Starting a dropshipping business is a great first step into entrepreneurship. You’ll be able to sell products to customers, set your own product prices, and market your very own brand. You don’t have to purchase inventory until it is sold to a customer. You can create a successful brand if you are willing to work hard.
If you are still unsure about starting an online business, it might help to know that in 2019, ecommerce sales reached nearly 3.5 trillion USD worldwide. If global statistics on ecommerce are anything to go by, it is a lucrative idea to start an online business.
This article will show you how to start a dropshipping company. We’ll explain what a dropshipping business is, how to find the right dropshipping business ideas, and everything else you need to know to start dropshipping.
What is Dropshipping?
Dropshipping is a business model which you can use to run your store without ever holding any inventory. After you have made a sale, your supplier will ship your products directly to your customer’s door from their warehouse. Your products will be shipped directly to your customer without any additional packaging or storage.
How Does it Works?
Dropshipping is a business model that involves three key players: the manufacturer (you), the retailer (you) as well as the customer.
The manufacturer’s role in a dropshipping business model includes creating products, carrying inventory, shipping products to customers on behalf of the retailer, replacing defective products, and restocking them. They sell products at wholesale prices to the retailer, taking on the risk of unsold inventory.
Dropshipping is where the retailer (you) sells the manufacturer’s products through your website under your brand. These products will be chosen and marketed by you. Plus, you’ll also be responsible for their shipping costs and setting prices that make you a profit.
Dropshipping is a business model where the customer purchases the products directly from the retailer. They can contact the retailer from which they purchased the product if they have any questions.
Dropshipping: How profitable is it?
That’s a dropshipping FAQ we hear quite often. Dropshipping is a great business model because you don’t have to pay shipping or manufacturing costs. Oberlo makes it easy to quickly reap the benefits of dropshipping. You can calculate your profit to ensure you are on the right track to success with our dedicated Profit Margin Tool.
Dropshipping is a good idea
A dropshipping business is a low-risk business model. When it comes to startup costs, you only pay for products that you sell to paying customers. It’s not necessary to be overburdened by the costs of creating products, maintaining inventory, managing unsold inventory, or hiring employees for packing and shipping products. Dropshipping is a great way to get into entrepreneurship. You can set up your own business during the weekends and evenings. Processing orders will take daily effort. Most of the order processing steps can be automated and done in a few clicks. Dropshipping is a great business opportunity. You just have to start.
Dropshipping: Can you make money?
Yes, you can make money through dropshipping, like many of our successful merchants continue to do. Dropshipping allows you to find products with huge profit potential, and set up a business selling them. You will be more motivated to sell products, which means you’ll spend more time on promotion and marketing. This will result in higher profits.
Dropshipping: Is it worth it?
Both yes and no. Dropshipping is well worth the effort and time. You will not reap the benefits of your online business if you don’t put in the time. One of the reasons why people quit dropshipping is the lack of consistency and perseverance. Dropshipping is a time-consuming business. You need to open a store, import the products, determine your pricing strategy and start selling. You can’t expect anything to happen if your efforts aren’t made.
How to find a dropshipping business for sale
You don’t have to start a Shopify dropshipping company from scratch. Instead, you can find dropshipping businesses for sale on Exchange. Exchange is a marketplace for Shopify stores. It’s available to both those looking to invest in a fully functioning business and those who want to jump straight into marketing. You can find a wide range of online shops, including dropshipping businesses, depending on your interests and budget. Exchange is the best place to find dropshipping businesses for sale.
Consider the following factors when buying a store: the price, design, age, popularity, penalties, and type of business.
- The cost: Are you able to pay for pre-made stores and invest in growing them? You need to determine what your budget is. How much are you willing and able to pay for a business’s services? Are there opportunities to negotiate a better deal for your business?
- The store’s design: Does it look professional or just a quick sale? It may be worth looking if the store’s design is professional, clear, and easy to use.
- Age of website: On Exchange, you can choose a dropshipping business based on its age. A website that is older will have a greater chance of being ranked online than one that is younger.
- What amount of money it made: You might see that a store made lots of money. You need to ask the question, “How much did it make at its peak?” This will allow you to determine if dropshipping is on the rise or not.
- Popularity of the niche: It’s unlikely that you want to sell fidget spinners or any other trending products. It could be a good idea to have a store that is in a niche that’s always popular and sells trending products. Stores that focus on broad topics (beauty, for example) are more successful than those that specialize in a particular product (makeup brushes).
- Penalizations: You must double-check that your website has not been penalized before you purchase a dropshipping company. You can use a tool like Is My Website Penalized to determine if a website has been penalized by Google. It may be more difficult to rank for search engines if a store has been punished. Also, ask them if they have banned any Facebook ads.
