What is Dropshipping? How to start a dropshipping business

 

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What is Dropshipping? How to start a dropshipping business

Dropshipping is a business model in which an independent seller does the buying and selling of products and services on behalf of another company that is interested in the customer's needs, not their own. All the work of managing, accounting and marketing is done by the dropshipper. You may be surprised to learn how much you’ve been doing behind-the-scenes for your own ecommerce store and discover if it will all fit into one place or be something else entirely. In this guide, we are going to take you through some basic steps toward starting a dropshipping business. This way:

You can determine what products would benefit from being sold online for sale with ease

You don't need any special skills or resources before you start your dropshipping shop. It's as easy as ordering a product from Amazon, for instance

Getting started doesn’t mean having to think about logistics and handling orders as a dropshipper

You don’t have to worry about dealing with customers directly, but instead, focus on growing their brand and creating loyal repeat customers through word-of-mouth advertising and other methods

We'll cover everything you need to know about dropshipping right now. But first…

Who Should Create Your Own Online Store?

The idea of launching an online storefront without the help of an expert isn’t exactly new. There’s nothing wrong with using an Etsy shop or eBay listing. However, if you're looking to get sales quickly, there's no other option than setting up shop yourself and trying dropshipping!

While working on this plan for my website during COVID, I needed to set up an account with Shopify and create my first online store. While getting started is never too difficult, a lot of people do not know where to begin. We recommend a few things first when you are just beginning. Once you've found these solutions, take them into consideration and see whether they match your specific needs or preferences, then move forward accordingly. These items are also helpful during setup, as you won't want surprises later on when shipping items and/or collecting online payment before you sell out your products. The only downside is that you're essentially making an entire store from scratch at launch. If you were able to find a solution that made sense for you, great! Just make sure you are committed throughout the process, whether that's a monthly subscription or longer (e.g. yearlong). That said, here are some ideas to get you started and hopefully make it a little easier for you.

How Does Drop Shipping Work?

Now that you know who should begin your initial drop-shipping experiment, how does each step of the process add up to creating a successful store. Let's go to our top picks and answer those questions one by one.

1. Identify Potential Products For Sale On Your Website And Sell Them Directly From An Authorized Seller Listing

One of the most frequently mentioned parts of dropping shipping is finding high-quality, unique products to market. Depending on what you decide to start out selling, you could offer physical goods or digital products or both. When you begin selling physical products, you can purchase wholesale quantities of products from manufacturers and resell them directly to consumers. Similarly, if you choose to start selling digital goods, you may want to consider offering low stock quantities that would allow you to sell directly from your website to customers and build a following. Regardless of your choice to sell physically or digitally, make sure that you do so in a non-disruptive manner. Don't flood the site with ads and don't promote anything that goes against your business plan (it's better to hide your strategy than to risk losing followers). Keep everything simple and focused on getting the correct number of buyers. As time passes, keep adding more inventory and grow your list of potential buyers to ensure you maintain a healthy balance between quantity and quality.

2. Choose Who Will Be Responsible For Selling You Offered Products

Now that you have set up your store and found an assortment of products, it's time to figure out who will take them off the shelves as well. Even though you do not need specialized expertise to run a successful dropshipping business, you still need someone else who has experience with inventory management to handle orders and collect payments. Without paying attention in detail when it comes to running your online store, it’s highly unlikely that anyone else within your organization will have the necessary skill set and knowledge to do as required. So who should be included? Well, the answer is almost straightforward. First, you’ll need an employee who is familiar with the ins and outs of inventory control. Then, you’ll need an administrative person. Finally, a financial manager will be involved to ensure you meet your daily budgets, stay within budget and follow proper tax regulations. Of course, if you are not planning to hire employees, you will depend on the skills of existing members of staff.

3. Decide Which Suppliers Are Worth Considering Having A Relationship With

Once you have settled on an amount of products to sell on your site, it’s time to make sure you’re sourcing the best products possible. No matter how many times you make changes to your supplier roster, your customers will probably continue showing the same behavior. Finding partners who specialize in certain areas will greatly improve your chances of finding relevant suppliers. Before you even think about contacting them (or worse, hiring them), ask yourself this question: Is the item going to be cheaper elsewhere? Can it be shipped faster? Will it come with a warranty? Do competitors offer similar products from their suppliers? Knowing what’s currently available is key to succeeding at dropshipping. After all, you don't want to wait until everyone in your office gets sick of a particular vendor or you've exhausted all your options and end up spending money on a product that won't deliver results. Instead, use advanced search tools to identify companies that match the ideal characteristics of your goal.

4. Determine Whether Any Inventory Needs To Be Held Back During Production Times

As long as you adhere to the delivery schedule and pay attention to details such as packaging or the shipping costs, you shouldn’t have a problem fulfilling orders efficiently. However, if the production timeline is delayed or the supplier decides to cut the hours in half to avoid extra costs, you may be left without stocks. Luckily, this is the last part of setting up your dropshipping store, and if it isn't handled correctly, it might result in unhappy customers, lost sales or lost profits.

5. Consider Wholesaling Through DTC Websites Like Oberlo and ThredUp

Another option that you simply must consider is wholesaling items to retailers or wholesalers. By picking the best deals available on popular wholesaler websites like Oberlo and ThredUp, you'll be able to obtain lower prices, guaranteed quality and fast deliveries. Not only does it save you money, but it also gives your dropshipping store a competitive edge. Most often, you can even find great discounts on used items as well.

6. Research Key Terms Used Within Industry Communities

While it can be tempting to limit your research into keywords found in industry magazines to narrow down your field of interests, it’s often far better to seek out trusted information directly from experts in the category. You might hear terms used in trade publications, online forums and podcasts frequently discussed amongst fellow enthusiasts. Take note of the buzzwords, terminology, acronyms and jargon that are commonly found in these types of sources to become familiar with this language. They are key to understanding what you are hearing because you should always look at “what is” as opposed to searching for the “how is” or “why is.” After that, check specific sites to get more insight into the topic. Ask around, and if you want a personal recommendation, reach out to friends with connections in the industry or try asking the founder of a company that does dropshipping. Again, your objective should be to learn everything that you can about dropshipping. Also keep in mind that these resources aren't designed to be strictly educational -- instead, they’re meant to provide useful content. Always remember that the goal is to expand your horizon and give you valuable insights into the dropshipping world.

7. Find Out About Discount Opportunities At Stores That Offer Loyalty Programs, Coupons And Other Promotions

Determine which stores that you want to target with discount codes and promotions (and remember that not every retailer offers discounts for the likes of apparel). Next, identify where the discounts are offered as well as whether they are exclusive or non-exclusive. Many merchants include incentives for loyalty programs, especially as you build up your follower count. Additionally, if you need additional coupons and offers to entice shoppers, consider signing up for multiple merchant email lists to receive early access to exclusive offers, promotional deals or free gifts.

8. Get Involved With Social Media And Email Campaigns

The days of holding flyers and throwing your name out onto social media platforms are gone; it's time to put your own stamp on your presence on these platforms. Because of this, you'll need to spend time engaging with other businesses, bloggers and influencers. Remember, you cannot have success solely online; therefore, it's imperative to invest in social presence too. Make sure you stay connected to your audience on Facebook, Twitter, Instagram and LinkedIn and engage with others who are already connected to these networks. Share updates and share opinions that directly align with your current content. Never be afraid to contact other businesses directly if you see something beneficial – you never know, maybe the next promotion you offer will make your life easier long term.