Last Updated on November 20, 2022
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.
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?
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?
The dropshipping market's significant growth is attributed to consumers' shift toward online shopping. In the last two years, eCommerce has been a massive surge because of the COVID-19 pandemic, which forced consumers to stay home and brick-and-mortar stores to shut their doors. Faced with such limitations and grueling circumstances, people had no option but to go online shopping 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 and don't have to pay for storage. This substantially reduces the start-up costs associated with starting a dropshipping business.
It would be best if you had the right marketing strategy to make the dropshipping business model work. It is easy to start a small business by creating your brand with an eCommerce platform.
You need to be good at managing personal and business finances to run your small business. You can run a successful business with the right marketing strategy, which involves proper search engine optimization of your eCommerce website and adequate market research. Your small business can increase if you can drive your marketing efforts in the right direction.
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.
Advantages of a Dropshipping Business
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 drop shipping experience to start.
You can enter into the world of dropshipping by taking the time to learn the basics of how to start a dropshipping business and eCommerce platforms that you can dropship from and the rest as you go.
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.
Easy to get started
Running your 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. Furthermore, you do not need to manage inventory.
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.
You don't require an office
How do you start a dropshipping business by yourself? We've got you covered. Using today's web tools, you can create it with little to no assistance. You can run an entire dropshipping business right from your laptop at home. Secondly, you can make high-level investments without making any high-level investments.
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.
Dropshipping is flexible
You are your own business and completely free to set your 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. Moreover, you can easily list new products of your choice per prevailing market trends while adjusting your strategies on the fly.
Simpler to manage
You can manage everything with little 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.
Is Dropshipping a Good Idea?
Dropshipping is indeed an intelligent business model. This is because dropshipping carries a low risk for store owners as you need minimum funds to get started. As a dropshipper, you can start selling products to customers in a niche market without burdening yourself with inventory costs and other business liabilities.
Is Dropshipping Profitable?
Dropshippers receive a wholesale price for a product and mark it up to a competitive retail price. Dropshippers can expect an average of 20-30 percent profit from each sale by selecting suitable suppliers and building a great brand. In the beginning, you can start by using cost-effective tools and your personal assets to get your business running.
Is Dropshipping Legal?
Dropshipping is entirely legal. The entire process runs on legal sales channels and eCommerce platforms. It involves only the sale of legal products as per the laws and regulations of the source and destination countries.
When you get started, there are specific business structures and best practices for establishing personal liability protection and using personal assets.
You may require a business license but do not need to register as a limited liability company (LLC) to start dropshipping, although we recommend it for the protection it provides. Depending on your state, a business checking account, business credit card, and business liability insurance might be required.
How Do Dropshippers Make Money?
Dropshippers act as product curators. They choose the right mix of products to market to customers. When customers buy products from an eCommerce store, a third-party dropshipping supplier ships the orders directly to the customers on behalf of the dropshipper.
The role of a manufacturer in a dropshipping business model includes creating products, shipping products on behalf of the retailer (dropshipper), carrying inventory, restocking products, and replacing defective products.
On the other hand, the role of a dropshipper is all about selling the manufacturer's products under your brand on your eCommerce website. The dropshipper is tasked with selecting and marketing the manufacturer's products.
Have you ever wondered what dropshipping looks like behind the scenes? Let's find out:
- 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.
- Your online store sends the order to the dropshipping supplier (let's say 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.
- 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 the invoice and tracking information to you, which will then be passed on to customer A.
- 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 actual 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.
How to Start a Dropshipping Business: The 10-Step Dropshipping Business Plan
1. Choose a niche for your business
Choose a niche for your business. This is the first and foremost step toward a successful dropshipping business plan. Therefore, you must take time first to understand the market and explore the best dropshipping business ideas. Dropshipping for beginners may appear overwhelming at first. Still, you will be happily 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 to succeed, you need to make a profit.
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. Still, they should only complete your store if you want to pursue dropshipping as a long-term business opportunity seriously.
2. 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. To gain traction for the store, you will have to seek out trending products and categories. 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. You can even visit Oberlo, which has millions of products for store owners.
