Dropshipping is a way for stores to do business where they don’t have their own inventory or control it.
When you receive an order, you send it to a supplier. The supplier will then accept the order and ship the product directly to the customer on your behalf.
Dropshipping is a great way for entrepreneurs to start their first online business because they don’t have to put up a lot of money right away.
What is dropshipping and how does it work?
Here is an overview of how the dropshipping business model works, step by step.
- Someone places an order on your website or online store.
- The order is then sent to the supplier.
- The order is filled by the supplier, who then sends it directly to the customer on your behalf.
Dropshipping’s Pros
- Simple to start up
- Less Capital Required
- can do their job from anywhere.
- Simple to try out different things.
- There is no need to keep a stock.
Dropshipping’s Downsides
- More prone to errors.
- Products are not as easy to brand or change.
- Less money in the bank
- Cannot control inventory
How to set up a dropshipping business
Now that you’ve decided to start a dropshipping business. Let’s make sure you take the right steps to get your dropshipping store off the ground.
Find a good niche for dropshipping
Finding dropshipping products and figuring out who your target customers are are the first steps to building a successful dropshipping business. You can do this with the help of one of the many tools for researching dropshipping products.
There are lots of tips on how to do this best. Some people say that you should choose the best dropshipping products based on your passions and interests, while others say that you should just sell what people want or need and what is making money right now.
We think a mix of both is best.
For instance, if you meditate and are interested in spirituality or astrology. You can put these two kinds of stores into one. This lets you build a brand around both, since each can appeal to a different kind of buyer.
Look into the market.
When it comes to researching your competitors and the trends in their products, we recommend two ways.
Research on a niche and keywords
Start out by making a list of product catchphrases in the markets you want to sell in. For example, if you are looking into fitness or activewear. Words like “athleisure,” “workout clothes,” “stockings,” “exercise garments,” “yoga pants,” and so on, were used as catchphrases. These terms will also help you find suppliers for your products. In this case, you would look for dropshipping clothing suppliers.
If you put these keywords into Google’s Keyword Planner to find out how often people search for them, you’ll see that “tights” and “yoga pants” are the most searched for.
Do something almost the same when you’re trying to decide what you want to specialize in. Start by figuring out possible business sectors (using your own skills and interests if possible), and then come up with watchwords for those business sectors. Take the most popular slogans and dig deeper to find out more about them. This will give you more time to present them.
So, let’s move on to the next step…
Determine Product Trends
Getting keyword information is great, but you also need to look at patterns to figure out if the trend is growing or going down. So, to do your research, you go to Google Trends and type in the keyword phrases.
If you type in your keywords, you can see how the trends have changed over time. Are they getting better or worse? Monthly, once a year, and for at least 5 years? This can give you a good idea of how the market is doing in your category or niche.
Remember this order when you’re looking for ideas for outsourcing. You can use Google Trends to find out if something is going up or down. If it’s the last one, you might need to go back to the planning stage.
Find the best companies that drop-ship.
We also made sure to say which supplier we chose and why in order to make sure we covered the best ones. Here is a list of the best suppliers for your dropshipping store, chosen by us.
- Spocket
- Oberlo (Aliexpress)
- Printful (for print on demand)
- Salehoo
- Modalyst
Here, you can read a more detailed guide on how to choose the best dropshipping suppliers.
How to set up a drop-shipping shop
To start a dropshipping business, the next thing you need to do is create and set up your store. We do this with Shopify, which is the best ecommerce platform for dropshipping.
This is where you will send people, sell products, and get paid.
Shopify makes it easy to make an ecommerce site and get it up and running. It’s an ecommerce platform that lets you sell anything online, in more than one currency, and make it easy to keep track of your products and take payments.
If you want to save time, you can just buy a dropshipping store that’s already set up from dropshipcorporation and we’ll get you up and running in 24 hours. So, you can start trying out products and start your online business without having to make your own store.
If you want to build a store from the ground up, you can start with a 14-day free trial of Shopify. Shopify has a full guide on how to set up a dropshipping store. Read our article “Helpful dropshipping tips for store owners” for more great ideas on how to build your store.
Choose how your business will be set up.
If you’re serious about your online business, you’ll need to set up a real business. We’re not lawyers, so we can’t give you legal advice. Instead, we can give you an overview of three common business structures:
A company with limited liability (LLC)
With an LLC, your personal assets are safe from your business. If someone wants to sue your business, this type of business structure will protect you. So, you’ll have less personal responsibility.
Corporation (C)
Most big businesses are set up as C corps, which offer the most protection when done right. They aren’t as simple as LLCs and have to pay more taxes, but they offer more protection than a single-member LLC.
Which one should you choose? Again, we are not lawyers, so we recommend that you talk to a lawyer. We recommend LLCs because that’s how most of the businesses we run are set up. It’s the easiest to set up and the taxes are easier to understand, which is great for people who are just starting out in business.
