Dropshipping is a hugely successful business model with more and more people wanting to get in on the action.
Simple. It’s one of the easiest and cheapest ways to start an ecommerce business.
With dropshipping, you can have your very own shop and sell products you don’t even own. This means little initial investment, no inventory, and no need to manage order fulfillment.
I know it sounds far too good to be true, and it can be. Many dropshippers fail because there’s a lot you have to get right to succeed. The good news is, in 2019, there’s still money to be made dropshipping, and there are tons of resources and software out there to help you.
Still thinking of getting started?
Great! Here are the 4 steps to start a dropshipping business!
Step 1: Know what you’re going to sell
This is the most important step. You can’t just choose a random product in a random niche and expect to get thousands of sales. Most niches are over-saturated with products sold by bigger, more-established stores. If that’s the case, it’s going to be extremely difficult to compete. So you’re going to need a strategy to choose your product. Check these out:
- Choose something you’re passionate about or, at least, know something about. Maybe passion is a strong word, but it’s always good to have a background in the niche you’re thinking about. It’ll give you unique insights and it’ll be easier and more satisfying to produce blog or video content that drives traffic to your store.
- Find what’s selling and who’s selling it. There are many dedicated tools to help you do this, but to get a quick overview, you can take a look at the ‘bestseller’ ranks on Amazon and eBay. Narrow it down to your niche and look for what’s selling well. Take a look at who’s selling them. Are they fulfilling the demand? What does their store look like? How do they write their product descriptions? A good idea is to read seller reviews, especially the negative ones. Can you do a better job making the buyers in this niche happy with their purchase and overall experience?
- Do some keyword analysis. There are some sophisticated tools designed for this, but you can simply type your ideas into Google or Amazon and look at the auto-fill suggestions. This is a great way to narrow down your niche and get product ideas.
- Use social media. Yes, we all love memes and cat videos, but Facebook et al. are great places to spot up-and-coming trends and to spy on your would-be competitors. Pay close attention to what ads are being targeted to you. Look at what kinds of products these companies or individuals are selling and, more importantly, how they’re selling them.
- Is it profitable? We’re not running a charity here, so it’s important to work out if a niche or product is going to make you money. This means checking the average selling prices of similar items and deducting your cost-per-unit and all related costs (shipping, taxes…) to make sure you can build a real business around this product. It’s difficult to state an ideal profit margin, as it can vary greatly depending on what type of dropshipping you are doing – few products with high prices vs. many products with low prices – but aiming high always makes sense when it comes to profit margins.
Step 2: Find a supplier
So, you’ve found your golden goose (your product… we don’t recommend you sell livestock) – now you need to find someone to supply and ship the thing to your customers.
It’s important to find a supplier that is super-reliable, stocks high-quality products and has excellent customer service. These are the guys who are actually sending the product to the customer. They are your business partner, so choose them wisely.
Things to look for when choosing your supplier:
- Quality products. Happier customers, better reviews, fewer returns, more sales.
- Fast shipping. Essential. Fast shipping times can give you an edge over your competitors. It’s a good idea to do test orders with a few suppliers and gauge their shipping times.
- Great customer service. You can call them whenever there’s an issue. They have your back.
- No huge per-order fees. Dropshipping is all about keeping those costs down and margins up. High per-order fees are a big no-no.
Where can you find suppliers?
To find the best suppliers, you have to hunt for them yourself. This can be a bit of a challenge.
Many new dropshippers consider going directly to manufacturers, but many manufacturers sell products at a discount only when wholesaling because they can generate bulk orders that way. Because of this, it’s unlikely that a direct relationship with manufacturers will be fitting for a dropshipping business where you’re placing one order at a time as products are sold.
AliExpress is the most popular choice for new dropshippers. It’s essentially a marketplace with millions of products at low prices. It’s very easy and free to use. You simply search for your product and compare the sellers who offer it.
Once you have a couple to choose from, it’s a good idea to place a test order with them and compare the product quality, packaging and the delivery time. Ask yourself, would your customer be happy with this?
Step 3: Find a place to sell the products
Things are really heating up now. You’ve got your product, you’ve got a supplier. Now, you need to decide where you’re going to sell. This is about getting your product in front of customers who are actually looking for it.
Although there are several options, I want to keep this guide nice and simple so I’m going to focus on two popular dropshipping models; Dropshipping on Shopify and dropshipping on eBay.
Dropshipping on Shopify
Shopify is a service that allows users to design and create their very own ecommerce store. It’s great if you want complete control of how your products are presented. Plus, you have Oberlo, Shopify’s own fully integrated supplier network, to quickly find and add products to your store.
A Shopify subscription starts at $29.00/month, and on top of that, you do pay a small transaction fee for each sale. Dropshipping with Shopify requires you to do the marketing yourself, and it can take time to drive customers to your store. There are many options to market your product(s). Here are a couple of popular ones:
- Facebook. Huge audience. You can pay for ads and tailor them to target your niche, e.g., Men, aged 40+ who like cycling. It’s relatively inexpensive and can yield fast results. You can also create pages and groups for your niche and advertise your product to your community.
- Google Ads. You can pay for ads on the largest search platform in the world and see your product on the front page when people search for your niche. You can achieve some great results pretty quickly and with Google’s keyword targeting capabilities, you can get your product in front of people who are actually looking for it.
- Content marketing. You could start a blog or YouTube channel where you show off your authority in your niche, slowly building a trusting audience who you can sell to. This can take some time but doesn’t cost you anything and works really well with some products – especially if you’re passionate about your niche.
- Forums and groups. The last method I want to talk about is exploring forums and groups in your niche. Similar to content marketing, if you can build trust and authority in your space, then selling becomes much easier. Just be careful not to go full-on salesman in the early days. People don’t like that.
Dropshipping on eBay
Dropshipping on eBay is great for beginners because people already know and trust it. You have a ready-made audience – some 170m active users – without having to do any marketing. You can list 1000’s of items easily and you can sell anything. Most eBay dropshippers source their products from Amazon, Walmart or AliExpress.
Selling on eBay isn’t free. Firstly, you have to pay a listing fee. You get 50 free each month (in the US) but more if you pay for a store. On top of that, there’s a final value fee of around 9%. Also, it’s really important to stay on eBay’s good side and not infringe on their dropshipping policy. You could get your account suspended.
Step 4: Keep those customers happy
This is more a friendly reminder than a step. Make customer service your top priority. Ship on time, share the tracking numbers, keep on top of complaints and returns and keep those ratings as close to 5 stars as you possibly can. This will nicely slide you ahead of your competitors selling the same product and, depending on the product, will keep your customers coming back.
There you have it – four steps to start your dropshipping business. Bear in mind that as you dive into the world of dropshipping, you’ll find that it isn’t easy to get into. You need to find the right products, find a good supplier, get the products in front of people who actually want to buy them, and keep those people happy so your reputation stays strong within your industry.
SaleFreaks is dropshipping automation software designed for arbitrage dropshippers that supports sourcing from Amazon and listing to eBay, Bonanza, and Shopify.
IMPORTANT: The contents of this blog do not constitute financial advice and are provided for general information purposes only without taking into account the investment objectives, financial situation and particular needs of any particular person. OzForex Limited (trading as OFX) and its affiliated entities make no recommendation as to the merits of any financial strategy or product referred to in the blog. OFX makes no warranty, express or implied, concerning the suitability, completeness, quality or exactness of the information and models provided in this blog.