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. For keyword research, you can try online tools like Google Ads' Keyword Planner. 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 the form of graphs to find the search 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 such as 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, including post frequency, feed layout, customer engagement, response time, and affiliate influencers. You can use Facebook's Ad Library to access details about sellers promoting products similar to yours.
3. 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 questions like what they sell, how they sell, how long they have been in business, and what promotional strategies have been doing.
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. Suppose you want to sell products in a different location than where you are. In that case, you can leverage third-party tools such as SEMrush or Ahrefs to collect data.
You can search via Alexa or SimilarWeb to identify niche competitors that might not have shown up in other search results. Websites such as Alexa or SimilarWeb can help you explore a brief, rich 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 drop shipping brands. Ask and answer the following questions.
- How do they market their products and brand?
- How many followers do they have?
- What are their best-selling products?
- How much engagement do they receive?
- What are they doing right, and what are they doing wrong that you can improve upon?
- What things can you do to stand out against them?
Content is king, and you should keep a close eye on 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 blogs. You can even sign up for your competitors' newsletters to know what, how, and when they are sharing content.
4. Find trustworthy and successful suppliers
One of your business plan's primary dropshipping business ideas is to find a good set of reliable and successful suppliers. You can find suitable, dependable suppliers on AliExpress, where you can access supplier reviews, ratings, and how long they have been on the platform. This will help you make an informed decision.
Once you have identified about 5-7 potential suppliers to choose from, you can have a word with them via email or call. You can ask about shipping times, methods, minimum order quantities, etc. After 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 journey to start a dropshipping business with no money. 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 if you also kept an eye on your credit card processing fees and shipping costs, as they will take a considerable chunk of your profits. Therefore, you should consider the wholesale price and suggested pricing of each product to determine the potential profitability level. 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 indeed difficult to measure the quality of your goods at all times. 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. Most dropshipping vendors are based in China; therefore, you should work with suppliers who offer ePacket shipping for fast, trackable deliveries. You should also carefully read the suppliers' return policy before making the final selection.
You can look at dropshipping business ideas, such as 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
Before you start with anything else, it's time for you to spend a reasonable amount of time finalizing the domain name for your online store. To get started, you can use a free business name generator to simplify the process. Remember, the domain name will stay with your brand for a long time, so you should choose with a high sense of care and diligence.
You should ideally go for a .com (dot com) domain and choose a broader domain name. For instance, if you want to sell eyelashes, your domain name should be general and not restricted to eyelashes, so you don't have to change the domain name in the future. It is essential to ensure that your online store is engaging, easy to navigate, and allows customers to place orders in the minimum number of steps.
6. Set up payment and shipping information
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.
Online stores across the globe act like eCommerce stores. The only underlying difference between the two is that the dropshipping business model doesn't involve the sale of products directly from the warehouse. Dropshippers need a payment gateway to make successful transactions if they want to sell manufacturers' products on their online store.
Choosing a reputed eCommerce payment gateway that your audience is likely 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. You should look closely at the transaction fees to ensure you don't incur hefty charges on every transaction.
7. Market your business to potential customers
At this point, you have read all about finding the right dropshipping products to sell and building your online storefront. Now is the right time to read about how to market a dropshipping business. Remember, this is not a one-time process. Your marketing strategies must evolve continually to stay in line with industry trends and customer preferences.
Let us explore some fantastic ideas to market a dropshipping business.
a) Facebook Advertising: You may be tempted to empty your pockets on day one, but you should be a mature advertiser. You would not make rain money on the first day or even a few days later. Consistency and patience are the keys to the success of your dropshipping business. Initially, you should keep the budget low, so you can experiment with different ideas to market a dropshipping business. You may still need clarification about what will be the best-selling products and your target audience.
