How to Start a Dropshipping Business in 5 Steps – An Ultimate Guide
- Bilal Uddin
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Are you willing to know about how to start a dropshipping business?
All right, fine!
From our social channels, we have been receiving various queries that relate to the topic from ‘what is dropshipping’ to ‘how to earn a million dollars from dropshipping’.
But, first of all, I want to address those who don’t consider dropshipping as a profitable and stable ecommerce, here are some facts you should know.
As of 2017, 23% of online sellers adopted the dropshipping model and made $85.1 billion in sales. Moreover, the business model is growing by 17% every year.
The manufacturers who dropship earn 18.88% more than traditional sellers.
Frankly speaking, it is one of the few businesses in the current era that you can start with minimal investment and low risk.
Now coming to all the queries from ambitious young entrepreneurs, who want to be a part of ecommerce circuit and have doubts about what is dropshipping and how does it work.
And all those people who have a mild idea about the business model or want to scale to their dropshipping business.
This post is all for you all and answers to all the questions about dropshipping.
Are you excited? So am I.
Chapter 1 – Understanding Dropshipping
Chapter 2 – Top Dropshipping Suppliers and How to Find Them
Chapter 3 – How to Start a Dropshipping Business in 5 Steps
Chapter 4 – Dropship on Ecommerce Marketplace
Chapter 5 – How Much Can be Earned from Dropshipping
Chapter 6 – Things to know about Dropshipping
Chapter 7 – Dropshipping FAQs
Chapter 1 – Understanding Dropshipping
What is Dropshipping?
Dropshipping is an e-commerce business model where a seller can operate an online retail store without keeping or owning any inventory.
Yeah, that’s true! NO inventory!
Imagine you set up an ecommerce store and consider it as a showroom.
Find a supplier who took the images of their products.
Post those images on your store as your product.
A customer comes to your store, likes the product, adds the item to his cart, buys the product, and pays you the amount.
Once you receive the order, you send the order details to the supplier.
Your supplier then directly ships the product to your customer.
So, the customer gets the product, but how do you earn from dropshipping?
The customer pays you, not your supplier. You then pay your supplier.
You can charge any amount from your customer and pay the supplier his price.
The remaining amount is your pure profits.
Here is an illustration of how dropshipping works:
Pros and Cons of Dropshipping
Every coin has two sides; similar goes with dropshipping.
I am trying to be super honest to tell you about the pros and cons of dropshipping.
So, let start with the pros of dropshipping,
- Easy to set up and low startup cost
Every ecommerce entrepreneur knows how easy it gets when you do not have to take care of your warehouse or inventory.
82% of businesses fail due to cash flow issues. Dropshipping does not require much investment to start and need only a few things to setup such as:
- Ecommerce Platform e.g., Shopify or WooCommerce (website and hosting)
- Laptop and internet connection
That’s it! These are the mundane things you need to start a dropshipping business.
- Sell from anywhere
Portability in a business is the biggest advantage of dropshipping. You do not need to stick to one place to operate your dropshipping store, you can manage it from anywhere on the globe. All you need is an internet connection and a device (mobile or laptop) to run your business.
- Sell anywhere
Another advantage of dropshipping is that it opens cross-border opportunities.
You can sell globally where shipping is allowed and find your niche and target them without any restrictions.
- Easy to handle (Automation)
One of the reasons that makes dropshipping easier to handle is the ability to automate your operations.
Apps like Oberlo makes it a lot easier to import product details on your Shopify store from supplier’s store (Aliexpress).
It automates the process and allows you to keep your focus on marketing to increase your consumer base.
Also, you do not have to handle any inventory or own a warehouse to keep your stocks, which is a great relief.
- You are the boss
Become your own boss!
Imagine how cool it is to work from anywhere, work on your passion, and don’t have to report to anyone else other than yourself.
Dropshipping is the most comprehensive gateway to become a sole entrepreneur.
- High competition
Dropshipping can start with little investment and low entry barriers that mean a lot of competition.
With growing competition, there is an increasing difficulty in having an exclusive deal with the suppliers.
That means you will find a higher competition in the market you want to penetrate. Competitors might be selling the same product that you are selling in low competitive prices.
- No control on supply chain
In a dropshipping business – you do not have the inventory – so do not have control over the fulfillment process and inventory issues.
You are totally at the mercy of your supplier to handle delays and return policies.
