Money

How to Start a Dropshipping Business (Profitable in 2021)

12 min read  ∎  Updated: January 16, 2021
Uday Tank
Uday Tank
Head of Content @ Hurryworld (or, in plain English, I'm the guy responsible for ensuring that every blog post we publish is EPIC).
Content Guide

Have you heard any eCommerce business which do not have any risk and only potential earning?

Yes, we are talking about a Dropshipping Business.

What scares you the most when someone introduces a new business to you?

The fear of risking your money and losing it or the fear of being unsuccessful?

How does dropshipping address the fear of failure among aspiring business owners?

According to the Harvard Business Review, your fears can come from seven places, which are:

Fear of being unable to fund the business:
You can start dropshipping with as little as a zero-dollar capital. Meaning you don't have to dread whether or not you'll be able to fund your business.

Financial insecurity: Since you can start dropshipping with zero capital, it means you carry no financial risk at all. Whether or not the business fails, you won't be losing any money.

Personal ability/Self-esteem: Dropshipping cuts across plenty of niches, which means the chances are high; you'll find a niche that suits your ability and self-esteem. 

Potential of the idea: Dropshipping is one of the surest means of making money online right now. If you do not trust me, you can check for yourself.

The business' ability to execute: Dropshipping is a tested and proven business model. Beginners have nothing to worry about. As far as execution goes, there are loads of step-by-step guides and templates to execute the business from start to finish.

Opportunity costs: Since you aren't risking a dime, what better alternative could you ask for?

What is dropshipping?

The ultimate and cheapest way to make money online!

Dropshipping is a business model in which a seller (You) sells a product to a customer without needing to participate in delivering the product. As the seller, you sell products to your customers through a dropshipping supplier, who stores, packages, and ships the product to the customer on your behalf.

How the Dropshipping Model works

🛒

Step 1

The customer places their order in your online store.

📤

Step 2

Your store forwards the order to a third-party supplier.

🚚

Step 3

The supplier ships the order/product to the customer.

📦

Step 4

Your store informs the customer that their order has been shipped.

Statistics showing the potential for profit in the business.

In case you're wondering whether there is genuine potential for making money from dropshipping, see yourself what the numbers say:

Relevant Key points to note in the tables:

What you need to start a dropshipping business

You only need two items to make money as a dropshipper. These are:

  • An online store or website (somewhere to sell on). If you don't have money, you can sell on free platforms like Constant Contact or Big Cartel. But, keep in mind that you may not sell well on these platforms because they're not so popular. Your best bets to make money quickly from dropshipping are paid platforms like BigCommerce or Shopify. Or you can pay to create your website (WordPress sites are cheaper to run).
  • Reputable suppliers. You can use tools like Oberlo or Spocket to scour for suppliers. More on this later.

Pros and Cons of Dropshipping

Before we reveal the details of "how to start a dropshipping business," I'm sure you're curious to know what are the Pros and Cons of the business.

PROS

1. Little to No startup cost is required

Unlike a brick-and-mortar business or a regular eCommerce store, you don't need a physical warehouse to store the materials; you don't have to worry about inventory cost, starting capital, shipping costs, or what have you.

2. Minimal Order Fulfillment Costs

As we know, you aren't responsible for the sourcing, packaging, and delivering the product; you don't need to worry about the additional cost incurred in the entire process. The only worry you have is to ensure the order gets to the customer on the agreed date.

3. Low Risk & Flexibility

Not having to handle inventory means you have limited risks to bear. On top of that, if you're not able to make money from your dropshipping business, you can opt-out anytime without much of a loss compared to losing a bunch of stored inventory. Additionally, since you aren't required to pay anything upfront to stock products, you will have more cash on hand to pursue other business opportunities.

4. Easier to Pivot

You have the luxury of being able to jump ship from one dropshipping niche to another if a niche isn't bringing enough profit.

CONS

1. Over-reliance on manufacturers

Since you don't physically hold products or items, you always rely on your suppliers to keep their inventory count. In the unfortunate event that a supplier is out of stock, you may miss out on sales opportunities.

2. Less control over customer service

Since you're not in charge of the entire supply chain (packaging, warehousing, delivery, etc.), it can be hard to guarantee the best of customer service. A supplier might cause a delay in shipment. A manufacturer might end up shipping sub-standard products to your customers, damaging your store reputation in the process. 

3. Lack of branding

Since you're selling other people's products on your website, your brand image can suffer from it. To mitigate this, make sure your wholesaler permits you to add branded packing materials upon shipping. That way, even if the product/item is coming from another brand, the unboxing experience ensures the customer remembers who you are.

