Let us find out how to start a dropshipping business in just six steps. Dropshipping is an easier way to handle the order fulfilment for your online store. Also, now it has become extremely popular with all-new DIY shopping cart platforms, payment gateways, and easy-to-use social media advertisements.
The idea of this blog post is to provide an overview of how to start a dropshipping business. If you are interested in learning about dropshipping in details, check this article: What is dropshipping – The complete guide.
How to Start a Dropshipping Business
- Check your capacity to start a business
- Select the best niche for dropshipping
- Find dropshipping suppliers
- Create an online store
- Price your products right
- Start marketing
First things first, is it a good idea to start a dropshipping business?
Starting a dropshipping business is easy! Everyone can do that. However, running a successful dropshipping business is not that easy.
That is why more than 90% of the people who start doing dropshipping fails.
Dropshipping is not saturated
I must say, there is nothing wrong with dropshipping. It is a damn good business model. It is not saturated, and it will never be. There are around 4 billion internet users and 20 million eCommerce stores on the internet. However, out of this 20 million eCommerce stores, less than 700,000 are making more than $1000 in annual sales.
That means, less than 700,000 eCommerce stores are selling to this marketplace with 4 billion users. It is not saturated!
Then, why people can’t make money from dropshipping
Yes, we are talking about the remaining 19.3 million eCommerce stores? They are not making $1000 a year. That is why I told that starting a dropshipping business is easy. However, running a successful dropshipping store is not as easy as you may think.
The most common reason for these failures is the lack of knowledge in doing online business in the right way. That is why, in this blog post, we are not just focusing on how to start a dropshipping business, but we are also going to learn how to run a successful online business.
The first step of starting a dropshipping business –
Check your capacity to start a business
Nowadays you can start a dropshipping business with around $100 initial investment.
The $100 budget is including a basic marketing budget, and assuming that you have basic computer and internet skills. Needless to say, if you can spend more, you can do better.
When I say “capacity of starting a business,” it is not all about money. I know finding $100 to start a dropshipping business is not that hard. By the way, if you don’t know how to make $100 on the internet, check this post about how to make money online for free.
Check your legal background to start a dropshipping business
Office workers, stay-at-home parents, students, and a lot of other people can start a dropshipping company to make a passive income or a full-time income. However, before you start, you have to do some background checking.
If you are a full-time employee, sometimes your company rules can restrict you from involving with any other businesses. If you are an international student, sometimes your earnings can be limited by law. Or else, depending on the country of your residence, you might have to register any business that you are involved in. Likewise, before you start a Dropshipping business, it is better to check with a legal adviser about your legal capacity to start a new business.
Even if it is not required by law to register your business, it is better if you can register your business anyway. Having a business registration can be helpful in many different ways. For example, if you use Paypal as your payment gateway (the method of accepting payments), you need to create a merchant account for PayPal; And, depending on your country of residence, PayPal merchant account may require a valid business registration. Also, having a business registration can help you to find good dropshipping suppliers too. More about that later.
How much time can you allocate for starting a new business?
Especially if you are a full-time employee, who is already working overtime and find it is challenging to spare time on other things, you might have to reconsider your decision of starting a dropshipping business.
If you wouldn’t be able to provide enough attention and care for your new business, you will end up being stressed out and lost. In the beginning, you would need to spend around four hours a day setting up everything. Once you get your business running, you can use around one to two hours a day for operations. However, as your business grows, you would have to spend more and more time to handle the operations. Anyway, if you get a good run, you can hire someone to support you.
The second step of starting a dropshipping business –
Select the best niche for dropshipping
Do we really need a niche? Can’t we sell just anything? No, you can’t!
Going with a niche is the best way to get started with your dropshipping store. If you have a niche, it is easier for you to market your products. For example, if you are selling niche products, you can easily use cross-selling strategies to sell more in dropshipping.
Selecting a niche to start a Dropshipping business is the most crucial and hardest step you will ever come across. Most new Dropshipping start-ups do not research on the niche before they start. Most of the time, they just get inspired by a Facebook ad from another dropshipping seller, and try to copy and get into the same niche. This is not the correct way of selecting a sustainable niche.
A right niche has some different qualities,
- A good trend of demand.
- The right size (envelop to shoebox packing) and price ($25-$50).
- An excellent potential profit margin.
- Optimum values for the average CPC (cost per click) and SEO difficulty.
- It can provide a solution for popular customer’s pain points.
- Should have good marketing opportunities.
- There should be enough room for value addition
- Availability of suppliers
For further reading, check this post about how to select the best niche for dropshipping.
The third step of starting a dropshipping business –
Find dropshipping suppliers
After selecting a niche for dropshipping, now you have to find the dropshipping suppliers for your products.
