Limited Time Offer: 50% Off on all services

0

Your Cart is Empty

Dropshipping

What Is a Dropshipping Business?

Dropshipping is a business model which you can use to run your store without ever holding any inventory. Once you’ve made a sale your supplier will ship your products from their warehouse, straight to your customer’s doorstep. You’ll never need to worry about storing, packaging, or shipping your products.

How Does the Dropshipping Business Model Work?

There are three key players in the dropshipping business model: the manufacturer, the retailer (you) and the customer.

The manufacturer’s role in a dropshipping business model includes creating products, carrying inventory, shipping products to customers on behalf of the retailer, replacing defective products, and restocking them. They sell products to the retailer at wholesale prices assuming the risk of unsold inventory.

In the dropshipping business model, the retailer (you), sell the manufacturer’s products on your website under your own brand. You’ll be responsible for choosing and marketing those products. Plus, you’ll also be responsible for their shipping costs and setting prices that make you a profit.

Lastly, in the dropshipping business model, the customer buys the products directly from you, the retailer. If questions or issues arise, they contact the retailer they bought the product from.

Benefits of dropshipping

 

Dropshipping is a great business model for aspiring entrepreneurs to start with because it’s accessible. With dropshipping, you can quickly test different business ideas with limited downside, which lets you learn a lot about how to choose and market in-demand products. Here are a few other reasons why dropshipping is such a popular model. 

1. Less capital is required

Probably the biggest advantage to dropshipping is that it’s possible to launch an ecommerce store without having to invest thousands of dollars in inventory up front. Traditionally, retailers have had to tie up huge amounts of capital purchasing inventory.

With the dropshipping model, you don’t have to purchase a product unless you’ve already made the sale and have been paid by the customer. Without significant up-front inventory investments, it’s possible to start sourcing products and launch a successful dropshipping business with very little money. And because you’re not committed to selling-through any inventory purchased up front, like in a traditional retail business, there’s less risk involved in starting a dropshipping store.

2. Easy to get started

Running an ecommerce business is much easier when you don’t have to deal with physical products. With dropshipping, you don’t have to worry about:

  • Managing or paying for a warehouse
  • Packing and shipping your orders
  • Tracking inventory for accounting reasons
  • Handling returns and inbound shipments
  • Continually ordering products and managing stock level

3. Low overhead

Because you don’t have to deal with purchasing inventory or managing a warehouse, your overhead expenses are quite low. In fact, many successful dropshipping stores are run as home-based businesses, requiring little more than a laptop and a few recurring expenses to operate. As you grow, these costs will likely increase but will still be low compared to those of traditional brick-and-mortar businesses.

4. Flexible location

A dropshipping business can be run from just about anywhere with an internet connection. As long as you can communicate with suppliers and customers easily, you can run and manage your business.

5. Wide selection of products to sell

Since you don’t have to pre-purchase the items you sell, you can offer an array of trending products to your potential customers. If suppliers stock an item, you can list it for sale on your online store at no additional cost.

6. Easier to test

Dropshipping is a useful fulfillment method for both launching a new store and for business owners looking to test the appetite customers have for additional product categories, e.g., accessories or wholly new product lines. The main benefit of dropshipping is, again, the ability to list and potentially sell products before committing to buying a large amount of inventory.

7. Easier to scale

With a traditional retail business, if you receive three times the number of orders, you’ll usually need to do three times as much work. By leveraging dropshipping suppliers, most of the work to process additional orders will be borne by the suppliers, allowing you to expand with fewer growing pains and less incremental work.

Sales growth will always bring additional work—especially related to customer support—but businesses that utilize dropshipping scale particularly well relative to traditional ecommerce businesses.

Can You Make Money Dropshipping?

Yes, you can make money through dropshipping, like many of our successful merchants continue to do. Dropshipping allows you to find products with huge profit potential, and set up a business selling them. When you are motivated to sell products you are more likely to invest more time into promotion and marketing, leading to more profits from your endeavours. 

Is Dropshipping Worth It?

