From Zero to Dropshipping Hero: How to Start a Dropshipping Business

Want to know how to start a dropshipping business? I’ve got your back!

About 2 billion people worldwide use dropshipping services.

It’s no wonder why so many entrepreneurs are turning to dropshipping, including me!

In fact, I started and launched at least three successful dropshipping businesses in my e-commerce career.

Whatever your budget or where you’re located, you can start a dropshipping business and generate income from home!

If you’re serious about learning how to start dropshipping and how to become a dropshipper, keep calm and just read on.

How Does the Dropshipping Business Model Work?

The Process

Before I show you how to start a dropshipping business, check out how the typical dropshipping process works.

1. A customer places an order from your e-commerce store.

2. You contact the supplier and order the item.

3. The supplier contacts their shipping company to pack and deliver the product directly to your customer.

4. You pay the supplier the cost of the product and shipping fee (minus any discounts they may have negotiated).

5. You earn a profit!

Types of Dropshipping

Before we tackle the steps on how to start dropshipping, check out the different forms of dropshipping that are commonly run by business owners.

Product Reselling (Traditional Dropshipping)

Product reselling shipping from China to the USA is arguably the most common form of dropshipping.

In this business model, you sell products first, then buy them from a supplier.

The supplier takes care of packing and shipping the product to your customer.

Branded Dropshipping

Branded dropshipping works just like traditional dropshipping.

However, the goods you sell have your own branding or logo printed on the product or its packaging.

Print on Demand

Here, you sell your own custom designs that are printed on merchandise, such as t-shirts, mugs, tumblers, or phone cases.

Your print on demand supplier will produce and print your designs, and take care of packing and shipping products as well.

Reverse Dropshipping

This ecommerce business model involves sourcing high-quality products from countries that typically import them and selling them to countries that export them.

For example, China is known for mass-producing low-quality domestic goods.

As a result, consumers in their country, especially wealthy ones, tend to look for other sources of high-quality products to suit their needs.

In reverse dropshipping, you sell premium Western-made products to rich people in Asian countries through your own website.

How to Start a Dropshipping Business in 7 Easy Steps

Step 1 – Research Profitable Dropshipping Products.

Your e-commerce store should sell a “winning product” if you want to enjoy a steady revenue stream.

Choose products that are durable, profitable, one-of-a-kind, and work as a solution for your customers’ problems.

Should You Start a General, Niche, or One-Product Store?

Before learning how to make money dropshipping, you have to decide whether you want to launch a general, niche, or one-product dropshipping store.

Here’s how each one works:

The 4 Criteria of a Winning Dropshipping Product

Selling a profitable product is the key to maximizing your business profits.

Here are the factors you should consider when selecting a product to sell:

• High Market Demand – Products that are in high demand sell much faster and in larger quantities. Customers value such products, so you’re more likely to enjoy repeat sales.

• Less Competition – If you’re the only e-commerce store selling a certain product, you can count on enjoying greater profit margins. Try not to sell a product that’s already being sold by everyone else.

• Earning Potential – Choose a product that retains higher profit margins even after accounting for marketing, packing, and selling expenses.

• Consistent Availability – Make sure that you always have a steady supply of your product. This allows your customers to purchase your goods anytime, creating repeat business and preventing lost sales.

The Best Product Research Tools

Finding profitable products to sell is easier said than done, especially for beginners.

The good news is that there are several product research tools available to help you determine the potential of your dropshipping business idea.

Some of them, like Google Trends, are even free to use!

Step 2 – Analyze Your Competitors.

If you want to know how to get into drop shipping, it’s crucial to find out who your competitors are and understand how they work.

Checking out successful competitors can show you what products sell the most and what marketing strategy works best in the market.

Here are a few ways to research your competitors and get some more dropshipping business ideas:

Run a Google Search.

Use Google to find your top five competitors.

Check each one and take note of their product range, site layout, pricing, product descriptions, advertisements, and marketing campaigns.

Use Competitor Spy Tools.

You can use third-party competitor and market research tools, such as Semrush, Similarweb, or Ahrefs to gather even more data.

Such tools can help you keep track of your competitor’s online activity, social medial profiles, number of visitors, top traffic sources, and their other competitors as well.

Browse Social Media.

Check your competitors’ Instagram, Facebook, or TikTok accounts and see how they manage their social media pages.

You’ll get to know more about their customer engagement, page layout, posting frequency, response time, and affiliate influencers.

Step 3 – Find a Reliable Dropshipping Supplier.

Now that you have a winning product to sell, it’s time to secure a reliable dropshipping supplier for your goods.

This is a crucial part of your dropshipping business plan because there are suppliers out there that can be frustrating to work with.

