How to Start a Dropshipping Business

how to start a dropshipping business
Table of Contents

The business landscape changed significantly over the last few years.

The digital revolution brought great ways to profit online with lower risk, capital, and effort.

One business model that has grown in popularity and profitability is dropshipping.

Today, about 2 billion people worldwide use dropshipping services.

It’s no wonder why so many entrepreneurs are turning to dropshipping.

You’ve come to the right place if you want to learn how to start a dropshipping business.

I wrote this guide to walk you through everything you need to start dropshipping. I’ll discuss the steps for creating a dropshipping store, provide reasons it’s a good idea, and more.

Let’s begin.

What Is a Dropshipping Business?

how to start a dropshipping business

A dropshipping business is an online business where you sell products without keeping any inventory.

When creating a dropshipping store, you work with a supplier who directly ships products to your customers without going through you.

Dropshipping is convenient because it removes the hassle and challenge of running a fulfillment operation.

With a dropshipping business model, you choose products to sell, promote those products, and have your dropshipping supplier send orders to your customers.

How Does the Dropshipping Business Model Work?

You must know how the dropshipping business model works to build your own store and successful dropshipping business.

Here’s the typical flow of a dropshipping business.

  • The customer orders a product.

You have your own online store as the virtual face of the company. People order through this store.

  • The store sends the order details to a dropshipping supplier.

When your customer purchases an item on your online store, the system automatically sends the order details to your dropshipping supplier.

  • The dropshipping supplier prepares the order.

Your supplier receives, then prepares the order. Sometimes, your supplier only creates the product once the order comes in to avoid oversupply.

  • The supplier sends the product directly to the customer.

This straightforward process saves on shipping fees and shortens the delivery time, ensuring your customer gets their product as quickly as possible.

Why Is Starting a Dropshipping Business a Good Idea?

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You’re probably wondering if it’s a good idea to start dropshipping.

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

1. Market Opportunities

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

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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.

There are many opportunities for dropshipping. You could be one of its many beneficiaries if you put in the work to start and build a dropshipping venture.

2. Requires Little Capital

You’d have to shell out thousands of dollars to build your own brand and brick-and-mortar store.

Starting a 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.

If you don’t have the budget for marketing staff, you can learn how to market your business (I’ll teach you basic marketing strategies to increase sales later in the article.).

3. Low Overhead Costs

When you start dropshipping, you don’t need much money to maintain your store.

Starting your own dropshipping business requires only minimal operating expenses.

Here are some costs your dropshipping ecommerce business might incur.

  • Customer support labor costs (This cost is optional because you can do this yourself.)
  • Subscriptions to online tools like the Shopify ecommerce platform
  • Prices of your dropshipped goods

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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
  • And many more.

4. Scalable Business Model

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

This scalability is because dropshipping 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 store, it can generate long-term revenue. You can run several dropshipping companies simultaneously to have multiple income streams.

5. Low-Risk

Drop shipping is a low-risk business model.

You don’t have to stress too much if the 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 ecommerce 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.

6. Anyone Can Start

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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 starting.

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

  • High-quality dropshipping products
  • Reliable dropshipping suppliers
  • A proven, efficient dropshipping system
  • Hard work

How to Start a Dropshipping Business

Here’s how to get into drop shipping.

1. Create a Business Plan.

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There’s a saying that goes, “If you fail to plan, you plan to fail.” This statement is true for everything, even starting a dropshipping business.

You should have a dropshipping business plan to prepare for challenges in your venture.

Your dropshipping business plan should include these essential elements:

  • Unique business idea

This section will answer the question, “Why is your dropshipping business idea different?”

  • Buyer personas

These are profiles or avatars of your target audience–the people you want to buy your products.

Your buyer personas should include demographic, behavioral, and economic characteristics. This information will help you develop marketing and outreach strategies.

Conduct market research to discover your target customers, what drives them, and where you can reach them.

  • Operations manual

Include regular activities and tasks that keep your business operational.

