What is Dropshipping? How to Start Your Dropshipping Business
Looking to start a dropshipping business or expand your inventory? From wireless headphones to rubber ducks, dropshipping is a low-risk way to make a profit online.
Learn more about dropshipping and learn how to get started:
What is Dropshipping?
How Dropshipping Works
Pros and Cons
How to Start Dropshipping
Making Your First Sale
01. What is Dropshipping?
Dropshipping is a type of retail fulfillment that lets you sell products without managing your own inventory. You connect with dropshipping suppliers and source products to sell online. Customers checkout on your site, then you forward the order info to the supplier, and the supplier fulfills the order.
Unlike traditional online retail, dropshipping releases the merchant from having to fulfill their orders. That means you skip the stress and cost of manufacturing products, storing inventory and shipping to customers. So what’s left for you as a dropshipper? You’ll choose products, run marketing campaigns and provide great customer service.
02. How Dropshipping Works
Here’s the basic flow of dropshipping:
Choose products. Source from independent suppliers or integrate with a dropshipping marketplace.
Import items to your online store and set your prices. You have full control over your listings and profit margins.
Accept customer orders. Shoppers find the items they want, check out and pay on your site.
Forward customer orders to the supplier. Put in your customer orders and shipping details. Then, pay the dropshipping supplier on your customers’ behalf.
Ship and fulfill orders through the supplier. Your supplier ships each order directly to your customers’ addresses. You’ll get a tracking number in the system so you can update your customers. If the supplier offers white label shipping, you can even use your own branding on the packaging.
03. Pros and Cons
Is dropshipping right for your business? Some factors to consider:
Reasons to Dropship
Start an online store with inventory ready to go. Dropshipping makes filling your storefront simple. Choose products, add a payment method and set up your online store.
Expand your product offering. You don’t need to limit the products you sell to your storage space or what you can manufacture.
Avoid upfront inventory costs. Production and storage costs are covered by dropshipping suppliers. That way, you can focus your budget and efforts on your website and marketing.
Operate from anywhere. Without a physical tie to your products, you can manage your dropshipping business wherever you have WiFi.
Test products and quickly adjust your inventory to the latest trends. Sourcing products from suppliers means that your inventory is flexible. If a product isn’t selling, you can easily switch to something else.
Reasons Not to Dropship
You can’t completely control product quality. If you work with independent suppliers, it’s harder to minimize risk. However, you can make sure your suppliers are reliable by sourcing through a dropshipping marketplace like Modalyst or Spocket.
Customer service may be more difficult. Unless you have in-depth experience with the products you sell, questions may come up that you can’t answer. To solve this, make sure you have a way to communicate directly with your suppliers.
You’ll need to manage returns and exchanges. Depending on your suppliers, you may need to handle the refund process on your own as well.
Shipping costs will depend on your supplier’s location, not yours. If customers live far from where your products are warehoused, shipping will be pricier. This can also work to your advantage though. For example, if you’re located in the U.K. and your supplier is in the U.S., you’ll have better shipping rates to U.S. customers.
04. How to Start Dropshipping
Decided you want to dropship products? Here’s how to make it work for your eCommerce business.
Create Your Online Store
Start your dropshipping business with an eCommerce website builder. With Wix, you can choose from 100s of customizable online store templates. Then, register a unique domain for your site so customers can find you online.
Choose Products to Sell
With hundreds of categories and millions of products to choose from, it may be a challenge to narrow down your offering. Check out this article for tips on choosing products to dropship.
Start by deciding on your niche. With niche products, you can sell more effectively to specific audiences. Specific doesn’t necessarily mean small; your niche market can be anything from avid fishermen to pop music fans. Use tools like Google Trends and marketplace bestseller lists to research your shoppers’ interests. See what they want to buy, find a supplier and get selling.
Trending products can be especially profitable. Do your research to find up-and-coming products. As long as you dropship, you don’t need to worry about overstocking your inventory. If a trend passes, you can swap suppliers or products.