No need to worry. I’ll show you exactly what to look for in a dropshipping supplier:

Characteristics of a Good Dropshipping Supplier

• Has been in business for at least two years

• Gives you a fair and transparent fee structure

• Fulfills orders on time

• Prioritizes customer service and product quality

• Handles returns efficiently

Here are some of the best free and paid dropshipping suppliers you can check out:

Step 4 – Build Your Dropshipping Store.

Here comes the exciting part—setting up shop!

Creating your online store can sound intimidating, especially if it’s your first time doing so.

But, don’t fret. I’m here to help you build, design, and launch your online store in no time!

Choose Your Hosting Plan.

Go with a reliable hosting provider so that your dropshipping business operates as seamlessly as possible.

I recommend checking out Bluehost or HostGator since they offer the most value for your money.

Both hosting providers offer a free SSL certificate plus a free domain for your first year.

Select an Ecommerce Platform

My personal choice for a dropshipping e-commerce platform would be Shopify.

This is a paid option and comes with monthly fees, but it’s the tool that lets you create an online store quickly and professionally.

Plus, it includes more than 6000+ third-party tools that help you automate all business operations and integrate your retail store with other marketplaces such as Etsy, Amazon, and eBay so that you can scale your business easily.

However, if you’re looking for free e-commerce platforms, here are some of my top picks:

WooCommerce

If you already have hosting and a domain name, you can create a WordPress website and install WooCommerce on your store.

This is a free dropshipping platform and it is available anywhere in the world.

After installing the plugin to your WordPress account, upload your products, and start promoting your store.

Square Online

Square Online has a drag-and-drop website builder that anyone can learn.

This e-commerce platform also has a payment processing service to take payments online.

Square Online has paid plans that start at $29 monthly. But not to worry, there’s a free plan available on the platform.

Just be aware that with the free plan, Square Online will take 2.9% + 30¢ once you start dropshipping and selling products.

Ecwid

Another free dropshipping store ecommerce platform you could use is Ecwid by Lightspeed.

Similar to other ecommerce platforms like Square Online, you can launch a site quickly without writing a line of code.

They also offer a mobile app that allows business owners to manage their online stores on the go.

Mozello

Last but not least, you can use Mozello to build a free online store and launch it quickly.

The service integrates with most social media platforms, so you can easily incorporate marketing efforts into your store.

On Mozello’s free plan, you can only add up to five products. But the advantage of using this service is that it doesn’t charge you transaction fees.

Name Your Store.

It may sound insignificant, but your store’s name can actually be a deciding factor between your online business failing or succeeding.

The name you give your online store creates your brand’s identity.

This also helps your customers easily identify your brand and differentiate it from competitors.

Here are some factors you might want to consider in choosing a winning store name:

• Does it sound catchy?

• Is it easy to pronounce and spell?

• Will it sound trendy even after several years?

• Does it suit your target audience?

• Is it unique and authentic?

Choosing your store name doesn’t have to be a one-man job.

Brainstorming with your team lets you exchange creative store name ideas and suggestions. You’re also free to ask the opinion of friends, family, co-workers, or customers.

Try creating online polls and find out which potential name gets the most votes.

There are also a variety of online tools that you can use as a source of inspiration, such as rhyming dictionaries or name generators.

Lastly, make sure that the name you picked doesn’t have any copyrights or trademarks attached to it.

Design Your Dropshipping Website.

Your ecommerce website should have a beautiful and easy-to-use front end if you want customers to buy your products.

If you don’t have the budget to hire a web developer to build a website, you can buy and upload a theme for your shop and customize it to your liking.

Set Up Your Payment Gateways.

A payment gateway is a facility that collects customer payments for you. You can use a service like PayPal or Stripe to do that.

Here are some payment gateways for you to check out:

You should provide as many payment options as possible so your customers can choose how to pay you. The more choices you provide, the higher your conversion rates will be.

Here are some standard payment options you should include on your dropshipping site.

• Credit card or debit card

• E-wallets like Apple Pay or Google Pay

• Bank debits and transfers

• Buy now, pay later

• Cash-based vouchers

• Coupons

You should also register your business and collect sales tax from customers.

Create and Optimize Your Product Listings.

Next, start adding your products to your online store.

Make sure that each product has an engaging landing page by:

• Writing compelling product descriptions with high-ranking keywords

• Creating professional-looking lifestyle images

• Adding product testimonials

I suggest providing multiple high-resolution images that showcase the best attributes of your products.

Lean more towards highlighting the benefits of the product instead of its features when writing your product descriptions.

I also recommend mentioning key details, such as shipping times, shipping method options, payment options, and return terms.

If writing isn’t your strongest point as a business owner, you can hire freelancers or use AI writing tools to help you get the job done.

Automate Your Dropshipping System.

Being a successful dropshipper relies heavily on your speed and efficiency compared to your competitors.

Having an automated dropshipping system ensures that you don’t fall behind on the order fulfillment process.

