Are you interested in starting an online business? Dropshipping might be a great choice.
A simple way to make money online is through dropshipping. With this method, you buy products from a supplier and sell them on your website under your own brand. The supplier takes care of shipping and keeping stock, so you can focus on building your brand and marketing your business.
The dropshipping market is expected to grow significantly, valued at a whopping $243.42 billion in 2023 and projected to reach $476.1 billion by 2026, offers exciting opportunities for aspiring entrepreneurs like you.
Wondering how to start dropshipping works and how does it work? This article covers everything you need to know to start your own dropshipping business.
What is dropshipping?
Dropshipping is a way for online sellers to have someone else handle finding, storing, and sending out their products. Typically, this someone else is a supplier. You don't need to open a physical store, employees, pay for expenses, or store inventory.
Dropshipping is a great choice for entrepreneurs who want to grow their businesses because it requires less money to get started compared to traditional retail.
In this setup, the dropshipper who is usually the business owner, handles most of the tasks related to running and advertising the eCommerce store. Meanwhile, the supplier is in charge of shipping the products and managing the inventory.
How start dropshipping work?
Dropshipping offers two big benefits: speed and affordability. With dropshipping, you don't need to spend money on making products, keeping them in stock, or storing them.
This means you can start or grow an Shopify online store quickly, without any delays. You're all set to start selling as soon as you find products to sell.
However, dropshipping needs to be done carefully, especially if you're new to starting a business. Here's dropshipping process in 6 step.
1) Product select
When starting a new dropshipping business, pick a niche that matches what you know and like, and has enough potential customers.
With dropshipping, you don't need to buy or store products upfront, so you can try out different things.
To create your own plan, see how your rivals present and promote themselves.
If you already run an online shop, consider expanding into related areas.
2) Find Dropshipping Supplier
Now that you know what product you want to sell, it's time to search for dropshipping suppliers.
Take your laptop and start looking for supplier who have a good reputation for making high-quality products, reliable shipping, and helpful customer service.
Check out different supplier to see if they offer dropshipping services. Some companies make products, while others sell products from multiple manufacturers.
If you want to sell customized items with your logo, look for print-on-demand companies or private-label dropshipping providers who can work with your requirements.
3) Business Brand identity
Apart from picking a specific market, having strong branding helps set your company apart from competitors. When your branding stands out, your target audience is more likely to remember you and buy from you.
Decide what makes your brand unique. Choose the most important feature or value that only you offer and not other similar brands.
Highlight this aspect in all your branding and marketing efforts. Come up with a catchy and easy-to-remember company name. If you need help, use our AI tool, which can give you many business name ideas.
When designing your business's visual identity, pick colors that look good together and match your company's style. Choose colors that represent your business and attract your target customers.
Make a logo that catches people's attention, even if it's simple. When people see it, they should quickly understand what your company does and believes in.
4) Set up your Shopify store
If you don't have a physical store, the first step is to make an online store, called an eCommerce website.
Even if you're not great at making websites, you can make a good-looking store easily with Shopify eCommerce.
They have a simple website maker with smart tools and fancy selling features, so anyone can make a website.
Once you set up a payment processor like Shopify Payments, you can start selling right away.
You can add products and categories by hand, or bring in data straight from your supplier's catalog.
Make sure to customize the content so it sounds like your brand, instead of just using the same words as your supplier.
5) Register your Dropshipping business
It's important to handle the legal aspects of your dropshipping store carefully.
First, check if you need a business license for dropshipping in your area. Make sure to research the requirements specific to your country.
To protect yourself from legal liabilities, consider forming a legitimate corporate entity after researching the laws.
Doing this may also open up opportunities to work with better vendors and business partners.
6) Optimize Dropshipping business
Now that your website is up and running, it's time to promote your dropshipping business and attract more customers. Here are some digital marketing strategies you can use:
SEO: This means doing things to make your website show up higher in search engine results and get more people to see it.
Blogs: Write blogs that explain how your products can help your target customers.
Email Marketing: Put a form on your website where people can sign up to get emails from you. Offer them a discount when they sign up to encourage more people to join your email list.
Social Media: Share your products on different social media sites to reach more potential customers.
Referral Marketing: Once you've made some sales, ask your customers to tell their friends and family about your products.
Affiliate Marketing: This is similar to referral marketing, but you work with other people who promote your products for a commission.
How to find best dropshipping suppliers
As you can see, having a good connection between sellers and suppliers is crucial for a successful dropshipping business.
Here are some steps to help you find best dropshipping suppliers:
Research: Look for vendors who specialize in the products you're interested in. If you already know some manufacturers, ask them if they offer dropshipping services.
You can also join online forums like Reddit's dropshipping community to connect with others and share ideas. Check out reputable dropshipping businesses like SaleHoo in New Zealand and GlowRoad in India.
Review: Once you have a list of potential suppliers, read their reviews and check their references. If possible, contact the suppliers directly to get more information. Ask plenty of questions to understand their capabilities better.
Talk to the supplier: Reach out to the candidates directly to learn more and ask questions. Inquire about their order fulfillment and processing procedures, as well as how you can communicate with them as a retail partner. Don't forget to ask for references.
