How to Start a Dropshipping Business in 3 Steps

  • Ameer Rizvi
  • Aug-17-2017
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So you want to know how to start dropshipping business, welcome to the club. While consultants and experts make it look easy, the course of creating the perfect drop shipping business has its obstacles. But, don’t get me wrong, when done correctly the rewards simply outweigh the initial outlay & efforts.How to Start a Dropshipping Business in 3 Steps

Drop shipping has seen massive growth from being a $220 billion industry in 2016, to a $370 billion in 2017 in the USA . According to a research presented by eMarketer.com global eCommerce sales amounted to a gargantuan $1.915 trillion in 2016.

In the sections that follow we will go over the basics of how to start a dropshipping business.

What is a DropShipping Business?

If you are new to the idea of dropshipping, the concept is built on the principles of convenience, low-cost, and storage free business. So, what exactly is dropshipping? Here are some definitions to learn from:

 Wikipedia explains dropshipping as:

“… A supply chain management method in which the retailer does not keep goods in stock but instead transfers customer orders and shipment details to either the manufacturer, another retailer, or a wholesaler, who then ships the goods directly to the customer.” [1]

Shopify, one of the pioneers of ecommerce, explains the concept as:

“… A retail fulfillment method where a store doesn’t keep the products it sells in stock. Instead, when a store sells a product, it purchases the item from a third party and has it shipped directly to the customer. As a result, the merchant never sees or handles the product.” [2]

The above definitions allow us to comprehend that dropshipping is a low cost way for entrepreneurs to set-up businesses. Dropshipping removes the issues of managing the hassles of delivery, storage, inventory management, and payments. Consider the diagram below:How to start a dropshipping business and what it is?

If you observe in the diagram above the process usually begins when a buyer places an order online. Next, The online shop  forwards the order to the dropshipping supplier. The supplier then confirms payment and dispatches the order to the buyer. The store owner can then confirm the order and send all delivery details to the buyer.

So hoping you have grasped the concept, let’s answer the question “how to start a dropshipping business?”

Three stages to start your DropShipping Business

Creating a dropshipping business as I have discovered comprise of three stages. These include:

  1. Setting up the store & identifying products to sell
  2. Finding Dropshipping suppliers
  3. Marketing & promoting your dropshipping business

Setting up the Store – Designing, Launching & Merchandising

The first and most basic step to take is creating a store front that you will sell through. Setting up the store front requires you to:

a. Register a domain & hosting service

The first and probably the easiest step on the way is registering a domain and choosing a hosting service. Domain registration is simple, you can use a hosting service like GoDaddy or NameCheap to do so. Usually, a decent domain name will cost you between $1 and $10 (I bought mine from GoDaddy),  more prominent domain names will cost $99 or more.

 b. Deciding which products to sell

Probably the more difficult decision to take is choosing whihc products to sell. Because you simply can’t expect to start selling branded products in a few days there are several factors to consider:

  • Why should people buy from me?
  • Which products sell best online?
  • Niche that have least competition
  • Products & services that offer the best profit margins
  • Identifying trends for various products or services

You can use a variety of data analysis tools like to search for products to sell on your online store, namely:

  • Google Trends,
  • Google Keyword Planner,
  • manually research products over ecommerce stores (AliExpress, Amazon & eBay etc.), or
  • Use a supplier directory e.g. SaleHoo or Oberlo

Resourceful product research tools are also available for eCommerce platforms. Platforms including SaleHoo, Shopify and others offer tools built for the online entrepreneur. These include tools with the ability to search for merchandise based on keywords offering you selling prices, shipping prices and sell-through rates. These research tools however come with subscriptions only. Read the detail blog that how to find the best selling products

c. Use an eCommerce platform to setup & launch your store

Another crucial decision to take is choosing the ideal eCommerce platform to setup your store. There are several worthwhile platforms like Shopify, LemonStand, Volusion, BigCommerce, Magento, WooCommerce etc. For those who haven’t encountered these platforms before, they primarily provide you with a storefront. eCommerce platforms include valuable features, especially those for sales, marketing, inventory management, shipping, payment systems, accounting, customer service, reporting, and many others.

 

d. Choose a theme for your store

Selecting an appealing theme for your visitors is crucial. However, i have noticed store owners are not bothered in the beginning, it is ideal practice to setup an appealing store front from day 1. Hence the color of your chosen theme, ease of navigation, and visibility of elements all contributes towards a positive customer experience.

Not everyone is blessed with a huge company and a large customer base. Therefore, it is good practice to get feedback from visitors on the design of your eCommerce store. Colors, icons, navigation, scrolling, CTAs, text type plus many other factors can have considerable effect on traffic & conversions.