4. Lower profit margins

Like every retail business, the margin for profit is low in dropshipping. But, of course, that is to be expected! Generally speaking, dropshippers can expect to make between 20-30% in profit, depending on their niche.

How to Start a Dropshipping Business: A 5-Step Guide

There are two ways to create a dropshipping business. First, you can build your business from scratch (more on that later), which is the usual way. Or you can buy an already made business. This second method is adopted by people who don't want to go through the rigorous process of launching a dropshipping business from scratch.

Where to buy from?

You can buy a dropshipping business from any of the following platforms:

When buying, however, be sure to look out for the following details:

  • The cost: Looking at your budget, are you sure you can buy a pre-made store and still invest in growing it, or after purchasing the store, your bank account will be on red? If the latter, you should look to buy a store that's almost "perfect" and "ready" to make its sales without investing in anything more.
  • The design: The better the looks of a store, the greater its chances of converting sales. Want to buy a store, make sure you're buying one with an exquisite design. The best way to judge a store's design is to ask yourself: is the design of this store appealing enough to make someone want to buy from it?
  • The age of the store/site: Don't buy a new store. It's a well-known fact in the dropshipping world that the older a store or site is, the better its chances of ranking.
  • The popularity of niche: This will help you judge your potential for making money from the store. Before you buy, find out what the most popular niches are.

Want to build from scratch? Follow the following steps:

1. Choose a niche

Of course, you know you'll need to decide on what you want to sell. And that's where your job begins. Most people will tell you to stick with products you're passionate about. But I've come to discover that passion and sales aren't of the same worlds. You could be passionate about tech gadgets like VR glasses, PCs, tablets, so much so that you know the world about them.

But if they are not amongst the list of the trendiest products, you'll struggle to make a dollar out of them. 

So, when choosing a niche (what you want to sell), you need to lean more towards its "profitability potential" rather than your passion alone. 

You can use two methods to know the niches that are most profitable in the dropshipping market. 

The first is to go with those niches known to be traditionally profitable (some niches are always on the upward curve anytime). The figure below highlights some of these niches.

Source: Oberlo.com

Alternatively, you can go with the trends and choose a niche based on what is trending. Here are a few tips to help you know the trending niches:

Aside from the potential for making profits, you should also lookout for the following points when choosing a niche:

  • The niche must boast a mix of higher-priced and lower-priced products: Choose a niche that allows you to sell to the low-class and the high-class. Remember, the amount of work required to sell a $15 item is essentially the same as what's needed to sell a $1,500. So, choose a niche that allows you to make small and big profits from the same amount of work. 
  • Consider shipping costs: Even though you won't be directly involved in the shipping procedure, you want to choose something you can offer at a free or low shipping cost.
  • Choose a niche that offers products that are not locally available: a great way to make plenty of sales is to sell something people can't find down their alley. 
Find out about your competitors.

Now that you've chosen a niche (what you want to sell). Who are those selling the same things? These are the guys you want to find out about.

In theory, they are the ones you want to beat to the shoppers. So, how can you know about them?

The best way is to start by stalking them.

  • Go on Google, Alexa, Bing, Yahoo, and SimilarWeb. Like for real, visit all these sites I've mentioned. When you get there, search for one of the products in the niche you've chosen. For example, if you've chosen the Women's Clothing & Accessories niche. You can search for "Women's Wayfarer Sunglasses." The first ten results you find on the search result pages of those search platforms are your biggest competitors. 

    Now that you know them, what's next?
  • Using SemRush or Ahrefs, you can analyze each of these competitors to know the keywords they're using, how they're getting their traffic, and what their audience engagement rate is like.
  • Search for them on social media to know how they're faring there. Or sign up for their email newsletter so that you'll get an update when they drop any new blog.
  • Once you gather this info, what you want to do next is beat them at everything they do. Do they publish blogs once every week? Make yours three.

    Do they take long to respond to clients on social media, or maybe they don't even engage at all? Do better than them. Visit their store to see how it's designed, then ask your store designer for something more exquisite. Like for real, you want to beat them at everything.

2. Choose a supplier

The next thing is to decide who your supplier is going to be. To do that, you will need to do a quick search of dropshippers who can fulfill your niche deliveries. That is suppliers who sell the type of products you want and who can deliver to customers on your behalf. 

However, you should be careful when searching suppliers, because there are many "fake suppliers" out there. More often than not, most of them will ask for an "ongoing fee" before doing business with you. It could be in the form of a monthly membership or a service fee.

