How to start a dropshipping business in 8 steps (2024)
This post was last updated on November 09, 2023.
Dropshipping is a retail fulfillment method where a store doesn't keep the products it sells in stock. Instead, when a store sells a product, it purchases the item from a third party and has it shipped directly to the customer.
The beauty of dropshipping is that it allows you to run an online store without the hassle of manufacturing, inventory management or distribution. You're the middleman between the customer and the supplier, taking the orders and handling the customer service while your supplier takes care of the rest. It's a world of opportunity right at your fingertips.
In this article, we'll introduce you to the eCommerce dropshipping business model and provide a step-by-step guide on how to start dropshipping from scratch.
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What is dropshipping?
Dropshipping is a retail fulfillment method where sellers list products for sale on their website, but they don't keep physical stock of the products. Instead, when an order is placed, the seller purchases the product from a third-party dropshipping supplier who then ships the product directly to the customer. The seller acts as a middleman between the supplier and the customer.
Dropshipping is a popular eCommerce business model with minimal startup costs, since there is no need to stock inventory, pay for warehouse space or manage order fulfillment. You also don’t have to worry about manufacturing. This keeps your operating expenses much lower than they would be for a traditional retail business.
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How does dropshipping work?
The process for this type of business 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 online store, 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.
How to start a dropshipping business
If you’ve decided this is the business for you, below you’ll find a full guide for how to start dropshipping. There are eight key steps for how to start a dropshipping business:
01. Research a niche and choose products to sell
Dropshipping has a huge corner of the retail sector. Grand View Research estimates that the global dropshipping market was valued at $225.99 billion in 2022, with an expected compound annual growth rate (CAGR) of 23.5% by 2030 in North America alone.
When you build a dropshipping business, you’ve got thousands—if not millions—of products to choose from. It can be a challenge to decide what to sell in this massive market in order to gain footing for your business idea.
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 Planner, social media and online marketplaces (like Amazon, AliExpress, Etsy and eBay) to see what shoppers are currently buying. According to the same Grand View Research report linked earlier, the top product segments in dropshipping are fashion; toys, hobbies and DIY; electronics and media; furniture and appliances; and food and personal care.
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 in order to establish your unique selling proposition (USP)?
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 business in home décor 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: Expanding your product offering via dropshipping could increase your profitability by up to 50%. 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 while still making sure you maintain some sort of net profit.
02. Select the right eCommerce platform
Building a defensible dropshipping business requires having all the right tools at your fingertips to get your online retail venture off of the ground. Ideally, the best eCommerce platforms will set you up for success with easy-to-use features and integrations, backed by a secure and crash-resistant infrastructure. Enter Wix.
Wix’s eCommerce solution offers baked-in dropshipping features, along with a suite of professional tools to establish, design, manage and grow your online store. You can connect your store to Modalyst’s marketplace and easily import products from the supplier’s wide-ranging catalog. Set your prices, product descriptions, shipping policies and payment options directly from your Wix dashboard. And, you can 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, an external eCommerce marketplace (like Amazon) and/or social media platforms.
03. Partner with the right dropshipping supplier(s)
Finding great suppliers is key to your success: industry research suggests that 84% of dropshipping merchants consider the process of finding a good supplier the most significant obstacle in the process of business triage.
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.” It’s the cornerstone of learning how to start a dropshipping business.
With Wix eCommerce, you can create a professional, responsive website using an intuitive site editor. Follow these steps to get started:
Pick a template: Choose from hundreds of designer-made eCommerce website templates to get your website design in the right direction from the start. Select one that fits your brand, style and target market, then customize the content to make the site your own.
Develop a brand identity: Create a cohesive branding strategy, starting with a concept statement that highlights 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 or check out this list of dropshipping business name ideas). Then, register a matching domain name and create a logo using the Wix logo maker.
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 search engines. Short on time? Use Wix's AI text creator to automatically generate product descriptions for you in a few simple clicks.
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 décor—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 to 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. Nail down 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, or private label dropshipping, is an increasingly popular add-on service you can consider when you start learning how to get into dropshipping. 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 into consideration (think: short-tail and long-tail keywords, meta descriptions and more). 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 business 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, teaming up with influencers who align with your brand is an effective marketing method for dropshipping.
Paid ads: Reach new customers with targeted ad campaigns on Facebook, Instagram, YouTube and search engines like Google. Experiment with various ad types until you find what works for your business. Wix users can take advantage of integrated Facebook and Instagram Ads and Google Ads right from their website dashboard.
07. Expand to other sales channels
While you’ll want to build 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. In fact, 87% of consumers are more likely to buy something via Amazon than any other online site.
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 starting a 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 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? Conversion rate will vary by niche and industry, but several estimates note that 3% is a good benchmark.
Monthly sales and profit margin: How much return on investment (ROI) are you seeing from your marketing and advertising efforts? Again, profit margin can vary depending on what you're selling, but estimates place a good range somewhere between 10% and 30%.
