airline. She loves travelling to different countries to immerse herself in the culture and in particular, enjoy the food. She currently calls Melbourne, Australia home.