Nobody truly realizes how many e-commerce sites are being built every day since the quantity is so enormous. It is impossible for even the biggest systems, like Shopify and WooCommerce, to pinpoint exactly how many shops they support. A staggering number of online retailers run dropshipping operations, in addition to the many that offer handcrafted goods or use standard inventory management systems. However, what is a dropshipping business really, and how can one start one?
101 Dropshipping
Dropshipping is an e-commerce concept in which you open an online business and sell goods straight from manufacturers. Unlike traditional retail, where you develop inventory, you do not handle the things yourself; rather, your consumers make a purchase, which is then forwarded to your supplier, who distributes the item straight to your client.
You are paid when your prices are higher than those of the product’s supplier. Your margin is the difference between the two prices (more on this later).
An illustration of this would be if you discovered a supplier that charges $29.99 for men’s traditional Oxford shoes on Aliexpress. You will charge, say, $59.99 for that exact pair at your store. When a client buys anything, you buy it from your supplier, who ships the item to your customer. This is a $30 buy for you.
You are undoubtedly wondering why a customer would choose to buy from your business rather than the provider directly right now.
There are several responses. To start with, a lot of suppliers only work with merchants like you and don’t sell directly to individual consumers. Moreover, most individuals are not aware of these providers, and they don’t want to take the chance of receiving inferior quality (you may ensure quality by using wise practices). Lastly, your marketing efforts will drive customers straight to your business—you won’t even need to think about a supplier.
Consider things from a new perspective. You still purchase your oranges from your neighborhood grocery store, even though you could probably obtain a pound of them for a lot less money from a Californian farmer.
First, choose a product (niche)
It’s possible to start a dropshipping business without deciding which items to offer or which niche to target, but it would be challenging. How would you name this business, for instance, whose items you are yet unaware of?
There are many approaches you may use when selecting the goods to offer. It’s possible that you have an interest in fashion and believe you understand what people prefer to wear. You may be aware of what products are being purchased online in your nation. Maybe you’ll find that you can purchase a certain kind of goods at a reduced cost and resell it at a higher price in your own country, therefore boosting your profit margins.
Establish a Store (Easily)
Although you are not in a hurry to open your business, there is a good reason why you should do it as soon as possible. The explanation for this is that weeks of store setup work won’t ensure sales.
What you need is a business that looks respectable and can be up and running in a few days, depending on how much time you have. The pre-made themes that the major platforms offer for your store are what you should be looking at; something straightforward and appropriate for the products you want to sell.
Save your time on things like a blog, detailed branding, and logos. Starting out, you’ll have a skeleton business with only the essentials.
You should set up payment methods, which are often PayPal and well-known credit cards. Additionally, if you can discover suppliers that give free delivery, you should consider offering free shipment as well, which you will then cover from your margin.
You will also probably require tools that will let you automate a lot of the work, depending on the platform you choose. For instance, this software handles the payment and customer data input when customers make purchases in your business by automatically ordering the item from your supplier.
Locate Vendors
Locating the suppliers is going to be one of the most important phases in starting your dropshipping business. Before you begin doing business with your suppliers, you will want to make sure they have checked a few boxes.
It is important to note that you will primarily be searching China for your suppliers before moving on to the checklist items. Specifically, AliExpress. AliExpress, which is the Chinese equivalent of eBay and Amazon, is well-known among dropshippers for one main reason: you can get goods there for incredibly low costs.
Although there are other resources and methods for locating suppliers, it is likely that you will be collaborating with Chinese suppliers.
Let’s move on to the boxes
You will, for starters, be searching for vendors with an impeccable record. This indicates excellent ratings and genuine client testimonials. Additionally, you will be examining the comments sections for each product—that is, the pictures. It is important to confirm that the goods depicted in product photographs match the real product photos that buyers have sent in.
An additional crucial characteristic to consider is ePacket shipping. It is an inexpensive delivery option that is rather quick (often less than a month) and was created especially for Chinese items sold online. Additionally, your customers may monitor their shipments using this service, allowing them to view their orders at any time. To put it briefly, one feature to look for in a provider is ePacket shipping.
And then, there’s the pricing issue. Specifically, you need to make at least as much as you pay the supplier for your dropshipping business to be profitable. This implies that you should never have a margin smaller than 50%. Stated differently, your supplier must offer pricing that allows you to increase sales without compromising your ability to fulfill orders.
One thing you should know is that, because this is what your suppliers are offering, you will either be selling generic items in your store or brands that are largely unknown in the west. Selling knockoffs of well-known brands should be done with extreme caution as this might land you in serious legal problems.
Promotion
The worst error you can make in your dropshipping business is to believe that having a store is sufficient. As we previously stated, there is no shortage of online retailers; thus, you must ensure that customers visit your business.
Put differently, you must engage in marketing
Making sales should be the only focus of marketing for those who have just launched their first dropshipping company. You’re not creating a name for yourself or making an impression on the market. This is a later development. Your goal is to close a deal. Two transactions. Three transactions. 50 sales in a single month. The next day, a hundred sales.
In the beginning, you will be dependent on paid advertisements even though there are certain things you can accomplish for free (albeit they will still take time), including certain SEO and content marketing. You will use advertisements on Facebook, Google, and Instagram, to be more specific.
The channel you choose will depend on what you are selling, so you must be very careful to select the appropriate one. Specifically, your budget will probably prevent you from being too creative and will force you to concentrate on a single channel.
Facebook is an intriguing alternative for advertising because of its comparatively inexpensive ad pricing and its capacity to target highly precise market segments. Instagram is also well-liked in several categories, such as the apparel and beauty industries. Due to existing competition, Google advertisements are typically out of reach for new dropshipping firms, but you should still research them.
It’s crucial to begin running your adverts cautiously at first. Make sure you are never spending more money than you make from your shop and only spend what you have. For instance, if a sale brings you $20 in income, you may use that $20 to buy Facebook advertisements the next day. You broke even if one new consumer comes from these advertising. Business is already profitable if you close two deals, and your marketing costs are covered.
You may progressively raise your marketing budget as you close more deals. On the other hand, you might need to adjust something or change the channel if you are not getting any results.
Essentially, the majority of your efforts will be focused on promoting your shop and raising conversion rates. Ultimately, the majority of your other tasks will be mechanized.
A Few Closing Remarks
Following our discussion of the fundamentals of launching a dropshipping company, there are a few extra considerations that you should make.
You should, first and foremost, research the laws, taxes, and regulations that apply to you in your nation. It won’t be long before you need to register your business and begin paying taxes. Before you start implementing all that, though, it would definitely be a good idea to give your store a trial run. Before taking any action, you may also wish to see an accountant or lawyer.
There will undoubtedly already be others doing dropshipping in your area, so you could also want to look at such groups. These kinds of forums are excellent resources for getting free counsel and recommendations on how to grow your company.
And lastly, never give up on learning. Dropshipping is much more than what you have read here. For example, this free Shopify drop shipping tutorial is a terrific place to start. You should also work on improving your marketing abilities as they will help you increase traffic and sales. After your company has stabilized, you may also begin to consider long-term marketing strategies including branding, content marketing, and product expansion.