- Communication channel issue
Because you are in a loop of communication between your customer and supplier, it becomes difficult to maintain clarity between different communication channels.
If one communication slows down, it will affect all other communication channels and resulted in solution delays.
- Need a lot of research to find the right niche
The success in dropshipping is highly dependent on how long it takes to find your winning product.
You have all the niches open in front of you but it takes a lot of research to find out your target market and testing a lot of product to find your winning item.
Well, the idea of listing down the pros and cons is to give you a clear picture of dropshipping. However, it depends on how well you can avail the benefits from pros and what plans you have to deal with the cons.
What is Private Label dropshipping?
Private label dropshipping is to buy goods put your brand name and resale it for profit.
In this process, the manufacturer makes the products but it is sold under sellers’ brand name.
Private label dropshipping has higher acceptance among people. Because the product that the customer receives comes with the name of the seller that increases the trust of the buyer in the company.
The retailer has more control over the quality as the seller can contact the manufacturer and can tell their requirements of quality.
It is a different dropshipping model. You need a large capital to order stock, keep in your warehouse, and ship it.
So, it is not exactly dropshipping.
Here is a list of good private label dropshipping suppliers,
- Dropship direct
- China brand
Check out this detailed guide to start your private label product business right away.
What is Aliexpress dropshipping?
Many people ask this question.
It is nothing new it is basically dropshipping.
You need to set up an ecommerce store like Shopify or have a store on an ecommerce marketplace like Amazon.
When a customer makes a purchase from your ecommerce store or your Amazon store, you directed that order to your Aliexpress supplier.
You pay the supplier,
The supplier sends the product to your customer,
And, you receive the payment from your customer with a profit margin.
The customers do not find out about the product coming from Aliexpress. They believe it is coming from your store.
Check out the complete Aliexpress Dropshipping Guide
Chapter 2 – Top Dropshipping Companies/Suppliers
In the dropshipping business, supplier possesses supreme authority than any other sort of business. It would not be wrong to say that the supplier is actually your dropshipping business partner. There are multiple reasons why I am saying this
- You do not have the product even you do not get to see the product – Your supplies owns the product he is in power to control the quality of your product.
- You do not have any control over the supply and shipment of the product, so you need to choose the best supplier for your dropshipping business and have smooth business operations.
I have a simple way to check the credibility of the supplier, have a chat with them, and order some sample product to validate the product quality.
For your comfort, I am listing down some of the platforms where you can find some genuine wholesale and retail suppliers.
List of Best Dropshipping Companies
AliExpress is a leading platform where the majority of dropshippers find their supplier.
Aliexpress offers millions of products from thousands of categories, including fashion, electronics, health care, and much more.
The best thing about Aliexpress is that you can sign up for free, where you can easily find the best product for your dropshipping business with the fast shipment (ePacket delivery option) and at reasonable prices.
However, Aliexpress has hundreds and thousands of supplier, so it is hard to trust every supplier, but you can validate the supplier based on the rating given by their clients.
The rating of Aliexpress suppliers is based on three parameters:
- Right Item delivery
- Good communication to take care of the issues with clients
- On-time shipment
So, to select a supplier from Aliexpress do check out their rating.
You need to evaluate the rating on these bases,
- The supplier should have experience of at least 3+ years.
- Good feedback on the product you plan to dropship
- The supplier should have an overall rating of 90+.
Wholesale Central might seems a little juvenile in design, but it is an excellent source of dropship supplies in multiple niches.
The best thing about this website is that there is no third party involvement between the dropshipper and the manufacturer – You click on the product, and you will be directed to the manufacturer’s website.
Worldwide Brands is the biggest dropshippers directory and distributor. You can find top-notch products at the factory prices.
The products are available here in almost every category. The list of suppliers keeps on updating, and every supplier is certified that allows the dropshipping to trust the credibility of the supplier easily.
For its services, Worldwide Brands charges a one-time fee of $299 to have complete access to the supplier’s directory.
Doba provides the facility to find the manufacturers and suppliers under one platform. Thousands of suppliers are present on this platform, offering over 2 million products. It covers a large business scale that allows you to deliver the product at any part of the world.
Its basic plan starts from $29/month with a 14-day free trial. You can check out its monthly plans here.
SaleHoo is another famous wholesale supplier directory for the promising dropshippers. It offers number of suppliers who provide products within multiple niches. The interface of this platform is extremely user-friendly that gives a filter to search for products that you want to sell along with the facility that helps in finding the trending and profitable products to sell.