Today the dropshipping business model is very popular among many wholesale suppliers around the world. Dropshipping is a win-win situation for both wholesale suppliers and online retail store owners. So, many wholesale suppliers around the globe support dropshipping, and they even provide technology to assist in seamless order fulfillment.
Start your dropshipping business with AliExpress or Oberlo
When you first start a dropshipping business, using Aliexpress or Oberlo (only for Shopify) can be the easiest and beginner-friendly method of selecting suppliers for dropshipping. There are plenty of guides and tools that support this process of sourcing your products from AliExpress. With that support, you can easily learn inside-out about dropshipping.
If you are going to start dropshipping with AliExpress, here is the best guide to learn dropshipping with AliExpress.
However, as your business grows, you need to find wholesale suppliers with better prices. Working with real wholesale suppliers let you create long-term business relationships. Finding wholesale suppliers can be a little bit hard process. However, we have created an excellent guide on how to find dropshipping suppliers.
The fourth step of starting a dropshipping business –
Create an online store
Today, creating an eCommerce store is simple than ordering a fancy coffee. You don’t need to have ninja skills in coding or web development knowledge to start a dropshipping store.
Do it yourself
Now there is a lot of beginner-friendly shopping cart platforms, with one-click deployments and integration methods. For example, if you need to integrate your shopping site with your Facebook page, it is just a matter of login to your Facebook page through the shopping cart platform. So it will automatically sync and update the Facebook page with every change you made on your shopping site.
Since creating your shopping site for dropshipping is so simple, we strongly advise you to do it all yourself. In that way, you can understand every ins and outs of site development. So, when you need to do a small change (you would have to do thousands of variations on the go), you can handle the changes by you, without spending much money on an outsourced developer.
Follow this post on how to start an online store. There we discuss in detail about the best way to build your own eCommerce store.
Find freelancers if necessary
Having a proper brand-identity for your eCommerce site is an essential part of building trust among your customers. Without building their confidence, you won’t be able to get any sales. Also, the graphics elements like your shop logo play a significant role in creating a better brand identity.
So, when it comes to creating graphics elements, like your shop logo, it is better to outsource and hire a freelancer who can do it professionally. However, then again, you don’t have to go for a $1000 logo at the beginning. You will be able to find a lot of good logo designers under $10 on freelancing platforms.
The fifth step of starting a dropshipping business –
Price your products right
Nowadays, the price is used as a marketing tool!
Most of the new dropshipping start-ups underestimate the power of pricing strategies for their products. So, they end-up underselling or overselling their dropshipping products.
When you undersell, you are losing money due to the unused potential profit margin. In the same way, if you oversell, you will lose customers due to high prices. So, it is essential to define the optimum price for products.
Do you know? The purpose of 2/3 of the people who are visiting an e-commerce store is to compare prices.
If you need to learn more, read this comprehensive article on how to price Dropshipping products.
Pricing is not just about covering your expenses and having a margin anymore. There are a lot of pricing strategies available for Dropshipping businesses.
- The traditional cost-based pricing
- Competition based pricing
- Customer-based pricing
- Psychological pricing
- FREE plus shipping
- Bundle pricing
- Cutthroat pricing
The use of these pricing strategies depends on the niche you are in. Sometimes you may need to combine different approaches to create a good game plan.
The final step of starting a dropshipping business –
The marketing is THE most essential element for any successful business. Dropshipping is a competitive industry. So, creating a proper online marketing strategy can help you to reach your customers.
When it comes to marketing, you can get better results by paying more. However, as a new business start-up, it is better to start small and grow. Then you get a chance to test your niche and gameplan without spending a lot of money.
Understand your audience
The first step of marketing is to understand your audience. We cannot, and we do not sell to everyone. We have to select a specific market segment, and a particular customer base to target our marketing campaigns. So, identifying and selecting your target market and the audience should be your first of building a successful online marketing strategy.
Use social media for marketing
Social media is getting popular every day. Also, almost all social networks can offer excellent advertising opportunities for your dropshipping business. However, depending on your niche, you might need to select the best social media channel for your business. Check this post about the six best social media networks for eCommerce advertising, and choose an excellent social media platform to build your marketing campaign.
Stay updated about the modern digital marketing trends
Digital marketing is a highly dynamic industry. So, make sure to follow a great community or a forum to stay updated about the modern digital marketing trends. You can read this post on Digital marketing trends for the future and get a good start.
Are you ready to start a dropshipping business?
Excellent! Anyway, remember, 90% of the new dropshipping sellers fail. However, as an EcommerceBuff reader, you should never fall into that group.
So, before you go ahead and start a dropshipping business, read a lot about online marketing. This knowledge about online marketing tactics will allow you to start a successful dropshipping business. We have plenty of blog posts explaining different segments of online marketing strategies. So, make sure to read them and learn.
I hope you will find this article really helpful. If yes, please share this and let us spread the word!