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How to Start a Dropshipping Business [2023] – 10 Steps to Guarantee Success

How To Start a Dropshipping Business

Want to find out how to start a dropshipping business with no money? If you are considering entering the world of dropshipping and have questions about getting started, this article is a must-read. Dropshipping can be hugely successful and profitable when done correctly.

The dropshipping market is set to explode over the next 3-4 years. The current value of global dropshipping is roughly $196 billion but is expected to grow to approximately $476 billion by 2026.

That's $380 billion in growth in just four years.

How To Start A Dropshipping Business - Dropshipping stats - Statista
source: Statista

Dropshipping is lucrative. This we know. But before we dig into just how profitable dropshipping is, let's gain a better understanding of what dropshipping is, how dropshipping works, and how to start a dropshipping business.

What is dropshipping?

How To Start A Dropshipping Business - A parcel for dropshipping

Dropshipping is a retail fulfillment method in which a store owner buys items from a third party, who ships them directly to the customer on behalf of the store. Hence, the store avoids having to keep inventory. In other words, the eCommerce store doesn't have to deal with warehouse or inventory management, which makes it a profitable business model.

One of the most significant differences between the business structure of the standard retail model and dropshipping is that the selling merchant in dropshipping doesn't own or stock inventory. Instead, the drop shipper buys merchandise when required from third parties – usually manufacturers or retailers – to fulfill orders.

How profitable is dropshipping?

How To Start A Dropshipping Business - Is Dropshipping Profitable?

The dropshipping market's significant growth is attributed to consumers' shift toward online shopping. eCommerce made a massive surge during the COVID-19 pandemic. Faced with such limitations and grueling circumstances, people had no option but to shop online to buy products.

Additionally, the increasing smartphone penetration and the rise of mobile commerce have facilitated the pivot toward dropshipping services and eCommerce. People are active, on the go, and find it easier to browse and purchase using their mobile devices.

One of the biggest reasons behind the popularity of the dropshipping model is the ease of starting a dropshipping business. Aspiring entrepreneurs don't have to hold inventory, which means they don't have to spend anything on acquiring goods upfront or paying for storage.

This substantially reduces the start-up costs associated with starting a dropshipping business.

You need the right marketing strategy to make the dropshipping business model work. Starting a small business by creating your brand with an eCommerce platform is straightforward and can work for most dropshippers.

You must manage personal and business finances well to run a dropshipping business. Understanding the business aspects of a dropshipping company is critical if you want longevity and success.

With its inventory-free set-up and low start-up costs, dropshipping has emerged as one of the most popular online business models, poised for massive growth over the foreseeable future.

Dropshipping business advantages

Want to understand how to start a dropshipping business with no money and how dropshipping works? Truth be told, you don't need any prior dropshipping experience to start.

You can enter the world of dropshipping by learning the principles of eCommerce and dropshipping fundamentals.

You don't have to pay for a warehouse to store products or worry about stocking or shipping. The business concept of dropshipping is surprisingly hands-off, especially once your business is established.

In fact, you can start a dropshipping business today with no money within a matter of a few hours. It requires basic knowledge and access to the right resources and tools to jumpstart your own dropshipping business.

Let's examine some of the benefits of a dropshipping business model.

1) Dropshipping is easy to start

How To Start A Dropshipping Business - Easy Packaging

Running an eCommerce platform is easy when you don't have to deal with an inventory. One of the primary advantages of dropshipping is that you don't have to pay for or manage a warehouse.

Also, you don't have to track inventory for accounting reasons. You don't have to pack and ship orders and don't have to handle returns or inbound shipping.

It also saves small business owners from the risk of storing products that may go out of style or see a sudden demand decline. With the proper business structure and dropshipping platform, you can get started.

2) Dropshipping doesn't require an office

How To Start A Dropshipping Business - Dropshipping from home

How do you start a dropshipping business by yourself?

You can run an entire dropshipping business right from your laptop at home.

A significant share of your expenses will be advertising and managing your eCommerce platform. Again, you can scale the advertising budget as your online store gains traction.

3) Dropshipping is flexible

You are your own business and completely free to set rules and regulations. Dropshipping is one of the most flexible career options anyone can pursue from the comfort of their home.

You can work at any convenient time for you. In other words, you are free to work at your own pace. You can easily list new products of your choice per prevailing market trends while adjusting your strategies on the fly.

4) Dropshipping is simpler to manage

Dropshipping offers less hassle as you don't have to spend countless hours managing employees. Once you have found a few reliable dropshipping suppliers and have set up the connection to their products, you are set to launch your site and marketing strategy.

When it comes to dropshipping, there are some questions that almost all beginners seem to ask. Here are those questions and answers.

