How To Start A Dropshipping Business

So, you think you want to start a dropshipping business but want to make sure you know exactly how it will work? If you’re looking for an easy way to understand dropshipping and your options as a business owner, you’ve come to the right place.

What Is Dropshipping?

Dropshipping is an all-digital business model that utilizes eCommerce platforms with point of sale integrations and third-party suppliers to move products. It is popular because it can be done anywhere, with very little set-up and initial investments. Dropshippers partner with wholesalers and manufacturers to fulfill individual orders as customers place them.

Here’s a typical order in the dropshipping model:

• A customer places an order on a merchant’s website
• The merchant sends an order to a supplier
• The supplier picks, packs, and ships the product to the customer

The downside of dropshipping? It tends to keep profit margins low as the industry is highly competitive.

How To Open A Dropshipping Business in 3 Steps

You’ve decided to enter the saturated world of dropshipping. Have no fear — dropshipping is still a viable small business model, and plenty of people find success.

Step 1: Pick Your Products and Partners

What are you going to sell, and where are you going to source your inventory from? Those are the two most important things to answer as you set up your business.

If you haven’t yet identified what to sell, a good place to start is perusing online marketplaces and dropshipping directories to discover what options are available. There are a plethora of dropshipping suppliers that are a quick internet search away. But how do you know if they are worth working with? Read reviews, shop at stores that use them, or order a sample for yourself!

Or maybe you are a brand/business owner looking for print-on-demand services? For that, we suggest researching Printify or Printful.

These are only ideas of where to start on your search for what to sell and who to partner with — much will depend on the type and scale of your own dropshipping business.

Step 2: Choose Your eCommerce Platform

Here’s a big decision to make: Should you set up an independent website, perhaps using a do-it-yourself website builder like Wix?

Or should you use a fully hosted eCommerce platform, such as Shopify or Etsy?

Setting up your own site takes more time, but you’ll avoid paying fees to the site host. Of course, if you opt for a hosted site, you will gain access to a huge existing customer base. Weigh the options, test each, adjust your business plan as necessary, and get started.

While Shopify has set itself up as the dropshipping king, it is not the only option.

Step 3: Market Your Store

Now, you need to get the word out about your shop. You can create an advertising campaign on Facebook or Google that allows you to target your ads toward those you think are most likely to buy from you. Utilize social media and targeted ads for your products. I always tell people, “You have customers. They exist. They want your product. You just have to find them.” Marketing is its own beast, but here are some things to try:

• Social media marketing/influencer marketing
• Email newsletter campaigns
• Paid/targeted ads

Build a brand and use all the traditional and wild marketing tactics available to you.

How Much Money Do I Need To Get Started With Dropshipping?

The best part about starting a dropshipping business (and the factor that makes dropshipping so attractive to so many) is its low start-up costs.

Because operating a dropshipping business doesn’t require you to order or hold any inventory, you won’t need to make a big initial investment before you can start soliciting sales. Once a customer orders an item from your website, you pass on that order — and the payment the customer made to you — to your dropshipping supplier.

Make sure to factor in the cost of a business license so that you’re able to legally resell items acquired from a wholesaler or manufacturer. Also, make sure that your technology is up-to-date. While you can do a lot to get the word out about your new website, you may quickly decide to spend some money to advertise on social media sites. Fortunately, that’s not a requirement, and you can scale your advertising approach to fit your budget, increasing it as your sales grow.

Dropshipping Advantages

Dropshipping has its perks and business advantages. Let’s take a closer look at some of them:

The easy and hands-off nature of dropshipping is what makes it enticing for entrepreneurs. Dropshipping might not even be your entire business but just a part, and it might be a better investment if you already have a built-in audience who wants your product (branded products through a print-on-demand store, for example).

Dropshipping Disadvantages

Like any business, this is not a guaranteed get-rich-quick tactic. Building a successful eCommerce store takes work, dedication, repeat buyers, and scalable solutions. While those things can happen in dropshipping, it’s harder for the following reasons:

Get Started With Dropshipping

As far as starting a business goes, dropshipping is a relatively low-cost, low-risk option. The overhead is minimal and it doesn’t take a big investment as far as time, either. That’s not to say it’s easy and that anyone can succeed with a dropshipping business without even really trying.

However, if you’ve done your homework and understand the pros and the cons — don’t be afraid to jump in! If you make a solid, realistic plan and choose your products and partners wisely, your dropshipping business could end up being one of the success stories.

And read our Shopify review if you think that platform might be a good fit.