The secret to starting a dropshipping business (that pays)
This post was last updated on September 22, 2022.
If you've spent any time watching pre-roll YouTube ads, you'll know that dropshipping is an inescapable buzzword in the world of eCommerce. Stories of overnight success, six-figure sales, and millionaire dropshippers make it seem incredibly lucrative.
In fact, you've probably wondered, "Should I buy into the hype?" "Should I start dropshipping?"
The truthful answer: it depends.
Whether you're looking for a new side hustle or already own an established business, dropshipping can be a worthwhile pursuit. Stratospheric success can and does happen, but, as with all business strategies, it's best to take a realistic and measured approach. There are no get-rich-quick schemes here.
In this article, we'll introduce you to the dropshipping business model and provide a no-frills step-by-step guide on how to start dropshipping.
Table of contents
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What is a dropshipping business?
In short, dropshipping is a popular eCommerce business model with minimal startup costs. It differs from the typical eCommerce business model in that it allows you to sell products without having to store, handle, or ship any of your own inventory.
Instead, you lean on a dropshipping supplier to handle everything from manufacturing to fulfillment. The process is simple:
You list a product for sale on your site. Every dropshipping supplier or marketplace offers a catalog of products that you can choose from. For example, Modalyst offers millions of ready-to-ship and print-on-demand products, ranging from decorative mugs to jewelry.
A customer completes a purchase on your site. Once you’ve listed and priced your products, customers can purchase them from your website, just like any other online order.
You forward the order to your supplier. With an all-in-one platform like Wix eCommerce, you can automatically route orders to your suppliers for fulfillment.
Your supplier handles the rest. Your supplier preps, packages, and ships out the product directly to your customer.
Challenges of dropshipping
While dropshipping sets you free from most shipping and order fulfillment demands, dropshipping successfully and profitably takes substantial dedication. As a dropshipper, your time will be fully dedicated to marketing your products, maximizing sales, and keeping things running smoothly. More specifically, you'll face:
Stiff competition. Given the low barrier to entry, there are tons of other dropshippers entering the arena. The same suppliers that fill your inventory could be providing inventory for other sellers.
Reliance on marketing. To truly stand out from the crowd, you must invest in solid product marketing and branding. This means maintaining a high-quality site and investing the time, money, and effort to market your products well.
Lower profit margins. While dropshipping cuts down your upfront costs, you'll have to be okay with using some of your hard-earned capital to pay your suppliers, plus afford advertising and marketing. This means that you'll have to sell more units than a traditional retailer to see the same level of return.
Reliance on suppliers. You're at the mercy of your suppliers when it comes to product quality, on-time shipping, or other important responsibilities. If there are any issues with an order, you’ll be left dealing with the repercussions and the potential hassle of finding a new supplier.
Keeping everything in order. Unlike a traditional retail setup, you cannot inspect each product before it goes out the door. Nor can you maintain full visibility over the warehouse and production floors. It's up to you to find trustworthy partners and to stay in close communication with them. It's also up to you to have a contingency plan (and/or to diversify your supplier pool) while keeping inventory levels in check.
So, is starting a dropshipping business worth it?
This largely depends on you. Are you willing to roll up your sleeves and remain committed to this venture?
To summarize, one of dropshipping’s biggest upsides is that you can start selling quickly with minimal investment. So, it’s always possible to cut your losses before breaking the bank. And, if your products don't sell, you won’t get stuck with leftover inventory.
The downside is mainly your lack of control as a retailer. Since you don't handle the products yourself, it’s harder for you to vouch for their quality or the customer experience. You have to assume the risk of supply chain issues—many of which may be out of your control. Dropshipping is additionally growing more and more competitive, especially as tales of riches have taken hold of the field. Your expectations should therefore be tempered.
With all that said, getting started with dropshipping can be easy, especially when you've got a platform like Wix eCommerce, where you can centrally manage your end-to-end operations.
How to start a dropshipping business: 7 key steps
If you’ve decided to start dropshipping, here are a few tips to keep in mind.
“Launch fast—don’t strive for perfection. Then test how customers respond to products and iterate based on sell-through.” - Jill Sherman, Co-founder, Modalyst
01. Select the right eCommerce platform
Building a defensible dropshipping business requires having all the right tools at your fingertips. Ideally, the eCommerce platform you choose should set you up for success with easy-to-use features and integrations, backed by a secure and crash-resistant infrastructure.