For beginner dropshipping store owners, I recommend using AutoDS or Gelato (for print-on-demand).

Both integrate with Shopify, and they automatically send order details to your suppliers, so you don’t have to do much else.

Step 5 – Register Your Business.

In most cases, you’re not required to register your business, but there are benefits to doing so.

First, you have personal liability protection. If you register your business as a limited liability company, it exists as a separate legal entity.

You will only lose business assets if you run into legal issues, not personal assets, helping you mitigate risks in case of business loss.

Registering a business also allows you to create a separate bank account for your company. As such, you can separate personal and business finances.

Choose a Business Structure.

Consider setting up a legitimate business entity to protect against legal liabilities.

Doing so can also make it easier for you to negotiate and work with suppliers and business partners.

Here are three of the most common business structures:

• Sole proprietorship – In this structure, your dropshipping business finances get taxed on your personal income. Sole proprietorship can be quite risky as your business is legally linked to your personal assets.

• Limited liability company (LLC) – Here, your business is established as a separate legal entity, giving you personal liability protection.

• Corporation – This business structure works just like an LLC. However, a corporation is owned and overseen by shareholders and directors, instead of just a handful of business proprietors.

Take note that the IRS requires all businesses to have an Employer Identification Number (EIN), which works just like a Social Security number for your business.

You’ll need this to apply for wholesale dropshipping accounts, file taxes, open bank accounts, or do practically anything related to your business.

Set Up Your Banking.

It’s always a good idea to separate your personal and business finances.

Set up a business checking account, where you deposit all revenue and withdraw all expenses.

Consider getting a business credit card to help separate your finances and accumulate great rewards, too!

Get a Sales Tax ID.

Most of the time, a sales tax ID (also called a business license, tax ID, resale certificate, or vendor’s license) is required if you’re setting up a dropshipping business in the US or Canada.

Also, some wholesale suppliers may require you to have one before they consider working with you.

You can visit your local county clerk’s office to apply for a sales tax ID. Don’t worry, the process is simple and inexpensive.

Step 6 – Promote Your Ecommerce Store.

Your dropshipping business is finally ready to take flight.

Now’s the time to spread the word and let shoppers know that you’re open for business!

Check out these marketing methods to see which one works best for your dropshipping business:

Paid Methods (Faster Results)

Paid marketing methods can be advantageous in different ways.

If done right, such methods can generate quick results, unlike free methods like SEO (Search Engine Optimization), which can take time before gaining momentum.

Paid marketing lets you target a specific audience based on demographics, interests, behaviors, and more.

• Influencer marketing – Collaborate with influencers in your niche to reach new audiences. Negotiate if you pay them by commission or with a fixed affiliate fee.

• Social media marketing – Run paid ads on Facebook, Google, Instagram, Tiktok, or other social media platforms.

• Google ads – Buy ads for your ecommerce store to appear on the first page of search engines for keywords you wish to rank for.

Free Methods (Slow Results)

You can market your dropshipping business without spending money.

Well, strictly speaking, these free marketing methods aren’t totally “free” because you need to spend quite a lot of time and energy to do them.

• Email marketing – Email marketing is one of my favorite methods to connect with customers. Once you’ve got a list of your customers’ email addresses, you can directly contact them about discounts, limited-time offers, promotions, or new product offerings.

• SEO marketing – Optimize your ecommerce business store to make it more visible on search engines.

• Content marketing – Create enticing content to help convert your target audience into customers. These can be in the form of blog sites, YouTube channels, Instagram posts, or Facebook videos.

• Community involvement – Build solid relationships with people who are also passionate about your niche. You can start by engaging with them on Reddit, Facebook Groups, or online forums.

Through Shopify, you can integrate your store and market your products on different marketplaces.

Check out my guides on how to dropship on Amazon, Etsy, eBay, or Walmart.

Just make sure to respect their dropshipping rules so you don’t run into any problems.

If you run a print-on-demand dropshipping business, you can also sell products online through Redbubble.

Step 7 – Running and Optimizing Your Dropshipping Business

As soon as your dropshipping business gets into full swing, you should be ready to handle different tasks.

These include managing order fulfillment, meeting customer expectations, analyzing your profit margin, and finding ways to drive more growth.

It’s important to have an organized system in place since there will be days when you’ll be handling multiple tasks.

Order Fulfillment

The dropshipping business model doesn’t require you to take a hands-on approach when it comes to fulfilling orders.

But you still have to keep an eye on that to ensure the smooth flow of business.

Make sure that products are shipped directly to customers in a timely manner.

I suggest ordering products by yourself to check if your dropshipping supplier does a good job or not.

Customer Service

Your customer service needs will increase as orders start pouring in.

You can either respond to customer queries as soon as you get them or set a fixed time each day instead.