Yes and no. Dropshipping is worth the time and money you invest into it. If you don’t invest time into your online business you will never reap the rewards. One of the reasons why people quit dropshipping is the lack of consistency and perseverance. Dropshipping takes time as you need to set up a store, import products, decide your pricing strategy, and starting selling. Nothing can happen if you don’t put in effort. 

How to Start a Dropshipping Business:

Step 1: Choosing a Dropshipping Business Idea

Truth is, what you sell matters. You should take some time to find the best dropshipping business ideas. Most people tell you to pick a niche you’re passionate about. But that’s only a half truth. It’s about a combination of profit and passion, skewed towards profit. The reality is the best dropshipping business ideas are usually the profitable ones. It’s a lot easier to be passionate when you’re actually making money.

Step 2: Competitor Analysis

Once you have decided what to sell you now need to educate yourself on who your competitors are, what they sell, and how they sell their products. There are many ways to do this.

  • Enter the name of one of the products you want to sell into Google and do a quick search to see who shows up on top. The top ten results on Google or any other search engine will give you a good indication of your competition in a certain location. If you are selling products in a location different from where you are based you can use third party tools to gather data. Use tools like SEM Rush or Ahref to get information about search results in different locations across the world. 
  • Search through Alexa or SimilarWeb to find niche competitors that might not show up high in general search results. These websites will give a summary of the websites you are searching for including their social media profiles, any advertising they are doing, audience and traffic information for their website, and a list of competitors for that business. 
  • Hunt around on social media. I’ve come up with dropshipping business ideas by doing competitor analysis. I’ll browse Facebook ads within a niche and social media pages for top brands. How many followers do they have? How do they market their brand? How much engagement does their brand get? What can I do differently to stand out against them? What are they doing right that I should copy?
  • Know your competitors content and what performs better for them through the use of BuzzSumo so you can replicate. This tool will give you insight into what content gets the most social shares so you can find inspiration for new blog ideas. Signing up to a competitor’s newsletters can also keep you on top of their content if they share their blog content this way.

Step 3: Find a Supplier

  • It can be easy to find a good supplier with Oberlo. Once you are on the platform you can search for products, and choose suppliers from the list of results. On the Oberlo platform you can see reviews, ratings and how long the supplier has been on the platform, for each supplier and this should sway your decision on which supplier to choose. 
  • When you have a list of five or six potential suppliers to choose from you can move onto the next step which is contacting these suppliers to ask important questions like minimum order quantities and shipping times.
  • By now you probably have reduced possible suppliers from a list of 5 suppliers to 2-3. The best way to make the decision now is to place a sample order with them for a product and compare the results. Compare ecommerce shipping times, product quality, and packaging while making a decision, keeping your customer in mind and what they will expect from you when placing an order.

Step 4: Building a Dropshipping Business Store 

Go to our Shopify stores page and choose one of them. All of them are fully automated and ready to make sales. Don't forget if you will have a professinal store, then you'll have more chance to make sales.


Step 5: Marketing Your Dropshipping Business with Everything You’ve Got

So at this point, you’ve found your product and built your store, now’s the time to market your dropshipping business like there’s no tomorrow. This is a crucial step in your dropshipping business plan. So don’t keep making tweaks to your store design and pretend like you’re making improvements. You don’t need to be scared of putting yourself out there. Getting your first sale is one of the best feelings!

Step 6: Optimize

Once you have spent time building your website, brand, and marketing you can start to analyze the results of your hard work. You may find that certain marketing activities are hugely successful while others are not so much. Or you can look at your pricing against competitors and see if you could change things up a bit to make things more competitive.

You can use tools like Google Search Console or Analytics to evaluate your online traffic to make sure that traffic is increasing, not decreasing. If you are using third-party tools for email marketing or social media reporting, set up weekly or monthly automatic reports so that you will be reminded to analyze this information regularly. Even a quick snapshot of data from a tool can be enough to decide if a campaign is working or not.

Overall the most important part of a successful online ecommerce store is to test and optimize in order to increase the revenue that you generate online. This makes sure that your website will not fall behind best practices and keeps you ahead of your competitors too. 

 

Get Your Fully Automated Store Now And Start Selling

Sign up for our Newsletter