How to Start Dropshipping: A Complete Beginner's Guide

How to Start a Dropshipping Business?

We can't stress enough how important it is to define your niche - you can't succeed as a dropshipper without standing out from the competition.

If you're starting a dropshipping business from scratch, it's crucial to choose your niche even before you start picking products to sell.

In the e-commerce world, if you're not different from your competitors, customers simply have no reason to buy from you instead of someone else.

Additionally, having a clear goal is a simple yet effective way to differentiate yourself from the competition.

You might have a general idea of what you want to sell, but when it comes time to start searching for products, it's much easier to find, negotiate, and manage suppliers when your goal is specific.

It's also helpful if you have expertise in the areas you've chosen.

Starting a dropshipping business is relatively easy.

You need to:

• Sign up for an e-commerce platform and design your website.
• Register with a dropshipping supplier and choose your products.
• Add or sync the product to your store.
• Set up your tax and shipping settings.
• Test your payment process.
• Launch your website.

That's pretty much it. As long as you have a functional website with a homepage, product pages, and the ability to purchase products, you have an online store.

Moreover, you can use an e-commerce tool like Shopify, automatically sync your products with a wholesale site like Inventory Source, and get your website online in a day or two.

If you need help setting up your dropshipping store, a great resource is Fiverr. They have a dedicated space for freelancers specializing in dropshipping, who can assist you with everything related to setting up your e-commerce platform, designing your store, and syncing your inventory.

Check out Fiverr's dropshipping experts here.

1. Marketing Your Store.

With intense competition in the e-commerce space, effective marketing is crucial.

First, you need to conduct thorough research on your target audience and try to solve a problem for them.

A product that solves a real problem is essential. You can then tailor your marketing efforts based on this specific customer base.

You should start by promoting your online store on the following channels:

Social Media.

Promote your store on social media channels like Facebook, Instagram, Pinterest, etc.

Here’s a list of the best social media management apps that can help you promote your pages. You can also run ads on social media channels to reach your target audience directly in their personal social media feeds.

Email Marketing.

This is one of the most effective forms of marketing for e-commerce businesses. Email marketing allows you to communicate with your customers where they are, which is in their inbox.

Use an email marketing software to send welcome emails (with a discount) and abandoned cart emails.

Paid Ads on Google and Facebook.

As mentioned earlier, you can launch paid ad campaigns on Google and Facebook. Here’s an overview of the most common types of campaigns (and their goals).

Google SEM or PPC Advertising

If you’ve heard of Search Engine Marketing or Pay Per Click (same thing), these are the ads that appear at the top of Google’s search engine results pages (SERP).

For example, with this form of advertising, you choose the keywords you want to bid on and create a text ad with a title and description. You also select a geographic area where you want your ad to appear, along with a schedule for when the ad will run.

When a user searches for that keyword and clicks on your ad, you pay Google for that click. This is called cost per click. This figure is determined by competition and other people bidding on your keyword.

While this form of advertising can get you a lot of clicks and quickly test products, I don’t recommend it for new dropshippers as it can become extremely expensive very quickly.

Google Shopping.

Instead of using text ads, e-commerce retailers often turn to Google Shopping ads.

These ads are created by uploading a product feed and appear for searches related to your keywords. The ads include images and text and are placed next to competitor ads so customers can compare prices.

For example, Google Shopping is a great tool for checking competition and seeing how saturated your niche is. If you're starting a new dropshipping business and find that your products are competing with large national brands, it might be time to rethink your strategy.

While there are tons of other e-commerce marketing strategies (which I’ve outlined in my guide here), these are the basics for now. Let’s move on to the next strategy to consider when launching your business.

2. Inventory Management.

Although the dropshipping business model doesn’t require you to hold inventory on your end, it’s wise to keep an eye on the stock levels of your suppliers’ warehouses (the supply chain) since you’ll be selling their products under your brand.

The good news is that there are many advanced inventory management and direct shipping management software available online to help you manage and track your inventory easily.

Take Ecomdash as an example.

It has revolutionized the automation software market for dropshippers with multiple order fulfillment centers.

Tracking your inventory using a tool like inFlow Inventory can help you on your end:

• Avoid unpleasant surprises after a customer places an order (which could have been avoided if the information had been available that the product was out of stock).
• Helps you place orders on time
• Aids in improving two-way communication with the customer (enhances customer experience).

3. Provide Excellent Customer Support.

With rising income levels worldwide and massive competition among all forms of businesses, we are witnessing a standardization of products and services provided.

One of the differentiating factors should be the excellence of customer support.

Here are some common platforms for the supply chain that you can use to provide exceptional customer service:

• Phone
• Social media platforms
• Emails
• Live chats

A support service available 24/7 is also an aspect you should consider as your business grows alongside your supply chain.