  • Competitor analysis

This section will help determine what other people in your dropshipping niche are already doing.

Accurate competitor analysis allows you to stand out in pricing, outreach, branding, and more.

  • Marketing plan

Your marketing plan contains strategies for getting your products in front of potential buyers and converting them.

  • Products

All dropshipping business ideas need high-quality products. Your business plan should include the products you want to offer on your dropshipping website.

Here are some tips for developing product ideas before starting a dropshipping business.

Look at Google Trends.

Google Trends is a tool that shows you the popularity of specific search terms. A high score means more people look for that product or answer.

For example, if you check “Who is Taylor Swift voting for” on Google Trends, you’ll see that many people enter that search query.

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Using Google Trends is an effective way to determine if your product idea is in high demand.

While search queries aren’t 100% accurate for showing people’s purchase intent, they give insight into the products people are curious about and search for online.

Choose Products You Can Sell at Higher Profit Margins.

As an online business, your goal shouldn’t be to have high gross revenue–it should be to increase your net profit.

You can increase your net profit by selling products that have higher margins.

Determine if a product has good profit margins by checking the prices other sellers charge for the same item.

You’ll also want to check dropshipping suppliers to see how much they’ll charge you to resell their products.

Look for wholesale suppliers who can give you the best deal. However, consider additional costs like shipping fees, surcharges, and more.

Note that some US states also require you to pay sales tax.

Look For Untapped Niches.

You’ll have a better chance of business success if you leverage untapped niches instead of oversaturated markets.

Look for products with low competition.

You can charge a higher price if you’re selling to a niche market since many customers willingly pay a premium for specialized or unique items. Doing so lets you earn more profit per product.

Reaching niche markets also requires lesser ad spending as the keywords and topics you’ll target aren’t as high-demand as saturated ones.

2. Develop a Brand Story.

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Everyone loves a good story, so your dropshipping business should have its own brand story. A unique brand story helps you stand out from your competitors.

Here are some stories you can tell to build your brand.

  • A brand origin story – how you started your business.
  • Business mission – why you started your business. You could say you created a dropshipping store to help customers access better-quality products.
  • Social Proof – clients’ testimonials to show you’re a trustworthy seller.
  • Unique selling points – shows people elements that make your products unique.

3. Find a Reliable Supplier

Your dropshipping supplier is one of the most crucial parts of your dropshipping business model. You’ll want to find a reliable and responsive partner.

Your supplier should also provide impeccable product quality and good customer service.

If you’re looking for a good supplier for your ecommerce store, these directories and services are a great place to start.

Automizely

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Automizely is a dropshipping app that works with Shopify, one of today’s most popular ecommerce platforms.

It’s a one-stop dropshipping solution that lets you sell quality products from vetted suppliers.

Automizely automates practically the entire fulfillment process. The service manages listings, purchases, tracking numbers, and updates.

The program also has an easy-to-use interface and droves of quality products with discounted rates.

Printful

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Printful is one of the most popular print-on-demand services and an online tool that lets you connect with a printing supplier.

With Printful, you can sell customized products like statement shirts, caps, hoodies, throw pillows, mugs, phone cases, framed artwork, and more.

AliExpress

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AliExpress is an online marketplace by Alibaba for people who want access to an extensive directory of suppliers on one ecommerce platform.

This marketplace is different from Alibaba’s wholesale service.

You can order single units of items on Alixpress and have suppliers ship directly to your customers.

AliExpress operates in China, so expect longer shipping times if you sell primarily to the Western market.

Worldwide Brands

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Worldwide Brands is a dropshipping directory of dropshippers, small to large-volume wholesalers, importers, and dropshippers.

The company operates out of Florida, making it a fantastic option for dropshippers in the US or nearby countries.

Worldwide Brands has been around for two decades, making it one of the most valuable online marketplaces for dropshippers.

This supplier directory is easy to use and provides users with training on finding trustworthy suppliers and running successful online stores.

Megagoods

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Megagoods is a dropshipping marketplace focusing solely on consumer electronics.

