Dropshipping is a business system that allows companies to sell products without having to maintain inventory of the products. When a customer places an order, the Company notifies the product manufacturer or distributor that the order is complete and must be included in a shipment to the consumer. Manufacturers or distributors ship products directly to consumers on behalf of dropshipping companies.
Ordering is easy. The consumer pays the dropshipper. Drop shippers pay manufacturers or distributors. The product will be shipped to you by the manufacturer or distributor. Basically, dropshippers are marketers.
Because dropshipping doesn't require inventory, it's a cost-effective way for new business owners to sell their products without a lot of overhead. It also prevents you from being stuck with inventory that won't or won't sell.
Here's how to start your dropshipping business in 6 steps.
1. Choose a business concept
A business concept describes what you sell and to whom. Since there are so many dropshipping options, you should start with a limited number of products that you think you can sell to a specific demographic.
For example, let's say you develop a business concept to sell graphic T-shirts to skateboarders. T-shirts will have a specific design that appeals to this demographic and will be of the quality and style worn by skateboarders.
Your concept is the foundation of the products you sell, your website design, and your marketing, so it's very important to spend time on it. However, keep in mind that the cost of implementing a dropshipping product line is limited, so if you feel you've made a mistake or your passion for the product changes, you can change it.
2. Source products
Business Concepts does not guarantee that you will get products that cater to your demographic. Before developing your website, take the time to research your product. To find the best wholesale price for a product, look for multiple distributors that sell the same product.
Examples of the most popular marketplaces are:
- AliExpress
- salefou
- global brand
- doba
- mega goods
- wholesale central
You can also find print-on-demand apparel, home goods, and books. The print-on-demand apparel company prints custom his graphics on a variety of brands and styles of clothing, including T-shirts, socks, and jackets.
Choose products that excites you, have a high profit margin, and look great in the images displayed on your website. Many of these suppliers also provide statistics on popular products, so you can choose products that are more likely to sell because there is already a market for them.
3. Supplier selection
Once you have found the product you want to offer, select the supplier who will actually ship the product to your customers. There are several things to consider when choosing a supplier.
- quality: Choose a supplier that provides the quality your company wants to represent. One of their business models is to charge more for higher quality products. This is in contrast to offering products at a discount that may not be of the highest quality. How do you want to position yourself?
- Profitability: You should be able to get a reasonable profit from the product. Please consider shipping charges and transaction costs in your calculations. Most dropshippers are looking to earn a profit margin of 15% to 20%. Of course, if you can generate higher profit margins, that's great.
- reliability: You want to choose a supplier that ships your products in a timely manner with reasonable shipping costs and days. Many suppliers are located overseas, so you need to decide if you want your customers to wait for the product. You also need a supplier to keep your products in stock, as it's frustrating for you and your customers if they can't fulfill orders. The best way to check authenticity is to order several products from the supplier and document the process.
- RETURN POLICY: If possible, look for a supplier that offers a return policy. This is often not the case, so you should check this before making your final decision. You should think about how to write your own return policy based on what your supplier offers.
Most dropshippers use online marketplaces because they tend to have more inventory of products from trusted suppliers. If you have a specific product in mind, you can also go directly to the supplier. This requires additional work to verify who is distributing the product to the manufacturer, and often requires a minimum number of sales per month to qualify.
4. Build an online store
To sell your products, you need to build an e-commerce store. An e-commerce store is a site designed to display the products you sell in an attractive way while providing the shopping cart necessary to complete purchase transactions.
Building a store can be difficult for beginners. This is because there are fewer moving parts.
To build a website, you'll need:
- Content management systems (CMS) such as WordPress, Shopify, Squarespace, etc.
- Domain name
- Web hosting (if using WordPress)
- Integration with your dropshipper of choice
- Built-in payment gateway to accept online payments
The best e-commerce websites automate the sale of products through orders to suppliers. If this step isn't automated, you'll be entering orders manually every day, which can be tedious and error-prone. Shopify is one of the leading choices for those building a dropshipping business. However, it's not the only option available, so it's worth learning more about the best e-commerce platforms.
Additionally, you may want to consider selling your products through other platforms such as Etsy, Amazon, and even social media (Facebook and Instagram). Multichannel sales are generally recommended as they help increase your business's exposure and drive more sales. That is, if you have the bandwidth to manage multiple sales channels.
5. Register your business
You need to set up your company as a business and separate it from your personal assets. This means creating a name (usually a domain name of your choice) and filing your LLC or corporation with the Secretary of State.
After successfully submitting your online application, you will receive a Taxpayer Identification Number (TIN) from the IRS. Use this TIN to open a bank account linked to your payment gateway. This bank account receives all deposits and pays the company's expenses, including web hosting and maintenance. It is also the account that pays the supplier for products when you place an order.
You will also need to obtain a sales tax ID or reseller permit from your state tax office. Most states require sales tax to be paid on items sold. You may also have to pay sales tax in the states where you sell your products.
6. Marketing your business
You can't just launch a website and expect thousands of people to find it. You need to market your new business. Because it's online, it has the potential to go beyond the word-of-mouth marketing you might do with other businesses in your community.
Join social media groups related to your business and start participating in a productive way. Don't just try to sell. Help with questions people may ask. Become an expert and a recognized resource within your community. People will find your business through this. Create a specific business page on Facebook, Instagram, TikTok, and other social media platforms. Post regularly about new products, sales, tips and tricks in your industry.
In addition to your social media efforts, you may also want to invest in actual advertising and sales. You can run low-budget Facebook ads that target specific demographics. Consider starting an advertising campaign with a budget of $10 per day to increase traffic to your e-commerce store. You can also write a blog that helps consumers find you through search engine optimization (SEO) strategies. For many new e-commerce stores, implementing these marketing strategies piecemeal is the key to getting enough attention to your store to convert them into buyers.
