How Do I Start a Dropshipping Business?

Dropshipping is about curating the ultimate customer experience based on your unique brand. Because you’re not actually buying or storing inventory until someone actually purchases it, it’s also one of the more low-risk ventures for an entrepreneur to tackle.

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If you’re just getting started in your quest to build an empire, we’ll tell you more about how to sell, set your prices, and market yourself to people who will actually care about what you do. There’s no sugar-coating the fact that a dropshipping business takes real work to thrive, but if you’re willing to put in the time, you might be surprised at just how far you can get.

A Quick Business Model Overview

With a dropshipping business, you’re the online retailer in the transaction. The manufacturer of the products is responsible for creating, storing, and shipping the products, as well as replacing them if they are defective. However, if there’s a problem with the product, the customer is coming to you to handle — not to the manufacturer.

You will determine your brand, select products that fit under that brand’s umbrella, and set prices that ensure you make a profit. In a world where nearly $3.5 trillion was spent on e-commerce in 2019, there’s money to be made with this model, you just need to know a few specifics before you launch.

Start with the Idea

The idea of your business is going to dictate what you sell, which will in turn dictate your revenue. Of course, it’s hard to predict where consumer preferences will trend, even if you believe you’re starting with the most fool-proof of concepts. The best advice you can have is to choose an area where you’re passionate so long as it doesn’t destroy your profit margins.

So let’s say that you want to start a business that pulls the best in men’s fashion under one website. Instead of your customers having to scour an infinite number of brands for the best duds, they rely on you to scout what’s new and now. You should be using your own knowledge of the industry as a springboard while still doing the research to learn more about what’s trending online. You can deduce a lot from online analytics tools, which will show you things like keyword search volumes and order volumes.

Should You Start from Scratch?

Once you know what kind of business you want to create, you’ll need to decide if you want to build it entirely on your own or purchase an existing dropshipping business that is for sale. There are marketplaces where you can buy Shopify stores that may already have a built-in customer base. In this scenario, you’re keeping what makes the store popular while adding and improving upon it to make the business your own.

You can expect the more popular businesses to cost more, but the extra investment could be well worth it because you already have a customer base. Make sure the website is easy to navigate and has a solid online ranking. You’ll also want to make sure that they’ve avoided major penalties from search engines. Finally, don’t be afraid to ask for more. Having excellent negotiation skills can really make a difference in getting a better deal.

Know Your Competitors

There are going to be plenty of other players in your space, regardless of what industry or niche you’ve chosen. You need to know who you’re up against, what they charge, which products they choose, and how similar they are to your brand. There are many reasons why a customer might your business over another, and it’s your job to find the most relatable ones so you can differentiate yourself through your marketing.

For example, maybe you charge a little more for your products than your competitors. This is because your product selection is more carefully tailored to the demographic you’ve chosen. For your customer, it’s worth paying a little extra so they don’t have to scroll through dozens of pages of the same product. Once you have this information in hand, it’s easier to decide on a marketing strategy.

You can find your competitors by searching anywhere from Google to social media. If you’re selling products locally, all you need to do is type in one of the items you’re planning to sell and see who comes up in the first few spaces. Tools like BuzzSumo and SEM Rush can give you more insight into which businesses and products are getting the most traction and why, regardless of whether you’re selling to people down the street or around the world.

Examine your competitor’s content, sign up for their mailing list, and check-in on their blog or YouTube videos from time to time. This is smart advice so you can offer something different to the same demographic, but it also reduces the odds that you’ll inadvertently mimic another competitor and risk infringement or copyright liability.

Find a Supplier

Suppliers are at the heart of your business, so it’s important that you find companies that are reliable. As with consumer products, ratings are key. The better the supplier’s review, the less likely you are to experience product recalls, unanswered emails, or just general demise in product quality. Alongside choosing a trustworthy supplier, ensuring you understand and obtain the necessary reseller certificate is crucial for your dropshipping business’s legal compliance and operational efficiency.

Once you’ve narrowed down the list to a handful, you should start building up relationships with the decision-makers. You might need to order in bulk to qualify for certain rates. You’ll want to know how long it takes to ship certain items, and how complaints are handled. Once you’re comfortable with their general process, try ordering something from each potential candidate and comparing everything from the packaging to the communication to the handiwork of the product.

Work on Your Online Presence

From your domain name to your content, how you carve out your space in the virtual world is exceptionally important. When you choose your domain name, make sure that it’s a relatively broad idea, in case you decide to branch out or expand your business several years down the line. You’ll also need to choose an e-commerce platform. Big names like Shopify offer comprehensive tools that make it easy to execute your vision for the site — even if you have little to no experience as a web designer.

You should also be going for broke in terms of marketing. This doesn’t mean spending all of your budget, but it will mean being relentless when it comes to getting your site in front of interested eyeballs. Who are your customers and where do they live online? Who is the primary, secondary, and tertiary demographic? For instance, if you’re selling toys, would you prefer to market them primarily to children or to adult collectors? Would your customers be more likely to listen to an influencer in your industry or click on a Facebook ad? If a customer visited your site but then clicked off of it immediately, would they benefit from a retargeted ad?

It’s rare, though not impossible, for dropshipping businesses to get very far by shelling out serious dough at the beginning. Because you likely don’t quite know which products will be best-sellers or how much discretionary income your customers have, it may make more sense to keep trying different things to find what works. In order to that though, you’ll need to choose marketing tactics that won’t cost you an arm and a leg.

Keep Up on Your Site

Successful dropshipping owners are constantly looking at the analytics of their site and using it to tweak their content however they need to. Ideally, the overarching values of the brand should stay the same, but you can still make adjustments to better fit the needs of your customers.

For instance, you might choose to expand your men’s fashion brand into smart home accessories for your sophisticated customers. The overall emphasis on quality and style is still at the heart of your business, but you’ve optimized the site for your customers to find even more great products that will perfectly align with their lifestyle.

You should also check in with how your prices stack up with competitors, how much your customers are engaging with your social media, and whether your email campaigns are sparking interest or falling flat. Major search engines like Google favor sites that grow and change with the user preferences. So if videos are hot and blog posts are not, you don’t want to risk falling behind by ignoring the trends.

Dropshipping can be slow going at first, and this is entirely normal. All the work and preparation you put into sourcing suppliers and finding the perfect template could easily be met with little to no initial interest. But as with any entrepreneurial effort, you can’t let this defeat you. As you keep putting in the time, you should eventually start to see the returns. The good news is that you’re not really spending until your customers are, which can help make it easier to survive those first dry months.

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