Launching a dropshipping business is an amazing way to dance into the arena of entrepreneurship. You are able to sell products directly to customers, set your own pricing, and even market under your own brand.
With dropshipping, you do not need to pay for inventory until the product has been sold to an actual customer. With self-determination, dedication and hard work, you have the potential to build a successful brand.
In this article, we will cover the most essential things you need to know about starting a dropshipping business, from understanding what it is to finding the right dropshipping suppliers and more.
Table of Contents
What is The Dropshipping Business?
Dropshipping is actually a business structure that lets you operate your store without holding any inventory. As soon as you have made a sale, your supplier will ship the products from their warehouse directly to your customer's doorstep. This cancels out the problem of storing, packaging and shipping the products by yourself.
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How Does The Dropshipping Business Model Work?
There exist three key players in dropshipping; the manufacturer, the retailer (you the dropshipper), and the customer.
The role of the manufacturer here is simply creating products as he normal does, maintaining inventory, shipping products to customers on behalf of the retailer, replacing defective items and restocking. Also, they sell products to the retailer at wholesale prices, therefore assuming the risk of any unsold inventory.
As the retailer, you sell the manufacturer's products on your own website under your brand name. You are the one in charge of selecting and marketing the products. More to that, you take care of the shipping costs and set prices that can yield you enough profit.
Finally, the customer purchases goods directly from you and in case any questions or issues arise, they will turn to you, the retailer with whom they have done business.
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How to Start a Dropshipping Business: The 6-step Dropshipping Business Plan
In the ever-evolving landscape of e-commerce, dropshipping has emerged as a popular business model, allowing entrepreneurs to start their own online stores without the need for significant upfront investments in inventory.
This guide aims to provide a step-by-step approach to help aspiring business owners embark on their dropshipping journey.
Step 1: Choose a Niche
Similar to the blogging field, the right niche is vital for a dropshipping business success. While having a passion for a chosen market helps, profitability remains the basic goal. In dropshipping, there are ever green niches such as fashion, fitness, Jewelry, beauty, tech, backpacks, which continually attract successful online stores.
Like for instance, entrepreneur Tim Kock found success with a watch business and he generated nearly $7,000 in only eight weeks, highlighting the importance or choosing an important niche.
There are a few tools and tactics which you can use to find niches for your own dropshipping business. Some of these tools include Google Trends and Ubersuggest's keyword tool.
Step 2: Do Competitor Research
As soon as you have made up of your mind on what to sell, you now need to educate yourself on who your competitors are, what they sell, and how they sell their products. Market research is an essential part of this step and there are several ways to do it.
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Step 3: Find a Dropshipping Supplier
It can be easy for you to find a good supplier on AliExpress which is one of the most popular platforms for dropshipping companies. Once on the website, you can search for products and then choose from a list of reliable suppliers based on reviews, ratings, and also their longevity on the platform. This information should influence your decision on which supplier to chose in the dropshipping process.
After you have made your list of like five or six potential suppliers, the next thing to do is contact them, and ask essential questions such as minimum order quantities and shipping times so that you can better understand your profit margin.
Step 4: Set Up Your Dropshipping Store
Below are the few components involved in building a dropshipping business store immediately:
Domain Name: Your domain name is very important if you are building a long term brand. In order to make the process even easier, you can make use of a free business name generator. No matter the niche in which you are in, it is good to always go for a .com domain name.
It is good you also avoid using your own name as the domain for your store, cause this might hinder you incase you ever want to sell your business.
Ecommerce Platform: The most comprehensive ecommerce platform on the market is no other than Shopify. You will find it easy to run a business on the platform since there are new features, tools, resources and even apps, being added regularly to the platform.
Theme: Since you we are making use of Shopify, you can explore free themes such as Minimal motion which is one of them.
Dropshipping App: In order to manage your inventory and also place orders efficiently, you will need a reliable dropshipping app. An amazing option for you is Dsers, which allows you to find products in a variety of popular niches.
I will advise you to focus first on 10 to 25 products for a start, since writing descriptions for a larger inventory can become overwhelming.
Step 5: Market Your Dropshipping Business
At this step, you have already selected your product and step up your store. What you need to do now is to market your dropshipping business.
This is an important component for every dropshipping business plan. For the newbies, it is good you keep in mind that effective marketing doesn't have to be expensive. There are several advertising platforms which you can make use of, such as Facebook advertising, Retargeting Ads, Influencer marketing and Media coverage.
Step 6: Optimize
Once you’ve spent time building your website, brand, and marketing, you can start to analyze the results of your hard work. You may find that certain marketing activities are hugely successful, while others not as much. You can also compare your prices to that of your competition and see if you could make things more competitive.
You can use tools like Google Search Console or Google Analytics to evaluate your online traffic and make sure it’s increasing, not decreasing.
If you’re using third-party tools for email marketing or social media reporting, set up weekly or monthly automatic reports to remind you to analyze this information regularly. Even a quick snapshot of data from a tool can be enough to decide if a campaign is working or not.
Where to Find Dropshipping Businesses for Sale?
If you do not want to build a dropshipping business from scratch, you can easily find a dropshiping business for sale on Flippa.
Flippa is a marketplace of websites for both people looking to invest in a fully functioning business and those who want to jump the building phase and start straight with marketing. On Flippa, you can find a great collection of online stores, including dropshipping, ecommerce businesses of varying price ranges and niches which you can choose from with respect to your budget.
So if you are in search of a dropshipping business for sale, then Flippa has got your back.
Factors to Consider When Buying A Dropshipping Store
When planning to buy a store, there are several factors which you need to take into consideration and below are some of the key factors you need to consider before you go ahead to buy a dropshipping store:
- Type of Business
- Design
- Penalization
- Niche Popularity
- Cost
- Earnings
- Website Age
Do You Need to Incorporate A Dropshipping Business
There are several advantages that comes with incorporating your dropshipping business. It actually separates your personal and business finances, protecting your money if the business goes into debt.
More to that, incorporating gets you an employer identification number (EIN), which makes it easier to file and pay sales tax. So in case you are planning for long term success, it is necessary you think of incorporating your business.
Is Dropshipping Worth It?
Similar to most other businesses, the value of dropshipping depends on the time and money you invest in it. If you dedicate time to growing your online business, you are more likely to reap the rewards. In my point of view I will say dropshipping is worth it especially if you put in the right amount of money, work and determinitation.
Final Thoughts: How to Start a Dropshipping Business
As your dropshipping business grows, explore additional marketing channels and strategies. Consider expanding your product range or targeting new markets. Stay informed about industry trends to remain competitive in the dynamic e-commerce landscape.
Starting a dropshipping business requires dedication, strategic planning, and adaptability. By following these steps and staying informed about market dynamics, aspiring entrepreneurs can set themselves on a path to a successful dropshipping venture.