Request samples: Ask potential vendors to send you sample products so you can assess their quality and packaging. You might also consider placing test orders with other dropshipping partners to see how well the process works from a customer's perspective.
Start small: As a beginner in dropshipping, it's best to start with just three to five suppliers. Once you understand the process better and know what customer service and marketing expenses are involved, you can expand your product offerings or add new suppliers.
Pros of Dropshipping
Low initial costs: When you start an online store using dropshipping and affordable eCommerce platforms, you can save a lot of money upfront.
You don't have to buy products in advance, and your suppliers usually handle shipping and storage expenses.
No need for storage: Since your suppliers keep the inventory, you don't have to worry about storing products in your garage or renting warehouse space.
Wide range of products: You can sell a variety of items because you're not limited by physical space or location.
You have access to a vast selection of products, allowing you to create a unique collection. If some items don't sell well, you don't have to worry about getting stuck with leftover inventory.
Work from anywhere: In the past, retailers needed physical stores, but now, if your dropshipping business is online-only, you can manage it from anywhere with internet access.
Automated processes: After your store is up and running, many of the daily tasks can be automated. While marketing campaigns and customer support still require attention, things like inventory management, order processing, and shipping can be handled in the background. Shopify's dropshipping service.
Easy scalability: With automation and supplier support, you can expand your business quickly with fewer employees and logistical challenges.
Cons of Dropshipping
Challenging Competition: Many sellers are trying dropshipping because it offers lots of benefits. To stand out, you need great customer service and a unique brand.
Slim Profits: Dropshippers often rely on very low prices because they have many suppliers, including overseas ones. This can make it hard to make money or compete with higher-priced items.
Quality Control Issues: Since you don't handle the products yourself, it's hard to know if vendors are sending good-quality items or cutting corners.
Environmental and Social Concerns: Studies show that many customers are willing to pay extra for products made ethically and sustainably.
Customer Service Responsibility: Even though you didn't make or ship the products, you're still in charge of solving any problems customers have. When choosing suppliers, ask for references to make sure you meet customer expectations.
Legal Protection: Before signing any contracts, it's smart to have a lawyer look over the terms. If your dropshipping partner is in another country, work with a local law firm familiar with their laws.
Dropshipping Model
Retailers can run a business without taking risks or keeping inventory using the dropshipping method. This involves three parties:
- The dropshipping supplier
- The retailer
- The customer
To sell products from the dropshipping supplier, the retailer also arranges contracts with the seller.
The costs for storage and delivery from the dropshipping partner are included in the price negotiated between the retailer and the partner.
When a customer places an order at the retail price set by the retailer, the retailer sends the order to the dropshipper for fulfillment.
The retailer keeps the difference between what the customer paid and what they paid their supplier to maintain profitability.
To work with a dropshipping partner, the store needs to invest in an e-commerce and customer support platform.
Retailers also need to pay for domain names, website hosting, marketing, and payment processing fees.
Is Dropshipping profitable?
The dropshipping industry has risks because profit margins are low like 10% to 15%. It's highly competitive due to cheap startup costs.
Some dropshipping businesses focus only on low prices and don't provide good customer service. This makes others lower their prices too. Also, many products get returned, which hurts profits even more.
But dropshipping can help increase revenue in certain situations. It reduces costs for businesses when they have trouble finding, stocking, and shipping products.
Regular stores can also use dropshipping to expand into new markets or sell different products without spending a lot on warehouses or inventory.
Successful dropshipping businesses do their homework. They invest in tools like email automation, point-of-sale systems, and customer relationship management software to improve their buying process and customer support.
By improving marketing and customer service, businesses can keep prices steady and make the profits they expect.
Should You be Dropshipping with Shopify in 2024?
Using Shopify for dropshipping comes with some clear advantages, but there are also drawbacks to consider. Additionally, the unique features of Shopify dropshipping may lead to challenges.
Hard competition
Setting up an online store on Shopify and starting dropshipping is easy, which means there will likely be a lot of competition and, sometimes, lower profits. Some sellers might even lower their prices to attract customers since they're selling similar items.
Inventory issues
You don't have direct control over your inventory. For example, if you work with a supplier who also sells to other stores, it could cause problems. Issues with suppliers might not always get resolved right away.
Shipping problems
Sending items to customers may become more expensive and complicated. If you have more than one supplier, each may charge different prices for shipping. If a customer orders multiple items from different vendors, you may end up paying most of the shipping costs.
Mistakes in order fulfillment
Helping customers with their orders in dropshipping can be tough because of order fulfillment and shipping. When something goes wrong, you have to deal with customers even though you didn't cause the problem. Also, mistakes are common in the e-commerce industry.
Conclusion
Selling products through Shopify using dropshipping has its pros and cons for online business owners. It's easy to get started and grow your business, but there's also tough competition and tricky operations to manage. At Tameta Tech, we offer customized solutions to help businesses succeed with dropshipping on Shopify. We focus on making operations smooth and helping businesses grow steadily in the ever-changing world of online selling.