Salehoo charges an annual fee of $67 or a one-time fee of $127. Check the prices here.
Dropshipper.com is a comprehensive solution for dropshippers to get access to over 2million products from 900 suppliers. You do not even need a dropshipping website; they offer everything to set up a dropshipping business, including a domain name and eStore.
It charges a fee of $29/month or a one-time fee of $99.
Inventory Source provides easy access to 150+ suppliers to search out the best product for your dropshipping store. It allows integration with multiple ecommerce channels such as Amazon, eBay, Shopify, and BigCommerce. It provides the features of inventory automation and the upload of product data.
It offers different plans that start from $50/month.
You can check a detailed list of +40 dropshipping suppliers based on niches.
Chapter 3 – How to Start a Dropshipping Business in 5-steps
Now comes the fun part! Here I am going to tell you about how to start a dropshipping business in 5 simple steps.
Step 1: Research for Dropshipping Niche
Primarily, you must know the niche you want to sell.
There are many ways to find the right niche and they range from finding trending products to getting into any very specific niche that has rare products.
Unable to find a profitable niche is one of the leading reasons for business failures. Therefore, before setting up a store, you’d better get an idea about what you want to serve.
What is a Niche Market?
A niche is a division that is focused on a particular audience’s problem that would be solved via a product or a service. This division of the market can be further narrow down to problems that are more specific – that is called a Sub-Niche.
Industry ——– Beauty & Personal Care
Niche ——– Skin Care
Sub niche ——– Skin Care > Sunscreen & Tanning products
Make sure to penetrate the niche in which you have some expertise and have high returns against investment.
How to Choose a Dropshipping Niche
- Follow Your Passion
You can better understand the niche in which are interested. Everyone knows the crux of his or her hobbies. For instance, if you have a dog pet you would have the knowledge about dog care and every need of a dog pet, in this case, you will have the edge to understand the target audience psyche better than your competitors do.
- Check Your Niche Market Value
Always check the market value of a niche before selecting it. By knowing the market value you will get a whole lot better idea about niche profitability. Like if you are want to penetrate in the baby care niche that you would be thrilled to know its market value is expected to grow $109 billion by 2026.
Here is the list of the market value of 80+ niches.
- Look current trends
The online sellers cannot ignore the trends. You need to make sure that the niche has a stable demand throughout the years, so you can assure that it would not fade away from the market in the near future.
Like here, I searched for ‘Dog Pet’ niche trends
The trends are superbly stable and contain a good demand, maintaining over 80 points out of 100.
These are some basic tactics that would help you to select the perfect niche for your dropshipping business. To understand more about profitable niche check the post in which we have explained 9 easy ways to unlock profitable niche for your dropshipping business.
To get some ideas about niches, download this guide for FREE – 725 Evergreen and Profitable Niches.
Step 2: Find the Bestselling Dropshipping Product
The product defines the success of your business. Once you finalize the niche for your business then you have to figure out the product that could become the bestselling product or we could say winning product of your dropshipping store.
The success of the dropshipping business is highly dependent on finding a profitable and bestselling product to sell.
There are multiple ways, paid and unpaid, to find out the best-selling products to sell online.
However, I will tell you the simplest and free way to find out the bestselling dropshipping products of your niche in 4 steps.
i. Find Product on Amazon Best Seller
Go to Amazon bestseller you will find the list of bestselling product on Amazon in every category.
This list is updated on an hourly basis.
Amazon is the biggest ecommerce marketplace and the product that is selling well here has higher chances of becoming the bestseller product of your store.
For example, my niche is baby care product, so I go to find the bestselling item of the baby product on Amazon.
I found out this carrot shaped baby teether ii the bestselling item list.
ii. Find the Product on Aliexpress
After that, I went to Aliexpress to find the same item to see if I can sell it in profitable rates.
Here I found my product in cheap price on Aliexpress. It means I can have a decent profit margin on this item.
iii. Search the Term on Google Trend
Now I want to know this product’s worldwide trend to know how much people are searching for this product.
The worldwide trend is showing an upward trend for the baby teether that means it is the trending product right now.
I scrolled down to see the region where this product is the hottest right.
So I figured that I should target Singapore, the Philippines, Australia, and Malaysia to sell this product.
iv. Check the search volume on Google
As I have taught you earlier how to use keywords everywhere to know the search volume of any keyword.
I use Ahrefs to search the keyword that works pretty well and accurately.
