Home / E-commerce / How To Start A Dropshipping Business | Step By Step Guide

How To Start A Dropshipping Business | Step By Step Guide

Have you been trying to find out how to start a dropshipping business? – You are a step away from the step by step guide on how you can own a profitable dropshipping business of your own.

It is worth knowing that dropshipping business made it to the list of profitable online businesses with small capital you can think of.

However, even with small capital for start-up, dropshipping is very profitable if you have a very good busisness plan and execution. Secondly, Dropshipping is a business you can comfortably start from home without much skills.

But, let us start by telling you what a dropshipping business means. Just like every business, it has its pros and cons. Therefore, make sure you properly understand what dropshipping means before setting up one.

Dropshipping Business Meaning

The dropshipping concept centers on an eCommerce or an online store where you can advertise goods that you do not physically have but have an idea of where to get them. In a simpler language, dropshipping simply means you are a middleman between a product and a buyer.

In dropshipping, you put up goods that are not physically available on your e-commerce stores. Your sole responsibility is to receive orders from buyers and use their money to purchase the goods for them from a known seller that has the goods. It simply means that you as a dropshipper has no contact with the goods in question.

But, everything good thing will still have its bad sides. Hence, lets go through the risks and advantages of a dropshipping business.

Little capital for start-up

Dropshipping business does not require to get a physical shop, does not require you to stock your products or any other expenses that comes with having an offline shop.

Since there is no investment on inventory, dropshipping can allow you to have as many products in your store as you desire without you paying a dime for any.

However, the little capital you will need to set up the dropshipping is just a few dollars for hosting your business site.

It is Flexible

Dropshipping does not require you have a big shop or an outstanding warehouse. It also does not require you to sit one place while doing the buying and selling. In other words, your dropshipping business is with you always with your smart device. That is why it is called an eCommerce business. All you need is a fully charged device, data or wifi and a steady internet network.

Therefore, This type of business is so flexible that you can combine it with other businesses, school or you can still nurse your baby while you dropship. This means that anybody, anywhere can dropship.

Easy to expand the business

When trying to start a dropshipping business, it is better to be specific with the products and expand the business as the time goes. The good thing with dropshipping is that you do not get more responsibilities for every item you add to your online shop. It simply means that expanding your online shop only will give more work of processing orders to your supplier.

In other words, you will not put in any additional capital nor need more hands to process the goods. All you need do is sit and track the extra orders from the supplier down to your customer.

Wide selection of products

Because you do not to invest to stock your products nor do you need a warehouse for stocking, you can stock as many products as you like. It simply means that you have no limitation to what you can place in your store online.

Nevertheless, it is important you narrow your niche to have authority in whatever you sell. Do not be jack of all trades and master of none

Disadvantages of dropshipping business

On the contrary to the rosy benefits of dropshipping, there are few cons you will consider before thinking of how to start a dropshipping business. Some of them includes;

Low Markup

The aim of every business is to make a substantial profit. The common challenge with dropshipping is that because any Dick and Harry can enter the business with virtually no capital, competition is always intense. In that case, most sellers will reduce the selling price drastically in order to stay in the market competition. Therefore, the goods will generally be sold with low margins.

But, the competition in a product will depend on the niche of products you sell. It is important to do a proper market survey to know goods that have potentials. Do not just rush into placing all sorts of good in your store without a proper background study.

Control over inventory

It is easier to control inventory if you are the one actually stocking the goods. But, in dropshipping, the supplier is in charge of stocking. Therefore, you may not be in good position to always know when goods are in stock and when they are out of stock.

This mistake will affect your business when you receive money from a customer and then discover that the product is out of stock from your business. This may send a bad message to your customer with regards to your business integrity.

Errors from your supplier

In this business, you will not get to see the product to be supplied to your customers. Most times the suppliers makes mistake with the packaging, some may include your invoice containing the price you purchased the goods to the customer. Also, the fraudulent ones may package a substandard product, or omit a product.

All these and so many other blunders the supplier may commit will have to be your responsibility. If eventually you are unable to address the issues diplomatically, you may end up loosing a customer.

Delivery time

Dropshipping business is not a “cash and carry” type of business. Some order may take up to 2 weeks or more to reach your customer depending on when the supplier packaged it. Therefore, always keep your customer updated and be sincere on the expected duration before he gets the goods.

You will charged shipping fee for every sell

A dropshipper makes use of so many suppliers. In an event where the products a customer selected cannot be sourced from one supplier. It becomes a problem sourcing it from different sources and paying the shipping fee for each product.