Dropshipping Behind-The-Scenes

Have you ever wondered what dropshipping looks like behind the scenes? Let's find out:

  1. Customer A places and pays for an order for a digital camera at your dropshipping store and receives an email confirmation. Let's say the order amount comes to $150.
  2. Your online store sends the order to the dropshipping supplier (ABC ltd.). Generally, a sales representative from ABC ltd. will receive and process the order after charging you (let's say $110). You receive a profit of $40 on the sale of the digital camera.
  3. ABC ltd. packs up the order and ships the product on your behalf (with the shipping label having the name and address of your online store). The invoice and packing slip will also have your online store's name. ABC ltd. will send you the invoice and tracking information, which will then be passed on to customer A.
  4. The customer receives the package and enjoys the digital camera. You receive the $40, your profit on the sale.

This scenario is simplistic; other factors, such as shipping and taxes, can impact the profit margin. Still, in essence, this is how it works. When done right, dropshipping is a smooth and fast process that is a win-win for everyone.

Additional Resources

How to Start a Dropshipping Business

The 10-Step Dropshipping Business Plan

1. Choose a niche for your business

Choosing a niche

Choose a niche for your business. This is the first and foremost step toward a successful dropshipping business plan. Therefore, you must first understand the market and explore the best dropshipping business ideas.

Dropshipping for beginners may appear overwhelming at first. Still, you will be surprised to know that you can make significant inroads with a robust business plan at your side.

It is important that you listen to opinions but act on what seems right to you. Some may suggest you choose a niche you are passionate about, but there are better ways to go.

Dropshipping is about a combination of passion and profit, and things should always tilt toward high-profit margins.

The best dropshipping business ideas are typically tied to the best profit margins. Being passionate about your niche is incredibly valuable. Still, you're investing in yourself, and you need to make a profit to succeed.

Some categories have more value than others for several reasons. For instance, fashion, fitness, backpacks, beauty, jewelry, purses, and supplements are some of the most popular evergreen dropshipping niches.

Here are some recommendations to help you find your niche.

  • Google Trends is an excellent source of information to determine how a niche is trending. However, Google Trends is only one of the sources of truth as far as assessing the viability of a niche is concerned. It is worthwhile to remember that some trending niches may need more search volume to make them good candidates for dropshipping.
  • You can use Ubersuggest's Keyword Tool to determine a keyword's competitiveness or search volume. This can help you gain a clear and complete understanding of the potential of your niche.
  • It is highly recommended that you browse popular and successful online storefronts within your niche. For instance, if you visit a popular fashion retailer's website, you will usually find their online storefront organized into trending categories. This will help you discover trends you should add to your online storefront. Additionally, you can navigate their section of best-selling products to find the best high-quality products to sell and where to price them.
  • You should always make it a point to check out the order volume for quality products to find out how popular a product is.

One of the basics of the dropshipping business model is always to remember that the most successful dropshipping business ideas are not trends but the trends within them.

For instance, artificial eyelashes are a popular trend within the beauty niche. Denim apparel is a trend within the fashion niche. The point is that you should have dropship products based on the trends.

Additional Niche Resources

2. Product Research

How To Start A Dropshipping Business - Product Research

Whether you're about to cast a wide net or want to stay niche-focused, you should conduct comprehensive product research to get a clear idea of what is selling and trending. You will have to seek out trending products and categories to gain traction for the store.

While researching products, you should consider important factors such as statistics on global order growth, geographical relevance for each product, growth of related sellers, etc.

You can use Amazon's Best Sellers lists to discover products performing at the top of their game in each product category. You can view these lists in broad categories like photo and camera or refine them to emphasize areas such as darkroom supplies.

It is equally essential for you to focus on keyword search volume. You will need to find out how many searches there are for a specific term or group of terms per month to determine the product demand and potential success. You can try online tools like Google Ads' Keyword Planner for keyword research.

This will help you gain insights into how frequently the keywords are searched. These insights can then be leveraged to gauge competitiveness and popularity and discover how keyword search volume can significantly affect your advertising budget.

Conversely, Ahrefs Keyword Explorer can analyze thousands of relevant dropshipping keyword ideas with a user-friendly keyword difficulty score, accurate search demand, and advanced metrics such as bounce rate, parent topics, and cost-per-click (CPC).

It is also vital that you give thought to trend data to find out how the performance of your products has changed over time. It can be used to measure the potential of a product for success in the long run or gain access to ideas that could be temporary hot-sellers.

The true beauty of the dropshipping business model lies in the fact that your store's offerings can quickly adapt to changing demand as compared to the inventory of a standard retail store.

By analyzing search trends, you can obtain a clear idea about the seasonality of a product. For instance, is it an excellent choice to diversify your offering or skip a product altogether if its popularity waxes and wanes throughout the year? You can use Google Trends to access search data in graphs to find the demand for a product over time.

