Is dropshipping a good way to start an online business?
I have been running a couple of dropshipping stores for years, and here are the “hard to swallow” facts that you should know before starting a dropshipping business.
- You cannot start a dropshipping business for free
- It is not a get-rich-quick scheme
- The profit margins of dropshipping businesses are low
- 90% of the success of your business depends on marketing
- Dropshipping is an online order fulfillment method only
If you can swallow these facts, I will tell you how to start a dropshipping business without getting stuck.
Yes, you will be able to build a solid side-income by starting a dropshipping business, as I do. And, yes, you may be able to leave your full-time job one day too.
Without further ado, let us start learning how to start a dropshipping business.
How to start a dropshipping business
Follow these steps to start a successful dropshipping business in 2021. After all, dropshipping is a good way to start an online business. Just go through the list, and we will get into details down below.
1. Search and select the best niche to start dropshipping
Not every dropshipping niche is profitable. There are a few, yet extremely important points that you need to consider before selecting the best dropshipping niche. Well, you can start dropshipping without having a niche store. But it is a lot easier to build an effective and low-cost marketing strategy around a niche store. So, let us keep things simple and start a dropshipping business around a specific niche.
2. Do a market analysis to confirm the profitability of your niche
Dropshipping is a highly competitive industry. There are many ways to make money and many ways to lose money. So, by doing a market analysis, you can make sure that you are starting a profitable dropshipping business. It is always better to have some sort of confirmation before spending your hard-earned money, isn’t it? Btw, do you know that you can make money online for free? Keep it bookmarked to read later.
3. Plan your dropshipping business strategy
Starting a dropshipping business without a business plan is like driving blindfolded. Never do that! Having a proper business plan helps you to structure how you start, run, and grow the dropshipping business. So, if anything goes off-track, you can correct things before it becomes a disaster.
4. Find winning dropshipping products
Which products will sell better in dropshipping? Should you sell cheap or expensive products? Should it be branded or generic? Learn how to select the winning products to list on your dropshipping store. The products you list on your dropshipping store can make or break your business. Choose wisely!
5. Start selecting the dropshipping suppliers
Now you got a niche, plan, and products. What is the next step of starting dropshipping in 2020? Well, now you have to find dropshipping suppliers. So, where can you find those suppliers? Don’t worry; we have a directory of dropshipping suppliers. So, you can quickly find legitimate dropshipping suppliers to work with.
6. Create an online eCommerce store for dropshipping
You can sell on eBay or Amazon to start dropshipping easily. However, creating an online store can help you to grow your dropshipping business, and it helps you to build some sort of authority for your brand. So, we will discuss some pros/cons of those two options and learn how to create a simple and low-cost online store.
7. Start marketing for your dropshipping business
Marketing is the key ingredient of starting and running a successful dropshipping store. When you start dropshipping, you won’t be selling unique products, or you can’t use pricing as your selling proposition! That’s why a well-thought-out, next-gen, dropshipping marketing plan is a must to start dropshipping in 2020.
Up next – We will find answers to all your burning questions on starting dropshipping business in 2021
Before we start going into details, let’s quickly go through some of the basics about dropshipping. If you already know the basics, feel free to jump to the next section.
What is dropshipping?
Dropshipping is an online retail fulfillment method. In simple terms, it is a simple and efficient way to deliver the products you sold to your customers. Look at this graphic, it explains what is dropshipping better than using words.
When you start dropshipping, all you have to do is, sell your supplier’s products on your eCommerce store. So, as you can see, you don’t have to maintain an inventory for the products you sell! That is a huge cost saver!!
What are the advantages of dropshipping?
- It is easy to start.
- You don’t have to maintain an inventory (a stock) of the products.
- There is nothing to worry about shipping your products.
- All you have to do is marketing and running your eCommerce store.
- It is an extremely low-cost method to start an online business.
So, why are we waiting? Let us go through the step-by-step guide to start dropshipping.
Select the best niche to start a dropshipping business
You already know what is dropshipping, but what is a niche?
A niche is a small or specialized range of products. So, when we say a dropshipping niche, we are talking about the range of products that you are going to sell in your dropshipping store.
Why do we need a niche? Can’t we just sell everything?
Apparently, yes! You can sell just everything. However, when you start dropshipping, you can optimize the marketing budget by having a specialized range of products.
How come? When you have a niche store, you can effectively select a target audience to build your marketing strategy. So, you can create the ads and content to resonate with the requirements of that target audience. Then, your ads and content will work better, giving you better results.
How can you select a niche to start a dropshipping business?
Here are the basic steps to select a winning niche for a dropshipping business. You can read the whole process on How to select a niche for dropshipping.
Check if your niche is evergreen, seasonal, or just a spike
Use Google trends to see the popularity pattern. Evergreen niches are the safest to start dropshipping. If you can afford to have a considerable ad budget, go for a seasonal niche. Depending on your marketing skills, even the spikes can be a good dropshipping niche to bag up some money.