The search volume for this keyword is 3200, which is very impressive.
This simple research suggested that I should be selling ‘baby teether’ in my store and it could bestseller product of my dropshipping store.
However, Ahrefs is a paid tool, there are lots of free keyword research tool such as
- Google Keyword Planner (AdWords account required)
I hope now you understand how to find the bestselling product.
To learn more tricks of finding the bestselling product do check out this post, ‘15 Killer Hacks to Find Bestselling Products.’
Note: It not always necessary that you would find the bestselling item right after the first campaign. On average, it takes 20 product testing to find out that one product that would help you to earn major profits from dropshipping business.
Choose a specific item and test your product in that particular niche, and eventually, you will find your winning product.
To select a product for dropshipping do check out this guide ‘how to search for a dropshipping product on Aliexpress.
You can use a variety of data analysis tools to brainstorm for the products to sell on your online store:
- Google Trends
- Google Keyword Planner
- Manual products research on ecommerce marketplaces (Aliexpress, Amazon, eBay, etc.)
- Use a supplier directory e.g., Oberlo
Check out the list of 91 trending products of 2019 to find out the bestselling item of your niche.
Step 3: Look Out for Supplier
In the dropshipping model, the supplier is the ultimate king that has the power to make or break your business.
Finding a supplier can be a tough task if you do not know the pattern where to begin.
To do in-depth searches of suppliers, do check out the list of suppliers for a dropshipping business for different niches.
Here is the list of some general dropshipping suppliers,
- Aliexpress ( Free to sign-up)
- DropshipDirect ( Free to sign-up)
- Wholesale Central ( Free to sign-up)
- Salehoo ($67/month)
- Worldwide Brands ($249 one-time fee)
- Doba ($29/month)
- Wholesale2B ($24.99)
How to Choose Best Dropshipping Supplier for your Business
To evaluate the best supplier, here are a couple of things you should perform to get the best suppliers for your dropshipping store.
Do Homework on Your Niche
Homework is essential before searching for a supplier. You must ask yourself what you want and how much you can earn from the products of your niche. You need to get familiar with your niche that includes these factors,
- How much can I earn from my chosen products?
- In what price can I afford to buy from the supplier?
- How much time should the product take to deliver?
You have to ask yourself these questions first to get your thought process clear. By doing so, you can clearly define the needs to your supplier.
Research on Supplier Directories
Go to supplier’s directories that I have mentioned earlier to search where you can find the best deal for your niche product in terms of,
- Delivery time
Evaluate the supplier on these bases then starts shortlisting.
Clear Your Intention with the Supplier
Once you shortlist the suppliers, clear your intention quickly with them that you are a dropshipper and clear the motives of your business transaction. Do not try to veil any information that could lead to miscommunication.
Order a Sample
Product quality testing is crucial in any business. You cannot judge a product with images; you must get your hands on the product and check the quality in-person. Suppliers are very cool to send out sample products so you must satisfy with the quality.
Talk to Your Supplier – Build Strong Relation
Many dropshippers make the mistake of not talking with their supplier. Talk to your supplier and deliver your requirements. Suppliers usually are very easy-to-go about talking with their associates.
Communication is crucial in the dropshipping business getting into the talking term with your supplier will help to run the business functions smoothly and build a strong relationship with your supplier.
Tips: Once you get a reliable supplier, try to maintain good business relationships with them. And also have two to three suppliers in your for a single item to switch in the case of a supply shortage.
Step 4: Setup a Dropshipping Store on Shopify
To make an ecommerce website for your dropshipping business you need to select an ecommerce platform to set up your dropshipping store.
Dropshipping is relatively easy to set up than an ecommerce store as you do not have to maintain or store your inventory and warehouse. Nonetheless, some hurdles are always present that comes as counterproductive elements for dropshipping business.
So before selecting an ecommerce platform, you have to consider certain factors before choosing an ecommerce platform. They include,
- Easy to use platform
- Supportive plugins for a dropshipping store
- Tools and apps to scale up the dropshipping store
- 24/7 support
Keeping the criteria as mentioned above in mind for dropshipping business, the best ecommerce platform present is Shopify.
Setup Shopify Store
Go to Shopify and select ‘start 14-day free trial’
Write Email, Password, Store name and select ‘Create Your Store’
Oberlo is a Shopify App that helps to import directly from Aliexpress with just one click. You only need to download Oberlo Chrome Extension.