You can check out search engine results pages (SERPs) to find invaluable insights into the performance of competitor dropshipping stores. This will help you find the most popular keywords and how you should manage your content, search engine optimization, and social media strategy. It is also an excellent choice for exploring shopping, image search, and standard web results.

You can even consider popular social media platforms like Facebook, TikTok, Instagram, and Twitter to engage, attract, and win customers.

Analyze the social media accounts of your competitors to find out how they manage those accounts. Look specifically at the following:

  1. post frequency
  2. feed layout
  3. customer engagement
  4. response time
  5. affiliate influencers
  6. platform choice

You can use Facebook's Ad Library to access details about sellers promoting products similar to yours.

3. Competitor Analysis

How To Start A Dropshipping Business - Competitor Analysis

Once you have finalized your dropshipping niche and what products to sell, it's time to educate yourself on your potential competitors.

Answer the following questions to understand better your competitor's actions.

  1. What do they sell
  2. How do they sell?
  3. How long have they been in business?
  4. What promotional strategies do they use?
  5. How often do they introduce new products?
  6. Do they have seasonal selections?

To get started, you can type the name of one of the products you intend to sell and search for who shows up on top. The top 10-20 results on search engines such as Google will give you a good idea of your potential competition in a specific area.

If you want to sell products in a different geographic location than where you are. You can leverage third-party tools such as SEMrush or Ahrefs to collect data.

Use Alexa or SimilarWeb to identify niche competitors that might not have appeared in other search results. Websites such as Alexa or SimilarWeb can help you explore a brief summary of the competitor sites you're researching.

Additionally, you can obtain information about advertising patterns, traffic and audience data, and social media profiles.

You can even perform competitive analysis on social media platforms such as Facebook. You can browse social media pages or Facebook advertisements within a particular niche to discover top dropshipping brands.

Ask and answer the following questions.

  1. How do they market their products and brand?
  2. How many followers do they have?
  3. What are their best-selling products?
  4. How much engagement do they receive?
  5. What are they doing right, and what are they doing wrong that you can improve upon?
  6. What things can you do to stand out against them?

Content is king, and you should closely monitor your competitors' content. Find out what is working for them, how they reach their target audience, and what things you can learn, unlearn, and improvise to be a better version of them.

For example, you can use BuzzSumo to get invaluable insights into what type of content gets the most social shares. This will help you get inspiration for your next set of blog posts. You can even sign up for your competitors' newsletters to know what, how, and when they share content.

Additional Resources

4. Find trustworthy and successful suppliers

How To Start A Dropshipping Business - Trustworthy Suppliers

One of your business plan's primary dropshipping business ideas is to find a good set of reliable and successful dropshipping suppliers. You can access a complete list of dropshipping suppliers, automation software, wholesalers, and fulfillment options here on Web Tools Advisor.

Once you have identified about 5-7 potential suppliers to choose from, you will need to contact them to ask about shipping times, shipping methods, minimum order quantities, etc.

From this, you can narrow the list to 2-3 suppliers, place a sample order with them, and compare the results. Compare product quality, quantity, shipping time, and packaging.

Sourcing products will always be one of the most tedious steps in your dropshipping journey. Therefore, you must carefully evaluate each item, partner, and vendor for their total viability to ensure that your efforts are well-spent.

You should carefully analyze product metrics on different dropshipping marketplaces. It may be easy to market less popular products, but hot sellers are always a safer investment. It would help to monitor your credit card processing fees and shipping costs, as they will take a considerable chunk of your profits.

Therefore, you should consider each product's wholesale price and suggested pricing to determine its potential profitability. Remember here that you are at complete liberty to reduce the markup of a product to attract buyers better or increase it to make your sales more profitable.

It is difficult to measure the quality of your goods. Therefore, it does make sense to rely on marketplace supplier ratings and sales numbers when judging the professionalism of manufacturers and the quality of products.

The location of suppliers is also a vital consideration, as it will significantly impact delivery speed and cost. There are dropshipping suppliers worldwide, and more popping up each year. You'll want to select a dropshipping company that aligns with your product needs and offers fulfillment in your country.

USA dropshipping suppliers are growing yearly, so finding a company in the United States is easier than at any other time.

You can look at business ideas like how to source your dropshipping partners directly. You can contact your existing marketplace vendors or source dropshipping wholesale suppliers through other means, such as ThomasNet, a supplier-discovery database of more than 6.5 million products.

You can explore ImportGenius, an import/export hub where you can find dropshipping suppliers or directly import wholesale goods. Or, explore industry-specific buyer's markets such as America's Mart, Dallas Market Center, and NY Now or talk with private-label sellers who provide their own branded products.

5. Build a dropshipping business store

How To Start A Dropshipping Business - Building a websitefor dropshipping

There are critical steps for starting your dropshipping store, including sourcing a domain name and procuring web hosting if you use WooCommerce or another bolt-on solution. Platforms like Shopify, GrooveKart, and other systems are self-contained, so the hosting comes with a monthly plan for the software.