Check the availability of dropshipping suppliers
There can be plenty of cool product niches with good demand and everything. However, don’t forget that we are going to start dropshipping. To select a niche for dropshipping, you need to check whether you can have dropshipping suppliers for these products too. We’ll talk about dropshipping suppliers in a bit.
Passion Vs. Money when starting a dropshipping business
Should you choose passion or money in a niche? That is a hard question to answer. Unless your passion is to have more money, you will get stuck at this point!
For some people, they need to be passionate about what they sell. Others just care about getting a fat bank account. So, which should you select?
Here my advise!
Go through the above steps to learn how to select a good niche to start dropshipping in 2020, and see whether you can find a niche that you are passionate about. If you couldn’t find one, go to the next best option. I mean, there is no point in starting a business that wouldn’t reward. So, for me, money beats passion!
Doing market research to confirm the profitability of your business
Since dropshipping is easy to start, everyone tries to give it a shot. However, only a few can survive. The most common reason for these failures is not doing their homework right! So, don’t you agree that you need to do a market analysis before start dropshipping?
Spying on your competitors is the best way to do market research. There are different ways to spy on your competitors.
Find and follow your competitor’s ads on social media
Check for comments, reactions, and feedback. This helps to get you an idea about the real requirements, likes, and dislikes of your target audience.
Check traffic to your competitors eCommerce sites
Use an online tool like similarWeb to check web traffic to your competitors. In this way, you can get an idea of the popularity of your competitors.
Go through the customer testimonials and review sections
You can learn what your potential customers think about those products from the customer reviews. Are they disappointed? Or, are they thrilled?
Check online statistics and talk to your potential customers to confirm the validity of your dropshipping business idea
You can validate your selection using online data, customer surveys, and face-to-face interviews. You can use online data sources like Statista, NAICS, USA.gov Statistics, U.S. Census Bureau to get support for this step.
Also, you can talk to your potential customers to get their feedback about your selection of the niche to start dropshipping. By the way, make sure you are not only talking to the people you already know. Talk to strangers and get honest opinions.
Planning a business strategy to start dropshipping
Having a well-thought-out business plan helps you to structure the way to start, run, and grow your business. As soon as you launch your business, you will have to work day and night, marketing and selling your products.
So, they will be no room for you to think about how you are going to grow your business. That is why you need a written plan to define, at least, the first couple of years of your business.
Also, after you start dropshipping, there will be ups and downs in your business. Sometimes you will not get your first order even after a month trying. So, if you don’t have a business plan, you will get frustrated, try to change things, and soon get overwhelmed.
Make a proper plan before starting a dropshipping business
Do not lose your hard-earned money by going haywire. Write down a clear business plan defining the below processes and stick to it for a defined period.
The vision of the business
What are the hopes and dreams of your business?
How are you going to achieve your vision?
Which products are you going to sell?
What is the target market?
How are you going to sell your products?
What is the pricing strategy?
Which marketing channels you will be using?
What are the promotional methods that you are planning to use?
Which specific marketing tools and services that you will be using?
Set specific, timely, and practical KPIs for your business. For example:
– Reply to all social media inquiries within 30minutes.
– Maintain a 30% customer retention rate for the first three months.
Include the major milestones that you are going to complete. For example:
– By “date” launch a business website with product listings.
Find winning products to start a dropshipping business
Now it is the time to select which products to sell (list) on your dropshipping store. For example, say that you have decided to sell pet toys as your niche to start dropshipping. So, it is time to select which pet toys to list.
Additional reading: Two simple hacks to find winning dropshipping products
Where to find winning products for dropshipping?
Below list gives you the places to get an idea of the winning products to start dropshipping. Later we will discuss where you can find suppliers for these products.
AliExpress is a popular online marketplace. If you are planning to use AliExpress for dropshipping check this guide to learn the process>> How to use AliExpress for dropshipping.
- Amazon best sellers
Amazon’s best sellers give you a comprehensive list of best-selling products on Amazon for different niches. Go through the best selling products related to your niche and check for the good products to sell.
- Social media ads
Social media ads from the other eCommerce sellers is another great place to find winning products to start dropshipping. Simply follow your competitor’s social media channels, and start getting their ads. Then, search for the ads with the highest engagement.
A checklist to filter products
Not every product can do well in dropshipping. There is a checklist to select the winning products. Let’s find out how to do this.
- Verify the size
If you are a beginner, try to stick to the small items (envelop to shoebox packing) and low ticket (price between $25-$50) products. It is safer, cheaper, and easier.
- Calculate the potential profit margin
Learn how to price dropshipping products to calculate the profit margin. Make sure to take the marketing costs into account to avoid the loses in long-run.
- Find the average CPC (cost per click) and SEO difficulty for the product keywords
Use a free online keyword tool to calculate the CPC and SEO difficulty. Higher CPC and SEO difficulty confirm the higher demand for the product. And, at the same time, it will be costly to run ads, and harder to rank your marketing content for those products.
So, try to find the right balance.
- Ensure the availability of suppliers
Make sure that you can find suppliers for the product that you are planning to start dropshipping. We’ll talk this in detail in the next step.