Just go to the Shopify App store (Shopify dashboard > Apps > App Store) and search Oberlo and click install.
With the Oberlo app, you can search for the product and with just one click, you can import the product in your product list.
Moreover, you can add the product with Oberlo Chrome Extension that is much easier.
For that, you need to have the Google Chrome browser for that.
Go to Chrome web store > search Oberlo > click add to chrome.
Click ‘turn on sync’ and you will have Oberlo extension installed in your browser.
Oberlo chrome extension has been installed.
Now here is how to use it to add products.
Go to Aliexpress write the product keyword in the search bar that you want to add in your store.
Select the product and just click to Oberlo Chrome Extension.
It will give the option of ‘Add to Import List’
That’s it you have successfully added the product in your Shopify import list with Oberlo chrome extension.
Add a Domain Name
In the Shopify store, you will have to buy a domain name to make your dropshipping name look credible. Otherwise, your store domain will look like this – yourstore.myshopify.com
Go to Shopify dashboard > Online store > Domain > Buy a new domain
You can also add any current existing domain if you already have one.
Select the option of buying a new one and write the name of the domain you want to have.
Buy a Shopify Plan
Now you have set up your store, you are only one step away from making your store live.
You will have to buy a plan for Shopify to live your store.
Shopify offers three plans, for the newbies, I recommend to take a basic plan for $29/month it provides the entire essential tools for a dropshipping business.
Shopify is the platform that provides free training and resources that is necessary to start an ecommerce store.
You can select either of the plans as both are amazing for a dropshipping business.
Check out the step by step detailed instructional guide of Shopify Dropshipping here.
Step 5: Marketing and Promotion
Organic traffic is significant for any website and business, but it takes a lot of time to reach the audience with SEO.
So, for initial sales, you need paid traffic, which I also recommend.
Marketing and promotion in the dropshipping business are not about making sales; it is more about finding that one winning product that could help you to earn hundreds and thousands of dollars.
How to Market Dropship Products?
Marketing is an essential part to earn profits from your dropshipping business.
In dropshipping, it is all about finding that one product in your niche that helps you to earn hundreds and thousands of dollars or even a million dollars in some cases.
To do so, you need consistent testing of products to find your winning combination.
- Sell Products with Facebook Ads
Run individual ads on all the products in your list and check out their response.
On average, it takes 20 products to find a winning item.
Once you run your ad of products, start retargeting by making a custom audience – target those audiences who have interacted on your ad – there is a high chance to convert these people to your potential customer.
The product that gets more responses in terms of likes, comments or views has higher chances to become your winning product.
So, this was the trick to find your winning products, nonetheless, to make initial sales of products, you need to check out the following strategies.
I am taking some insights from the researched post on our channel that defines strategies to get the first sale in the ecommerce business, here are some takeaways.
Facebook marketing is more likely to get you fruitful results as it gives you the audience insights, and with detailed targeting, you can easily retarget the audience who can become your potential customer.
- Reach Out Relevant Influencer
Instagram helps in an excellent way for micro and macro-influencers to create a huge fan following.
You need to find out a relevant influencer that can review products of your niche, give a shout-out on their Instagram stories, or offer discount vouchers of your products.
Maybe big influencer does not agree on your terms unless you pay their fees.
However, you can use a couple of micro-influencers by giving them some free sample of your products.
Check out this video to find a reliable and relevant Instagram influencer:
- Ask Your Friends to Make a Purchase
You need initial traffic on your website. The best way to do this is by asking your friends and family to make purchases on your online store and write some reviews about the product, hence promoting word-of-mouth marketing.
You can also provide them some free products in exchange for asking them to share your product links to their connections.
- Offer Discounts and Coupons
Offering discount vouchers is the most conventional way of marketing yet the most effective way to make your first sale.
You can set some conditions on discount offers.
For example, invite three people to the store by your reference and get 50% discount on your purchase.
- Sell in Ecommerce Marketplaces
Start selling your products on multiple marketplaces such as Amazon and Ebay.
In these marketplaces, there are higher chances to target the customer who is searching for products that you are selling.
Also, you can run ads to show your ad on the top search for a particular keyword to increases the chances of sales.
Ranking on the top will increase your chances to make your first sales quicker.
Check out this Facebook Ads Guide to make your Facebook ad flawless.
It takes on an average of testing at least 20 products to get that one winning product for your dropshipping store. So keep testing.