Ideally, you should choose a .com (dot com) domain for broader reach. For instance, your domain name should not be too narrowly focused if you want to sell eyelashes. You might need to pivot at some point or broaden your product selection; thus, selecting a domain in beauty or fashion would allow this.

WTA Recommends: How to Start a Dropshipping Business on Shopify & Guarantee Success

6. Set up payment and shipping information

How To Start A Dropshipping Business - Online Payment

Once you've set up your online storefront, it is time for you to explore the best payment gateways for eCommerce & dropshipping. For instance, you can choose from a wide range of payment gateway options, including but not limited to Apple Pay, WePay, Authorize.Net, Stripe, 2Checkout, PayPal, Skrill, and Google Checkout.

Choosing a reputed eCommerce payment gateway your audience is familiar with is essential. For instance, PayPal is the most popular eCommerce payment gateway in the United States, just as Stripe and Payoneer are in Canada.

Tip: look closely at the transaction fees to ensure you don't incur hefty charges on every transaction.

7. Market your business to potential customers

How To Start A Dropshipping Business - Online Marketing Channels

Once you have established your eCommerce store, your next and largest investment will be in marketing your dropshipping store.

Let's explore some fantastic ideas to market a dropshipping business.

Facebook Advertising: You may be tempted to empty your pockets on day one, but you must pace yourself as an advertiser. Consistency and patience are key to the success of your dropshipping business.

Keep your initial budget low to experiment with different ideas to market a dropshipping business. You need clarification on which products will sell best and on your audience in general.

Create different advertisements to discover what works best for your dropshipping store.

Pro Tip: Exclude the United States, Canada, Australia, and the United Kingdom while targeting customers through Facebook ads to keep ad costs low. Once you have success, you can alter your strategy.

Once you have made some sales, you can create separate campaigns for these countries.

Retargeting Ads: If you want to keep your advertising budget tight, it is best to opt for retargeting ads. Retargeting works best if you have an online store with lots of traffic. Retargeting ads can help you take free traffic and convert your visitors into paying customers.

Influencer Marketing: If you're tight on budget, you can offer influencers an affiliate commission instead of paying them upfront. Even the most successful niche influencer may not help you generate sales.

Choosing to pay influencers an affiliate fee for every sale they contribute can significantly reduce the risk for your online storefront. Furthermore, an influencer might be more motivated to get sales converted for you as their income depends on the number of successful conversions.

8. Optimize your campaigns

How To Start A Dropshipping Business - Studying Analytics

Campaign optimization is critical for longevity. You may notice that email campaigns you expected to work on could have done better, and those less likely to convert produced huge sales.

You can even review the strategies of your competitors and redefine your approach to readdress industry trends, customer needs, preferences, and expectations.

One of the first things you can do is use tools such as Google Analytics or Search Console to review your site's performance. Set up automated campaigns through third-party email marketing software or social media management tools.

9. Process orders and ship products

How To Start A Dropshipping Business - Packaging

Once orders start coming in, you'll want to have a plan for ensuring the processing and delivery go smoothly. An eCommerce platform's dashboard will provide insights on new, processing, and shipped orders. You will also receive email and SMS notifications if you have the right systems in place.

You should also keep a close track of the money and transactions coming in and going out (including sales and other taxes) to stay compliant with regulations. You'll want to ensure profit margins and cash flow are positive and stable once orders start rolling in.

10. Keep your dropshipping store relevant and engaging

How To Start A Dropshipping Business - Engaging Online Store

It's good to have everything in the right place. However, ensuring the dropshipper store stays engaging, relevant, and customer-centric is crucial.

You must stay abreast with prevailing industry trends, the bestselling dropship products, what is selling or what is not, how your competitors are performing, what you can improve, and how you can better serve your customer's needs.

So, is dropshipping worth it?

Well, the answer is just what you want to hear, YES! And, rightly so. The concept of dropshipping has seen a massive surge. The dropshipping eCommerce business model is attractive, feasible, and affordable and will continue to prosper well into the future.

It is estimated that over 50 percent of all businesses in the United States alone will start as dropshipping eCommerce businesses within the next decade.

You can create and run a successful dropshipping business with careful planning and consideration. First, educate yourself on the basics of dropshipping. After, create a strong dropshipping business plan, and then follow through with building your dropshipping store, carefully considering all the necessary steps for success.

How to Start a Dropshipping Business [2023] – 10 Steps to Guarantee Success

Ben Adams

Ben Adams is an online entrepreneur with over 20 years of digital marketing experience in SEO, content marketing, analytics, email marketing, e-commerce, and other strategies. He enjoys consulting and helping businesses and entrepreneurs succeed by using technology and tools to power their online presence and growth. He also enjoys writing, photography, traveling, and spending time with his family.

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