According to the U.S. Small Business Administration Office of Advocacy, there are more than 30 million small businesses in the United States. When you consider how tempting the idea of being your own boss can be, it’s no surprise that millions of Americans choose to strike out on their own.
However, starting your own business isn’t an easy feat. When you consider potentially high startup costs and the fact that roughly 50% of businesses fail within five years, putting money into a business idea might seem like too great a risk.
Thankfully, due to the rise of e-commerce, it’s possible to start an online business without investing much capital or having to quit your day job. In fact, if you rely on dropshipping, you can create your own e-commerce business without handling inventory, employees, and order fulfilment.
Like any business model, there are steps you can follow if you want to start your own dropshipping business. This process is difficult, but if you’re willing to test several store ideas and have patience, you can start a new side hustle by running a dropshipping business from home.
What Is Dropshipping?
Traditional e-commerce businesses operate similarly to brick-and-mortar retailers because they store their own inventory and are responsible for shipping and logistics whenever customers order.
Dropshipping is different. With dropshipping, you never handle physical inventory or shipping. Rather, dropshipping businesses work directly with manufacturers to sell and ship products.
When a customer orders from your dropshipping business, the manufacturer ships it directly to the customer. This lets you focus on selling and developing a brand without having to worry about the fulfillment process.
Dropshipping also saves business owners from renting expensive warehouse space to store their inventory and hiring employees to help with fulfillment.
Almost one-third of online stores use dropshipping. In fact, you’ve probably shopped online at a dropshipping business before without realizing it.
Ultimately, the simplicity of the business model makes it appealing for anyone looking to start a simple home business that doesn’t require startup funding or employees.
How to Start a Dropshipping Business
Dropshipping seems simple on paper. However, like any business idea, you need an action plan if you want any chance of success.
1. Pick a Niche
For dropshipping, niche selection can make or break your store. In the early days of e-commerce, it was possible to create a profitable dropshipping business with dozens of cheap, trending products and to sell without having a substantial brand identity.
These days, e-commerce is more competitive. Although there are dropshipping success stories of people selling one-off products, nowadays, successful dropshipping businesses need to build a comprehensive brand and cohesive store that’s inviting to customers.
All this boils down to picking a niche you understand and one that sells online easily. Common examples of dropshipping niches include:
- Clothing and accessories
- Garden products
- Home goods
- Sports and toys
- Technology and gadgets
- Jewelry and watches
However, these are still broad niches. If you choose to sell kitchenware, there’s little reason for a customer to choose your brand over goliaths like KitchenAid or general retailers like Walmart.
“Niching down” into a specific product category is the best way to create a strong brand and to focus on a product you truly understand.
For example, rather than creating a store that sells women’s clothing, you could create a store that only sells rompers or a narrow category of women’s fashion to be more unique.
2. Find Potential Suppliers and Products
A dropshipping niche is necessary to build a brand identity. To maintain your brand reputation, however, it’s important to find reputable suppliers with quality products, affordable prices, and reliable shipping times.
Additionally, shipping times have steadily improved over the years, meaning you can sell cheaper Chinese goods to a global audience without having to worry about month-long shipping times.
Granted, some dropshipping businesses have moved away from Chinese suppliers to improve product quality and shipping times. Spocket is one popular option that lets you sell products from U.S. and EU manufacturers on your dropshipping store.
Whatever the case, some common requirements to look for in your products and suppliers include:
- Product Reviews. Avoid selling products with low customer ratings or a lack of customer feedback.
- Shipping Times. Find products that ship within a few business days and take under a month to reach the customer.
- Cost. In dropshipping, you pay the manufacturer for the product cost and shipping fees. Your own store has to mark up product prices to turn a profit. Ideally, you should be able to mark up products by two to four times without being too expensive for consumers.
- Quality. If you’re serious about dropshipping, order product samples from the manufacturer to inspect quality yourself. This is an easy way to test shipping times and to ensure the product you’re reselling isn’t faulty.
Ultimately, this stage in starting your dropshipping business is purely for research purposes. Ideally, you should find several suppliers and enough products in your niche that will let you create a robust storefront.
If you can’t find several products or products with positive reviews, it might be a sign to find a new niche.
3. Create Your Store
You need to create a website for your dropshipping store, but don’t let this step scare you. One advantage of dropshipping is the low startup cost, and it’s incredibly easy to set up your own storefront without much technical knowledge.
Shopify is a popular choice for dropshipping businesses, and it’s perfect for beginners and experienced sellers alike. Beginner stores cost $29 per month, and Shopify has a number of features that make running an e-commerce business easier, such as:
- Secure payment processing
- Unlimited product listings
- 24/7 support
- Discount codes for products
- Fraud analysis to flag suspicious orders
Plus, Shopify offers a diverse range of free and paid themes you can use to create a beautiful storefront. You can also customize your storefront with Shopify’s intuitive design features, making it easy to upload your own logo and craft a unique website.
Because Shopify is built for e-commerce, themes are typically designed like popular e-commerce websites. You can create featured product slideshows, product categories, and insert newsletter sign-up boxes to capture customer information.
Of course, some sellers choose Shopify alternatives, such as WooCommerce for WordPress stores or other software like 3dCart. However, these require slightly more technical knowledge than Shopify and aren’t as popular for dropshipping businesses.
4. Import Products
One advantage of dropshipping is that stocking your store with products is easy. Because you’re selling someone else’s products, you don’t have to take product photos or hire a photographer because you can import existing product images to your website.
To find and import products, many dropshipping stores use the Shopify app Oberlo. With Oberlo, you can browse millions of products across dozens of niches to add to your store.
You can also import products directly from AliExpress, which is useful if you identified several products you want to sell during your niche research.
When Oberlo imports a product, you also choose which product photos to include and set the product description. You should manually review each product you sell, choosing the most enticing pictures and writing a detailed product description.
Thankfully, Oberlo’s free version has enough functionality for a beginner dropshipping store. With the starter plan, you can:
- Import 500 products
- Fulfill unlimited orders
- Set prices automatically or manually
- View product statistics for potential products, such as sales trend data, total imports to other dropshipping stores, and customer ratings
You can upgrade your Oberlo plan for $29.90 per month if you want to sell more products and have real-time order tracking and fulfillment monitoring. However, this isn’t necessary when starting. A beginner dropshipping store has few sales, if any.
If you generate a sale, you use Oberlo to fulfill the Shopify order by processing the order through Oberlo and then manually adding a shipping tracking number to Oberlo.
5. Finalize Your Store
It might be tempting to start promoting your store once you import products. However, many beginner dropshipping stores fail because they start selling too early.
A successful e-commerce store is more than a product catalog. Your store needs to look professional and inspire trust in buyers. To help accomplish this, your store should have the following pages:
- About. Create a page that describes your brand’s mission, when your store began, and why customers should shop at your store. Are you an expert in your niche and source the best products? If so, describe this to customers.
- Shipping. Write a detailed shipping page that explains any costs, shipping restrictions, and expected delivery times.
- FAQs and Returns Policy. Create a page that answers commonly asked questions, such as payment options you accept, how customers get updates on their orders, and your cancellation and return policy.
- Contact. As a beginner store owner, you are the customer service department. Create a contact page t
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