In that case, what will you do? Decide not sell?, Add the cumulative shipping fees to your customer? Or pay from your pocket? Your choice of action at this point is very important for the continuity of your business.

Steps on how to start a dropshipping business

To start a dropshipping business is very easy in theory but the hard part of it is that it is not something you just jump into. Every step in the business requires enough research about what will work and what will not work. Aside that, Dropshipping is a cool business you can easily start without much stress. Below are the steps to owning a dropshipping business;

Step 1. Decide the things you will want to sell

Finding a dropshipping niche is a very crucial step in start a business online. You do not just start selling clothes because everybody is selling. This step is very important and requires a great deal of research and trials. However, i will give you a few factors to consider when trying to choose a niche you will want to join.

a. Sell what people actually search

When deciding on what to sell, do not start selling what is easily obtainable in the street. People will not have to order it online or wait for the long shipping time if they can walk in any nearby store and get it. So,consider products that are rare, only that will make your products appreciated.

However, there are online tools you can use to actually know what people are searching such as the Google’s Keyword Planner and Trends.

b. seek attractive profit

The aim of every business is to make attractive profits. Too much competition tend to force sellers to sell at low margins but getting a niche where you can have authority will allow you sell at good margins.

Nevertheless, not all goods without competition is a good shot for dropshipping because it may mean there are no demand for the goods.

c. Goods with low cost of shipping

Cost of shipping goods is very important because it will affect your selling price of products. Do not go for very heavy items that will require higher cost of shipping with low gain. If possible,if you can get goods with free shipping, that is wonderful.

An ideal shipping price should be between $2 to 5$. Price higher than that may significantly increase your selling price which may turn off your customers.

Step 2. Build your website

Here, is where most starters make mistake. Dropshipping does not require a very professional website. A simple site with an e-commerce theme is good enough to go. In addition,most e-commerce companies like shopify, Amazon and Etsy can actually help you with a platform where you can start.

The advantages of using an already existing platform or e-commerce team is that is easier to setup and also to add your cart and your payment details. However, the disadvantage its not that flexible for you to brand your site as you wish.

In summary, the take home is that you will try not to waste money on building websites for your business when you can get similar or better ones for free. Try as much as possible to save cost while setting up your business.

Step 3. Find a trusted supplier

In the dropshipping business, the supplier has a great role to play in the success of your business. Hence, care is taken to get a good supplier that will sell at a whole price, a supplier that will always be trusted to deliver and a competent supplier that will not be making unnecessary mistakes.

In other words, a bad supplier can ruin your business for you. When looking for a supplier, try to get a supplier that is a wholesaler and not those posing to be one. Getting a direct wholesaler will ensure you get the products at a good price. Also, make sure that your supplier has experience in dropshipping and can be competent in packaging and delivering of your products.

Step 4. Advertise your business

Having your online business set with wonderful products is not a guarantee that you will start selling. You will have to let potential customers know about your business through a tool known as Digital marketing skills.

There are so many ways you can advertise your business online and each method requires skills you can easily learn with google digital marketing skills. Here are few ways you can use to market your products online

Social media marketing

As i mentioned earlier, billions of people are in different social media such as instagram, Facebook and Pinterest. Social media marketing will allow you to portray your business to this online community.

You can step up your business by running Ads such as facebook ads through facebook ad manager or better still promote your products with instagram influencers.

Content marketing

This type of advertisement involves to create contents or posts similar to your products and engaging potentials to take action by buying your products. However, this type of advertisement is slow because your blog site need to be optimized before it can start appearing on the search engine.

On the contrary, you may choose to place your advertisement on a friends blog or forum with a domain authority already.

Email marketing

The email marketing as the name implies is simply gathering of email list of your potential customers through sign ups, promos or offers. The reason for making this list is to help you keep in touch. Inform your customers of a product, ask for their opinion or review about your products and provide them a targeted engagement.

Target marketing through search engines

Google for example is the biggest search engine with millions of publishers all round the world. Running an Ad with google search engine is a sure way of targeting customers that are interested in your products,

Conclusion

The physical requirements of starting a dropshipping business is not much but the main idea behind a successful dropshipping business is the technical analysis. Therefore, you will to learn those aspects before the thought of how to start a dropshipping business.

Leave a Reply

Your email address will not be published. Required fields are marked *

error: Content is protected !!