Starting a dropshipping business is one of the easiest ways to make money online in 2019. The growth of Amazon, eBay, Etsy, Shopify, and other online marketplaces and platforms means that anyone can start an online store for as little as $20.  If you’re thinking of starting your own dropshipping business, take a look at the basic guide below for newbies.

What is dropshipping?

Here is an example of how the dropshipping mode operates:

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The dropship model
  • Firstly, a customer places an order on your website.
  • After that, you pass the order information to your dropshipper.
  • On receiving the order, the drop shipper charges you for the goods, then packages and ships them to your customers.

Dropshipping is when you advertise a product for sale that you do not stock yourself. When someone buys from you, you take that money,  put in your buyer’s shipping info and have the supplier ship directly to your customer. Your price of the item should be high enough to cover the item, taxes, shipping, and profit.

In summary,  dropshipping is the process of selling a product on your website without actually handling its fulfillment and shipping. In this model, the goods will be shipped directly to your customers from a third – party supplier.  Another key component of this model is that you won’t pay for the goods until the customer does. Therefore, it eliminates the risk of storing goods that won’t sell.

Types of dropshipping model

Print On Demand (POD)

With the print on demand (POD) model, your designs are printed on products only as orders come in and only in the quantity that the order asks for. Similarly to the dropshipping concept, POD means that you don’t need to buy large quantities of products when you get started – each order is printed as it comes in. The printed designs work on almost everything from T-shirts, to books, and mobile phones, but the most sold ones are on shirts, mobile covers, and cushion covers.

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POD shirt selling

Warehousing & Fulfillment (W&F)

So what is Warehousing & Fulfillment? With W&F services (often called third-party logistics or 3PL) you keep a stock of your products at a warehouse of your partner who fulfills incoming orders and sends them to your end-customers.

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warehouse & fulfillment

What are the advantages of dropshipping?

  • A small amount of start-up capital: the seller only purchases the product when the customer does. This eliminates the risk of storing products that may not sell well and other storing and labor costs.
  • Flexible workplace: with the Internet connection to communicate with your supplier and customers, you can work wherever you like.
  • No need to worry about logistics as the third-party supplier will be responsible for the physical process of packaging and shipping the goods to customers. On the other hand, dropshipping also reduces loss from damaged products as shipment takes a direct route from the warehouse to the customer.

What are the drawbacks of dropshipping?

  • Low profit: the barrier to entry for dropshipping is low. As a result, if you use the same supplier with everyone and sell the same products, you’ve entered a highly competitive market. You’ll need to lower the price to make more sales and this leads to a decrease in profit.
  • Duplicate shipping fee: If the customer places an order of 3 products from 3 stores then you’ll have to pay for the shipping cost 3 times without requiring the customer to pay for it all.

 

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pros and cons

 

What do you need to start a Dropshipping Business?

Despite all the drawbacks, none of the followings means that dropshipping business is a wrong fit for you. It just means that you’ll have to do a little work to increase chances of success. Now let’s take a look at 6 basic steps to start a dropshipping business.

  • Figure out your niches
  • Choose the selling platform
  • Choose a dropship supplier
  • Creating your online business store
  • Get a tax ID
  • Promote your store

Step 1: Figuring out a Dropshipping niche

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choose niches

Choosing a niche is the first step to start a dropshipping business.  The emergence of dropshipping makes it harder to find a not-saturated-yet niche. However, new products and niches are emerging every day, so opportunities are almost endless. Here are a few things to keep in mind when you’re in search of your own business ideas:

  •  Start with your interests and passions: If you enjoy traveling or hiking outdoors, you’re going to have unique knowledge of the products and trends in those markets that can help you identify a viable niche.
  • Scratch your own itch: if you have a problem in your life then it’s likely that others will have the same problem. Identify a product solving that problem and you might have uncovered a great dropshipping niche.
  • Use Google’s Keyword Planner to check out the competitiveness of your niche keywords. This helps you understand the potential of your dropshipping business ideas.
  • The perfect dropshipping product on Amazon and eBay is generally not dominated by major brands, $15-$200, small and lightweight, and non-seasonal.

Now that you have at least one niche idea at this stage, you’re ready to progress to the next level.

Use Spyfbads for Market Research
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Spyfbads

Spyfbads is a powerful market research tool for dropshippers and eCommerce store owners. It provides you with valuable information on thousands of products across various categories such as:

  • Full ads data for POD/ Dropshipping
  • Filter on like, share, comment of the product
  • POD Platform filter
  • Hidden Post included

It can help to give you product ideas and save you hours of time that it takes to conduct market research manually.