If such tasks eat up a lot of your time, you can consider hiring a part-time customer support representative or outsourcing the work to a third-party service provider.

Basic Accounting

You won’t have many accounting responsibilities to take care of upon starting a dropshipping business.

However, you still need to monitor how much money comes in and out of your ecommerce business, including sales tax, licensing renewals, and platform fees.

Analyze & Improve

Finding ways to improve is a key part of overseeing your business.

Some aspects of your business might run smoothly while others might encounter difficulties.

Here are some of the areas that you should look into when running your online business:

• Sales – Take note of your best-selling products, most popular categories, and best-performing channels.

• Shopper Behavior – Are your customers buying more on their mobile or desktop? How do they interact with your store? Do you have any repeat customers?

• Profitability – Highlight which products and variants sell the most. I recommend tracking sales and customer purchases every month.

Is Starting a Dropshipping Business a Good Idea?

The answer is yes! It’s a good idea, and here are six reasons:

Market Opportunities

According to projections, the dropshipping market will likely increase to about $372.47 billion by 2025.

This growth has resulted in many business owners starting dropshipping stores.

A dropshipping store might be ideal if you want to enter a fast-growing market.

Requires Little Capital

Starting a dropshipping business online makes sense if you don’t have significant capital.

You don’t spend too much when starting a dropshipping business because you don’t need a physical store or a massive initial inventory.

You can build your store with only a few dollars for web hosting and reliable suppliers as an online retailer.

Low Overhead Costs

Starting your own dropshipping business requires only minimal operating expenses.

Here are some costs your dropshipping e-commerce business might incur.

• Customer support labor costs (This cost is optional because you can do this yourself.)

• Subscriptions to online tools like the Shopify e-commerce platform

• Prices of your dropshipped goods

Unlike a traditional company, your business doesn’t need to pay the following recurring expenses.

• Rental

• Utilities (gas, water, electricity, etc.)

• Cleaning and maintenance fees

• Inventory management

• Warehousing

Scalable Business Model

Dropshipping is a profitable business model that’s also highly scalable.

This scalability is because dropshipping ecommerce businesses require little work to maintain.

You can automate most processes in your dropshipping business store, allowing the business to run itself while you focus on other things.

If you start a successful dropshipping business, it can generate long-term revenue. You can run several dropshipping companies simultaneously to have multiple income streams.

Low Risk Business Model

You don’t have to stress too much if the dropshipping business doesn’t go as planned. The low capital requirement means you’re not significantly affected if the venture fails.

Despite the low risk, the chances of dropshipping e-commerce businesses becoming profitable is relatively high.

Dropshippers can make around $100 to $20,000 in monthly net profit.

Low risks and high rewards make dropshipping one of the most promising business opportunities.

Anyone Can Start Dropshipping

Anyone can take advantage of the dropshipping model, regardless of age, background, or educational attainment.

You can have a successful dropshipping store if you do the work and take the time to research before you start dropshipping.

To be successful in the ecommerce industry, you just need the following:

• High-quality dropshipping products

• Reliable dropshipping suppliers

• A proven, efficient dropshipping system

• Hard work

Frequently Asked Questions (FAQ)

Can You Make Money Dropshipping?

Yes! Dropshipping can be profitable if you plan and run your business properly.

Many factors affect your shop’s success, including your dropshipping business ideas, marketing effectiveness, product demand, etc.

Being deliberate and wise about your products and marketing tactics should give you a better chance of making a profit through dropshipping.

How Profitable Is Dropshipping?

Dropshipping is a viable business model, but the payoff depends on many factors.

Dropshipping sellers need to look at the wholesale price of their products and their shop’s retail price.

You can profit considerably from your store if you regularly sell enough units.

You’ll also need to regularly keep track of how much is needed to pay sales tax, e-commerce platform subscriptions, shipping costs, and marketing fees.

Should I Register My Dropshipping Business?

You’re not required to register your business, but there are benefits to doing so.

You have personal liability protection. If you register your business as a limited liability company, it exists as a separate legal entity.

Registering a business also allows you to create a separate bank account for your company. As such, you can separate personal and business finances.

Is Dropshipping Legal?

Yes! Dropshipping is perfectly legal.

However, just like any business, you should follow the rules and regulations set by local, national, and international authorities concerned with selling goods.

What Are The Best Dropshipping Products?

Some of the most profitable dropshipping items to sell now are apparel, electronics, baby supplies, and fitness accessories.

I recommend selling a product that’s unique, trending, lightweight, and durable.

The Bottom Line

You can start a dropshipping business but don’t think it’ll be a get-rich-quick scheme. You’ll need to work hard and invest time and energy into your venture.

Now that you know how to start a dropshipping business, you’re all set to begin the process of creating and running your business.

If you have fun and follow the steps I outlined in this article, you can significantly increase the likelihood of operating a successful dropshipping venture.