These are the steps, which you have to go through to start a dropshipping business.
Chapter 4 – Dropship on Ecommerce Marketplace
Dropshipping on Amazon
Amazon has a strict policy regarding dropshipping. If you miss even one rule, you lose the chance of dropshipping on Amazon.
On Amazon, the conventional style of dropshipping is not acceptable – in which your suppliers deliver the product.
Also, the supplier’s information should not be included anywhere on the product. On the slip, invoice, or on any document your name should be included as the seller, not suppliers. Otherwise, Amazon will shut down your operations before you can ask, “Why?”
Amazon offers an FBA program that would store, pack, and ship the product. Your supplier’s only responsibility is to deliver the product the on Amazon fulfillment center.
Get product category approval
You need Amazon’s approval to sell a certain kind of product. You can view the approval requirement of each category individually.
Integrate Amazon with Dropshipping Store
you can sync the dropshipping website with your store on Amazon.
How to Add Amazon Account on Shopify
Go to the left sidebar and click sale channels
Multiple options of sales channel would pop-up, come to Amazon and click it.
Then click ‘Connect to Amazon’ to continue your product listing on Amazon.
Create Product Listing on Amazon
Now your ecommerce store has been connected to Amazon. Here is what you need to do next.
Click on the Amazon sales channel link and go to Shopify’s left panel.
Click ‘create listing’.
Click Select Product.
Two options will pop-up.
As a dropshipper, you will click on the second option ‘This product is made by another brand.’
Now, you will be able to search for the product to become a seller for that SKU.
Once you find the product click ‘select’.
Lastly, click ‘publish’ for the process to be completed.
Although Amazon showed some restriction on dropshipping, still allows integration with an ecommerce store.
To learn more, check out the detailed Amazon dropshipping guide.
Amazon Dropshipping Pros & Cons
The pros and cons are nearly similar to eBay
- Large Audience
Amazon has a large market to penetrate where you can easily find the customer for your product. Getting traffic on the store is always the primary concern of every online seller. Amazon takes care of most of the traffic issues. Millions of people come to Amazon every day, that significantly increases the chances of your store to get a potential buyer.
- Easy to set up
For newbies, it is tough to set up and handle the hassle of an ecommerce store. Amazon makes it much easier to sell online by setting up stores and list products by following an easy process.
- Customer Support
When you sell on Amazon, you get hassle-free from all the after-sales services. Amazon provides 24/7 customer support to everyone who sells on its platform.
- Hard to build a brand
When you sell on Amazon, you are not selling as a separate store; you sell as an Amazon’s brand that makes it difficult to dropshippers to build their brand on Amazon. You need to have your own dropshipping website then you can develop your brand; otherwise, it is not possible by solely selling on Amazon.
- No Data of customer
Having a target audience makes it much easier to retarget and create a loyal customer base. But, it is not possible if you are selling on Amazon, as it does not provide any emails of customers and also restricts the seller to contact directly to the customer. Not being able to create an email marketing list is the major downside of Amazon dropshipping.
- Profit Cutting
Amazon does free marketing and provides a large audience for your store, but it all comes at a cost. Even after you buy Amazon professional account, you will still have to pay 15 – 20% fees for each item sale, which would surely impact your overall profits.
- No Store Control
Amazon has the right to shut down your store anytime without even bother informing you. You either break one rule or come close to breaking the rule you will never know what made your store closed.
Tip: Amazon strives for fast deliveries and using Chinese suppliers usually takes 2 – 3 weeks to deliver the product, so to dropship on Amazon you’d better have US-based suppliers for fast deliveries. You can check the list of dropshipping suppliers USA Here.
Dropshipping on eBay
Before anything, let’s address the elephant in the room – Is dropshipping legal on eBay?
You can dropship on eBay; there are no hidden laws or illegal elements involved in dropshipping on eBay. You can drop ship anything that is allowed to sell on this platform.
How to dropship on eBay?
Dropshipping on eBay is similar to sell anything on eBay
- Set up your seller account
- Select the product to dropship on eBay
- Create listing
- Manage listing
That’s it when your customer place an order you tell your supplier and your supplier will ship the product. Similar to Amazon you can also integrate your Shopify store with eBay.
Pros and Cons of Dropshipping on eBay
- Easy to Setup
It is easy and simple to use. Dropshipping on eBay is as easy as signing up for an account and listing the products. No technical knowledge required.