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: Over 70% of shoppers abandon their carts without finishing their purchase. How many people are leaving your site before they complete their order? Is there an issue with your eCommerce 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 as you perfect the art of how to dropship.
Tips for starting a dropshipping business
You’ve learned everything you need to know about how to start dropshipping, and it’s time to get your business off of the ground. Here are some additional tips for creating a dropshipping business:
Set realistic expectations: Don't expect to get rich quick with dropshipping. It takes time and effort to build a successful business. Some estimates say you can be profitable in around three months, but this timeframe can vary depending on multiple factors, including how much time and energy you have available to invest into your business.
Stay up-to-date on trends: The dropshipping market is constantly changing, so it's important to stay up-to-date on the latest trends. This will help you find products that are in demand and that will sell well.
Offer competitive prices: One of the best ways to attract customers is to offer competitive prices. However, you need to make sure that you still make a profit after you factor in the cost of the product, shipping and other expenses.
Run effective marketing campaigns: You need to let people know about your dropshipping business if you want to generate sales. There are many ways to market your business, from social media to email marketing to advertising.
Build a strong brand: Your brand is what will set you apart from your competitors. Make sure your brand is consistent across all of your marketing materials and your website.
Track your results: It's important to track your results so you can see what's working and what's not. This will help you make necessary adjustments to your business to improve your chances of success.
What is the cost of starting a dropshipping business?
The cost of starting a dropshipping business can vary depending on a number of factors, such as the products you sell, the platform you use and your marketing strategy. However, you can get started for as little as $100 to $500, according to Fit Small Business.
Some of the initial costs you can expect to incur are for a dropshipping platform, domain name, web hosting, product sourcing and marketing. Once you've covered these initial costs, you can expect to incur ongoing costs, such as:
Product fulfillment: This is the cost of shipping products to your customers. This cost will vary depending on the weight and size of the products you sell, as well as the shipping method you choose.
Customer service: You'll need to provide customer service for your dropshipping business. This can involve costs for live chat, email support and phone support.
Marketing: You'll need to continue marketing your dropshipping business to maintain sales. This can involve costs for advertising, social media marketing and email marketing.
The total cost of starting and running a dropshipping business will vary depending on a number of factors. However, you can start small and scale your business as you grow.
Is starting a dropshipping business profitable?
According to NicheDropshipping, dropshippers can make somewhere between $500 and $3,000 per month in their first year of business. As with most things, this amount can vary—but it’s evident that this can be a substantial income supplement if not replacement once your dropshipping business gets up and running.
Common mistakes when starting dropshipping and how to avoid them
Dropshipping is not 100% foolproof. Here are some common mistakes when starting a dropshipping business and how to avoid them:
Not doing your research: This is one of the biggest mistakes that dropshipping beginners make. Before you start selling any products, you need to do your research to make sure that there's a market for them. You also need to make sure that the suppliers you're working with are reliable and offer high-quality products.
Choosing the wrong products: Not all products are created equal. When choosing products to sell, you need to make sure that they're in high demand and that you can make a profit on them. You also need to consider the competition and make sure that you're offering something unique.
Setting unrealistic expectations: Dropshipping can be a profitable business model, but it takes time and effort to build a successful business. Don't expect to get rich quick.
Underpricing your products: In order to make a profit, you need to price your products competitively. However, you don't want to underprice your products so much that you're not making any money.
Not marketing your business: You can't expect people to find your dropshipping business if you don't market it. You need to create a marketing plan and use a variety of channels to reach your target audience.
Not providing good customer service: Customer service is essential for any business, but it's especially important for dropshipping businesses. You need to make sure that you respond to customer inquiries promptly and resolve any problems quickly.
Not tracking your results: It's important to track your results so you can see what's working and what's not. This will help you make necessary adjustments to your business to improve your chances of success.
How to start a dropshipping business FAQ
How can a beginner start dropshipping?
If you're brand new to dropshipping, it helps to sit down and make a plan. Here are the four basic steps that will help a beginner start dropshipping:
Choose a niche
Find reliable suppliersSet up an online store
Market your business
Provide excellent customer service
Can you start dropshipping for free?
Yes, you can start dropshipping for free. There are many dropshipping platforms that offer free plans for beginners. However, you will need to pay for some expenses, such as domain name registration and web hosting.
How to find the best products for dropshipping?
Not every product niche is a guaranteed winner. There are a few things to keep in mind when choosing products for dropshipping:
Demand: The product should be in high demand. This means that there are a lot of people who are interested in buying it.
Profitability: The product should be profitable. This means that you should be able to make a profit after you factor in the cost of the product, shipping and other expenses.
Competition: The product should not be too competitive. This means that there should not be too many other dropshipping businesses selling the same product.
Shipping: The product should be easy to ship. This means that it should be small and lightweight.
Return policy: The product should have a good return policy. This will help you avoid problems with customers who are not satisfied with their purchase.
Can dropshipping be easy?
Dropshipping can be easy, but it takes work. You need to do your research, choose the right products and market your business effectively. However, if you're willing to put in the effort, dropshipping can be a profitable business model.
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.