The U.S. The Small Business Administration Office of Advocacy reports that there are over 30 million small enterprises in the United States. When you consider how appealing the concept of being your own boss might be, it’s no surprise that millions of Americans opt to start their own businesses.
However, beginning your own business is not a simple task. When you consider the potentially hefty initial expenses and the fact that nearly half of enterprises fail within five years, investing in a company concept may appear to be too risky.
Fortunately, with the advent of e-commerce, it is now feasible to establish an internet business without investing a lot of money or quitting your work. In fact, if you use dropshipping, you may start your own e-commerce firm without having to manage inventory, personnel, or order fulfillment.
If you want to establish your own dropshipping business, you may take the same steps you would with any other business model. This is a challenging process, but if you’re prepared to experiment with different shop concepts and have patience, you may start a new side hustle by running a dropshipping business from your home.
What is dropshipping?
Traditional e-commerce enterprises function similarly to brick-and-mortar merchants in that they maintain their own inventory and are in charge of shipping and logistics when clients place orders.
Dropshipping is different. Dropshipping eliminates the need to handle physical inventories or ship orders. Dropshipping enterprises, on the other hand, sell and distribute items directly to manufacturers.
When a customer orders from your dropshipping firm, the manufacturer sends it directly to them. This allows you to focus on selling and establishing your business without having to worry about fulfillment.
Dropshipping also saves business owners money by eliminating the need to rent expensive warehouse space and hire workers for fulfillment. Dropshipping companies that employ robust inventory management systems may handle complex product lines without many of the complications associated with physical storage.
Almost one-third of all internet stores employ dropshipping. In fact, you’ve probably already purchased online at a dropshipping company without realizing it.
Finally, the simplicity of the business concept appeals to anybody wishing to establish a basic home business without the need for startup financing or personnel.
How to Start a Dropshipping Business
Dropshipping appears straightforward on paper. However, if you want to be successful with your company concept, you must first develop an action plan.
1. Pick a niche.
It makes no difference if you want to create a dropshipping business, a blog, or any online money-making venture; niche selection is important to determining your target audience.
For dropshipping, specialty selection may make or destroy your business. In the early days of e-commerce, it was easy to run a thriving dropshipping business with hundreds of low-cost, trendy items and sell without a strong brand identification.
Nowadays, e-commerce is increasingly competitive. Although there are dropshipping success stories of people selling one-off goods, today’s successful dropshipping enterprises must establish a full brand and a unified store that appeals to buyers.
All of this boils down to choosing a specialty that you understand and can readily sell online. Common examples of dropshipping niches are:
Clothing and Accessories
Garden Products
Home goods
Sports and Toys
Technology and gadgets.
Jewelry and watches.
Kitchenware
Nonetheless, these are vast niches. If you decide to offer cookware, there’s no reason why a buyer would select your brand over goliaths like KitchenAid or generic shops like Walmart.
“Niching down” to a certain product category is the most effective strategy to build a strong brand and focus on a product you fully understand.
For example, instead of opening a store that sells women’s apparel, you might open one that only offers rompers or a certain type of women’s fashion to be more unique.
2. Find Potential Suppliers and Products.
A dropshipping specialty is required to establish a brand identity. To protect your brand’s image, select trusted suppliers who offer high-quality items at reasonable pricing.
Dropshipping enterprises have traditionally used AliExpress and Alibaba to source their items. This is primarily due to the fact that both platforms provide a diverse product variety at reasonable pricing.
Furthermore, shipping speeds have significantly improved over the years, allowing you to offer lower-cost Chinese items to a worldwide audience without worrying about month-long shipment waits.
Granted, some dropshipping companies have moved away from Chinese suppliers in order to increase product quality and shipment speed. Spocket is a popular alternative for selling items from US and EU manufacturers through your dropshipping business.
Regardless, here are some typical needs to look for in your products and suppliers:
Product reviews. Avoid selling items that have low customer ratings or no consumer feedback.
Shipping Times. Find goods that ship within a few business days and take less than a month to reach the consumer.
Cost. Dropshipping involves paying the manufacturer for both the product and the shipping expenses. To make a profit, your store must mark up its goods pricing. Ideally, you should be able to mark up things two to four times without making them prohibitively expensive for customers.
Quality. If you’re serious about dropshipping, get product samples from the manufacturer to check the quality yourself. This is a simple technique to evaluate delivery times and guarantee the goods you’re reselling is not defective.
Finally, this step of launching your dropshipping business is only for research reasons. Ideally, you should discover numerous suppliers and enough items in your specialty to support a successful shop.
If you can’t locate multiple items or products with positive evaluations, it may be time to pursue a new specialty.
3. Create your store.
You must establish a website for your dropshipping business, but this should not be a daunting task. One advantage of dropshipping is the inexpensive initial investment, and it is really simple to set up your own storefront without any technical skills.
Shopify is a popular alternative for dropshipping businesses, and it works well for both new and seasoned merchants. Beginner shops cost $29 a month, and Shopify offers a lot of tools that make running an e-commerce business easier, including:
Secure payment processing.
