How to Start a Dropshipping Business
If you have heard or seen the successful practices of dropshipping and ever considered what does it take for you to start your own dropshipping business, stay with us today. We’ll explain everything behind the retail fulfillment method that made itself popular in the modern days, in which you don’t have to have your products in stock to manage an entire business.
The Basics Of Dropshipping
In a nutshell, dropshipping is all about perfect organization. It is unlike any standard retail model and revolutionizes the use of third-parties. With this in mind, the dropshipping business doesn’t have any stock yet always has enough in stock to deliver in any location.
The merchant in the dropshipping method is instead purchasing every single inventory from a third party. Whether the third party is a wholesaler or manufacturer of any kind, dropshipping orders are being fulfilled quickly and efficiently without any present stock at the dropshipper.
Now, before we get started on the matter of how to start your own dropshipping business, we need to clear it out – this business has a lot of benefits, but also considerable drawbacks.
The Advantages and Disadvantages of Dropshipping
The “Plus” Side
On the good side, there are many aspects which are revolutionized with the dropshipping business.
- Easy To Get Started – The ultimate ground breaker when it comes to dropshipping is that basically anyone can start it. It is an easy method in which you don’t need to deal with storing any physical products – which means that there are no sufficient investments in inventory upfront. But apart from that, there is a whole other burden which you are not tied with, including tracking inventory, packing and shipping the orders, managing and paying for a warehouse, handling the returns and managing the stock level.
- Less Capital Required – The most major advantage and a privilege for anyone to start with dropshipping in an easy way is the need for capital, which is eliminated in the very start. This means that you don’t need to purchase any inventory put front nor tie up huge amounts of money in the banks to secure your business. What you need to do is to focus on the three-dimensional synergy – between you as a merchant, the sale and the end-customer.
- Flexible Location – You can work with dropshipping from the comfort of your home, or any other location with an Internet connection.
- Wide Variety of Products – You don’t need an inventory, right? That means you are not required of making any pre-purchases – which in other words means that you can have any product on your mind to be resold afterwards. You can sell cars, ship parts – even rocketcraft, if you think it’s profitable!
- Fully Scalable – If you start with several products and it turns out great, you can easily grow your dropshipping business without doing all the extra work. With a great leverage put on a variety of suppliers, some process automation when it comes to the additional orders as well as expansion on the current plans – you can grow your dropshipping business to new heights – and makes sales grow without any special effort in inventory, or investments of any sort.
The “Minus” Side
- Low Margins – Probably the biggest disadvantage to ever be considered with dropshipping are the lower margins. With the overhead costs being too much minimal, and the easiness to get started with the business, many suppliers have considered and worked their way through the margins and came up with low margins. However, that hasn’t stopped many people and companies from building a fortune in dropshipping.
- Shipping Issues – Many times, working with suppliers means dealing with a lot of drop shippers as your competition and dealing with shipping issues and complexities. Whether it’s the charges which are passed along to the customer in the worst-case scenario, the OVERcharges which are a practice of many suppliers or simply other miscalculations, everyone considering to start a dropshipping business should have this in mind.
- Inventory Issues – As much as there is no inventory at all, this creates problems to track items and which ones are in and out of stock. This is simply due to the inventory changes in dropshipping and the number of orders fulfilled, cancelled, shipped or returned. However, there are a lot of programs and software to sort these issues out, and a constant sync of the inventory with the suppliers is the best practice in dropshipping.
Now that you know both the good and bad sides, you have probably come to a decision where the good sides win over the bad ones (which are not really bad at all), and you still consider to start a dropshipping business and lead it to success.
But how to start? After all, there are many thins to have in mind, right?
How To Start A Dropshipping Business
In order to start your dropshipping empire to-be, you need the first and most basic 3 elements. Without them, you are left with nothing.