👍 Best Tip: Reputable suppliers don't require potential partners to pay monthly fees just for access to their products.

To find legitimate suppliers, follow the following tips:

  • Contact the manufacturer:

    Since you know what products you want to dropship, simply contact the manufacturers of these products and ask them who their distributor/wholesalers are. Reach out to these wholesalers to find out if they offer dropshipping services.
  • Search on Google

    Merely typing in "{product name,} supplier" into the Google search box can return to your legitimate suppliers' names. But be careful to scrutinize the results extensively to be sure it's not a scam. Check their contact details, social media details, etc. 
  • Use Dropshipping tools/online directories

    In the last few years, many dropshipping tools have been introduced to make it easier for dropshippers to find products to sell and suppliers to work with. Some of these tools include:
  1. Oberlo

    The Oberlo app uses AliExpress to help you find and add products to your store. On Oberlo, you can search for products and choose suppliers from the list of results. There, you'll see reviews, ratings, and how long the supplier has been on the platform. What's more? The app also helps you forward the orders to your dropshipping supplier, so you never need to worry about packaging, shipping, or managing inventory.
  2. Aliexpress dropshipping center

    Aliexpress's solution to the challenge of finding reputable suppliers is the "Aliexpress dropshipping center." This tool helps you find and analyze products, as well as dropshipping suppliers for your store. With the tool, you can search for products based on "hot selling," "image," or "sponsored products." 
  3. SaleHoo

    On SaleHoo, dropshippers have access to nothing less than 2.5+ million products & 8,000+ suppliers. So if you're looking for a supplier to work with, you can find one on SaleHoo.
  4. Doba

    It's a directory of retailers and wholesale suppliers with available 165 suppliers. 
  5. Worldwide Brands

    It's a wholesale & dropship directory having thousands of wholesalers.

Attend trade shows

Trade shows are a great location to meet manufacturers and wholesalers in a given industry.

  • Use your competitor to find suppliers

    From the names of the competitors you identified in the previous step above, choose one and place an order with them. Once your delivery arrives, Google the return address you find on your package to determine who the original shipper was. It is your guy!

3. Build your dropshipping business website or store

There are 2 methods you can implement to build the store or website you want to sell on.

Either you can decide to set up your e-commerce store or sell on popular e-commerce (e.g., Shopify, Woocommerce, etc.) that allows other merchants to sell on their platform.

Now, if you're new to the world of dropshipping, you're better off starting with the second option as it saves you a lot of stress and money. 

Although most e-commerce platforms receive visitors from all over the world, you should find out which platform your target audience likes to use the most before signing up with one. 

For example, you'd be making a terrible mistake signing up with Shopify if the country (say an Asian country) you're targeting use Alibaba. 

The best way to choose your platform is to simply research (ask around or online) where the people you're targeting likes to buy from the most. 

By and large, some of the popular e-commerce platforms to choose from include: 

  • BigCommerce
  • Magento
  • Volusion
  • Demandware
  • WooCommerce
  • 3dcart
  • Shopify
  • Kibo

4. Finding Dropshipping Products to Sell

You don't just choose products to sell based on what you like or what you think people are talking about the most. If you wish to make money from dropshipping, you need to identify products with the highest sales or profit potential in your target niche.

To find those products, you'll need to consider the following factors:

Pricing

If you're in a niche where people don't mind spending top dollars on products, you might want to consider selling high-price products. But if you're dropshipping in a niche where the audience is known to be frugal in their spending, you may want to stick with low-price products.

Size & weight of products

The size, along with weight, may manipulate and affect the product's cost more than you anticipate. Without a doubt, everybody knows that a more extensive and more massive product will command:

  • Higher packaging charges
  • Higher shipping charges
  • Handling charges (sometimes)

Meaning that if you're selling these types of products, you may end up losing some of your profits to packaging, shipping, and handling costs. If you decide to shift some of these costs to consumers by raising your products' prices, you will end up chasing a lot of them away, which means fewer sales.

A better practice would be to start with smaller products.

Cross-selling

Another good idea for selecting products to sell is to go with those products that have the potential for cross-selling – that is, those products that allow you to sell other products. For example, selling shoelaces along with shoes or selling smartphones with fancy phone pouches.

Renewability

What to sell in a given niche makes much sense to go for high renewability products before considering products with low renewability.

Products with high renewability need to be replaced, which means more and more customer orders will undoubtedly come your way.

It is a great way to guarantee a never-ending sales cycle.

