Today, many developed online marketplaces such as Amazon, eBay, Shopify, and more offer B2B (Business To Business) and B2C (Business To Consumer) services, and you can start an online drop shipping business as a side-hustle or a full-time job. However, there has been stiff competition in the dropshipping business, and, without the correct procedure, you may find it hard to start a thriving dropshipping business. It is for this reason that you need this ultimate guide to starting a dropshipping business.
What is Drop-Shipping?
Drop-shipping is a business model where you sell goods to your prospective customers without you having a stock of the products. The customer places an order, and you forward the request to your supplier.
Once the order is received, the supplier ships the order to the customer under your business name, you should note that you will be the one who is paying the wholesale price to the supplier.
One thing you should keep in mind is that success doesn’t come overnight, drop-shipping won’t make you rich overnight. So, you need to have patience and determination. Below are the steps to follow.
Choose A Business Niche
There are many business niches that you can choose from. As a drop-shipper, you need to be careful as you decide on what kind of products you will be dealing with. Don’t just decide to work with a particular product because your friend works on the same.
Take the time to evaluate some of the factors and possible limitations that may arise when you drop ship your chosen product. You may even be required to conduct research on different sites to find out the products that sell well and you are comfortable with. For example, if you search on Google right now, most of the products you will find on the first page are products under the; fashion niche, beauty, electronics, jewelry, and more.
While sale volume may differ according to the seasonality of your product, for example, if you are drop-shipping clothing products, you may see steady sales though out the year while products under the winter sports niche will only perform well during that time of year.
Choosing a niche, you’re comfortable with doesn’t mean your passion should only guide you. Remember, you are drop-shipping so that you can make a profit. Passion AND profit should be your guide. Take a look at some of the ideas below that will help you find the best niche for your drop-shipping business.
Use Google Keyword Planner
This tool helps you to figure out whether a particular niche is on the upward trend or not. You will have to put the keyword of the niche you want to search for. If you are using the free version of this tool, you won’t get an effective solution. Therefore, consider using the paid version. It will filter through the broad range of results you encounter in a free version and give you a more precise result. This will be a milestone towards starting your drop-shipping business.
Take time and visit popular websites related to the niche you’ve chosen. If, for example, you have decided to deal with fashion, visit the popular websites on style, and check how they organize their sites regarding the trending items and more. If you haven’t selected a niche yet, you can try searching online for best-selling products to get some ideas of things you can start with.
Consider Your Financial Capability
Different niches require different investments, which will be determined by your financial capability. When you are starting, it may be challenging in the sense that you may not have sufficient funds. Therefore, try to choose a niche that won’t require a substantial initial investment.
Finding A Drop-Shipper Supplier
As mentioned before, the key players in the drop-shipping business model are the supplier, the retailer, and the customer.
So, how do you find a supplier? That’s the million-dollar question when it comes to starting a drop-shipping business. Finding a good supplier you can trust and can effectively work with can stop many would-be drop-shipping entrepreneurs from starting a drop-shipping business.
Remember, it’s the supplier who has the products and is ultimately responsible for shipping those products to your customers. They are also responsible for the quality of the products. If the products are of poor quality, you may run the risk of the products getting returned and even losing some of your customers. Below are some of the steps you can do to find a reliable supplier.
Search Online For Suppliers
Use the internet to search for suppliers. For example, if you are looking into selling watches, you can search for watch suppliers’ on Google or other search engines. Visit the search results that appear and figure out if the supplier has the quality of a good supplier. You will learn the quality of a good supplier later on in this guide. Alternatively, you can search the product on marketplaces such as Alibaba.com and Aliexpress.com. Here, you will be able to find a bunch of suppliers,, although most all of them will be suppliers from China.
Use A Wholesale Directory
SaleHoo is a good example of a directory that has over 8000 suppliers who are verified. Getting a supplier from this site helps you to overcome online fraud. Below are the qualities of a good supplier.
How To Choose A Good Drop-Shipping Supplier
1. The Supplier Is A Real Drop-Shipper.
Some suppliers are offering wholesale and manufacturing services but not real drop shippers. Therefore, confirm that the supplier does drop shipping as the main service or business.
2. The Supplier Shouldn’t Be Charging High Order Fees.
Although the supplier requires a fee from you, it shouldn’t be something high. $2 to $5 can be enough depending on the products and your agreement.
3. The Supplier Should Be Able To Fulfill Orders In A Timely Manner.
The supplier should be able to fulfill customers’ orders and ship those orders quickly. You know as a customer yourself how customers frustrating it can be waiting for a company to ship your item.
4. The Supplier Should Have High-Quality Products.
You need to make your customers happy and convince them to come back to your store. You can achieve this by offering them quality products. The supplier should be able to send you images of the products for you to use in your product listings. The supplier should also be willing to provide you samples of the products so that you can test the quality.
5. The Supplier Should Have Experience.
Choose a supplier who has experience. This experience will help to avoid the chaos and erroneous activities that are the result of “newbie syndrome.”
Get A Vendor’s License
A vendor license is also known as a resale number, tax ID, resale certificate, etc. This is a tax imposed on all physical goods that you sell to your customers. The tax is around 6-9% of the sale price. However, this value may vary according to your geographical location. In the United States, for example, most states require you to have a tax ID. The value may also vary according to the state you reside in. Therefore, you need to conduct research and stay updated on the laws.
Choose A Selling Platform
Great! You’ve accomplished a lot so far. The next step is to choose a selling platform. The selling platform can be an online marketplace such as eBay, Amazon, etc. Alternatively, you can decide to start your online store. If you’re a beginner and just starting, using the established online marketplaces is the best choice for you since you don’t have experience launching a website yet. You want to drop-ship and learn at the same time. Using these online markets is easy since creating an account with them doesn’t require a lot of trouble, but there are limitations too.
Amazon, eBay, and Etsy are the best markets you can choose from as you start. If you feel starting your website is the best choice, and you can manage even as you start, you can opt for it, although it requires more significant initial investment compared to using the established marketplaces. It can give you more freedom on how you run your business.
Optimize Your Account
You’ve done everything, and here comes the final step on how to drive traffic and get your products purchased. Persuading customers to buy your products may be a long journey. Though you may start it for free, the paid strategy is the best for you. Through a paid strategy, you will be able to advertise your products on different sites so that people can see them and click to view and ultimately buy your products if interested. You can decide to go with Facebook Ads for Drop-shipping, Google Ads for eCommerce, or Social Media Influencer marketing.
The Bottom Line
This guide was comprehensive, and it includes legit ways that when applied correctly, your eCommerce business on drop-shipping can develop very fast. You should remember that the following tricks will help you a lot.
- Maintaining a good relationship with your supplier.
- Being close to your customers through emails and answering queries.
- Do the right advertisement and get traffic.
Starting, you may have to run your business at a loss. You are building a foundation, and this will takes time, but with enough determination, you will hopefully be successful. Good luck on your drop-shipping journey!