Unlimited product listings
Support is available 24/7.
Discount codes for items
Fraud analysis to identify dubious orders.
Furthermore, Shopify provides a wide choice of free and paid templates to help you design a stunning shop. You may also personalize your shop with Shopify’s user-friendly design capabilities, which make it simple to upload your own logo and create a distinctive website.
Because Shopify is created for e-commerce, themes are often modeled after prominent e-commerce websites. You may use highlighted product slideshows, product categories, and newsletter sign-up boxes to collect client information.
Of course, some merchants choose Shopify alternatives like WooCommerce for WordPress businesses or 3dCart. However, they demand significantly more technical knowledge than Shopify and are less popular among dropshipping firms.
4. Import Products
One benefit of dropshipping is that you can easily supply your business with merchandise. Because you are selling someone else’s items, you do not need to take product shots or employ a photographer because you may import current product images onto your website.
Many dropshipping companies utilize the Shopify app Oberlo to search for and import items. Oberlo allows you to explore millions of goods from dozens of genres to add to your store.
You may also import items straight from AliExpress, which is great if you discovered multiple things you wish to offer when conducting niche research.
When you import a product using Oberlo, you can specify which product photographs to include as well as the product description. You should individually go over each product you offer, selecting the most appealing images and creating a descriptive product description.
Fortunately, Oberlo’s free edition provides adequate capability for a new dropshipping store. The starting plan allows you to:
Import 500 items.
Fulfill limitless orders.
Set pricing automatically or manually.
Product statistics for prospective items include sales trend data, total imports to other dropshipping businesses, and customer ratings.
You may upgrade your Oberlo plan for $29.90 per month to sell more goods and get real-time order tracking and fulfillment monitoring. However, this is not required when beginning. A newbie dropshipping store generates few, if any, sales.
If you make a sale, you utilize Oberlo to fulfill the Shopify order by processing it through Oberlo and manually entering a shipment tracking number.
5. Finalize your store
It may be tempting to begin advertising your business after you have imported things. However, many new dropshipping shops fail because they begin selling too soon.
A successful e-commerce business is more than just a product catalog. Your shop should appear professional and instill trust in customers. To facilitate this, your store should include the following pages:
About. Create a page describing your brand’s objective, when your business opened, and why people should purchase there. Are you an expert in your field, sourcing the best products? If so, explain it to customers.
Shipping. Create a descriptive shipping page that describes all charges, limitations, and projected delivery timeframes.
FAQ and Return Policy. Create a page that addresses frequently asked questions, such as the payment methods you take, how consumers may receive updates on their purchases, and your cancellation and return policy.
Contact. As a new shop owner, you are the customer service department. Create a contact page that allows consumers to email you if they have any queries or complaints. You can also connect Shopify Chat, allowing consumers to communicate you directly.
Blog. Creating a blog is a simple way to provide material to your shop that highlights your expertise. For example, if your company offers hiking boots, you might write purchase recommendations for customers or articles about the greatest hiking paths. This builds customer trust, and a blog might eventually drive extra traffic from search engines, resulting in more purchases.
It’s also vital to prioritize larger design components for your shop before focusing on sales. To begin, build a store logo using a free tool like Canva or hire a designer through a company like Fiverr.
Ideally, your logo and website colors should match each other. You should also spend time testing various font kinds and sizes, as well as the general layout of your business, to discover a design that appeals to you.
If you need design inspiration, browse different e-commerce websites. The leaders in your field have had success selling online for a reason, and you don’t have to recreate the wheel.
6. Promote your store.
If you want to increase sales, you must attract website visitors. As a new dropshipping store, you’re beginning from scratch, and you can’t rely on word of mouth or established brand awareness to boost sales.
However, there are free or low-cost promotion possibilities. Typically, dropshipping store owners build social media profiles for their businesses.
Instagram and Facebook are simple places to start. You may submit product photographs to both platforms, make store announcements, and interact with page visitors who leave comments or send you a message.
Furthermore, Instagram allows you to add relevant hashtags to your posts, which will display in hashtag search results and improve visibility. If you understand how to utilize hashtags correctly, you may get thousands of free visitors to your profile page, more followers, and free website traffic.
Another typical promotional method is to use Facebook Ads. This is one of the quickest and cheapest methods to see if your things can sell online, and getting started is straightforward.
The 15-minute Facebook Blueprint course is a free Facebook training that teaches you how to build Facebook advertising, define business goals, and track campaigns.
If you follow this course and watch the Facebook Ads for Dropshipping courses on YouTube, you will have a basic grasp of how to utilize Facebook to drive traffic to your website.
Online advertising may be overwhelming at first. Furthermore, it takes time to get comfortable with investing your own money without expecting a certain return.
Unfortunately, this is typical of e-commerce advertising. Before you promote, set a budget for testing out a few of your store’s items.
There is no hard and fast rule for how much you should spend on a product to determine its feasibility. Some business owners may spend hundreds of dollars, but others may follow a basic rule of $50 per product test.
Finally, you should think of your advertising spend as a tool to collect data. You select how much data you need to determine whether or not customers enjoy your product.