To get started, you can create different advertisements to discover what works best for your dropshipping store. Initially, it is a good idea to exclude countries such as the United States, Canada, Australia, and the United Kingdom while targeting customers through Facebook ads so that ad costs stay low. Once you have made a few good sales, you can create separate advertisements for these countries.
b) Retargeting ads: If you want to keep your advertising budget tight, it is best to go for retargeting ads. Such advertisements work best if you have an online store with lots of traffic, your store is getting exceptional traction from a blog post or Pinterest, or you have joined hands with influencers to make things work for your dropshipping store. Retargeting ads can help you take that free traffic and convert your visitors into paying customers.
c) Influencer Marketing: If you're tight on budget, you can offer influencers an affiliate commission instead of paying them upfront. This is because even the most successful niche influencer may sometimes be unable to help you generate sales.
After all, every form of marketing is a shot in the dark, and influencer marketing is no exception. Suppose you pay influencers an affiliate fee for every sale they contribute. In that case, you can significantly reduce the risk for your online storefront. Furthermore, the influencer would be more motivated to get sales converted for you as their income from you depends upon the number of successful conversions.
In addition to these advantages, you will have some pictures that can act as social proof. If the influencers you have hired have real followers ready to pay for a good product, you and the influencers will make great money. It will be a win-win situation for you and the influencers, as you will get more sales. In contrast, influencers could make much more money than they would have received if they were paid a flat rate.
The next step in your dropshipping business plan is deeply analyzing your hard work results. 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 relook at the strategies of your competitors and redefine your approach to perceive industry trends and customer needs, preferences, and expectations.
One of the first things you can do is make use of tools such as Google Analytics or Search Console to make traffic genuine and increasing. You can set up weekly, nightly, or monthly reports automatic using third-party email marketing software or social media management tools. The point is constantly making efforts to keep your dropshipping store relevant, engaging, and unique.
9. Process orders and ship products
Once you've everything else in the right place, it's time for you to wait for orders to start trickling in. In case you are utilizing dropshipping marketplaces, keeping an eye on order management and fulfillment would be a good idea. You can count on the eCommerce platform's dashboard to provide insights on new, processing, and shipped sales. Suppose any order is sitting unshipped for too long. In that case, you will even get a notification, and then you can talk to the supplier.
It is always better to smoothly transition from dropshipping marketplaces to direct contacts with vendors after a while for more significant margins. You should stay in good standing with dropshipping suppliers while keeping communication professional.
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.
10. Keep your dropshipping store relevant and engaging
It's good to have everything in the right place. However, ensuring the dropshipper store stays engaging, relevant, and customer-centric is crucial. For this to happen, you would need to stay abreast with prevailing industry trends, the bestselling dropship products, what is selling or what is not selling, how your competitors are performing, what they are doing right, what you can improve, and how you can better serve your customer's needs.
So, Is Dropshipping Worth It In 2022 And Beyond?
Well, the answer is just what you want to hear, YES! And, rightly so. The concept of dropshipping has seen a massive surge in recent times, especially after the COVID-19 pandemic hit. The dropshipping eCommerce business model is attractive, feasible, and affordable and will continue to prosper well into the future. It is even estimated that more than 50 percent of all businesses in the United States alone will get started as dropshipping eCommerce businesses within the next decade.
With careful planning and consideration, you can create and run your dropshipping store and make it big quickly. All you need is to first educate yourself on the basics of drop shipping and how and why dropshipping for beginners could be an excellent choice for you. After that, you must have a foolproof dropshipping business plan on how to start a dropshipping business and a clear understanding of how dropshipping works.
How can a beginner start dropshipping?
Absolute beginners can do dropshipping. All you need to do is to know about the trending products online, select your niche and create an online eCommerce website to start selling.
Often the supplier would take care of most of the order fulfillment for you. Your part is to select the best product and bring traffic to your website, so people place an order.
How do I start a dropshipping business?
To start a dropshipping business, you must first select a niche. The next step involves setting up a list of products and creating a website to launch the product. Writing excellent product descriptions would help to sell the product faster and SEO your product pages on Google search results. Once your website is complete, you will need to bring traffic to your website.
Is dropshipping for beginners?
Yes, even complete beginners can get started with dropshipping. Learning skills like creating stores online with Shopify or other platforms and digital marketing strategies to bring traffic to your virtual store are essential for long-term success.