How to find DropShipping Suppliers

Finding suppliers and dropshipping partners can be a massive headache if you don’t know where to begin. Searching for dropshipping suppliers is a daunting task and must be done very carefully. There are several ways to shortlist dropshipping suppliers like:

  • Google Search,
  • Subscribing to Supplier Directories,
  • Contacting Manufacturers directly
  • Looking up suppliers on eCommerce websites like Amazon, AliExpress, Etsy etc.

Possibly this is one of the most crucial aspects when learning how to create a dropshipping business. Hence, supplier search requires addressing certain questions, including:

  1. The prices/margins the supply partner offers
  2. Handling or shipping fees charged by supplier
  3. Shipping methods are provided
  4. Billing methods provided
  5. Return & refund policies

Finally, do beware of known scams circulating online as drop shippers. These websites are very convincing but deceptive, demanding a costly fee. Be very careful if a supplier demands a very high upfront fee, its probably a scam. Listed below are verified services that provide you direct access to dropshipping companies:

  1. World Wide Brands – Subscription
  2. Oberlo – Subscription
  3. SaleHoo – Subscription
  4. Wholesale Central – Subscription
  5. Dropship Direct – Subscription
  6. Sunrise Worldwide – Subscription
  7. Wholesale 2B – Subscription
  8. AliExpress
  9. DOBA – Subscription
  10. Mega Goods – Subscription
  11. Inventory Source – Subscription
  12. E-Sources – Subscription
  13. Dropship Access – Subscription

As you will notice most of these services are subscription based as indicated. It is understandable though, since these directories are providing access to wholesale suppliers who are difficult to find. Oberlo & SaleHoo are leading facilitation platforms that online business owners turn to. These two primarily because of their ability to provide different eCommerce services & tools.

Managing Social Media, SEO, and SEM Marketing

Once the difficult areas have been covered, then comes the easy on going aspects of running your dropshipping business. Since it’s all online you will attempt several organic and paid marketing strategies to first direct traffic to your e-store. Next, you will intuitively covert this traffic into leads.

Indicators from ReadyCloud article These Ecommerce Statistics Matter Most

Organic marketing is the use of social networks, communities, and Google to promote your products directly to relevant niches. So, if you sell women’s jewelry a great place would be social groups & communities of that women join.

Email marketing remains the prevalent method to generate leads, driving approximately 20% of leads in 2016 according to Remarkety’s sales report 2016. But, social media including Facebook, Twitter, Instagram, LinkedIn, YouTube & other platforms have also contributed massive traffic for e-commerce businesses.

SEO is massive to promote business, if you notice in the stats in the image above a resounding 34% of ecommerce traffic comes from “Search”. Search basically indicates traffic arriving from Google, Yahoo, Bing and other search engines. Ahrefs.com offers a brief guide on the basics of ecommerce SEO you should definitely read through. In addition, there are also other interesting guides at kissmetrics, backlinko, search engine journal, SEM rush, and Big Commerce.

Similarly, Google PPC (SEM) & Facebook Ads can be used to reach a much larger target audience. Usually, this requires an expert to handle ad bids plus decide exactly how much to spend. No need to entirely forgo this tactic since organic traffic saturates at one point requiring you to experiment with paid marketing campaigns.

Developing Your Dropshipping Business Competency

Though it has nothing to do with setting up your dropshipping business initially, you will be required to decide what your competency will be. The added value that customers get from shopping on your e-store, defines your future success.When discussing eCommerce, e-store and dropshipping I noticed there are 3 major values that you can develop your competency in, namely:

  1. Distribution – fastest delivery times
  2. Value – best prices
  3. Experience – best customer experience

Principle dictates that you cannot have all three of the above. You will have to forgo one value based competency. If you choose distribution & experience, then you will definitely have to incur higher costs. Similarly if you choose value & experience, distribution times & costs will be dependent on the dropshipping supplier.

In a Nutshell

Seemingly easy but a dropshipping business requires great attention and patience to setup. As my first blog regarding the subject I have articulated my own experience stepping into the eCommerce industry. I hope you enjoyed my brief introduction on how to start a dropshipping business yourself.

In case I missed something or you feel should be included, drop a comment with a shout out below. I would also like devout readers to leave their feedback and their areas of concern for us to address in future publications. Remember to share this article with friends and join our growing community of entrepreneurs by click the social icons above.

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Written by Ameer Rizvi

Ameer Rizvi is a professional blogger and previously worked with lifestyle, information security & entertainment services. Ameer now exercises his digital marketing & authoring skills assisting entrepreneurs and prospect wantrepreneurs reach their million dollar goals. A loyal Liverpool FC fan, EDM fanatic, geo-politics observer, and history geek; Ameer spends hours discovering strategies, hacks and tricks to contribute towards the eCommerce community.

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