A Step-by-Step Guide to Starting a Dropshipping Business

A Step-by-Step Guide to Starting a Dropshipping Business

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  • Dropshipping is a business model that allows retailers to sell products in their online stores without holding inventory. Dropship store owners are responsible for marketing the products while suppliers are in charge of shipping orders to customers. 
  • Even people with a limited budget can start a successful dropshipping business. 
  • While dropshipping is not a get-rich-quick scheme, earning huge profits is possible when the right amount of work is put in and the right strategies are followed. 

Starting a business in any corner of the globe with just a laptop and an Internet connection is a dream job for many. But when you only have a small budget to jumpstart your goal, you may feel discouraged to pursue your dream. Dropshipping makes it possible for people with limited resources to sell products online and develop a new revenue stream.

In this article, you’ll learn how to start your own dropshipping business.

Let’s begin. 

What is Dropshipping?

Dropshipping is a retail fulfilment method where you, the dropshipping retailer, acts as the middleman between the customer and the supplier. You’ll purchase the items from your supplier once your customer places an order. The supplier then sends the items directly to your customer.

With this business model, you won’t have to handle the products physically. You’ll be able to save on operational costs like maintaining a warehouse. With dropshipping, your resources are concentrated on product research, marketing, customer acquisition and customer service. 

How Profitable Is Dropshipping?

If you build a strong brand that targets a specific niche and partner with the right suppliers, you can earn sizable profits from dropshipping. Since dropshippers can cut down on overhead costs such as renting a warehouse, you could potentially rake in four to six figures in revenue.

But contrary to what some people say, dropshipping is not a get-rich-quick scheme. It’s a respectable business model that can only scale if you handle it properly – just like any other business venture. When you consistently provide high-quality products, quick delivery and excellent customer service, you can gain more customers and improve your bottom line. 

How to Start a Successful Dropshipping Business

There are several steps involved to start a successful dropshipping business:

  1. Select a niche
  2. Research your competitors 
  3. Find your products and secure a supplier 
  4. Build your dropshipping store 
  5. Create a marketing plan 

Step 1: Select a Niche

The niche you choose should ideally be something you’re interested in. If you like what you’re selling, you’ll have more ideas on how to market and sell your chosen products. 

Before choosing a niche, conduct market research to identify trending products and underserved markets. In order to assess if a particular niche will be profitable, examine the following criteria: 

  • Has to have a large potential market 
  • Has low shipping costs
  • Not available in the local area of your potential customers
  • Has a target market that is easily accessible and identifiable
  • Not oversaturated with competition

Step 2: Research Your Competitors

Stores that are in the same niche and sell similar products are your competitors. If you come across several competing stores, take it as a good indicator of a profitable niche.

With dropshipping, you don’t have to reinvent the wheel. You can just model what works and make the necessary improvements. Researching your competitors helps you learn more about your niche and your target market. It also helps set a benchmark for your business in terms of marketing and customer service.

Look at your competitors for guidance—what products are selling well? What are some of the market gaps that your store could potentially fill? What marketing efforts are they doing to attract and keep customers?

Here are some ways for you to conduct competitor research:

  • Google Shopping: Type on Google Shopping the name of the product that you want to sell and check out the stores that appear on the list. 
  • Social media: Browse your competitors’ social media pages and check which posts have gained traction and engagement. Also, look at their social media branding to help you differentiate your brand from theirs. 
  • Newsletters: Subscribe to your competitors’ newsletters so you’re updated on their new offerings and their marketing efforts. 

Step 3: Find Your Products and Secure a Supplier

Partnering with a reliable supplier is a crucial step in starting your dropshipping business. The last thing you’d want is to get scammed or to have a misunderstanding with a stakeholder. Conduct due diligence to avoid getting into hot water.

One of the most important things to consider when choosing a supplier is ease of communication. You need to understand each other clearly and get quick responses.

Try finding supplier recommendations from other dropshippers. You can also use platforms like Oberlo to find products to sell or Alibaba to communicate with potential suppliers. 

Step 4: Build Your Dropshipping Store

If you’re just beginning your dropshipping journey, the easiest way to get your business off the ground is to build your online store in an eCommerce platform like Shopify. The platform is user-friendly—no complicated coding is required and you can install additional features to optimize your operations and help with your marketing efforts.

Once your store is gaining steady revenue, you can invest more in your site and hire web designers for further customization.

