The growth of the internet has brought many income streams, giving people from all walks of life a chance to earn passive income from the comfort of their homes. This business model entails earning passive income by selling products online without maintaining any stock or other inventories. One buys products that are shipped directly to the consumer by the supplier and earns a commission once the order is completed successfully. However for one to be successful in this, they have to be well informed on how to go about it. Below is a step by step blueprint on how to start a successful dropshipping business.
The secret to finding a suitable niche is selecting a niche on a product you are interested in. In most cases, people get discouraged before they get started, given the difficulties in successfully scaling such a business. You want to do product research, analyze the competition, keyword research and more.
Ensure that the product you want to sell has low shipping cost to avoid discouraging the customers. Also, make sure that the product you are selling is not readily available in the streets and in this way, customers will be more attracted to your products. Finally, create your brand of the product you have chosen to sell.
Table of contents
- Who’s the competition
- How to get started dropshipping
- Pick the right supplier
- What to look for in a supplier
- Questions to ask a potential dropshipping partner
- The set up
- Track the data
- Watch for:
- Don’t be like other guys
- Drive the traffic
- Products that can be dropshipped
- Specialize
- It’s always a desert before it becomes a flood
- Pros of dropshipping
- Pros of dropshipping
- The customer is still always right
- Don’t give up
Who’s the competition
In this business, there is a lot of competition from other drop shipping operations and the retail giants. Most drop shippers make mistakes in this aspect because they go for products with less competition when this means that they are not in demand. Look for products that are facing high competition because this serves as a sign for the high demand for these products. But make sure the market isn’t too saturated. You don’t want to get lost in a sea of competitors. You also need to watch for brand domination. And you don’t want to be in a market where there are lots of name brands to compete against.
How to get started dropshipping
Does dropshipping sound attractive to you? Lets consider those things that will help you get started.
First, you need to setup a website or a platform in order to take orders from. Then, partner with a dropship wholesaler or a distributor that will be willing to ship products direct to their end consumers. As part of your partnership, you and the dropship supplier will then decide on a wholesale price for the products you desire to sell. Once there’s an agreement between you and your supplier, here’s how dropshipping works then.
The customer will place an order for a product on your online store and you will collect the money. You will then send the order and shipping details to your dropship supplier. And you will then pay the agreed wholesale price for the product. Your dropship supplier will then package and ship the order directly to the end customer as if it was shipped directly from your online store. You will get to keep the difference between the selling price and the wholesale price.
Sound good to you, right? Let’s look at how to get started with dropshipping.
Start your dropshipping website
Actually, setting up your dropshipping website is the simplest part of the process. Because there are many easy to use uptions today. However, your ecommerce platform decision will be strictly based on your budget. What features you will need and how tech savvy you are.
Research profitable dropshipping products to sell
The margins of dropshipping tend to be lower, the best dropshipping products for you to sell are goods that will carry a higher price tag.
If probably this is your first time selling online, here are some guidelines that you should follow.
- The product’s value should be ambiguous: It is easier to command premium pricing on products that will not be easily comparison shopped. As a result, try to avoid electronics and focus on products that don’t have an intrinsic value.
- Choose a niche with many related products: The key to running a successful dropshipped store is to cross sell your products.
- Sell goods where the average order size will be at least $50: Because margins are lower with dropshipping, you need to make sure that you will generate profit per sale
- Sell products that are timeles: Avoid products that go out of fashion within a short period of time. After all, the more a product turns over, the more work it will be for you to be updating your product listings and maintaining your website.
Find dropship suppliers
Dropshipping is popular and the internet is filled up with scammers, you will need to know how to spot a fake wholesaler.
First off, a REAL wholesaler will not charge a monthly fee for you to access their catalog of goods. Genuine dropship wholesalers are also distributors and their target is to sell their product in bulk.
Second thing to know, a real dropship supplier will showcase their products to the end customers at wholesale prices. Remember, the primary customer of a wholesaler is the retail shop and it wil go against their best interests for them to compete with their own customers.
Pick the right supplier
This step is not supposed to be rushed because it will be wrong to partner with the wrong supplier. Most of the suppliers are not found locally but are on overseas, and this makes the aspect of communication vital in terms of the speed of response and ability to understand each other. If the one you find is not able to meet the communication needs, continue with the search until you find the right supplier.
What to look for in a supplier
Your business success hinges on the quality of your dropshipper. Some of a few attributes that you will look into when evaluating your suppliers.
Remember, that a successful dropshipping will require a partnership between you and your distributor. Remember that trust is essential.
As a result, before you will rely on any dropship vendor, you should place a test order to see how the order will be handled.
Basically, you will be looking into:
- How fast the order ships: Shipping time is very important for any ecommerce store. And it’s very essential that orders are shipped within 1-2 business days.
- How the orders are packed: Will the product be shoved in a crappy box with packing peanuts? Do you think that being will be unmarked without the suppliers business name? Will the product arrive safely and undamaged to your potential customers?
- The quality of customer service: Do they always respond in a timely manner? Will they provide the tracking information and an invoice? Do they give refunds for any defective merchandise and returns?
Questions to ask a potential dropshipping partner
Partnering with a drop shipper is a perfect way to start your online venture with minimal risk. By not having to keep out a bunch of cash to buy products wholesale, you’re not even risking your money. There is no need to store any inventory, and you will never have to worry about keeping up with your shipping products out to customers in a timely manner. But it doesn’t mean that you should ignore those important elements of your business to please anyone. Working with a bad dropshipper, could sink your business before it ever takes off the ground. There’s no need you going into the process of finding and negotiating with a potential dropshipping partner blind.