It's like comparing a phone part or accessory (pouch, screen, mouthpiece, charging port, etc.) with a phone. While your phone may fall and you may need a new screen or touch-pad twice or thrice in its lifetime, you may have no reason to buy a new phone in years to come.

By and large, the chances of replacing a phone part/accessory with a new one are higher than the options of replacing a whole phone outright.

Grudge products

Grudge products are the #1 type of products you want to avoid at the beginning of your dropshipping venture.

It is because grudge products are products consumers don't want to buy but they have to buy. After all, they're compelled to do so. 

It includes medical insurance, medical supplies, automobile tires, different types of coolants, and engine oil are all grudge purchases. I don't think anyone wants to buy them, but they have to, due to dire circumstances.

If you are selling grudge products, orders may be hard to come by. So, it's better to avoid them altogether.

What is the Best Ecommerce Platform for Dropshipping?

Having addressed what to sell, the next line of action is deciding where to sell.

I know we've already talked about the plethora of options dropshippers have when choosing a dropshipping platform. But which of these platforms is the best to start a dropshipping business?

Is it Shopify, Woocommerce, BigCommerce, or Magento?

Let's find out!

Best eCommerce platform based on some essential dropshipping criteria:

  • The platform should be easy to use and almost free:

    Based on this criterion, the best eCommerce platform for dropshipping would be Woocommerce. Woocommerce is the easiest to use because it is built on WordPress, a favorite platform among bloggers. Also, when it comes to the monetary aspect, Woocommerce is entirely free for use. It is a plugin of WordPress, and users who have WordPress installed can easily install it as a plugin without paying anything. What's more? It also allows users to add multiple add-ons for free. 

    Another simple to use platforms includes Shopify and BigCommerce.

  • It should have efficient and 24/7 support:

    In this regard, Woocommerce comes out on top again. Not because it has the best customer support (almost all of them do), but because it has a widespread community of designers and developers, which means that users can easily find a ton of material on installation and support of this platform on the internet.

    On the other hand, platforms like Shopify are entirely proprietary, meaning you won't find much help on community forums related to custom development.

    With Shopify, all the help you'll get is in the form of "Shopify's official forum," where questions are asked and answered.
  • It should support many dropshipping plugins:

    Almost every eCommerce platform will tell you they support one dropshipping plugin or the other. Shopify offers you Oberlo. And Woocommerce offers you the Alidropship and Dropified.

Best eCommerce platform based on popularity

Based on the number of users a platform has, one can catch an idea of how reputable, trusted, and popular such a platform is. 

Source: Builtwith

From the above figure, it's evident that Woocommerce is the most used eCommerce platform.

5. Finding the customers to patronize your store

The biggest challenge you'll face when you start a dropshipping business is finding the customers to patronize your store. And part of the reason for this challenge is because almost every niche is saturated with guys selling the things you intend to sell, which means consumers already have someone they buy from.

However, the good news is that dropshipping is a global business, meaning that you can find your customers by targeting a new group or demographic.

Don't know how to do that? It's All In The Marketing!

Here are the most effective marketing strategies you can use to find customers for your dropshipping business.

Social Media

You can promote your store on social media channels like FB, Instagram, Pinterest, Whatsapp, etc.

You can also run advertisements on social media channels to reach your target audience right into their social media feeds.

Email Marketing

It is one of the effective forms of door-to-door marketing for eCommerce businesses. It allows you to connect with your customers directly via the inbox.

You can use email marketing software to send welcome emails, discounts, or offer emails, blog emails, and abandoned cart emails. 

Paid Ads on Google and FB

As described above, you can run paid ad campaigns on Google and FB. Here's a breakdown of some of the most common types (and goals for each).

SEM called Search Engine Marketing, or PPC called Pay Per Click Advertising

If you've already heard of SEM/PPC (same thing), these are the advertisements that show at the top of Google search engine pages (SERPs). With this advertising form, you select keywords you want to bid on and create text-based ads with a title and description. You can also set a geographic location/area where you wish your ad to appear and a schedule of when the ad will run live.

When a user searches for that keyword and clicks on your ad, you pay Google for that click. It is called cost-per-click. This number is dictated by the competition and who else is bidding on your keyword. 

Google Shopping

Instead of text-based PPC ads, eCommerce retailers more commonly use Google Shopping ads

These ads are created by uploading a product feed and appearing for searches related to your keywords. The ads have images and text and are placed next to competitor ads so consumers can compare pricing.

Tips for success in a dropshipping business

Like in every business, success in dropshipping is not a guarantee. 

However, you can boost your chances of success by following some laid down principles.

Below are some of the essential dropshipping tips needed for success.