For example, Wix eCommerce offers baked-in dropshipping tools. Connect your store to Modalyt’s marketplace and easily import products from Modalyst’s wide-ranging catalog. Set your prices, product descriptions, shipping policies, and payment options directly from Wix. And, trust Wix to automatically sync inventory so that you don’t accidentally oversell on any sales channel—whether you choose to sell from your online store, a marketplace (like Amazon), and/or social media.
Here’s a closer look at some of Wix’s core eCommerce features.
However, before you begin setting up your eCommerce store, there are a few things you’ll want to consider:
Who will you sell to?
What products will you sell and why?
How do you plan on differentiating your online store?
The answer to these basic questions will help you to define your audience, and design the best store and catalog for your target audience.
02. Choose products to sell
As a dropshipping business, you’ve got thousands—if not millions—of products to choose from, so it can be a challenge to decide what to sell.
To find your focus, take the following steps:
Research your target audience. Investigate their values, preferences, needs, and shopping behaviors. Pro tip: avoid using broad statements to describe your niche, such as “outdoor hobbyists,” “music fans” or “young women.” Broad niches lack focus and make it difficult to attract high-quality leads or differentiate yourself from other retailers. Instead, create buyer personas that dig under the surface and help you put yourself in your customers’ shoes. Note that dropshipping allows you to be more experimental with your catalog than traditional retail, since you don’t have to pre-order and store inventory.
Research trending products. What categories are popular among your target buyers and what products are trending? Use resources like Google Trends, Google Keyword Search, social media, and online marketplaces (like Amazon, AliExpress, Etsy, and eBay) to see what shoppers are currently buying. For more ideas, check out our list of the best dropshipping products to sell online or this article on choosing products to dropship.
Do some competitor analysis. Make a list of your top competitors. What’s selling well for them? What sort of content elicits the most engagement from their social media followers? Study their websites to see how they price, describe, and market their products. Sign up to their email lists to get insight into their marketing tactics. What can you learn from them, and on the flip side, what can you do differently?
Establish your business idea. Once you’ve done your research and settled on a niche, determine the breadth of products you want to sell and how they all fit together. For example, if you start an online home decor store selling big-ticket items like furniture, will you also stock smaller household accessories like lamps, decorative pillows, and rugs? The great thing about dropshipping is that you don’t have to worry about overstocking your inventory. If products don’t sell well or a trend passes, you can easily swap out items from your product catalog.
Enhance your existing store. If you already have an online store and want to use dropshipping to boost your inventory, then you’ve probably got a clear idea of the products you want to sell. Make sure that your dropship items complement your existing stock and match your audience’s price range.
03. Partner with the right dropshipping supplier(s)
Finding great suppliers is key to your success. But industry research suggests that 84% of dropshipping merchants consider the process of finding a good supplier the most significant obstacle in their business journey.
You not only need a supplier who can fulfill a small scale of orders, but one that can also scale with your business as it grows.
Fortunately, there are are various sources for finding the right supplier:
Independent suppliers. You can search for suppliers directly on Google. You’ll want to research reviews, talk to other sellers (if possible), and vet suppliers carefully. For this reason, manually finding suppliers can be time- and research-intensive.
Dropshipping marketplaces. Alternatively, you can find suppliers through a dropshipping marketplace that can connect you with a wide range of pre-vetted partners. Make sure to choose a marketplace that integrates well with your eCommerce platform. With Wix eCommerce, you can browse and install a wide range of dropshipping platforms via the Wix App Market.
Print on demand (POD). For a more bespoke offering, it’s best to integrate with a POD platform, like Modalyst, Printful, or Printify. Print on demand is a form of dropshipping that allows you to sell customized products with your own design or logo on them. Just like with traditional dropshipping, you can select from hundreds of products and outsource printing and fulfillment to your supplier.
As you consider which suppliers to work with, check that your suppliers provide realistic and transparent shipping estimates. Keep in mind that a supplier’s proximity to your shipping regions can impact shipping times and the overall customer experience. Make sure to order samples of your products and use reviews from other merchants to help gauge your supplier’s reliability.
04. Build your eCommerce store
Like a beautiful brick-and-mortar business that draws customers in, a thoughtfully built online store will enhance your credibility, compel shoppers to stick around, and make them feel secure when hitting “buy.”