Find a Supplier
Finding dropshipping suppliers independently requires intensive research. If you’d like to stick with independent sourcing, search for suppliers on Google. Reach out to dropshipping wholesalers who seem reliable. Look for positive reviews from other merchants to help you decide.
To make the process easier and widen your product choices, source through a dropshipping marketplace. A dropshipping product network gives you access to millions of products from thoroughly vetted suppliers.
Alternatively, you can sell your own branded products with a print on demand service. Print on demand is a form of dropshipping. Product fulfillment and shipping are handled by the supplier. In the case of print on demand, the supplier also puts your custom designs on the items you sell. Select products, add your designs or logo, then import the products to your online store.
Add Products to Your Online Store
Edit the product listings in your storefront. Make product pages your own with item details, high-quality images and videos that match your brand.
Next, set your pricing and shipping rules. Think about your profit margin. When setting your prices, take wholesale and shipping costs into account. Find a balance that will increase your revenue while keeping your products affordable.
Make it easy for customers to find exactly what they want. Get into the mindset of your shoppers. View your online store from your customers’ perspective to better understand their experience. Create filters, categories and collections for your products.
Promote Your Business
Once you import dropshipping products to your storefront, it’s time to start marketing. Spread the word about your business with a marketing plan that works for your target shoppers.
Cover these 5 elements:
SEO (Search Engine Optimization): Strong SEO makes it easier for shoppers to find you on Google. Use relevant keywords for your business. Incorporate key phrases into your site pages and blog content.
Email Marketing: Incentivize your subscribers with exclusive discounts. Set up email automations reminding customers what they left in their carts.
Social Media: Run marketing campaigns on social. Post tips, product photos, promo videos and customer testimonials to engage your audience.
Paid Ads: Reach new customers with targeted ad campaigns on Facebook, Instagram and search engines.
05. Dropshipping FAQs
Is dropshipping legal?
Dropshipping is completely legal. To be clear, you are selling products with the suppliers’ permission. Make sure to run honest marketing campaigns and comply with online sales tax laws.
How do dropshippers make a profit?
As a dropshipper, you’ll need to balance your costs and revenue. Consider the wholesale prices of the products you source as well as your marketing efforts. Price your products wisely to ensure that you’re earning more than you’re spending on your dropshipping business.
The key to a smart dropshipping profit margin? Remember to stay competitive. Of course, you want to cover your costs and earn revenue. Still, make sure to research the competition’s prices to get a reasonable range. Choose a profit margin balance that will win over customers.
How much does dropshipping cost?
There are 3 main costs to consider when starting a dropshipping business online:
Your eCommerce platform plan: $17-$35 per month with Wix.
Your website domain: $5-$20, depending on your domain name. With Wix, your domain is free for the first year when you upgrade to a Business and eCommerce Premium Plan.
Your marketing: This depends on your strategy. Each Wix Business and eCommerce Premium Plan includes professional marketing tools built in. Additional costs, like targeted Facebook Ads, can add around $79 per month.
Is dropshipping worth it in 2021?
That’s up to you. Dropshippers take a minimal risk, with a small investment and no commitments to order minimums. This gives you the opportunity to test new markets. Best case scenario, you start a successful online business. Be sure to do your research when selecting products, put your best marketing efforts forward and review the dropshipping pros and cons above.
06. Making Your First Sale
Imagine the moment you get a sale on your site. Congrats in advance! Here’s an idea of how dropshipping fulfillment will look:
Once you receive an order, the info is forwarded to the supplier. You pay the supplier for the items. Then, the supplier packages and ships the order directly to your customer.
Many suppliers ship white label, which means that the product packaging won’t have their branding. This is ideal so your customers won’t confuse you with the supplier. Even better, some dropshipping suppliers will let you place your own branding on the packaging. Branded packaging builds trust, looks professional and helps customers remember your business.
Tova is a content marketer with a passion for compelling business stories. Perhaps more obsessively than others, she watches the Super Bowl for the ads.