Note: Find suppliers to start dropshipping
Hey there, we have a free directory for the dropshipping supplier marketplaces for popular niches. Check it out, we are updating that list frequently.
Another Note: High ticket dropshipping
High ticket dropshipping is a bit different from the regular dropshipping processes. So, if you are interested, here are some secrets to high ticket dropshipping.
Create an online eCommerce store to start dropshipping
So far, we have discussed how to find products to start dropshipping. Now, let’s see where can you sell those products? Can you start dropshipping on popular marketplaces like eBay or Amazon? Or, do you need an eCommerce store to get started? Let’s see.
Start dropshipping on eBay or Amazon
The easiest way to get started with dropshipping is to start selling on eBay or Amazon. However, there are a few limitations.
If you start using eBay or Amazon as your selling platforms, you cannot do blind dropshipping. What does that mean?
eBay and Amazon are serious about buyer protection policies. Therefore, they work hard on filtering out the sellers who are not serious about what they do. So, they don’t let us “re-sell” someone else’s products.
But dropshipping is all about re-selling! Yes, it is. That is why you cannot start dropshipping blindly on eBay or Amazon.
eBay and Amazon dropshipping policies clearly mention that “listing an item on eBay or Amazon and then purchasing the item from another retailer or marketplace that ships directly to your customer is not allowed”
So, how can you start dropshipping on eBay and Amazon?
You have to either get into a dropshipping agreement with your supplier and be the seller of record of your products.
When you get into a dropshipping agreement, you can ask your supplier to change all packing slips, invoices, external packaging, and other information to identify you as the seller and supplier.
However, you get this kind of service from most of the AliExpress sellers. So, you will need to work with the wholesale dropshipping suppliers. Follow the instructions in step 5 to find how to work with wholesale suppliers.
Starting an eCommerce store for dropshipping
Do you know that you can make an online eCommerce store, with having to know a single line of code? Yes, that is possible.
There are plenty of CMS (Content management systems) available to create an eCommerce website without having to write a single line of code.
- Shopify– Shopify is the most popular and all-around platform to start an online store. They offer a large number of subsidiary services like Orbelo (to easily import products to your store) and Printful (for on-demand printing/ order fulfillment service). Shopify’s basic package will cost you $29 per month + transaction fees.
- WordPress + WooCommerce – The most flexible and agile online store building platform. Well, it is not so beginner-friendly. But, this is the best, fully customizable, and open-source platform to start an online store if you know a bit about web development. You can start an online store with WordPress for around $30 per month (including the domain name, hosting, and SSL certificate).
Create your online dropshipping store on Shopify
Creating an online store is easier than you may think. Now with online store building platforms like Shopify, you can even create an online store without any technical knowledge.
And, you can try Shopify for free to see how it works. So, follow this guide on how to create an online store to learn the steps, and register on Shopify to start your free trial.
Hey, do you know that you can simply hire a freelancing eCommerce site developer to create a stunning WordPress or Shopify online store for less than $50? Just hire a freelancer and save your time to focus more on your business.
Hire an online freelancer to build your site
Hire a professional freelancer for less than $50 to get your online store up and running in no time.
Start marketing for your dropshipping business
Well, we came to the last, but the most important step in starting a dropshipping business.
90% of the dropshipping businesses fail within the first few months due to the lack of marketing knowledge.
Think about it; When you start dropshipping, you are not selling any unique products. Also, you won’t be able to use “low selling prices” to get a competitive advantage. So, how can you give a reason for your customers to buy from you?
Marketing for dropshipping
There are a few proven strategies to handle marketing for dropshipping. Here we have added a list of marketing methods that you can follow to build your overall marketing strategy.
Run Facebook Ads to achieve your marketing goals
Facebook ads are the quickest way to make your first sale. Also, you can use Facebook ads to build an audience for your other marketing methods to build a sustainable marketing strategy.
Use influencer marketing
Influencer marketing is one of the most effective ways to sell on social media. You can work with micro-influencers to create a strong influencer marketing strategy to promote your dropshipping business without costing a fortune.
Use up-selling and Cross-selling
Up-selling and Cross-selling are the best growth hacks for any business. With proper up-selling and cross-selling strategies, you can increase the average order value of your eCommerce store.
Start email marketing for dropshipping
Email marketing is the best way to reach your existing customers and bringing them back to your business. Also, there are many FREE email marketing services available.
Start content marketing for your dropshipping business
Content marketing helps you to attract new customers into your sales funnel in the early stages of their purchasing journey.
Now you know how to start a dropshipping business, what’s next?
Start now! Of course, you can keep reading to learn “everything” before starting a dropshipping business. But, trust me, that won’t work.
The best way to learn how to start a dropshipping business is by actually starting it. Many problems and difficulties will arise, but don’t let them put you off. Google your question, and you will definitely find an answer. Keep in touch with us. We share the best tips, tricks, and guides to teach you how to better your business. Subscribe to our email updates or follow us on Facebook.
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