Starting a dropshipping store sounds like an exciting and lucrative idea for those who are interested in online commerce businesses. As the demand for online shopping is growing, the number of e-stores is also getting higher that leads to more new retail businesses who are working with the dropshipping model.
As years go by, dropshipping is becoming more popular worldwide, however, for many people, the meaning of it is still not completely clear. This is why we are here, to help you get a better understanding of this business model, and also to show you what are the 7 steps that are needed for starting a dropshipping store.
- The Meaning of Dropshipping
- Advantages and Disadvantages of Dropshipping
- 7 Steps of Starting a Dropshipping Store
The Meaning of Dropshipping
Dropshipping is a business model for online merchants. Retailers do not have to invest money in product inventory, they do not have to stock products in a warehouse. They fill their online store with their supplier partners’ product data, they will have “virtual stock”. Originally, the supplier ships the products directly to the customer who ordered the item from the reseller’s store. The customer pays for the product to the retailer, then the retailer pays for the product to the supplier.
Capital investment for the functioning and start of the business is needed for those online stores as well that are working with the dropshipping model. Starting a dropshipping store and then constantly managing it is not possible with zero capital. Of course, the invested money is lower than in the case of running an online business when working with wholesale suppliers. Entrepreneurs can save much money, time and work on logistics.
The profit of the retailer will be the difference between the products’ wholesale/dropshipping price and the retail price in their store.
Advantages and Disadvantages of Dropshipping
Starting a dropshipping store has its own advantages and disadvantages. Businessmen and women have to decide if the conditions of this model are right for them. Here below you can read about these in general. So you can have a winner position on the market as a retailer, it is important to work with real suppliers and also to sell products that your target market is not oversaturated from. Sell products that your target audience is in need of.
- Small capital investment: there is no physical product inventory, you do not have to spend money on it. You just have to pay for running your website, online store, etc.
- No logistic problems, no warehouse: as there is no physical product stock you do not have to rent a warehouse and you do not have to deal with logistics.
- Lower risk: especially for beginners. You do not have to pay for products in advance so you do not have to be afraid of not being able to sell them successfully later.
- A wider product range that is easy to modify: as you do not have a real inventory you can change your store’s product selection from one day to another if you wish for any reason.
- More opportunities: when it comes to starting a dropshipping store you can pick products from a very large selection. The number of dropshipping suppliers on the market is getting higher and higher. Do not forget to pick partners who have their warehouse near to your location so you can provide good shipping conditions to your customers.
- Fewer commitments: it goes for more factors. Firstly, you do not have to deal with logistics, you do not have to pay for this. Secondly, it doesn’t matter where exactly your supplier’s warehouse is (it doesn’t necessarily have to be in your town or country), or where your colleagues work. You can manage many things online.
- Easy start-up: when starting a dropshipping store you have to pick what you want to sell and from which supplier. You have to build your online store, you can ask for help from experts. You have to deal with marketing. You do not have to care about inventory and logistics. Less money will be enough for kickstarting the business.
- Automated processes: all processes, the product data uploads, updates, order synchronization can be automated if you are picking the right solution for this.
- Products arrive separately: even though products will arrive one-by-one from the supplier and not in bulk, if you work with more partners it can easily happen that a customer orders more products from you which are from different suppliers. However, when it happens the customer will get more packages on different days, and you will probably get complaint messages from the customer after the first package which contains only one product. Solution: you have to ask for the products to arrive at your place first then you can let the goods wait for each other. Then, you can ship the items in one package. If you are working with local suppliers, the delivery time can stay short.
- Low price margin: suppliers often offer lower discounts for dropshipping retailers than when it would be a bulk order. Furthermore, when you will add your markup to the products’ price to get your store price you also have to take care of not adding a way too high price margin otherwise retailers will get the product from somewhere else. Solution: work with real suppliers and not with companies who are just resellers with their own retail prices. Real suppliers will provide you reasonable product prices.
- Less control: you do not manage the products physically, you do not meet them thus cannot be completely sure that the product and package that arrives at your customer truly represents you. Solution: ask for the products to arrive at your place first so you can check the quality of it and so you can place a small gift in the box. Moreover, make sure the manual that belongs to the item is in the language your customers speak.
- Long delivery time: many dropshipping retailers choose suppliers from overseas, from another continent thus the shipping time is long. Solution: when you are at the time of starting a dropshipping store choose a partner whose warehouse is in your target audience’s (or at your) location, or close to it.
- Big competition between online stores: there are more and more online stores on the market that run by dropshipping that comes along with more e-shops selling the same articles to customers so the competition is getting bigger. Solution: when starting a dropshipping store choose unique products that suit your target audience’s needs. Check what is missing from that market, and do not follow other companies in everything. Listen to both to your mind (what is worth selling) and to your heart (what you would like to sell).
Check the advantages of the new way of dropshipping in another article of ours before starting a dropshipping store to get a clear view of how to work with this business model.
7 Steps of Starting a Dropshipping Store
Starting a dropshipping store takes a few steps, however, you have to make sure you do everything in the best way, and you have to learn from more sources. Previously we have written about the conditions of starting an online store, it might be an interesting topic for you to read.