Note that the EIN (employer identification number) and business structures we’ve talked about so far are mostly for businesses in the United States. If you are a business outside of the US, please check out this guide.
Make sure your business has an EIN number.
Make sure you ask the IRS for your EIN. This is needed to open any kind of business bank account or credit card. At the end of the year, you have to tell the IRS how much money your business made for tax purposes.
Getting an EIN doesn’t cost anything and can be done online.
Take care of your money.
When starting a business, people often make the mistake of using their personal bank accounts for business. Not only can this be hard to understand, but it can also leave you open to huge risks. If you use your personal checking account for business and get audited by the IRS, your personal account can be used to cover any business debt.
As much as possible, you should keep your business money and your personal money separate. The best way to do this is to start new accounts in the name of your business. You will need to open these:
Checking account for a business
You need to open a business checking account before you make any payments or make your first sale. You should use this account for every sale and payment you make. This makes it much easier to keep track of your income and expenses.
Credit card
You don’t have to have one, but having a business credit card is highly recommended. Having a business credit card will give you a backup source of cash in case you need to pay for extra expenses or orders. Since you’ll buy a lot of things from providers, you can also collect reward points and travel miles that you can use. We’ve found that the best travel rewards program is from Capital One and that the best money-back program is from Fidelity Visa/American Express.
Collect sales tax
If you sell any kind of product online, you need to think about taxes.
Shopify has a tax guide manual with step-by-step instructions for both the US and other countries.
How to start a business from outside of the U.S.
Even though it can be hard, international merchants can set up a business in the United States. This gives them access to drop shippers and customers in the US. The merchant will need to come to the US to fill out the necessary paperwork, have a trusted business partner in the US who can act on his behalf, or hire an agency to set everything up.
Here you can find a guide to getting set up in the US. Foreigners Tax Guide
How to Draw People to Your Shop
There are many ways to advertise your business and bring people to your online store. We could talk about just this topic for hours and hours. But today, we’ll talk about the main ones we should focus on if we want people to visit our store, starting with the free ones and ending with the paid ones. When you start your dropshipping store, it’s important to have a good plan for marketing and sales.
When it comes to free reach, Pinterest is one of the best social media sites. You can reach more people, and the site is very visual, which makes it a great place to promote products.
If you have a blog or post on any other social media site. Just by sharing a pin or post, you can get a lot of people to interact with it and send them to your ecommerce store. If you’re not on Pinterest, you should definitely make an account and look around.
Posts that are “featured” or “guest”
Having a guest post on a blog is one of the cheapest ways to get people to visit your online store. To do this, you need to find blogs that post content that is related to the niche or category of your product. Then, you’ll contact the blog’s owner and ask if you can write or post a guest post. This will help people who read blogs and search engines find you.
SEO: Natural Search
Most people think that SEO, or Search Engine Optimization, is a really hard science that only tech experts can understand. But in the end, it’s what the algorithm does to place you in the results of search engines like Google and Bing.
For dropshipping, we want to make sure that your results show up correctly in search engines and that we are aiming for the right keyword phrases, SKUs, product titles, and anything else that tells us about your products.
Bing Shopping & Bing Ads
Even though google shopping is more popular. Bing Shopping is much less expensive and can help you reach more people. Bing also has bing ads, which let you target new customers who use bing search instead of google by showing them ads based on what they are looking for. With their integration app, it’s easy to connect your Shopify store to Bing Shopping.
Google Shopping
Google Shopping is the best free way to bring people to your site. Your products can now be listed on Google Shopping with just a few clicks. When someone searches for a product on Google, they will be able to find your product in the google shopping product feed. As of this year, you can quickly put all of your products on Google by adding your channel right from your store.
Ads on Google
When it comes to searches with clear goals, Google Ads might be the best ad platform. People first look for what they want to buy on Google when they need to buy something. Because of this, anyone who wants to reach buyers who are ready to buy should put Google Ads at the top of their list for paid traffic.
Facebook Ads
It can be hard to use Facebook ads to sell things online. It is a great way to retarget. For instance, if someone comes to your store but doesn’t finish the checkout process. You can remind them to finish their purchase by showing them an ad on Facebook.
Facebook ads are probably one of the best ways to reach people who are interested in online shopping. They do need a different plan than Google Ads, though. Remarketing should be your main focus if you want your Facebook ads to work right.
In other words, when someone visits your site from Google or any other source, you’ll want to use Facebook ads to tell them, “Hey, we saw you visited but didn’t buy. Come finish your check-out.”
If you want to find new customers on Facebook, you should set up a funnel so you can help your customer through the buying process. People usually have to see Facebook ads more than once before they buy something. Because of this, Facebook ads are the best way to get back in touch with a customer.
If you haven’t used Facebook Ads before. You can go to the official Facebook Blueprint page and learn more about it.