The company has warehouses with ready-to-sell products, allowing US customers to get their orders faster.

Wholesale2B

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Wholesale2B is one of the best examples of an end-to-end dropshipping service.

This service lets you research products, integrate them into your online stores, and manage buying and shipping processes.

4. Build an Online Store

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Here’s an overview of the steps to build an online store.

Buy a Domain Name.

Your domain name is the unique text string (web address) that directs people to your online store.

It would be best to choose a domain name with your brand name. Keep your domain name short and easy to remember.

You can buy a domain name from a hosting provider like Namecheap or Hostgator.

Choose an Ecommerce Platform.

An ecommerce platform is a system you’ll use to host your content, products, and apps to create one solid backend for your website.

The most popular ecommerce platform is a content management system, a service allowing you to build a website with little to no coding.

WordPress, Shopify, and Squarespace are some of the most popular CMSs. Use the one you like best.

Start with a basic plan when you’re new to dropshipping.

Once your business grows, you may need to research enterprise-level ecommerce platforms. These platforms will help your website remain stable despite the heavy traffic and order volume.

Design Your Drop-shipping Website.

Your 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 a theme for your shop and customize it to your liking.

Upload Your Products.

Add products to your store. If you’re using WordPress, you must install WooCommerce to add products to your store.

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Your product listings must include the following:

  • Keyword-rich product titles
  • Compelling product descriptions with details such as size, colors, and other variations (as applicable)
  • Captivating, high-quality photos
  • Professional-quality product videos (if applicable)

Integrate Your Dropshipping System.

Automate your dropshipping model by integrating a dropshipping system into your backend.

If you’re using Shopify, I recommend using Automizely or Printful since they automatically send order details to suppliers, so you don’t have to do much else.

Set Up Your Payment Gateway.

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

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.

5. Promote Your Dropshipping Business.

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Once your shop is ready, promote it on various online channels to spread the word.

Here are some marketing strategies to promote your dropshipping business ideas.

Social Media

Social media marketing is one of the most potent content-marketing tactics.

Create profiles on one or two social media platforms to share your content.

Mix your promotional posts with value-giving ones like tips, stories, and entertaining content.

Engage with people on social media by joining groups and commenting on other people’s content.

Don’t be afraid to join Facebook groups and talk directly to people. You can even communicate with customers via online forums.

Influencer Marketing

You can work with influencers to promote your brand and products online for an additional promotional boost for your social media strategy.

Contact micro-influencers with massive social media followings.

However, it’s best to work with an influencer in your niche.

For example, if you sell electronics, look for a vlogger or Instagram influencer who reviews tech.

Email Marketing

Email marketing is another popular and effective content marketing strategy.

Build a list of subscribers you can send regular emails to whenever you have a sale, special offer, new product, or new content.

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Grow your email list by adding a freebie or discount when people sign up. You can use services like MailChimp or ActiveCampaign to help you with your email campaigns.

Paid Ads

Use paid ads on Facebook, TikTok, Google, and other platforms to drive traffic to your site.

Take it further by using ads for retargeting people who’ve visited your site or abandoned their carts. Doing so allows you to you improve conversion rates.

SEO (Search Engine Optimization)

SEO means making your website more visible on search engines by targeting specific keywords.

61% of marketers believe that SEO is essential for success.

Find keywords to help you rank and create blog content that will drive organic traffic to your shop.

Frequently Asked Questions (FAQs)

Can You Make Money Dropshipping?

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Your goal should be to learn how to make money dropshipping, but is it possible? Do all dropshippers make money?

Business is always a risk. Only 10 to 20% of dropshipping businesses succeed.

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.

Store owners 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 look at expenses, such as ecommerce platform subscriptions, sales tax, shipping costs, and marketing fees.

Should I Register My Dropshipping Business?

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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.

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.

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.

Enjoy the process of creating your business. Your business should be profitable and fun. It would be hard to succeed if you’re not having fun.

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.

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