Step 5: Create a Marketing Plan

The bulk of your work comes down to marketing. Attracting customers, directing them to your site and inspiring them to buy is how you’ll stay ahead of the game. Having great products and a nice website isn’t enough—you need a good marketing strategy to draw customers into your store.

Here are some marketing methods to include in your marketing plan:

  • Facebook Ads: The most basic way to jumpstart customer acquisition is to launch a Facebook ad campaign. Facebook helps you reach your target audience and gain traction. 
  • SEO: Optimizing your website for search engines is a good way for people to discover your products. SEO is complex, but the easiest way to do it is to insert relevant keywords to your product names and product pages. 
  • Email Marketing: Email marketing has many benefits and is an effective way of reaching your customers’ inboxes and marketing your offers directly to them. 
  • Content Marketing: Content is king nowadays. Photos, infographics, videos, and blog posts can magnetize consumers and help build rapport. Creating great content will help you attract your target audience, connect with them and motivate them to buy. 

How Much Does It Cost to Start a Dropshipping Business?

Since you’re not required to put up and maintain a physical store, there are lower barriers to entry and fewer upfront costs. Even with a lower capital requirement, you still need to shell out money to hit the ground running.

To start dropshipping, these are the five things you need to invest in:

  1. An online store platform
  2. A domain name 
  3. Add-ons
  4. Product testing 
  5. Marketing 

1. An Online Store Platform 

This is where you display all of your products and transact with customers. Platform subscriptions fees are paid monthly. Platforms such as Shopify, WooCommerce, Magento and BigCommerce offer a range of plans.

Estimated cost: $29 Basic Shopify

2. A Domain Name

You will need a domain name to get a unique web address for your store. You can purchase directly from Shopify, or you can buy from other providers like GoDaddy or Namecheap. Find out how to choose the best domain name for your business

Estimated cost: $15

3. Add-Ons

These are various apps that can be integrated into your store to make your processes more efficient and draw in more customers.

Estimated cost: $50

4. Product Testing 

This step is crucial to ensure that you have good-quality products. By placing test orders, you will get to know your supplier’s fulfilment process. The cost for this will vary depending on your niche, but let’s set aside a solid $100 (including the shipping fee).

Estimated cost: $100

5. Marketing

Marketing costs will vary per country and niche. For this one, let’s focus on Facebook advertising since it’s the most widely used marketing platform for eCommerce. In the United States, the average cost per thousand impressions (CPM) is between $8-$10. Let’s say you want to reach 20,000 people.

Estimated cost: (20,000 / 1,000) *10 = $200

The total cost for starting a dropshipping business is around $394.

Conclusion

There you have it! Any serious undertaking needs commitment and if you’re aiming to build your business empire, you’ll have to put in the effort to make it happen.

Luckily, the dropshipping model isn’t as taxing as running a brick-and-mortar store. It sure has its challenges, but as long as you’re willing to keep on learning, you’ll set yourself up for dropshipping success.

We hope this article will help you along in your eCommerce journey. Happy selling!


Steve Tan

CEO at Leap Vista Pte Ltd

Good day! I'm Steve Tan, a Singapore-based serial entrepreneur with in-depth knowledge of dropshipping and digital marketing. Leveraging my 14 years of experience in the eCommerce industry, I have been able to build an eight-figure business using the dropshipping model. Together with my brother Evan, we’ve sold over $100 million worth of products from our eCommerce stores, including one that generated over $360,000 in revenue in one day. Now known as the Super Tan Brothers, my brother and I formed the Super Tan Brothers Group, a global group that consists of eCommerce, software, education, logistics, and marketing agencies, with over 400 employees across 6 countries. I have been featured in Forbes, Entrepreneur, Business Insider, Medium, The Next Web, and other major media outlets where I periodically contribute articles in the eCommerce niche. I have delivered keynotes at various eCommerce events and Mastermind retreats globally and have shared the stage with digital marketers such as Neil Patel, Peng Joon, and other internationally renowned entrepreneurs. I touch base with aspiring entrepreneurs through a private Facebook Group I founded called eCommerce Elites Mastermind, which is one of the biggest eCom groups on the platform. Now with 100,000 members, eCom Elites has grown to be a community where newbies and seasoned entrepreneurs alike can interact, network, and share knowledge. As CEO of LeapVista, I am leading the company to enrich, empower, and educate individuals by providing world-class quality programs. LeapVista offers a global educational platform that delivers transformational and innovative business training for 1 million aspiring entrepreneurs. Visit www.leapvista.com to learn more about our work.


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