Starting a Dropshipping Business

A Beginners Guide

Starting a dropshipping business can seem like an easy way to make money while you sleep and become wealthy beyond your wildest dreams. That’s what a lot of online advertisers want you to think anyway. In truth, if they were multi-millionaires from dropshipping they wouldn’t be spending thousands on adds trying to get you to do it. That would just further stretch the market share and increase their competition.

The truth is, there is a lot of money that can be made from dropshipping, or any other business for that matter, but it is much more complicated, time consuming, and technical than it seems at first glance. If you don’t know what dropshipping is, it’s a fairly simple concept on the surface. Here’s the breakdown

1. You create an online storefront, connect with a supplier

2. You list their products for a higher price than you pa

3. Customers purchase from your store

4. You buy the product and have it shipped to your customer, pocketing the profit

This may seem a little sketchy, but in truth it is simply a form of inventory system your accountant would call JIT (Just In Time). Its legitimate and a perfectly fine business model which reduces, minimizes, or eliminates warehousing and storage costs, and in this case makes it possible for individuals to start a business with no inventory on hand.

So what’s the problem then? The issue is that too many people jump into dropshipping under the impression that the four steps above are the extent of it and no additional work needs to be done, then fail miserably. If you’re interested in starting a dropshipping business, or even a hybrid then I’m going to share a few tips to help you prepare and get started on the right foot.

What to Sell

Know what you want to sell. This seems like an obvious first step, but with the ease of dropshipping today its tempting to just pick a name, open a store and then randomly add whatever you find and hope it sticks. While you can do that and I won’t say that you can’t find success in that, it is much easier to succeed with a strategy. There are a few approaches to finding what to sell, I will recommend 2 that I really think are easiest:

1. Sell something you are passionate about

I suggest this because the best way to market for the long term is to build an captive audience (i.e social media following or email list) and the best way to build that audience is to establish yourself as an authority on the topic. For example, if you are a car enthusiast you probably find it easy to talk about cars and engage with other car enthusiasts, but if you try to sell perfume because it has a high margin, then you may find it difficult to connect with your customer base on any meaningful level. This is important because its that connection that can quickly become your competitive advantage. Consumers like to see their favorite brands succeed and often encourage those who they feel close with to become a part of that connection. For example, if you have ever met a fan of the HBO series Game of Thrones then you have likely been asked to watch it, probably more than once, or maybe you are the one asking. The point is, when people we care about like something that you identify with then we feel validated and it strengthens that connection with the other party. So if people can connect with your store then they will be your most powerful marketing tool for the long haul.

2. Research trending products, find a category you like with a lot of trending products and build your store around that.

While this doesn’t offer the same long-term marketing & repeat customer opportunities as the previous, it does allow you to see what products are easiest to make conversions on. This gives you a good chance to hit the ground running, make some sales, get contact information, provide a good experience and hopefully earn repeat customers. The downside here is that trending products change quickly and once a customer has bought it; they aren’t likely to buy the same thing again. This is why I suggest you choose a category rather than a hodgepodge of trending products. It gives you a slightly better chance of repeat customers. For this you will still need to try to build a captive audience and you will need to keep up your research to make sure you are always adding the latest trending products to your store.

Sourcing

Sourcing can be tricky. There are many dropshipping partners out there whom you can use for sourcing, but not all are created equal. Here are some things to consider:

· Some integrate with your storefronts, some don’t. Those that do, getting products loaded can be as simple as installing an app on your website, while those that don’t will require you to manually load each and every product.

· The next hurdle is finding a dropshipping wholesaler. There are many suppliers who are willing to let you dropship their products, but many have retail pricing which forces you into premium pricing, making it significantly more difficult to compete in the market.

· Shipping Time This is the MOST IMPORTANT thing for you to look into. Those suppliers with wholesale pricing are far too often Chinese suppliers, which would make no difference if not for their lengthy handling times and import times through customs. The ideal shipping time is no more than 5 days from order to customer. Amazon has proven that one day shipping is what many want, but for dropshippers 3–5 days is a really good goal that you should strive for, any more than that and you are testing your customers patience.

· Resale certificate — if you are really serious you may want to pursue obtaining a resale certificate which will allow you to connect with true wholesalers in the US (you can do so without one, but it is much better/easier if you get one)

Platform

There are many ways you can start dropshipping from creating your own website from scratch from somewhere like GoDaddy or use something directly geared toward sells like Square or Shopify. Each has its own unique properties and customizability, but my personal recomendation is Shopify because of its easy integration with multiple sales channels and social media platforms and there is no need to understand coding.

Layout

As important as having the right products and pricing is, layout and design is almost as important. Depending on what type of product your selling, there are optimal layouts which drive conversions. This is part of your “click funnel”. You have to consider what drives a site visitor to click on this or that category, then what leads them to click on a product, click add to cart, and eventually make a purchase. The reasons may vary depending on what your specialization is, so you will likely need to do some research to determine those answers, but this is another reason I think Shopify is a good place to start, they have prebuilt, customizable layouts that are geared toward driving conversions on almost every sales category. The downside is that they do require an investment of $200–400 usually.

Marketing

This is basically the lifeblood of your store. You have to get your products and store in front of the right people and identifying those people or how to do that can be tricky. It generally takes a little over 500 site visits before you make your first sale, and about 22 contact points before a customer makes their first purchase. In other words, you have to get your site or products in front of any given consumer at least 22 times before you get anything out of it. That is assuming you are offering something that they want at a price they are comfortable with. That means marketing, retargeting, email campaigns, SEO optimization and making your site appealing enough to entice them to take another look on their own. The good news is that once you do have a purchase you are much more likely to get that consumer to buy again and develop that relationship we mentioned earlier. So essentially, while marketing never stops, the greatest investment will always be in new customers and over time profitability should increase though repeat customers and building your captive audience.

Wrap Up

This is by no means a comprehensive breakdown of all things dropshipping, but hopefully this does give you an idea of what to expect and what you need to look at to get started if you make your own informed decision to do so. So to recap:

Step 1 — Find what you want to sell

Step 2 — Find a platform that suits your needs

Step 3 — Find a supplier

Step 4 — Set up & optimize your layout

Step 5 — Advertise, build audience, engage

Published by Andrew Holcomb

MBA working on DBA. Owner of A & N Accounting, Midnight Supplies, and Da Pet Treats

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