With Wix eCommerce, you can create a professional, responsive website using an intuitive site editor. Create an account for free and then follow these steps to get started:
Pick a template. Choose from hundreds of designer-made online store templates. Select one that fits your brand, style, and target market, then customize the content to make the site your own. Remember that your website is often the first impression your customers have of your business, so it should be clean, easy to navigate, and well-branded.
Develop a brand identity. Create a cohesive branding strategy, starting with your core values and ending with your visual identity. Decide on a store name that reflects your brand story, mission, and/or personality (you can use Wix’s free business name generator for inspiration). Then, register a matching domain name and create a logo using the Wix logo maker or by hiring a professional designer from the Wix Marketplace. For more tips, follow this guide to branding your online store.
Connect to a dropshipping platform. Install your chosen dropshipping or POD app by going to the Wix App Market, searching for a dropshipping platform, and clicking the “add to site” button. Create an account with your platform-of-choice and start your hunt for great products.
Add products and descriptions. Once you’ve chosen and imported products to your store, fight the urge to simply copy and paste product descriptions from your supplier. Instead, take the time to write unique descriptions that fit your company’s tone and are optimized for SEO. Consider shooting your own product images and/or videos using a sample product. This gives you the creative freedom to show products against backdrops and settings that help your customers better visualize themselves using your product. Plus, you can use this content for marketing and advertising purposes.
Set your pricing and shipping rules. When setting your pricing rules, take wholesale and shipping costs into account as well as any additional business expenses. Consider your competition, differentiators, and perks that you can offer (e.g., free shipping or white-glove service). Then, establish a dropshipping pricing strategy that keeps your products competitive yet affordable. As a general rule of thumb, avoid competing on price alone. This is a losing strategy for most businesses, and will inevitably throw you into many price wars.
Be transparent. Learn about your suppliers’ shipping and return policies so that you can write clear store policies. Let customers know what to expect when purchasing from your store. Wix merchant, The Boho Birdy, sells a broad range of dropshipped goods—from clothing to home decor—with a touch of bohemian style. Within their site, the company clearly states that they source from multiple, international suppliers. They additionally anticipate customer questions about shipping and delivery with a detailed FAQ page. This strategy allows them to manage expectations and prepares customers for the trade-off that comes with making a purchase from their store.
Optimize your storefront. View your online store from your customers’ perspective to better understand their experience. Is it easy to navigate? Make it simple for customers to find exactly what they want by creating filters, categories, and collections for your products that align with how your customers tend to shop. This can be tricky at first, but don’t be afraid to ask customers for feedback and then make additional tweaks where needed.
Optimize the checkout flow. Keep customers happy by offering multiple payment options on your site. Connect your store Wix Payments, which allows you to accept debit/credit cards, Apple Pay, Pay Now by Klarna, and other popular payment methods.
Go live. Click that “publish” button and make your store visible to the world. Congratulations. Your hard work has paid off and you’re now in business.
05. Solidify a seamless order fulfillment process with your supplier(s)
Once you sell a product, you need a process for forwarding those orders to your suppliers. The best processes are automated, saving you time and reducing the potential for any errors.
Having an automated fulfillment process is especially important as your business grows and your order volume multiplies. While evaluating different platforms to use, you should make note of the differences in their fulfillment solutions and ultimately select the one that best suits your business.
For example, some dropshipping and POD apps are more manual, requiring you to click a few buttons to confirm and send orders to your supplier. Others, like the Wix-Modalyst integration, are automated, routing orders to your suppliers and sending you order status changes in real time.
Whether you manually send orders to your supplier or automate the process, make sure you nail down an order fulfillment process that fits the needs of your business operations and creates a seamless experience for your customer. Doing so will increase customer satisfaction and may even minimize returns.
Pro tip: White-labeling is an increasingly popular add-on service offered by dropshipping suppliers. With white labeling, your supplier adds your branding and/or labeling to the product packaging during the fulfillment process. You pay a little bit extra to make a product look uniquely your own. Although this can cut into your profit margin, branded packaging builds trust, looks professional, and helps customers remember your business.
06. Market your dropshipping business
As a dropshipper, a bulk of your time will be spent drawing attention to your store. Your primary responsibility is to develop a strong brand that earns your customers’ trust. Start spreading the word with a well-rounded marketing plan that includes these elements:
SEO (Search Engine Optimization). SEO is foundational for increasing your visibility online and making it easier for shoppers to find your products on search engines like Google. Boost your product pages with unique descriptions and content that take on-page SEO factors (think: short-tail and long-tail keywords, meta descriptions, and more) into consideration. You may even want to start a blog that lets you publish fresh content regularly and reach buyers at various stages of the customer journey.
