What is Dropshipping?

Before you can learn how to start a dropshipping business, ensure this is the right type of business model for you. In order to make this determination, it’s important to understand exactly what drop shipping is and how it works.

In short, dropshipping is a form of eCommerce order fulfillment that allows you to sell products on your website that you are not directly responsible for warehousing or shipping. Instead, you purchase products wholesale from manufacturers or dropshipping suppliers, which oversee fulfillment for you.

How Does Dropshipping Work?

With this basic definition in mind, let’s break down how dropshipping works in a little more detail.

Overall, there are three parties involved in the dropshipping business model of eCommerce—you, the retailer, the customer, and the supplier or manufacturer.

The dropshipping process, therefore, can be summed up like this:

• A customer buys a product on your eCommerce website.
• You send the order information to your dropship supplier.
• The supplier picks, packs, and ships the product directly to the customer.

Dropshipping Pros

So, why would you opt to figure out how to start a dropshipping store over a different type of business?

Overall, dropshipping has become a popular business model because it makes starting an eCommerce business simple. Shipping is taken care of from the get-go, and adding new products to your catalog is as simple as a few clicks. Your risk is minimized because you don’t have to pay for inventory or warehousing, and if the products you sell ever lose popularity you can simply change them out.

In addition, the startup costs are minimal. You only buy what you know you can sell, and many drop shippers won’t charge you a fee to work with them. Plus, drop shippers offer cheaper and more efficient shipping for their vendors than they would otherwise get. All you have to pay for is your eCommerce website and internet connection.

Finally, most dropshipping services will allow you to provide your own labels, so your customers don’t even need to know you’re a drop shipper.

Dropshipping Cons

At this point, dropshipping probably sounds too good to be true. Unfortunately, a lot of other people thought the same thing, which makes the dropshipping industry highly competitive. Because of all this competition, the profit margins are low as merchants compete to offer the lowest prices on popular items.

This can be a vicious cycle, as you need to do a lot of business to compensate for your low-profit margins, and yet you have a lot of competition for every sale. You are also at the mercy of the manufacturers or suppliers you work with, as they have control over fulfilment and returns, yet you have to deal with the customer.

It can also be harder to build a brand as a drop shipper, given that you are selling a variety of other businesses’ products.

How To Start A Dropshipping Store In 5 Steps

Ultimately, it’s up to you to determine whether or not dropshipping is the right type of business for you to start.

However, if you do decide to invest in learning how to start a dropshipping business, you can make the process easier by breaking it down into smaller, more manageable steps, as we’ve done below:

Step 1: Figure Out the Logistics

Overall, the first step to starting a dropshipping business is actually getting through the paperwork and other necessary steps to start a business. With this step, learning how to start a dropshipping business is generally equitable to starting any type of business.

Step 2: Identify a Market and Choose a Niche

The next step is narrow down the specifics of your dropshipping business idea. You and your competitors have access to the same products and work with suppliers that offer similar levels of service. Therefore, the great differentiator between your business and your competition will be your marketing efforts. To market successfully, you need to identify a target demographic and sell a product that speaks to them in some way.

Step 3: Find the Right Supplier

Once you settle on a niche you want to target with a specific product. Time to find the perfect supplier that sells that product. If you’re wondering where to source products for dropshipping, the process shouldn’t be nearly as difficult as identifying a niche. There are a variety of dropship suppliers out there that offer millions of products.

This being said, your dropship supplier is a key partner in your business. In order to find the right supplier, we recommend prioritizing the following criteria:

Step 4: Build Your E-commerce Website

At this point, we’ve identified a market and we’ve aligned with a supplier. Now, the next step to build the actual website where we will sell our products.

There are two ways to go about this. You can create a store on a major eCommerce marketplace like Amazon or eBay. You may also build your website from scratch using an eCommerce platform provider like Shopify or WooCommerce.

Step 5: Optimize and Market Your Site

Once you’ve actually launched your dropshipping site, the last step is to bring in customers.

Regardless of which platform you choose, you are going to need to market aggressively and optimize your site for search. You can do this through a combination of email marketing, paid ads, and social media. Each eCommerce marketing approach has its own merits. We recommend settling on a few that work best for you.

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