4. Product Exchange and Refund Policy.

Your exchange and refund policy is a glaring touchpoint of the dropshipping business that can make or break your company.

With the popularity of social media, communication is no longer a challenge. However, in the case of online retail, positive word-of-mouth marketing can do wonders for your business, but negative word-of-mouth can be detrimental.

If you want to earn your customers' trust, make sure to take swift action whenever a customer requests an exchange or refund.

Handling customer complaints and product exchange and refund policies reflect the company culture and the priority it gives to its customers.

Offering a high level of customer satisfaction can translate into improved customer lifetime value (CLV) as well as generating new customers.

Here’s an example from Gymshark’s return and refund policy.

As you can see, the return policy allows the customer to effortlessly return the wrong product.

However, refunding dropshipping products is a bit different from a traditional e-commerce site.

For example, in this case, you’ll need to work with the supplier to retrieve the product from the customer and then proceed with an exchange or refund.

These points are by no means a comprehensive overview of what you need to do to manage a dropshipping business. But following them will greatly help you set up and manage your dropshipping business.

How to Grow Your Dropshipping Business?

Keep one thing in mind: the dropshipping model is a slow business model.

Expecting very high growth and significant profit margins in a short time frame is unrealistic.

On the contrary, the business model requires a long-term investment to become a profit-generating entity.

But that doesn’t mean you should give up all the impressive work you’ve done over the days on your site.

Now, you need to focus on scaling and growing the business.

The following measures can help you grow your dropshipping business:

1. Use Multiple Marketing Channels.

It’s never a good business idea to put all your eggs in one basket. So, it’s wise to leverage the multiple channels at your disposal, including Amazon, Alibaba, eBay, etc.

This way, the number of customers you can reach increases exponentially. It’s impossible to address such a wide audience if you only use one channel.

However, when using multiple channels, you need to ensure that your best-selling products are always stocked and ready to ship. Otherwise, if you sell the same product on different online stores and customer purchases are very high, the product can easily go out of stock.

Out-of-stock products on your site lead to pending orders and can cause significant delivery delays. This can create a negative experience for the customer.

Once you’ve ensured that you’re well-stocked, you can even target an audience on a global scale.

2. Build Your E-commerce Store

While using multiple channels as part of a dropshipping business idea can contribute to profit margins, it’s also essential to build your own store to enhance your brand image.

Creating a dropshipping store has many advantages, such as:

• Better control over the website's user interface
• Better control over products, storage, and marketing.
• Better decision-making regarding discounts and bundled sales
• Control over positioning and brand image on your site

The ability for owners to have their own dropshipping stores also means they don’t have to pay a commission to online sellers to showcase their products.

As a result, the profit margin per product increases, ultimately leading to higher revenues.

You can use various online websites and e-commerce store builders to create your store.

Most of these builders offer attractive templates and various marketing and analytics tools to help you grow your store.

Check out my review of some of the best e-commerce platforms to choose the best option for building your dropshipping store.

READ MORE >> Step-by-step guide to creating a Shopify store

3. Leverage Email Marketing.

According to Oberlo's email marketing statistics, with a return of $32 for every dollar invested, email marketing offers one of the highest return on investment rates.

That’s why it’s essential, to make dropshipping profitable, to focus on your email marketing strategy.

To do this, you first need to build a list of email addresses made up of a relevant audience. The advantage of email marketing is that it gives you direct access to prospects who have voluntarily signed up to receive your emails.

To build your email list, you can pique your audience's interest by offering something valuable for free.

Check out my form:

To encourage my readers to sign up for my newsletter, I offer them a free PDF upon signing up.

After building your email list, make sure to engage your audience regularly. Send follow-up emails, offer discount coupons to encourage them to buy from your store, etc.

However, don’t flood your subscribers' inboxes every 2 days. Let them know how often you plan to send email newsletters, and then keep your promise. A very high sending frequency can backfire and lead customers to unsubscribe.

4. Use the Right Advertising Channels.

If adequate investment is necessary to get your business off the ground, it’s imperative to spend money in the right places to make that money work for you.

That’s why, before increasing your marketing budget, you should spend time on proper market research.

Try to identify advertising channels that can help you maximize customer visits to your website.

For a dropshipping business, where you don’t have a physical store, it’s crucial to take advantage of online advertising modes like pay-per-click (PPC). It’s easy to launch ad campaigns on multiple social media platforms like Facebook, Instagram, and Twitter, among others.

Make sure not to waste your money by spending it on websites that only bring in low traffic.

Here’s an example of a well-done dropshipping business:

Budget optimization for ad campaigns, among other measures, has worked wonders for Andreas and Alexander. They optimized their Facebook ads to achieve maximum returns.

5. Use Video Ads.

Video marketing is the new way to reach your customers.