Never try to beat your competitors by price slash.

Due to the saturation of most dropshipping niches, it can be hard to start a dropshipping business without fighting off so many competitors both locally and globally. 

In a bid to win this fight, many beginner dropshippers go with the old-school strategy of "price slash," hoping that when consumers see that their products are cheaper, they'll opt for them.

This is a very wrong way of doing things.

If "cheaper" meant "you'd woo every customer to your side," then Walmart should have monopolized the retail industry by now.

The fact that they haven't shown that consumers want more than just "lower prices."

So instead of offering your products for lower prices, look for ways to provide better value than justifies your higher price. 

Depending on your niche, value to customers can come from product knowledge and expertise, service, packaged deals, free shipping, etc. 

For example, suppose you're selling on Shopify. In that case, you can try to beat the competition by providing real-time information, product relevant how-to guides, and industry-relevant tips to customers via your Shopify blog.

This is an excellent way to offer better value to customers than price slash. 

Remember, anybody can sell a product for a lesser price, but not everyone can provide consumers with the right product information/support. You need high-end industry experience and knowledge to do that. And if you're lucky to have that, you can trust that people will prefer to patronize you.

Find and list those products the big guys don't like to stock.

One of the biggest draws of dropshipping is that people can make money without holding any inventory. 

It is in contrast to what happens in a traditional retail store like Best Buy and Walmart. Over there, big retail brands shell out top dollars to stock merchandise. But, to not end up stocking products people rarely buy, most of them only hold an inventory of products they feel people will want to buy. And any merchandise they think might not generate enough request/order; they avoid it altogether.

It is why you'll hardly find specialized merchandise like — let's say an automatic shrimp-peeling machine on the shelves of your local Walmart.

You can make the most of this situation by researching and listing those in your niche that most retailers (including the big guys) will be unwilling to sell. 

Since you won't be buying and storing them somewhere, you can list as many of them as possible. Suppose orders come in for them, then OK. And if not, you wouldn't have lost anything!

Offer packaged deals

Another good strategy you want to include in your dropshipping arsenal is the idea of bundling related products together and selling them as a package deal. 

People are often forced to order merchandise as separate commodities because of the different sources the products are coming from. Unfortunately, this usually leads to higher packaging and shipping fees for the consumer. 

You can help solve this problem by looking around for those products you know go hand-in-hand and then offer them a complete package to consumers. 

An excellent example of this is smartphone and smartphone accessories (pouch, handsfree, screen guides), TV, and TV cables; baby wears (e.g., clothes) and baby products (e.g., pampers), pet treats and pet products (e.g., leash), etc.

Another considerable advantage of this strategy is that it allows you to boost your profit margins.

For example, if you see that a particular product is selling well, but you don't have a significant margin on it, you can look around at what people might want in conjunction with that product/item and bundle them together. Use some extra margin from the add-on item to offset the big products' low margin. 

Sell in multiple market places

There's no crime in opening a store on multiple eCommerce channels. 

If you have the strength and time required to handle all of them, please do not hesitate to do it. 

Logically speaking, you're more likely to make more money from dropshipping if you have a Shopify dropshipping store, an eBay dropshipping store, an Amazon dropshipping store, and a Woocommerce dropshipping store than someone who's managing only one of those.

By and large, the whole idea of selling on multiple channels is so that you don't miss out on those customers looking for your product on all the other marketplaces.

Provide awesome customer service

Excellent customer service may not always equate to new customers; it does guarantee the return of old ones. 

And in the sphere of eCommerce, getting old customers to patronize you again is an outstanding achievement because consumers are spoilt for choice. So when old customers decide to come back to a store they've once patronized before, it could only mean one thing – that they enjoyed the customer service they received the first time.

Did a customer patronize you some months back and dropped their email? Email them today and ask about their experience with the product? Do you have an ongoing discount offer on a product a customer got some weeks back? Reach out to them and let them know your store offers a better deal than the last time.

The name of the game here is trust in your brand, and top-tier customer service is by far the best way to win trust, obtain positive feedback, reviews, and ratings.

Conclusion

If you're looking to make money online, there's no better way than dropshipping. 

It's cheap (almost free to run), comfortable, not so technical, and has an excellent track record of turning people into millionaires.

Dropshipping has already proven itself to be an excellent tool for making money on the internet. 

The only question is: are you willing to put in the work to become a dropshipper?

If you are, then you have virtually everything you need to get started in this guide.

LEAVE A REPLY
Your email address will not be published.

COMMENT
Get Started

Related Articles