- Type of Business: If you plan on buying a dropshipping business, you need to select dropshipping on Exchange. You may also need to purchase and keep inventory, which can be more expensive over the long-term, especially if you have unsold inventory.
How to Start a Dropshipping Company: The 6 Step Dropshipping Plan
Step 1 – Choosing a Dropshipping Business Idea
It is important to know what you are selling. It is important to take the time to research and find the best dropshipping ideas. Many people will tell you to choose a niche that you are passionate about. This is only half the truth. It’s about profit and passion, with a bias towards profit. Dropshipping is a profitable business idea. When you are actually making money, it is easier to feel passionate.
At Oberlo, we regularly save you time by creating lists of trending products. Although it’s true that these are the ones that people gravitate towards, it’s also because they have been proven winners. It is absurd to try and enter a niche without any competition. I found that out the hard way. We see top online shops succeed in niches such as fitness, jewelry, beauty and tech. For example, Tim Kock recently created a dropshipping case study where his pineapple business failed but his watch business made nearly $7000 in only 8 weeks, showing that your niche matters. Spend some time exploring other dropshipping business options.
Here are some things to remember if you want to start your own dropshipping company ideas, rather than looking at ours.
- Google Trends can be used to determine if a niche is in an up- or downtrend. But, it is not enough to tell if a niche has any potential. While some niches are on the rise, others don’t have enough searches volume to justify their popularity.
- Use Ubersuggest’s Keyword Tool. What is the keyword search volume? Or its competitiveness? Ubersuggest’s Keyword Tool can help you assess the potential of your dropshipping ideas and provide additional ideas for the future.
- Look at popular websites in your niche. If you visit a fashion retailer’s website, you will see that they organize their shop into trends categories. This will help you identify the trends that you should add to your store. You can also browse a store’s best-selling products to help you find the best products to sell.
- You can check the order volume of products. Oberlo allows you to browse products by order volume. This will help you determine how popular a product is. Dropshipping is an option if the product’s popularity is lower than other products. However, these products might be more recent.
Trends are not the most lucrative dropshipping business ideas. They have their own trends. Denim clothing is one example of a fashion trend. Artificial eyelashes are a popular trend in the beauty niche. Marble phone cases is a trend within the phone case niche. If you are building a long-term company, it is important to keep the trends in mind as products and not as an entire store. So keep that in mind when you’re working on your dropshipping business plan.
Step 2 – Competitor Analysis
After you have determined what you want to sell, you need to learn about your competitors, their products, and how they market their products. This can be done in many different ways.
- To see the top results, enter the name of the product you are trying to sell into Google. You can get a good idea of the competition in your area by looking at the top ten results from Google or any other search engine. Third-party tools can be used to collect data if you sell products in another location than yours. SEM Rush and Ahref can help you find information about search results from different locations around the globe.
- SimilarWeb and Alexa are great tools to search for niche competitors that may not appear in the general search results. These websites will provide a summary of websites that you have searched for, including information about their social media profiles, advertising, audience and traffic information, as well as a list of potential competitors.
- Hunt around on social media. I’ve come up with dropshipping business ideas by doing competitor analysis. I will search Facebook ads for niches and top brands on social media. What number of followers does this person have? What marketing strategies do they use to market their brand? What is their brand’s engagement rate? What can I do to make my brand stand out from the rest? What is it that they are doing right that I should emulate?
- Know your competitors content and what performs better for them through the use of BuzzSumo so you can replicate. This tool will provide insight into which content is most popular on social media so that you can get ideas for blog posts. If they share their blog content, signing up for their newsletters will keep you in the loop.
Step 3 – Find a Supplier
- It can be easy to find a good supplier with Oberlo. Once you have registered on the platform, you can search for products and select suppliers from the results. Oberlo allows you to see ratings, reviews, and information about how long a supplier has been on the platform. This should help you make a decision about which supplier to work with.
- Once you have a list with five to six potential suppliers, you can start the next step. Contact these suppliers to get important information such as minimum order quantities or shipping times.
- You have probably reduced your list of possible suppliers to just two or three. It is a good idea to order a sample product from each supplier and then compare the results. Compare ecommerce shipping times, product quality, and packaging while making a decision, keeping your customer in mind and what they will expect from you when placing an order.
Step 4 – Building a Dropshipping Store
There are a few components to building a dropshipping ecommerce business the right way. Here are some:
- Domain Name – Your domain name matters, especially if building a long-term brand. You can use free business name generator to help you simplify the process. No matter what, always get a domain at.com. If you want your niche as a keyword in the new domain make sure it’s broad like beauty, jewelry, fashion rather than very specific so you don’t need to change your domain name down the road. Avoid using your own name as your domain. You could legally transfer the rights to your name if you sell your business.