Here are some statistics that will make you aware of the amazing benefits of video ads:

• 82% of Twitter users use video
• More than 500 million hours of video are watched every day on YouTube
• 33% of online activity is spent watching videos
• 85% of the American internet audience watches videos online

Video has the power to reach a massive audience, multiplying your reach.

In addition to advertising your products and brand, video ads have the power to do much more, including

• Customer engagement
• Getting your prospects to click and arrive at your store
• Influencing your potential customers to buy your product

To reach your target audience, you can share your video on social media platforms, on YouTube, or buy ad space on a third-party website to increase your visibility.

Finding Dropshipping Products to Sell.

We’ve explained that dropshipping is a simple business model. With the right partnerships, the right products, and a bit of patience, anyone can succeed.

However, dropshippers need to differentiate themselves in marketing and focus on branding above all else.

If people remember the products they buy, they always remember the brand they bought them from.

Choosing the right niche is essential. It will help you define your brand voice and attract a specific target audience.

Here’s a list of some of the trendiest dropshipping niche ideas you can try.

• Technology: Wi-Fi 6 products, wireless technologies, clothing and accessories, 360-degree cameras and accessories, VR devices
• Lifestyle: Smart home devices, travel gear, indoor gardening tools, swimsuits, and water bottles.
• Fashion: Rattan bags, hair clips and barrettes, metallic clothing, women's shorts, and lace clothing.

Additionally, you should have a set of proven criteria to determine the type of product(s) you want to sell, including:

1. Pricing.

When you’re dropshipping products, a large part of your success and profit margins depends on retail and wholesale prices.

A low price can boost sales, but your profit margin will suffer. On the other hand, if you raise your price, you might discourage most customers from buying, but you’ll earn more on each sale. So, it’s essential to find a balance and choose the right price level.

To do this, research competitors in your niche, suggested retail prices, and develop a plan to sell products at a competitive price.

2. Size and Weight.

Size and weight can manipulate and affect product pricing more than you think.

A larger and heavier product will command:

• Higher packaging costs
• Higher shipping costs
• Handling fees (sometimes)

It’s wise to start with at least smaller products and settle for a lower margin. This will at least allow you to avoid the extra expenses you might incur with larger and heavier shipments.

If you need help shipping heavy items, you can use a fulfillment service like Red Stag Fulfillment, which specializes in this area.

3. Cross-Sell and Upsell.

It’s best to choose a niche that allows you to easily sell your products through Cross-Sell or UpSell.

These 2 techniques help you not only sell more but also generate more revenue and increase your margins without extra costs.

A great example of cross-selling would be selling shoelaces alongside shoes or selling mobile phones with specific custom cases.

An example of upselling would be the campaigns from Dollar Shave Club, which lures you in with the prospect of a $1 shave and then displays more expensive options on its website.

Their selling point? Great value for money!

Both upselling and cross-selling can help you achieve excellent profits and make your dropshipping business stand out.

4. Renewability.

It makes sense to sell products that have an average lifespan. Products with low durability need to be replaced, and hopefully, you’ll get more orders from customers.

It’s like comparing toothpaste with a refrigerator. While you need a new tube of toothpaste every 2 weeks (low durability), you probably won’t replace your refrigerator for the next ten years (high durability).

It’s about playing on margins, and it’s up to you to decide what type of product you want to sell.

5. Constrained Purchases.

A constrained purchase is a product that the customer doesn’t want to buy, but has to buy because their options are limited.

For example, products like health insurance, medical supplies, car tires, coolants, and motor oil are all constrained purchases. No one wants to buy them, but they are forced to due to tough circumstances.

If you sell products like tires or coolants, orders may be rare, and the points of sale can also become a problem for you.

You need to be cautious when selling these products. They are not bought in bulk either, and margins tend to be very low.

It’s difficult to maintain constrained purchases over a long period. So, it’s best to avoid these products at the beginning of your dropshipping venture.

Conclusion

This article gives you an in-depth overview of the entire dropshipping business model. As mentioned, it’s not for someone looking to make quick money and get out.

Sure, dropshipping seems like easy money. You just act as a link between the customer and the wholesaler/supplier and take a cut for yourself. However, when you consider all the downsides, challenges, efforts, attention, and work, dropshipping isn’t that easy.

You need to stick to your business plan to make it work, and then reap the rewards.

Without any initial investment, no rent, or inventory costs, dropshipping can provide the perfect environment for someone looking to test their business acumen, try out new products, and assess product viability and market scenarios.

A great option for beginner entrepreneurs and budget-conscious business people, dropshipping is also a very safe platform. Even if you fail, you won’t risk losing a lot of money. On the other hand, the process helps you gain valuable business and market knowledge.

I hope this article has been helpful and inspires you to launch your dropshipping business.

Ready to start dropshipping?

Further reading: Check out my article on the best order management and fulfillment companies if you prefer to hire a 3PL company to provide your e-commerce with 2-day shipping capabilities and my article on the