7. Restart or scale.
If you try numerous goods using Facebook advertisements and don’t see any sales after paying a few hundred dollars, you may become disappointed.
However, this is part of the process of establishing a successful dropshipping business. After all, for every successful store, there are several failed concepts and niches.
Some common causes for a lack of sales are:
Not spending enough. If you just spend $5 per product and a few individuals visit your website, you don’t have enough data to make a decision.
Poor ad targeting. Facebook allows you to target groups of individuals based on their interests and demographics. For example, a dropshipping company offering weightlifting shoes may appeal to younger men and women who like powerlifting. Targeting frequently determines the success or failure of an advertising effort. Consider testing many targeting concepts with advertising to determine which groups of individuals are more interested in your items.
Ugly advertisements. Creating Facebook advertising is straightforward with Facebook’s ad creation tool. You may use free stock photographs from Facebook or your own product shots, and keeping it basic is ideal. Unappealing or unclear adverts deter visitors from clicking, resulting in lost prospective consumers before they ever visit your business. Spend time researching how to build interesting Facebook advertising, and ask your friends to provide input on the advertisements you intend to run to get an outside perspective.
Website Issues. Regardless of your promotional efforts, generating purchases on a website that loads slowly or appears incomplete is difficult. In actuality, most dropshipping optimization should be on your store rather than your adverts. Are your product pictures enticing? Do your product descriptions entice shoppers to spend? Is there anything about your shop that seems shady or unprofessional? Consider these questions and carry out your own e-commerce store audit.
If your shop isn’t experiencing these issues, your specialty might be the limiting cause. Although this is a difficult pill to take, the reality is that certain niches are too saturated and competitive to survive in, while others are too limited to produce enough traffic and revenue.
Knowing when to quit and scale your efforts is an important part of dropshipping success. If you aren’t making sales after months of labor, consider switching to a different specialty or focusing on free social media advertising rather than paid ads to save money.
If you’re making sales, reinvest the proceeds in advertising and retail enhancements. Gradually expand your Facebook budget, experiment with new items and consumer audiences, and keep learning about online advertising.
Also, do not be scared to invest in your website. Shopify offers a variety of applications to help you enhance the operation of your business, such as those for collecting customer emails, developing your own affiliate network for brand ambassadors, and encouraging sales using pop-ups to encourage purchases.
There is no recipe for designing the ideal store. However, by experimenting with different items and ideas, you may increase your e-commerce abilities and, eventually, revenues.
8. Consider the legal and financial implications.
As a novice, you do not need to bother about incorporating your firm or employing an accountant. The truth is that most dropshipping shops do not earn any money, and those that do typically require time to expand.
Given dropshipping’s high failure rate, there’s a good possibility your shop will only last a few months.
However, once you start making income, you must address the tax consequences and your legal structure.
For dropshipping, registering as a limited liability company (LLC) or S corporation (S-Corp) is a popular choice since it provides liability protection and allows earnings and losses from the firm to flow through to the owner.
Ultimately, this allows you to claim additional small-business tax deductions, such as those for your website and home office. Rocket Lawyer allows you to easily set up an LLC.
You should still consult with an accountant before making any legal choices for your firm. You should also learn how to handle your accounts if you start to create significant revenue and begin recruiting people or managing many locations.
To begin, invest in accounting and bookkeeping software to monitor revenue and costs. Quickbooks and Freshbooks are two popular and economical solutions, with basic accounts costing less than $30 per month.
Keeping track of your company’s finances is crucial during tax season, and the more spending you document, the greater your chances of finding tax deductions.
Finally, if you know you’ll be dropshipping for the foreseeable future, create a small-business bank account and a company credit card.
Business credit cards are especially handy since they often offer greater spending limits and more attractive benefits, which can be beneficial if you spend a lot of money on your company each month or do not qualify for a small-business loan.
These processes are not essential for beginning a dropshipping shop, therefore don’t allow the legal framework or tax issues deter you from starting. They become more critical if you’ve established a profitable dropshipping business.
In Conclusion
Most side company ideas require a significant amount of starting cash to get started. Similarly, internet employment such as English instructor or freelance writer typically demand experience or even a degree to gain work.
Dropshipping is appealing since it is one of the most affordable and accessible money-making opportunities available. You only need a concept and a website to get started.
Plus, due to social media, you may market your shop to customers all over the world for free or experiment with low-cost online advertising services.
The disadvantage of dropshipping is that it is frequently marketed as a get-rich-quick scheme or borderline fraud due to its ease of implementation.
Unfortunately, this means that dropshipping has a somewhat poor reputation, particularly because pricey dropshipping courses sometimes mislead consumers into launching a company with exaggerated promises of riches.
Most dropshipping stores fail. It takes time to identify winning items, and you must grasp the intricacies of starting an e-commerce business from beginning.
However, if you stay with it and are prepared to try numerous businesses, there’s no reason you can’t make your dropshipping business into a profitable side hustle. Furthermore, you never know; your next store concept may grow into a full-fledged business if sales take off.