1. Decide on What to Sell
Before starting a dropshipping store, the very first thing to do is to decide on what you would like to sell. You might already have a basic idea and that is why you wish to open an online store. In this case, you have to check if that product has great selling potentials on your market and if your business can be lucrative selling that item.
What can you do to find the best niche, winning, trending product for your business? You must consider if there is anything that you couldn’t find in the local stores, or if you had any friends who wanted to buy something locally but they couldn’t. Do you have any hobbies that have great product potentials? What do others sell on the market? What do you see on social media and YouTube? What is something that is close to your heart and you could run a business passionately about? Research the market, create questionnaires, share them in Facebook groups. Go to Google Trends and check the popularity of your chosen product. Stand out from the crowd with your product selection.
2. Pick a Supplier
If you already know what you would like to sell then the next thing you have to do before starting a dropshipping store is to find a reliable supplier. What do you have to make sure of? First of all, you have to make sure the supplier offers dropshipping solution. Then, it is also important to pick a supplier who has their warehouse in your target audience’s location or its neighborhood so the shipping time can be short. Speak with your future partner first about all details of the cooperation before you start selling products from them. You can avoid future misunderstandings like this.
Furthermore, when you are starting a dropshipping store do not pick many supplier partners, pick only 1, or maybe 2-3. Why? Because if a customer orders 5 products from you and they are from 5 different suppliers then they will receive 5 different packages on 5 different days. After the first package arrives the customer will write a complaint message to you that 4 other items are missing. What you can do to avoid this if you want to work with more suppliers than one? Ask for the products to arrive at your place first so you can let the products wait for each other and put them in one box. Pick suppliers with short delivery time.
Where can you find reliable suppliers? Check Syncee Marketplace where you can find millions of products from local and global suppliers.
3. Define Your Strategies
Before starting a dropshipping store you need to work on your strategies. You will have several of them. You need to decide what kind of products you would like to sell. You also have to define your target audience and in what way you are planning to reach out to them. You need plans about how you will run your online store, and if there are more people working at the store, decide on who will be responsible for each task. You will also need a well-focused marketing strategy. Moreover, make sure logistics will run smoothly as well.
Have goals. You need to know the name of your business, what your message is, why you are starting a dropshipping store, why you sell those particular products, and what is your goal with the whole business. You also need to have your goals relating to monthly incomes, and you need to define strategies about the possible ways of getting one-time and ongoing incomes, and the amount of them. Working on strategies is important to make sure you can run your business in a smooth way and so you can always know what are you doing, in what way, and why.
4. Choose an Ecommerce Platform to Work on
Originally, you have two options regarding starting a dropshipping store and building the website. You can start working with developers who will create an online store, a site for you from scratch. Your other option is to subscribe to an ecommerce platform and make creating an e-store easier. Check what each platform can provide you and what its advantages are. Use their free trials to learn more about them.
Just to mention a few examples of ecommerce platforms you can check Shopify, Wix, BigCommerce, Ecwid by Lightspeed, Jumpseller, or Shoprenter. Moreover, when starting a dropshipping store it is also beneficial to pick ecommerce applications for your business to make your job easier.
5. Build Your Online Store
In the process of starting a dropshipping store, we got to the step of literally start building it. Pick a winning name for your business, register your domain, register to your chosen ecommerce platform, install the necessary applications—such as product sourcing dropshipping application—, decide on the design (on the colors, fonts, visual components, and the design of the website, etc). Learn from various sources how to do everything in the best way, read articles, watch videos, check the service’s Help Center online. Or, you can still pick an expert team to build your online store.
6. Deal with official, legal matters
When starting a dropshipping store it is very important to deal with all of the necessary official and legal matters. Contact someone who is an expert on ecommerce and can help you. Choose an accountant, and a lawyer if needed. Make sure the chosen partners are familiar with ecommerce and dropshipping. You will have to register your company officially. Do not trust everything you read on forums and social media groups. Your accountant will be a great help for you through the processes. It is also an option to find solutions, software for hassle-free accounting for your ecommerce business online. You will have to gain knowledge about all the important official, legal matters, such as how to make an invoice.
7. Start Your Marketing Processes
Marketing helps you get more visitors and turn them into buyers which will lead to receiving more orders. Create your marketing strategies relating to starting a dropshipping store. Be present on every important social media platform such as Facebook and Instagram, and post often. Have a specific visual style you represent everywhere.
Social media posts, emails, newsletters all belong to marketing. You can send emails about the registrations, sales, special offers, tips & tricks. Furthermore, there is Search Engine Optimization (SEO) which method you can use to generate traffic in the long run. It doesn’t cost you money, just time. The next marketing element we talk about now is paid ads. You can run Google Ads (Search campaign, or other Google advertisement methods like videos, emails, or Google Shopping), Facebook Ads, and Instagram ads as well. Another piece of advice is to place a little gift and a greeting card in the product packages when you are sending it to your customers. It is beneficial to often have special offers, sales too.
Are you Thinking of Starting a Dropshipping Store?
If starting a dropshipping store is your top dream now you are probably looking for products and suppliers. Syncee Marketplace is a global B2B platform where you can find millions of products from reliable suppliers from all over the world. The system has you covered relating to automated product uploading, updating, and order synchronizing processes.