Start a Dropshipping Business in 4 Simple Steps
Updated: Feb 5, 2021
Dropshipping is a business model in which a businessperson buys goods from a supplier and sells to his/her customers at a slightly higher price. The businessperson does not need to have their inventory. Sounds good, right? Now, if you’re a wannabe entrepreneur with zero experience, you can start off by foraying into the dropshipping business. Part 1 of this article explains how to start a dropshipping business in 4 simple steps.
In a dropshipping business, the customer places an order for an item on your web store. You forward this order to your supplier. The supplier provides goods to you at a wholesale price. In this model, the supplier is also your shipping partner. Upon receiving your order, they ship the item directly to your customer. The product is labeled under your business name, and you earn a profit margin.
As a dropshipping business owner, your responsibility is to set up the online retail store, drive customers to your website, and provide customer support. So, how do you do it?
The Dropship Model. Credits: SaleHoo
Step 1: Choose a Product/Product range for your Dropshipping Business
What items are ideal for dropshipping? Look at the business profitability; choose that over personal preferences. Did you know that about 22-33% of online retailers are dropshippers?
Market research is important to ensure that you don’t choose a product that is highly competitive. Always go for low to medium competition. Some of the considerations you need to make when you select the product:
Size, ideally small and easily portable
Seasonality of the product
Domination by market giants
You might like: How Netflix Leverages Big Data to Drive Success
How to Choose a Product?
Like we discussed, the dropshipping business is pretty much crowded; so if you want to beat the competition at sales, marketing and reach, here are a few things you can do:
Know your competitors: Start with Amazon and eBay. Who are the top sellers in the niche you have selected? How many sellers are there in the niche? It is best to choose a product that has minimal competition.
Pay Attention to the Product: Now that you know your competition, it’s time to study them. Look at their product listings. Pay attention to details like the pictures of the product, type of content used for sales and the platform used to host their business. Feel free to draw inspiration.
Also, work on whatever inferences you make to provide a better experience to your customers. Overcoming your competitor’s shortcomings can prove to be a worthwhile USP. In the process, you will end up making your product listings more attractive for prospective customers.
Do people want your Product?: Before you dive in, check the traffic for some of the common keywords related to your product. Ensure that at least a considerable search volume exists for your niche. Use tools like Google Keyword Planner and Google Trends.
Take Feedback Seriously: Dropshipper or not, customer reviews are the fuel for businesses. Spending time to understand what customers liked and did not like about the services of your competitors is a worthwhile investment. Use this feedback to refine your approach to customer service.
Now, here are some examples of successful product niches in dropshipping.
Men’s Grooming Products
Step 2: Onboard a Dropshipping Supplier
The supplier is a very important partner in your dropshipping business. They are responsible for supplying the product that you place orders for and delivering it to your customers. They ensure that the delivered product matches the quality standards that you advocate and advertise.
In simple terms, finding a supplier for your dropshipping business is a serious decision that should be given much thought and consideration. A few pointers:
Your dropshipping partner must offer dropshipping services: This means that the supplier must not be just a wholesaler or manufacturer, but also offer shipping. They must keep your inventory in check and maintain product quality. Before making a commitment, make sure that they are actually dropshippers.
Your dropshipping partner must charge reasonably: Dropship suppliers generally charge a small fee in return for services. If they charge heavily (more than a few dollars), you can look for other options.
A good dropshipping partner is experienced and helpful: Suppliers, being the most important partner in a business, must be previous players in the industry. The partner must be well-informed and familiar with varying business situations.
Gives first priority to quality: The dropship supplier must ensure fast shipping within 1-2 weeks. It is always a good idea to ask for a few test samples to check the quality and speed of shipping.
You can choose your supplier, either from an online search for product suppliers or by means of a wholesale directory. A wholesale directory has a list of verified suppliers you can commit to for a dropshipping business partnership. Searching for your product on websites like Alibaba.com or Aliexpress.com is another way of procuring it. Most of the suppliers from China list their products on these websites.
Step 3: Finding A Marketplace to Dropship
To start a dropshipping business, you need a product, a supplier for the product, a marketplace to sell, customers who need your product and a way to take products directly to customers.
The marketplace, in this case, is the platform where your website is hosted. The choice boils down to between selling on established platforms like Amazon or eBay vs starting an independent online store. And this is a crucial element to the success of your dropshipping business.
When you start a dropshipping business for the first time, there’s no shame in opting for a well-established online marketplace. For instance, consider these advantages:
They get plenty of visitors every single day; potential customers who trust the platform. Moreover, you can set up and sell easily without hassle. There is a downside, however. These marketplaces charge fees and give you little autonomy with regards to branding or UI/UX.
Own Store or Well-Known Platform?
When you start a dropshipping business, initially, a platform that’s already out there seems like a viable solution. However, ultimately, you will need to open your store for the long term. That is the only way you can grow as a businessperson.
You might need to invest some money, but the internet offers a number of tools that can help you get started. Read our blog post on starting your online clothing store here.
It’s a good idea to have your store as it leads to higher profit margins since you don’t have to pay platform fees any longer. You can brand yourself any way you want, have your own customer service, and avoid direct competition from other dropship businesses on the same platform.
Step 4: Drive Customers to Your Business
It’s amazing to have people love what you give them. But how do you find people who will love what you offer them?
This is where a customer acquisition strategy comes in. Every company has some form of it. Basically, customer acquisition strategies are of two kinds: Organic (slow results that accumulate in the long term) and Paid (quick results but not long term solutions).
Organic methods are free and require time and dedicated effort. For example, setting up a babycare blog can be helpful for a company that dropships baby products. Similarly, you can also start an email marketing campaign by collecting email addresses from your website visitors.
Driving customers to the business is a hurdle all businesses face. But once you get your trusted base, there’s no stopping you. Read our previous post on customer acquisition for new companies here.
In Conclusion: Wanna be A Dropshipper?
Like we saw in the beginning, dropshipping is one of the simplest ways to get into entrepreneurship. Millennials who can’t afford to invest huge amounts and build a brand are turning to dropshipping as a viable option, thanks to strong internet marketing skills.
At the core of every good marketing and acquisition strategy is data. Analyzing data and metrics available to you is essential for business growth. Identify your customer acquisition channels, from sources like Google Analytics traffic and Facebook conversion data. If you can understand where each one of your sales comes from, you will be able to optimize your channels in tune with the traffic.
If you need help unlocking your business potential with data, feel free to reach out to us.