We all know the magic of online retail. With just a few taps on a keyboard, you can have nearly any item delivered to your doorstep within days. Of course, all that shopping can quickly drain your bank account. But what if you were on the other side of the transaction?
Many of those oh-so-convenient online stores are actually dropshipping retailers. They make money by connecting buyers to wholesalers, which can be very profitable with little effort.
It’s now your turn! In this article, we explain how to set up a dropshipping business from scratch. You’ll learn everything you need to get started and the best dropshipping tips for beginners.
Table of Contents
What is Dropshipping?
Let’s say you’re buying something online. Maybe it’s a funny T-shirt, a small appliance, or a fancy new cat toy – it could be anything, really. With a few clicks, you make a payment, get a confirmation email, and begin eagerly awaiting your package.
Now, chances are you’re not buying those items directly from the manufacturer. Instead, you’re paying an intermediary to handle your order. This whole process is called dropshipping, and it lets online retailers make money without stocking any items of their own.
If that sounds like a nice little business, you’re in luck! With a bit of initiative and know-how, you too can set up a profitable dropshipping business of your own.
How Does Dropshipping Work?
So, how exactly does dropshipping work? Well, it’s about connecting people to products without a brick-and-mortar storefront. You see, in traditional retail, a merchant buys items in bulk and then sells that inventory to customers bit-by-bit. In dropshipping, the merchant doesn’t buy the inventory until after collecting orders. They buy the requested items on the customers’ behalf at a lower price – and collect the difference as profit.
Here’s a concrete example. You set up an online shop selling cat toys for $20. A customer places an order for one toy and pays you $20. Then, you send that customer’s order to a manufacturer or wholesaler who sells each toy for $15. You pay $15, they ship the order to the customer, and you pocket the $5 difference. The customer gets their toy, you get your profit, and everyone is happy – especially the cat.
Setting up a dropshipping business is great because it doesn’t take a lot of overhead to get started. You don’t have to buy huge inventories beforehand, store unsold products in your home, or even physically handle the shipping process. In fact, most of your work is processing orders, marketing your online shop, and managing any customer service problems as needed.
Of course, like with any business, there are downsides as well. In the world of online retail, the options are endless and competition is fierce. And since most dropshipping stores have to keep prices low to attract customers, you may start with very low-profit margins. Plus, you’ll have to handle any customer complaints, from delivery snafus to the products themselves. That’s why it’s essential to partner with the right wholesaler, which we’ll cover in the next section.
Best Dropshipping Tips For Beginners
1. Sell evergreen products
What is an evergreen? Simply put, an evergreen product is one that remains in demand regardless of the season. This is the opposite of a seasonal product. Examples include T-shirts. Holiday sweaters are seasonal products. Jackets are always in style. Halloween costumes are seasonal. This is not to say you should ignore seasonal products completely. Even if you want to build a business that is sustainable and profitable year-round, you should focus on evergreen products to build a successful dropshipping business.
2. Find a niche that is related to your passion.
Find a niche that is related to your passion. If you love and enjoy trail running, it makes perfect sense to start a dropshipping business that sells all sorts of trail running-related products. Trail running footwear, running shorts, hiking sandals, and accessories are all examples of this. Having a business based on a hobby or interest is the best way to avoid burning yourself out. You enjoy what you do most of the time, so why should you burn yourself out? Your business will be more enjoyable if you love the niche. Work becomes fun. Many aspiring entrepreneurs dream of that.
3. Automate as many of your business processes as possible
You can automate your dropshipping business using a wide variety of tools and resources available online. Some of them are even free to use. If you cannot focus your full attention on your business, automation is crucial. Automation also helps your business grow and scale quickly. Marketing tasks, advertising tasks, email, ad retargeting, and customer service are all things you can automate. Dropshipping businesses have never had it so easy to simplify and automate tasks. Finding the right plugins, add-ons, and tools isn’t difficult.
4. Choose a good website design and theme
Here are a few things you should know about online consumers. Customers often judge e-commerce sites based on the design. When people see a bad design on your dropshipping store, they will probably assume that your products are bad as well. People view poorly designed websites with less trust.
Thus, you should hire a professional web designer who can create for you a simple but professional-looking eCommerce store. With so many freelancers available these days, finding an experienced developer isn’t difficult. You should hire a developer who specializes in dropshipping-related website development. You can find freelancers on sites like Upwork and Fiverr.
5. Deliver exceptional customer service
Your customers may not always remember the product they bought from your website, but they will always remember how you treated them. Because you don’t handle the products yourself, customer service is essential in the dropshipping business.