Step 2: Choosing your selling platform

Here are some of the most popular online platforms for dropshippers:

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E-commerce platforms
  • Shopify: there are 500,000+ active stores on Shopify platform, and store owner has processed $40 billion worth of sales! Shopify gets a percentage of each sale, plus a fee for the transaction – either a fee paid to them for using their Shopify Payment system, or a surcharge for using your own payment system such as Authorize.net. In addition, the drop-shipper also gets a percentage of each sale.
  • Amazon: the most well-known dropshipping business platform with about 300 million active users. Fees vary a lot but sellers will pay about 15% of their sale price to Amazon. In 2016, more than 100,000 sellers made more than $100,000 on Amazon. Many manufacturers use Amazon as an additional sales channel to their physical stores. So how can you do dropshipping on Amazon? You can do this through their Fulfilled by Amazon (FBA) program. In this program, you ship your products to Amazon warehouse and they’ll ship them directly to your customers. The benefit of Amazon is it has some of the fastest shipping times on the market and your customers will receive the goods even sooner.
  • eBay: around 171 million users with 1 billion products of 190 different categories. Beside a few free listings, eBay charges listing fees and sale fees, which are 10% less than the sale price. Moreover, eBay is essentially an auction house, so unless you list your product as ” Buy it now” people will bid to buy and it may take one week to sell a product.
  • Etsy: this platform has around 2 million sellers and 32 million active buyers and is extremely popular with women. Its focus is on arts, crafts, homeware, and handmade goods.

Step 3: Choose your best dropship supplier

Most dropshippers operate as Business to Business (B2B) companies so they have different strategies for attracting their audience. That means they won’t necessarily appear at the top of search results on the Internet.

To get better results, start by trying words like “wholesale”, “bulk”, “distributor’, “manufacturer”. You can also combine these terms with your niche for a better result. Additionally, when you’re choosing your usual dropshippers, keep in minds these considerations:

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Trust – worthy dropshipper
  • How long have they been in business? A veteran drop shipper with a record of trustworthy and safe shipments is usually preferable.
  • What goods do they provide? At what cost? Are there additional fees? Payment options?
  • Who do they ship with? Is the shipping company trust-worthy? Can they ship to your targeted places?
  • How is the customer service? Will they send the order notification email? What is their return policy?

Step 4: Creating your own online business store

A lot of dropshippers take the route of starting their own online store. While it requires more investment up front, this is really the ultimate long-term option for making money and building a business online. Nowadays, there are plenty of online tools like Shopify that makes it really easy to get started.

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Your own online shop

PROS

  • First of all, because you’re building a business independent of a third-party platform,  you have complete control over branding, design, layout etc.
  • Secondly, no fees, no higher profit margins and no direct competition from other sellers on the same platform.

CONS

  • First, you may miss out on the guaranteed traffic (customers) from established platforms
  • Second, it takes time to rank on Google and you’ll have to invest in SEO and marketing

If you have the time and money to invest in your dropshipping business and you’re planning to be in it for the long haul, then starting your own store is a good option, especially with established platforms becoming more and more saturated every year.

Step 5: Get the tax ID

You can apply for a tax ID by visiting your local country clerk’s office or just Google “your state + sales tax ID”. To get your sales tax ID, you may need to be a business entity, a company and have a Federal Tax ID number. Also, remember that some wholesale suppliers require you to have one before doing business with you.

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Get a tax ID

Step 6: Implementing a Customer Acquisition Strategy

Now that you have an online platform for your business, you need to attract customers to your stores. Below are some strategies for your online dropshipping store:

Facebook Ads for Dropshipping

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facebook ads

68% of Internet users come from Facebook ones,  resulting in a vast advertising opportunity for businesses. Facebook ads are a good option for the following reasons:

  • First, it’s easy to get started and yield fast results which help to increase brand awareness
  • Moreover, you can control how much you spend each day and target highly-specific demographics
  • Furthermore, a good ad or boosted post can go viral

Email Marketing

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email marketing

Building an email list is still one of the most effective ways of acquiring customers. First, you need a way of capturing email addresses, such as a request to sign-up at checkout, or an offer or competition that requires an email address. Once you have a decent list of email addresses you have a way of reaching a large group of people regularly, for free.

Blog or Forum Marketing

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forum mkt

This involves finding blogs or forums that are related to your niche and actively participating in discussions. By positioning yourself as an authority in your niche and including a link to your website, you can increase traffic and acquire new customers.

Conclusion

Finally, to conclude the Basic Guide to Dropshipping, there is surely a lot to gain from the dropship model, as long as you follow the tips above and you choose the right dropshipper for your business. With a bit of work, negotiation and set up, you will have your online store in no time! We hope you’ve enjoyed this blog on how to start a dropshipping business. Did this inspire you to create one? Just leave a comment down below. And don’t forget to share this article with your entrepreneurial friends.

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