Email marketing. Keep your brand top of mind with a thoughtful email strategy. You can incentivize site visitors to subscribe to your email list by offering a special discount or gift for their subscription. Use email to engage customers at various stages of their journey, e.g., send abandoned cart emails reminding them to complete a purchase or request feedback on a recently purchased product. Promotional emails can keep customers coming back as well, plus provide insight on the types of products and seasonal campaigns that appeal to your target audience.
Social media. These days, one viral TikTok video or Instagram Reel could get your product in front of millions of potential customers. When building a social media strategy, be selective of the channels that you invest your time and money into. It’s better to start with one or two strategic channels than to blindly test every channel possible; each channel has its own quirks and algorithms that you’ll need to get used to. Test various types of content like videos, hashtag contests, and posts featuring user-generated content. If it’s within budget, team up with influencers who align with your brand.
Paid ads. Reach new customers with targeted ad campaigns on Facebook, Instagram, YouTube, and search engines like Google. Experiment with various ad types—e.g., Google Search versus Display versus Shopping—until you find what works for your business. Facebook Ads by Wix uses a powerful machine-learning algorithm to optimize your ad campaign and maximize performance continually. You could even set up remarketing campaigns that only serve up ads to people who’ve already visited your site.
07. Expand to other sales channels
While you’ll want to groom a strong online store, it pays to offer your products on other channels that have large, established audiences. You may find that certain products sell better on your website, while others sell like hot cakes on Amazon.
That said, you’ll want to be strategic about the channels you pursue. Each channel comes with a strong learning curve. From learning how to price your products competitively, to learning how to remain compliant with a channel’s listing requirements, there’s a lot you’ll need to learn before you can even make a sale.
Fortunately, when using a tool like Wix’s multichannel campaigns, you can automate and better manage certain processes. For example, you can easily import your store products to Amazon or eBay, while retaining the ability to customize your offer to each channel. You can additionally avoid complexities that come with managing a multichannel strategy, such as keeping inventory synced and routing orders to the right fulfillment partner.
Whichever channels you choose to sell on, make sure you’re keeping close watch over their performance. Test various offers, messaging, and/or product assortments to find what resonates best with each unique audience.
08. Optimize your dropshipping business
When it comes to business, one thing is certain: there’s always room for improvement. That’s why from the get-go you’ll want to set clear and measurable goals that help to guide your growth as a business.
Use the performance-measuring tools like Wix Analytics, Google Analytics, and Google Search Console to gain valuable insights into what’s working and what’s not. There are a number of key performance indicators (KPIs) that you can and should measure. To name a few:
Traffic growth - How is your website traffic growing over time? Which sources are people entering your site from, and which pages do they tend to engage with?
Conversion rate - How many site visitors end up buying from your site?
Monthly sales and profit margin - How much ROI are you seeing from your marketing and advertising efforts?
Purchasing trends - What products are selling best and why? Is demand for those consistent year-round, seasonal, etc.?
Average order value (AOV) - Do you see any opportunities to upsell and cross-sell customers, and thereby influence larger cart sizes?
Customer retention - How many customers are new versus returning in a given period of time? Is there a way that you can encourage repeat buyers and reward their loyalty?
Cart abandonment rate - How many people are adding items to their cart, but leaving before they complete a purchase? Is there an issue with your checkout flow or payment options?
By continually setting new goals and looking for ways to improve, you can optimize your business for sustainable growth and success.
Get started with dropshipping today
So there you have it. Dropshipping is a quick way to start selling new products online and can serve as a great revenue stream, even if you’re an established eCommerce merchant.
As a dropshipping entrepreneur, you can channel your energy into building an eye-catching brand, selling a large assortment of products, and serving a specific audience. But, like any modern business, it requires lots of hard work to get right.
We hope this article helps you to understand the dropshipping business model better and to find success worthy of a Forbes profile.
Ready to start making money dropshipping? Create your eCommerce store today.
Marketing Writer, Wix eCommerce
Geraldine is a marketing writer for Wix eCommerce. She uses her broad experience in journalism, publishing, public relations and marketing to create compelling content and loves hearing user success stories.
Allison Lee Editor, Wix eCommerce
Allison is the editor for the Wix eCommerce blog, with several years of experience reporting on eCommerce news, strategies, and founder stories.