- Less Effort on Marketing
On eBay, you get free marketing for your listings. You do not have to worry about marketing your listings, as eBay will put your listings in front of millions of buyers on their platform.
- Cash-in the Goodwill of eBay
Customer trust is already available for eBay. All customers trust eBay when it comes to purchasing online, so you get to enjoy that free trust.
- Listing Fee
The listing fees can cut into your profits. The first 50 listings are free, but after that eBay charges you a small fee per listing. The profit margins are already slim when dropshipping and eBay’s fees can quickly chew into your profits.
- Hard to Build USP
Dropshipping on eBay is a great way to start a business, but there are not many customization options available for you, which makes it difficult for sellers to differentiate themselves from the competition.
- Constant Monitoring
To stay in the competition on eBay, you need frequent monitoring to outrank your competition. Multiple software is there to automate monitoring, but manual analysis is always required.
- Cannot Build a Brand
Similar to Amazon, you cannot build your dropshipping brand on this platform as eBay is structured to focus on its brand and not on merchants (you).
What to do?
In my understanding, these marketplaces provide dropshippers the exposure of the market by having a broad audience, but on the other hand, they snatch all the control of the store and the chance to build a potential audience.
So, it is better to have your dropshipping website and sync it with these marketplaces to generate maximum profits for your dropshipping business.
Chapter 5– How Much Can Be Earned from Dropshipping
>How Much You Can Earn From Dropshipping?
What if I tell, you can earn over a million dollar from the dropshipping business.
I am not kidding, you can actually earn in six figures revenue from dropshipping with the right targeting and finding the right niche.
I have gone through the interview with the multimillionaire dropshipper Fred Lam who earns millions in a year just by identifying his winning products.
Here are some outtakes from his interview,
- Create Connection between Product and Customer
Fred said that it is really important that your customers feel a connection with the products.
He tried to target the niche of accessories such as jewelry, watches, wallet, etc. However, the focus of Fred was to create a connection between the product and the customer.
To achieve this goal Fred aimed for narrow targeting. Here is how he did it.
- Narrow Targeting
Fled adopted the approach flex approach – narrowing your audience. The product that helped Fred to earn a million dollars in a year was this butterfly watch.
To narrow down his target audience he targeted those who have a keen interest in butterflies after that he made it narrower by targeting those who are interested in accessories.
This step gave him the potential customer base for his store and took his store earning in five figures in just the matters of days.
- Continue data analysis
He constantly emphasized in his interview to focus on data and continue to analyze. Run ads and see the result as that is an effective way you will get to know what your audience is demanding.
By continuously running ads and taking insights into your ads, you will get to know about the products that your audience like or dislike.
Start eliminating the products that receive few or inadequate responses and increases the advertisement of products with good response. That is how you will find your winning product.
- Switch Targeting from Narrow to Broad
Once you find your subscriber (those who like your page, response on your post or purchase from your store), you need to find out the lookalike audience, similar to your subscriber.
Facebook ads will do the job here and it is the time to do aggressive advertisements on the lookalike audience to get three times to return on sales.
The Facebook insight will help you to pick up more winning products. An average ad price that is recommended to spend on an ad is $5 dollars a day.
In that price with the help of click, impression, CPA (cost per acquisition) and CTR (click-through rate) you will easily figure out what is working and what should take off from the listing.
Going for the lookalike audience will lower your risk of ad irrelevancy; it would make sure that the right audience is watching your ad.
This approach helped Fred to earn $6 million in one year.
In our channels, there is an interview of a dropshipper Mr. Dishawn Smith who earned 0 to 30K USD in 30 days in his dropshipping business.
Check out his interview to get more ideas to earn money from dropshipping.
Chapter 6– Bitter Truths about Dropshipping
The term dropshipping has been branded as ‘easy-to-start’ and ‘maximum profit with minimum investment by giving 2-3 hours a day’. It all sounds so good, but not all glitters are gold.
Here are some things that you need to know about the dropshipping business.
It Takes Intense Attention
The online industry is utterly capricious; you never what is going to happen even the next day. As a dropshipper, you must have a keen observation in the ongoing market and must know what is in the trends. In dropshipping business, if you miss the trends, you lose the profits.
It is not a one-person job
You must have heard stories about dropshippers that you only need a couple of hours a day, and you can make hundreds and thousands of dollars. Well, it is not true at all. You need to invest a lot of time and effort to taste success in dropshipping. Also, you have to balance the communication between your suppliers and customers to makes things work smooth.
