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What Do You Need to Know to Start a Drop shipping Business?

how to start a drop shipping business

If you want to be a leading entrepreneur or if you are taking your baby steps towards entrepreneurship then starting a dropshipping business is a great idea. Dropshipping is an extremely popular business model for new entrants in business, especially for the millennials having very limited funds. You can sell products to customers, set your own prices and market your own brand without even having to worry about inventory.

You just need to put efforts to build the business. In this article, you will learn what Dropshipping is and how you can start drop shipping business easily.

What is Meant by Dropshipping? How Does it Work?

Drop shipping business is a business model where you sell the products to customers online but instead of you carrying the invoice and dispatching the order, the manufacturer ships the product on your behalf.

There Are 3 Key Players in Dropshipping Business

The Retailer, The Manufacturer, and The Customer

You play the role of the Retailer. You sell the products that manufacturers produce on your website under your brand name. You will be responsible for showcasing, choosing and marketing the products and creating a sustaining brand image. You will also be responsible for acquiring customers, managing their orders, inquiries and complaints, and refunds.

The manufacturer’s role would be creating the product, developing the product, maintaining the inventory, shipping the products at the right time on behalf of you. The manufacturer will also be responsible for replacing any defective product. They sell the goods to you at wholesale prices.

The customers buy the products directly from your website. Anything regarding the product quality, quantity, price, description or complains they will contact you. However, the manufacturer will ship the product under your brand name to the customer in due time.

Sounds simple? It is actually.  Drop shopping not only cuts down operational costs completely but it also frees up most of your efforts in generating business and directs everything to customer acquisition.

Steps Involved in Starting a Dropshipping Business

So, if you are ready to start a limited budget business, yet compete with your giant competitors, follow the following steps and establish your first start-up.

Step 1:  Select an Industry

Before you begin, you have to decide what you want to sell. And hence, you have to start by selecting a niche. Select something that you are genuinely interested in. If you sell an undesirable product range, your marketing strategies may fall flat soon.

And if you aren’t passionate enough about your product, you will more likely become discouraged. Remember, a drop shipping business takes time to soar and run and unless you are determined and passionate enough, this wouldn’t work out.

Some of the elements you need to consider while selecting your industry include:

  • Select a niche that generates great profit. Your focus should remain on marketing and customer acquisition, so don’t bother about the price.
  • Make sure you provide a low shipping cost. An inexpensive shipping strategy will also give you the option to offer free shipping.
  • Your products should trigger impulse buys and appeal to those customers who can afford to purchase on spot.
  • Make sure people are searching for your products actively on the internet. If nobody wants your product then you are already dead in the market.
  • Look for a product that you can white label and sell under your own brand with personalized design and packaging.
  • Pick a product that is not easily available in the local market and customers to have to search for it online.

Step 2:  Research Your Market and Your Competitors

You will be not the only dropshipping company online, neither will you be the only e-commerce store selling the product. You will be indefinitely competing with Amazon, eBay, and Walmart. Do you know what that means? They are the retail giants. Don’t go for a product that has little or no competitors. This is where you may lose opportunities. Competition is more where the demand is more. It is a sign.

Okay, here is the thing; a product might not be competitive for a lot of reasons. It may have high shipping cost or poor profit margins or probably manufacturer issues. However, you can create competition for those products by getting them on the sale with reasonably priced shipping and good quality products with advantageous profit margins. It would need some critical business strategizing efforts from your end.  To make all these simple, go for a product range that is profitable and has good competition.

Step 3: Look for a Good Supplier

If your manufacturer is not good, you may incur tremendous losses. So, it is important that you take plenty of time and put good efforts to choose a great supplier for your products. Communication is extremely important if your supplier is located overseas (most drop shipping manufacturers are not from the home country).

Your communication with each other should be strong, speedy and clear. There shouldn’t be any place for misunderstandings or lack of clarity. If you aren’t 100 percent sure about the communication, move on to find someone else.

Language could pose a great barrier. Make sure you ask a lot of questions and answer a lot of questions. Learn about their production style, unit, raw material sources etc. They should have the capability to grow your business.

Talk to already established entrepreneurs and businessmen for guidance.  When you agree with a supplier, ensure that he understands your demands about customizing products and product quality and quantity.

Step 4: Establish Your Website and Build Your Brand Value

You won’t be able to acquire customers and build a viable brand image if you don’t have a place to market and promote your products. And the best and fastest way to do so is to create a great website from a reputable web development company. We all know that a website today is the face of a company profile; it acts as a smart choice for business cards.

If your budget is limited, start your own website using a popular e-commerce web hosting platform. You don’t have to be an expert to have your website up and running. All you need is a creative mind, patience to learn and plenty of common sense.

Even if you have a sizable budget and have all the resources to appoint a web developer, we suggest you start with play and plug option instead of going for a customized web design solution. This is important especially if you are a beginner.

Once your brand is established and the profit starts to flow in, you can think of developing your website, explore additional website customization and get it done professionally.

Step 5: Develop a Marketing and Promotion Plan

Here comes the most important step. A website is the business card, but you need customers to show your cards. Without customers looking in your direction, a great product or a great website will be of no use.

There are several ways to attract customers. You can use the traditional approaches or use digital marketing trends.  Either way, you will be greatly benefited.

However, since you are a start-up and we suggest that you walk with a limited budget, do not invest heftily on marketing and promotional activities from the very beginning. Although we do keep advising that marketing and promotion is the backbone of any business and that you should invest in it generously, it is better you start your drop shipping business with cost-effective ways.

So, the most effective option we could think for you is Facebook Ad Campaigns. Nowadays, it is quite easy to start a Facebook Ad Campaign. You can, in fact, generate revenue from the very beginning.  Facebook Ads lets you place your ads to the right audience at the right time. All you need to do is create your audience avatar, a model that represents your perfect customer.  This would give you the ability and freedom to deal and compete with the largest of brands and retailers.

Apart from Facebook Ad Campaigns, use Instagram and Twitter to promote your website. You can also start a Blog site and make yourself seem like a pro in your industry. In the future, when your business takes a stable turn, invest in other forms of marketing, such as SEO, PPC, Social Media Marketing, Email Marketing etc.

Step 5: Track Your Marketing and Promotional Efforts

Your final effort will be to track all of the data and metrics available to boost your sales. Facebook conversion pixel, Google Analytics traffic are two tools you can leverage to find the data you need. It is important that you track every single lead conversion – to know from the location customers came in, what path they chose to visit your website, what is their age group, how long did they spend on your website and so on.

The figures and analysis will help you scale your business and make you understand what works, what does not and what should be changed.

You have to constantly try new marketing solutions and advertising pattern. You cannot have a single set solution for long. Refine your campaigns and tweak your methods to know when to use what approach to fit the situation best.

There you go! We have got you covered on how to start a drop shipping business all by yourself. Take the first step and rest will fall easy. Let us know if you come up with new ideas for drop shipping business.