The internet has radically changed how people do business and has given life to new, unexpected business models that leverage the power of the World Wide Web to lower investment and generate more significant revenue.
That’s precisely why modes of selling like dropshipping have become increasingly popular in recent years, providing a practical way for people worldwide to kickstart an e-commerce business without needing to store or physically manage their inventory. The practicality, simplicity, and low initial investment of dropshipping make it an ideal choice for those entering the e-commerce industry.
In this article, we’ll teach you everything you need to know about getting started with this incredible e-commerce technique.
Table of Contents
What is dropshipping and why it works
How to start dropshipping
Conclusion
What is dropshipping and why it works
Dropshipping is a retail model in which an online store doesn’t keep the products it sells in stock. Instead, when the store sells a product, it purchases it from a third-party supplier who ships directly to the customer. This way, the seller does not have to manage the products physically and does not need a warehouse.
So, let’s say a customer buys an item from a dropshipping online store. The dropshipper (usually the owner of a platform that gets the orders) then forwards the order to its supplier, pays the agreed price, and keeps the profit margin. For example, if the customer pays USD 20 for a product and the wholesale price is USD 10, the dropshipper keeps USD 10.
According to a study from Research and Markets, the dropshipping market was worth USD 249.16 billion in 2023 and is forecast to grow at a CAGR of 30.6%. By 2027, it’s projected to reach an impressive USD 724.26 billion. This significant growth potential is a testament to the many advantages this business model offers.
In addition, starting a dropshipping business requires only a small initial investment because newcomers don’t need to purchase products upfront before selling them, only samples. Second, the supplier manages the storage, packaging, and shipping processes, making it a straightforward business to operate. Lastly, dropshipping has no limits: the store owner can choose from a vast range of products, run operations from anywhere in the world with an internet connection, and scale their business by adding new products and new target audiences whenevery they please.
How to start dropshipping
From the description above, dropshipping may seem like a piece of cake and a success-proof model. In reality, that’s not the case. This model requires thorough research, initial investment, and a plan like any other business.
For those interested in starting dropshipping, here below are the four main steps to help ensure your retail business is a success:
Research is key
Before beginning operation, the first and most crucial step in starting a successful dropshipping venture is conducting thorough market research. This process, which includes analyzing market trends, identifying potential target customers, and studying existing competitors, is key to finding the optimal market entry point.
Tools like Google Trends and social media are great for grasping what people want to buy and how often they search for them. Some e-commerce stores earn hundreds of dollars just selling one “hot” product, while others succeed by offering different items in the same industry.
It’s essential then to create a portrait of your business’s potential customers based on age, gender, purchasing behaviors, and interests. This helps find your niche and determine the best channels to market your products (see step 4 for information).
Also, it’s a good idea to analyze competitors’ websites to understand what products they sell, at what prices, and what marketing strategies they use. It’s not about copying; it’s about spotting the best practices.
Find the right suppliers
The core of dropshipping success lies in the relationships businesses are able to establish with their suppliers, as they are the ones who manufacture the products, sell them, and, most notably, decide on prices.
Fortunately, websites like Alibaba.com and AliExpress have thousands of reliable suppliers and a platform created specifically to choose and connect with them. From there, dropshippers can check a vendor’s reputation, customer reviews, and access various ratings to help them find a match.
Before embarking on a partnership, it’s crucial to order samples. This allows you to assess the quality of the products and the speed of shipping, both of which can significantly influence a business’s success, ratings, and customer satisfaction rate.
A platform worth buying from
The next step is to create a professional website or platform page to sell your products using e-commerce platforms like Shopify, WooCommerce, or BigCommerce. Remember that your website is the face of your online business and should represent it in the best way possible. For this reason, you must be especially mindful of branding and colors, as well as consider selecting product reviews from Trustpilot, Google, etc., to build trust and engagement.
The browsing experience is also extremely important. A website should be easy to navigate, with a clean, professional design that streamlines the payment process. Make sure you are able to accept convenient payment methods like PayPal, credit cards, and other common online payment services in the country your target audience resides in.
Finally, investing in high-quality photography for your products is a good idea, as too is bringing in at least one copywriter to create detailed, engaging descriptions highlighting your products’ key benefits and features.
Getting the products out there
Once everything above is in place, it’s time to start promoting and marketing your products. Social media is a powerful tool for building brand awareness and engaging with potential customers. Facebook, Instagram, and TikTok each offer unique opportunities to reach different demographics. Moreover, forming partnerships or striking deals with influencers in your industry can be a game-changer, significantly boosting sales and visibility.
Using on-page and off-page SEO (search engine optimization) techniques is crucial to reaching potential customers searching for related products online. This is why many e-commerce stores also have accompanying blogs with articles that target specific keywords. Companies can achieve the same result, reaching a broader audience with PPC (pay per click) campaigns on Google Ads and Facebook Ads.
Conclusion
We hope that after having read this guide on how to start dropshipping, it’s clear why this business model represents such an excellent opportunity to build an income stream with relatively low initial investment and simplified management.
However, like any other business, likeliness of success will depend on careful planning, choosing the right suppliers and products, and an effective marketing strategy. By following the steps outlined in this article, get a head start on building your dropshipping business from the ground up.