- A Web Store
The home of your products is the web store. Also, it is the most functional part of the system and takes the form of a basic eCommerce store split up in different categories. Whether you are selling clothes or electronics, you need to be able to differentiate the products so that the customer can find his way through them and eventually make an order.
Having an online store is essential to start with dropshipping, as it is the main element on which you get involved with your customers. They make the orders, you ship the products. In a nutshell, that’s how it goes.
So, how to set up a web store for dropshipping?
We’ll explain this in a few step-by-step methods:
- Get a hosting and domain
- Install WordPress
- Configure and install a theme
- Install an eCommerce plugin (WooCommerce) and configure it for taxes, payment issues, shipping etc.
- Add all your products you are starting with. Make sure to add a relevant product description and a featured image of the product
- Structure your website in the best way
Of course, there are platforms like Shopify who offer all-in-one web store solutions for dropshipping, however they usually cost a lot. On the good side, setting up a store on Shopify is easier than on WordPress, in which case you might need help of someone more experienced in the technical side.
- A Supply Chain
The second part and probably most tangible part in your business is the supply chain. The products from the web store must come from somewhere, and that is exactly your supply chain.
Instead of stocking up products in inventory, with dropshipping you can work on a supply chain with a cost-effective side, since you don’t need to deal with inventory – only with suppliers and manufacturers. Here, you decide who you work with. However, it is important to take advantage on the best manufacturers and sellers which also offer the greatest margin – something that will be worth to you a lot on the long run.
From the product’s perspective, a supply chain is meant to have the most popular and wanted products on the marketplace. That is why considering which products to start with into dropshipping is one of the biggest struggles.
So, how to find a dropshipping supplier or manufacturer for your business?
Before finding a relevant supplier, you need to ask yourself the following questions to make sure you are on the right way:
- Does it have all the products I need?
- Does it have a premium customer support?
- Does it ship to every location – or where does it ship to?
- What are the delivery times?
- What is the profit margin on the products + the shipping costs?
As you can see, the process is straightforward and takes a lot of work. However, if you do it the right way, you can end up with a supplier or a manufacturer worth of having. In fact, most of the good suppliers are most likely already tied with many dropshippers, so their practice in this field is extensive and they are able to guide you in how it works. However, be aware of everything before making a contract!
- Your Marketing Efforts
Sure, you got the web store and the supply chain. But how will you attract your visitors?
Before starting off, you need a solid digital marketing strategy so you are not left behind with nothing but expenses. Your organic customers must come from somewhere and it’s up to you to decide how you’ll bring them in.
So, what type of online marketing should you use for your dropshipping business?
Some of the best digital marketing practices with dropshipping are:
- Online marketing (Google Adwords, Paid Ads etc.)
- Social Media (Facebook, Twitter, Instagram)
- Quality Blogging with Keywords
- Competitions, sweepstakes and contests
- Email marketing with an organic mailing list
- SEO (Search Engine Optimization) techniques
The truth is, each one of this methods underlies a lot of steps and techniques you will most likely learn on the way to your dropshipping success. They all are considered as Internet sciences and in order to grow your dropshipping business fast, you need to adopt them as the only side of dropshipping you are concerned with – and that is marketing your products.
Conclusion – Is Dropshipping worth it?
Dropshipping is nowhere near the perfect business model. But when you see better, is there such model? If it was, we’d be all running it for sure…
On the good side, dropshipping will make your time online worthwhile with you learning so many things you can also use later. The online marketplace is tied in with basically everything and the number of advantages when it comes to dropshipping are definite. However, there are problems which are a reality, but if you try and solve them like many of the dropshipping giants do, you will be on your way to dropshipping success.
To wrap it up, the good news about dropshipping is that with a careful practice and consideration, you can slowly move your way up in the business, solving every bit of problem and generating stable cash flow. Starting the dropshipping business and failing it won’t leave you with a big investment in water, since it is flexible and fully scalable solution to grow a business online.
So, why not build your own dropshipping empire?