Since your products are being shipped by someone else, there is a higher risk of returns and complaints. You should provide 24/7 customer service if your business receives many orders in a day. If you need two representatives, hire them. One will work in the morning, and one will work in the evening. One of the best ways to build loyalty among your customers is to provide exceptional customer service.
6. Work only with experienced suppliers
If you browse through a dropshipping directory, you are likely to find thousands of suppliers. Many of them are brand new to the business. Choosing an inexperienced supplier as an anchor for your business is a mistake. Identifying inexperienced dropshipping suppliers is easy in a dropshipping directory.
To begin with, they usually have no or very few reviews. Furthermore, their prices and costs are usually a lot lower than average. It is often much more expensive to deal with suppliers with extensive experience in the industry, but they are a better option for you. They can guarantee the quality of their products and services. When you are starting an eCommerce store for the first time, dealing with inexperienced suppliers is just too risky.
7. Ask for product samples before shipping them out to customers
Do not rely on the words of your supplier or manufacturer. As a general rule, before you list a product in your e-commerce store, thoroughly test a sample of the product. There is no way around this. You need to test the product first before you sell it.
Ask your supplier to send you a batch of the products so you can test several items. Do not assume that the products look exactly as advertised. There are several advantages to requesting product samples. These include the following:
- You can experience what it is like to buy a dropshipping product. By doing so, you can identify any problems with the process.
- You can use the product samples for online advertising, test videos, and other promotional materials.
- Touching and looking at the actual product will help you write a better and more detailed product description.
- The samples will help you take better-quality photos of your products.
8. Choose light, durable products instead of heavy, fragile ones.
When choosing which products to dropship, it is tempting to choose products for which there are many suppliers. But before you sell fragile goods like porcelain vases, home theater systems, or other profitable but fragile products, you should be aware of how risky these products are.
Fragile goods are a disaster waiting to happen. You’ll face countless returns and chargebacks before you know it. Logistics is one of the most important aspects of shipping products. It is always better to ship lightweight and durable items rather than heavy ones. They are easier to ship and cost less.
9. Sell products that you know
It is always a good idea to market and sell products you know thoroughly. When you are knowledgeable about the products you are selling, you won’t have to guess when selecting them. The way you present your products on your eCommerce website will reflect your knowledge and experience of the products you sell, as well as your confidence in your offerings.
Another important benefit of selling products you know is that it will greatly improve your ratings as a seller. Seller ratings are an important driving force in dropshipping. They help build customer confidence in you and your products.
10. Use reliable order management and dropshipping system
There should be a reliable and secure connection between your company and your supplier. It can be difficult to get the system to work properly, especially if you are working with multiple suppliers. If you are working with multiple suppliers, you will need to set up more than one system connection.
It’s also worth noting that some suppliers also work with multiple eCommerce website operators. This means they also manage multiple accounts, which can further complicate the process. There are many platforms you can use to simplify this process. Again, take your time to weigh your options. Some of the more popular order management systems today include Orderhive, Ordoro, and Sellbrite.
11. Be prepared for product returns, backorders, and lost packages
Dropshipping businesses face these problems most often. Remember that you do not have direct control over how your products are handled and shipped to your customers. This requires proper planning and preparation.
Talk to your suppliers about how they handle returns and backorders. This should be clear from the beginning. As the business owner, you need to discuss your responsibilities and obligations with the dropshipper. As a result, all parties will do their utmost to prevent product returns, backorders, and lost shipments.
12. Build a brand around your dropshipping business
Online sales require a lot of branding. Generally, consumers support companies that they are familiar with or can easily identify with. Offering your products on as many platforms as possible is not the essence of branding. Maintaining a line of products that are consistent in feel, appearance, and quality is also crucial.
Have a strong voice for your business. Your brand should be tailored to your target market. As an example, if you want to target teens and young adults, the look, feel, and language you use on your website should appeal to them.
Dropshipping is a special type of e-commerce where you connect customers to suppliers while taking a cut of the transaction. Anyone can set up a dropshipping business by selecting a niche product, spending a little time and money on advertising and marketing, and carefully optimizing their workflow.
Among the best ways to steer your dropshipping business to success is to watch and learn. Try to learn from successful dropshippers. Take a close look at the most successful entrepreneurs in your niche and see how they operate. What are they doing to present their products online? What marketing strategies are they using? Which software are they using? Who are their suppliers? How do they handle customer service? What about returns?
Find out how they do it and copy it. Over time, you can scale up your business and begin making real profits with very little risk or overhead.