How to Start a Dropshipping Business
As online shopping continues to grow, dropshipping has become an enormous global industry. At the same time, modern e-commerce tools make it easier than ever to start your own business.
Dropshipping presents an ideal entry point for the e-commerce marketplace. In this guide, we’ll cover the basics of the trade and explore how to start a dropshipping business so you can launch your new venture today.
Whether you are interested in Walmart, Shopify, or Amazon dropshipping — or using a different platform entirely — our actionable steps will help you navigate this exciting journey.
What is dropshipping, and how does it work?
Dropshipping is a business model in which you sell products without maintaining an inventory of goods. Instead of purchasing a large stock of products, you advertise and sell goods manufactured by a network of distributors.
The dropshipping business model has three key players: the manufacturer, the retailer (that’s you), and the customer. First, the customer browses your digital store and purchases a product. Next, you pay the distributor or manufacturer. Once they receive payment, the distributor or manufacturer ships the product to your customer.
Dropshipping yields a high profit by eliminating inventory management, manufacturing, and shipping costs. All those expenses are built into the price you pay the manufacturer. That said, you must sell a high volume of products to maximize profits, as per-transaction margins are lower than those of a traditional retail model.
Why start a dropshipping business?
There are many benefits of dropshipping. Here are some convincing reasons to try it for yourself:
Minimal startup costs
You don’t need to invest thousands in inventory or rent a massive warehouse space when dropshipping. Instead, you can launch your business with minimal upfront investment. Amazon and Shopify even offer seller accounts for free.
These platforms do not charge any upfront fee for listing your products. Instead, they charge a small commission on each transaction. Walmart also allows dropshippers to start selling products with zero upfront costs.
Low financial risk
A primary appeal of dropshipping is that you incur minimal financial risks. If you decide dropshipping isn’t for you or your business isn’t adequately profitable, you can close up shop without liquidating inventory or canceling any contracts.
Once your dropshipping business is up and running, you can manage it from anywhere with an internet connection. This flexibility allows you to live life your way without sacrificing revenue.
Suppliers handle shipping, so you can easily scale your business. You are only responsible for accepting orders and forwarding that information to your suppliers. With the right tech, you can even automate the data exchange between your store and your suppliers’ ordering platforms.
6 steps to start a dropshipping business
Now that we’ve defined dropshipping, let’s explore how you can use it to start your own business. If you’re ready to start dropshipping, follow these steps:
1. Choose a niche
First, decide your target audience and what you want to sell. With endless product options, you may be tempted to build a massive catalog to target as many consumers as possible. However, it’s best to focus on a few products you’re passionate about. For instance, if you like to get creative in the kitchen, consider selling pots and pans, utensils, and other relevant cooking products.
2. Find the ideal platform
Next, decide where to sell your products. Amazon, Walmart, and Shopify dropshipping are some of the most popular options. Amazon and Walmart offer the most straightforward startup process, whereas Shopify enables you to build a digital store — a vital part of creating a recognizable brand.
3. Select the right suppliers
Now that you have a platform and niche, it’s time to start finding suppliers. Consider factors the following factors during your search:
- Product quality
- Return processing
Lay the foundation for the success of your dropshipping business by choosing a few reliable suppliers that provide great products.
4. Build your store
Your digital store is the face of your business. Ensure it is user-friendly, engaging, and responsive.
There are a few ways to build your store. You can do everything yourself for maximum customization and control, although the process is time-consuming and challenging. Alternatively, an all-in-one platform like Shopify can accelerate the process.
5. Register your business
You’re almost ready to start selling. However, you must first register your business with the state. Register your business name and create a limited liability company (LLC) to separate your personal assets from your company earnings and protect you from liability.
6. Start marketing
Finally, launch your site and start marketing your new business to your target audience. You can take to social media or run paid ads on Google. When building your strategy, leverage a multifaceted approach to attract new customers and rack up sales.
How to find suppliers for your dropshipping business
Here are some of the best dropshipping suppliers:
- Wholesale Central
- Worldwide Brands
Although these suppliers rank among the best and most popular worldwide, this list is not exhaustive. Hundreds of manufacturers and suppliers exist, so do plenty of research and find the partners that best align with your dropshipping goals.
Tips for a new dropshipping business
Dropshipping is a competitive business. Follow this advice to provide a great customer experience and develop a positive brand reputation within the dropshipping industry:
- Avoid using subpar hosting services as you prepare to start your dropshipping business. Instead, choose a reputable, secure hosting service to protect your customer’s data and inspire confidence in your platform.
- Ensure a seamless user experience on your website. A slow and poorly designed website will diminish the customer experience and reduce sales volume. To prevent this, take the time to build a great site and thoroughly test it.
- Don’t skimp on branding when you dropship. You’ll find hundreds of potential competitors regardless of which niche you choose. You need a great marketing strategy and powerful branding to gain an edge.
- Choose your offerings carefully. Avoid broad product categories that are inundated with stores, as it will be challenging to gain a foothold. Instead, choose a specialized niche you know well.
- Offer top-notch customer support to ensure repeat customers. Make it easy for customers to seek help or share feedback. Include an online form on your digital store or add a live chat feature so they can get help if they encounter a product issue.
Implement EDI in your dropshipping business with Orderful
Electronic data interchange (EDI) technology translates data from retailers or suppliers into a universal format your internal software can process. Integrating EDI technology into your digital storefront simplifies e-commerce fulfillment processes and transforms your dropshipping company into a scalable, agile business.
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