TikTok and TikTok Ads
TikTok is now the social media platform that is growing the fastest, and it is expected to grow even faster than YouTube in terms of how many people watch it.
If you want to grow your dropshipping business with tiktok, you can use tiktok ads or just make viral content to grow your brand on its own. If you’re new to TikTok, you can use our free guide to learn how to make money with it. Check out our TikTok Ads guide here if you want to learn how to use tiktok ads for dropshipping.
Contests to Give Stuff
You should also hold contests to give things away. This can be very effective if you sell expensive items. Since your profit margin will be much higher, you should be able to make a good profit.
Check out this list for 10+ ideas for free stuff you can give away to get more people to buy from your dropshipping store.
These are just a few ways to run traffic without getting too specific. If you want to learn more about something in depth, you can join EcomMentorship.club.
Now that we’ve talked about some of the basics of getting people to visit your dropshipping store, let’s talk about the most important part: increasing the value of your customers over time.
Look at your product and make it better.
Dropshipping is a pretty easy way to make sales. But if you want to make money and grow your business past 5, 6, and 7 figures, you need to make sure all the parts of your funnel are in place to get the most money out of it.
Abandoned Cart Emails (includes a free template)
The majority of people who shop online give up on their checkouts at some point. But if you follow up by email or send reminders to people who have left items in their shopping carts, you can almost cut this number in half or more.
The best way to make sure your customers finish their checkout is to send them an email telling them to do so. You can also give them a discount to get them to come back and finish their order.
If you’re new to email marketing, you can get one of our best templates for emails to people who have left items in their shopping carts here.
Upsells and products sold together
Do you want to make more money? Give your customers the option to group products together. You can do this by letting them buy add-ons or other similar products as part of a package. You can do this with apps for shopify that help boost sales.
You might be surprised to find that half or more of your customers buy the bundle. This is one of the easiest ways to raise your average order value, and your customer will be glad you saved them from having to buy something else they didn’t need.
Loyalty program for customers
Almost every store has a way to reward customers who sign up for a free loyalty program or give their email address. This lets you get their contact information so you can easily send them discounts and special offers via email or SMS.
Have a live chat or real people to help customers.
Showing that you care about your customers is one of the easiest ways to keep them happy. To do this, you can just answer any questions or worries.
I know that most of us don’t want to spend the whole day answering questions. So most of this can be done with a simple chatbot that uses questions and answers that have already been set up.
You can also have a virtual assistant take care of live chat at certain times. You can find a virtual assistant for a low price on sites like Fiverr.com. Customer service is one of those things that can set your brand or store apart from the rest in a big way.
Common questions about dropshipping
How much do I need to get started with dropshipping?
In a technical sense, you don’t need much money to start dropshipping. But first, let’s talk about what you need to get started selling online.
- After your 14-day free trial, a basic Shopify plan will cost you $29 per month.
- You can get free suppliers through Oberlo or Spocket if you only want US suppliers. Spocket starts at $49.
- You’ll also need a way to pay your suppliers and money set aside in case you get a refund or a chargeback. We think a few hundred dollars is a good amount for this.
Before you start dropshipping, we recommend that you have at least $300 saved up. But after your 14-day free trial is over, you can start with just the cost of your Shopify membership.
How many items do I need to have in my store?
Most people think that to open a store, they need to have a lot of things for sale. But that’s not true at all. To open a store, you only need one good item that people need or want. If you can find one good product and make sure it sells, you can easily offer your customers other products that go well with it.
Is a store that only sells one thing better or a store that sells a lot of different things?
You might be wondering if buying one thing or going to a general store is better. The truth is that your store should focus on one type of product and offer several options in that category. So for example, if you’re selling personal blenders. Don’t sell just one kind with no other choices. You want to sell different sizes, colors, etc. of the same thing. You should also sell other products that either go with your main product or are similar to it.
Is there too much dropshipping?
Not even close. There are always new markets and products. As the world becomes more digital, there may be more competitors, but people will always spend money online, 24 hours a day, 7 days a week. Instead of trying to sell the same products that everyone else is selling, you should focus on building a brand around a category of products that you are either interested in or know a lot about. It’s all about standing out from the crowd and going after the right kind of customer.
I’m getting visitors, but I’m not making any sales. What do I need to do?
If you don’t make any sales but get a lot of clicks, you need to figure out what’s wrong.
- Do people add things to their carts? So what?
- Is it easy to get around on your website?
- Is it clear what your product is when the page loads?
- Are people going through the checkout process but not placing their orders?
These are some of the questions you should ask yourself if people are coming into your store but you’re not making any sales.
A Sneak Peek at Ecom Upstart
We’ve talked about how to start a dropshipping business. We’d like to tell you about a mentorship and course that will be starting soon. Ecom Upstart will help you through the process of dropshipping.
The program will give you access to a private group, live updates once a week, templates for your marketing, store setup, ads, and more, among other things. Sign up here for the pre-release and get a huge discount.