- Sign up for Shopify – Shopify is the most comprehensive ecommerce platform on the market. Shopify is constantly updating its features, tools, resources, and apps to make it easy to run your business. Shopify’s gurus are available to help you with any questions or difficulties.
- Shopify Themes – Personally, my go to free theme is Minimal Vintage it’s easy to navigate, clean and overall a great starter theme for those on a tight budget. You can change themes over time. While you are testing out different themes, the best way to start is with free ones. You can start making money once you have some.
- Install Oberlo – Oberlo dropshipping allows you to find products online that you can sell the same day. There are many niches you can find products. Start with 10-25 products. It can be overwhelming to describe product descriptions for more than this. You can contact Oberlo via their blog, social media pages, or Shopify’s support number if you have any questions. You can also check out 50 Ways to Get Sales with Dropshipping to learn the exact strategies and marketing hacks I’ve used on my own online stores to make money with dropshipping.
- Do you need a step-by-step guide? Check out this article to learn how Tomas Slimas launched an online store in only 30 minutes.
Step 5 – Marketing your Dropshipping Business With Everything You Have
Now that you have found the product and created your store, it’s time to start marketing your dropshipping business. This is an important step in your dropshipping plan. So don’t keep making tweaks to your store design and pretend like you’re making improvements. Don’t be afraid to put yourself out there. It’s one of the greatest feelings to get your first sale!
You’re likely on a very tight budget if you’re just starting your business. Some of my best marketing ideas have come from those super frugal moments. These are just a few ideas to get you started.
- Facebook Advertising: I know it can be tempting to blow $500 on Facebook ads. Many entrepreneurs believe they will make it big on their first attempt. I spent $20 on my first ad and lost it all to no conversions. A failed ad made me cry. Truth be told, I didn’t take much risk. I quickly bounced back and created another ad, which was converted at five cents per click. To be able afford to experiment, you need to keep your budget small at the beginning. At this stage, you don’t know which product is your best-selling. To find the best product, create multiple ads. Targeting is key. Create a World ad, but leave out Canada, Australia, United States, and U.K. This will reduce your advertising costs. You can also create ads for each country as your business grows or if you have more money. The United States will also have an ad for the other three countries.
- Retargeting Ads: If you’re really tight on budget, I really like retargeting ads because they keep the cost low. If you have lots of traffic to your store, this ad is great. You might be marketing on Pinterest for free and getting lots of traffic. Perhaps you have a blog post that was published on your site and featured influencers shared it. You can take this free traffic and convert it into a paying customer with a retargeting advertisement. It’s even better than a regular Facebook ad. It’s also much cheaper. This is how I made my first sale in just two days.
- Influencer Marketing: Starting a dropshipping business will require you be a bit scrappy in the beginning. You can offer influencers an affiliate commission if you don’t have the funds. This is a great thing. It was hard to learn that not every niche-specific influencer converts. It’s almost as if you are shooting in the dark. You lower your risk of dropshipping by paying an affiliate fee per sale. It’s up the influencer to convert the sale. You’ll also get pictures that will increase your social proof and help you brand. An influencer with real followers could make more money as an associate than if they were paid a flat fee. This gives them the chance to make more.
- Get free media coverage: Using the free HARO tool you can subscribe to a three times a day email list where reporters reach out to you to get stories for their article. Others may be searching for influencers within a particular niche, while others might be seeking product recommendations. You could make some sales if you have a retargeting campaign in place. Instead of adding a link to your homepage ‘websitenamehere.com’ send it to a product collection or a specific product to create a more targeted focus. You can still add your brand’s name as the name for the hyperlink.
Step 6 – Optimize
After you have invested time in building your brand, website, and marketing, you can begin to analyze the results. It is possible that some marketing activities are more successful than others. You can also compare your pricing to see if there are any ways you could make it more competitive.
Analytics and Google Search Console are two tools that can be used to assess your online traffic. This will ensure that it is not declining. You can set up automatic reports for social media reporting or email marketing using third-party tools. This will remind you to review the information frequently. A quick snapshot of data can help you determine if a campaign works or not.
Overall the most important part of a successful online ecommerce store is to test and optimize in order to increase the revenue that you generate online. This ensures that your website is up to date with best practices, and also keeps you ahead of your competition.
Here you go! We’ve got you covered on how to start a dropshipping business. You can build an online empire by incorporating the information in this article to your online store. You can reach the Oberlo team via social media if you have any questions. Remember, taking the first step in building a dropshipping company is the best way to learn.
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