To handle all these tasks, you must give all of your time or have a helping hand, a Virtual Assistant, or a business partner.
It takes constant product testing to figure out the winning products that give your business the maximum profits. To do so, you have to be persistent in your product-testing task. On average, it takes 20 products to figure out the winning product for your store, but sometimes it takes many more products. So, you have to have the patience to become successful in this business.
Finance Could Become an Issue
Yes, I agree it does not require much investment to start a dropshipping business, but cash flow issue is the reality of dropshipping business. Payment gateways like PayPal take weeks to clear the payment that could lend you in hot water. You could be left with no money to order the new products from the suppliers and could not fulfill your order, which is the nightmare of any business.
So, you must be sharp in handling finance and have proper planning to manage cash flow issues. You’d better own a credit card or have $200 – $300 in spare to face this foreseeable problem.
Chapter 7 – Dropshipping FAQs
Q:1 Is Aliexpress dropshipping dead?
No, it is not, the reason this question arises often is that dropshippers do not resolve customer queries quickly. Treat your customer with excellent services as well as maintaining a good relationship with your supplier, and you will never have any issue with your dropshipping business.
Q: 2 Is dropshipping ethical?
Yes, it is ethical. You are buying the product from the supplier and you are selling the product further for profits, which means you are paying for your merchandise.
Q: 3 Does anyone make money from Shopify dropshipping?
Just read two great success stories who earn over a million-dollar from their Shopify dropshipping business.
Q: 4 Minimum how cost does it require to dropshipping?
Let’s break down the cost on a minimum level.
- Dropshipping setup cost:
Shopify minimum cost to start a store is from $29/month.
But if we go for the minimum cost, you do not need to build your ecommerce store.
You can start dropshipping from Facebook by taking Shopify lite plan which costs $9/month.
- Supplier cost:
Well, you only pay the supplier when you receive the order from your customer.
However, the payment of your customer could take weeks to clear, so you need to have some finances in your hand to keep cash flow cycle running.
For that, $150 – 200 would be enough to pay your supplier initially then you will receive payment from your customer.
- Advertisement cost:
To make the initial sales, you will have to spend money on Facebook advertising.
This cost is significant if you are selling five units and assigning $5/day for one unit.
So, you need $25/day to run an ad for all five units. If you run an ad for ten days, that means you need $250 to run an ad for ten days.
As per our calculation, you need to have around $400 – 450 in your hand to start a dropshipping business.
Q: 5 What is the difference between dropshipping and dropsurfing?
There is relatively the same thing.
Dropsurfing is actually dropshipping; you just have multiple suppliers to get the best product.
In dropsurfing, you keep your contact with more than one supplier so you can choose the supplier as per your preference.
In simple words, if you find more than one supplier in your dropshipping business that becomes dropsurfing.
Q: 6 What are the most profitable dropshipping product?
It highly depends on what is trending. To find out the best trending products, do check out this post – 91 trending products to sell online in 2019.
Q: 7 How much money do you need to start a dropshipping business?
To start a good dropshipping business you need to have at least $500 to start and $200 – 300 for cash flow.
Q: 8 do I need an EIN for dropshipping?
Identification number (EIN), works as a security number for the business.
A business owner needs this number to file taxes, open a bank account, apply for wholesale dropshipping accounts, and much more to do anything related to your business.
So, yes, you’d better have an EIN to start a dropshipping business.
Q: 9 Do you need a business license for dropshipping?
It varies from the country’s policies you sell from, but it does not require any license to start a dropshipping business.
In this guide, I tried to cover all the concerns regarding dropshipping – from its definition to generating revenue.
I hope you got all the answers and can easily start your dropshipping business by just following the simple steps mentioned in this guide.
Here are some points that I would like you to memorize by heart.
- Find a niche with which you are well aware and connected. So you have an idea about the trend and ups-and-downs of the market that helps you match the consumer’s intent.
- Figure out the winning products of your eStore by evaluating through advertisement data.
- Increase your store’s digital presence by joining different eCommerce marketplaces such as Amazon, eBay, Etsy, etc.
Remember these three steps at the start of the dropshipping business that would definitely give you the initial sales.
Dropshipping takes time, care, and regular testing, but the results are always fruitful if you maintain the focus.
You probably have gotten every answer of the query related to dropshipping, in case you find something missing or uncover feel free to comment down below. We are very active in the comment sections.