Here are some questions that might help you determine if they are the right for your business.
- Once your customer has placed an order, for how long will it take to be processed and shipped out of their facility?
- What methods of shipping are the products available? This is important when they are located overseas and are shipping internationally.
- This is a big one: Do you have a tracking system so that you and/or your customers might see the status of their order easily? This is one of the things customers need to be able to do.
- How will you deal with issues like lost shipments? You don’t need your customers to get frustrated with issues you won’t control. And have this in mind that as the seller, you are responsible for customer service. Will this lost shipments cost you money?
- Do the products offer have warranties/guarantees or not? What happens if one of customer isn’t satisfied with the produc: what’s the return policy? Does the dropshipper guarantee the product? What happens when the product fails in some way?
- Make sure to confirm that the drop shipper’s policies matches up with your customer service philosophy. When a customer started feeling that they’ve been taken advantage of you won’t point to the drop shipper and blame them. Because you are the one that sold the customer and the product.
It’s also a perfect good idea to check forums, blogs, and social media for comments about the dropshipping company from other online entrepreneurs. Dropshippers who have a bad reputation or have bad business practices will still be exposed, often in detail, so you might avoid them.
The Setup
The simplest way to achieve this step is by using e-commerce platforms. Such platforms do not want one to have a tech background to start running the site since they many inbuilt features to help you set up a website successfully.
Have a plan on how to capture the attention of prospective customers. Business is no business if you have no customers looking to buy your products. A great product and a perfect website should be accompanied by the availability of potential customers. Employ the possible ways in which you can attract customers, but the most effective way is by opening a Facebook ad campaign as it will generate as many sales and revenues as possible right from the beginning of the business. Through Facebook, you can be able to place your offers directly in front of the target audience giving you the ability to compete with large retailers and brands at once.
Another way to attract many customers is by employing the use of email and engine optimization as a marketing strategy. First, set up an automated email sequence that offers customers discounts and special offers. From there, start collecting emails since it is the easiest way to increase the existing customer base and earn more income without incurring additional advertising and marketing costs.
Track the data
Keep track of all the data and the metrics available for the business to grow. If Facebook is your customer acquisition channel, make sure to track all the conversion to know the origin of the customer and what path they took on the website that resulted in a sale. Tracking of data will allow you to scale what works for your business and what doesn’t and in this way, it will be easy to eliminate things that don’t work. Regarding advertising and campaigning, setting advertising and marketing solutions will help in generating knowledge to optimize or decide to shift cost used in campaigning.
Watch for:
The critical elements to success are the main factors for the continued success in the business and therefore must be considered after the business has been set up. The key elements that can lead to success include;
Don’t be like “other guys”
The new player wishing to start a drop shipping business must ensure they plan well on how to add value to their prospective clients as it is the most critical factor that determines their success rate. This is important for drop shipping businesses where one is forced to compete with legions of other personal shops selling the same products.
While drop shippers will be selling products, the merchants will be busy selling information and insights. As well as solutions alongside the products they sell to their customers and this adds value to what they offer in the market. If drop shippers are unable to add value to the products, they will end up losing customers, and their competing point will only be on prices. Instead of struggling with the problem. One is advised to find a niche in a market that could offer them the opportunity to provide quality in both the products and in terms of information and solutions.
Drive the Traffic
The first year of this business is critical, and unless one puts more effort on marketing and driving traffics, there will be no success. One of the problems facing merchants and drop shippers included is the lack of traffic on the websites. One might come up with a perfect website but launch it to a world that has no idea of the website existence.
Start by taking a personal initiative to develop your marketing skills within the first few months when no one knows about you and upon launching, dedicate three-quarters of your time on marketing. Once a strong marketing foundation has been established, now scale back on the work have put in the effort.
Products that can be droppshipped
Just like any online business, you need to be in a market that is “hot” and where there is a lot of people who are ready to buy the products you sell.
When you have a passion for a particular market or kind of product, that enthusiasm will make your efforts, and by extension your business, stronger. Not only that, but you’ll enjoy what you’re doing which will help your work to be more enjoyable. Fortunately, there are many dropshipping companies that can handle every market, niche, and any kind of product.
This will include the following:
- Baby items
- Yoga clothes
- Electronics
- Clothing
- Art
- Books
- Beauty supplies
- Supplements
- Home and garden items
A great place tthat you can check for hot niches is big online e-commerce platforms like Amazon. and eBay. Whatever products are on the bestseller lists there could be a great fit for a dropshipping business. But also keep an eye on trends that you see on Facebook and other social networks. Also, look for products that are also in the news, and listen to the products your friends and family talks about.
During the holiday season, football season, back to school and other special times of the year, related products will do very well.
A big mistake many people make when starting any kind of business, dropshipping included, is that when they see other people doing it they think it’s too competitive and they can’t be able to make any money in it. Nothing could be further from the truth. When you see many competition that’s the sign of a big, healthy, profitable market.
Specialize
Your dropshipping store must have one common thing that it sells to the customers. The store will decide to pick one line of products or a single niche that it will bring the products to. Most to the times, people tend to think that narrowing their limit to a single line of product will limit their potentials to earn more profits, but the opposite is true. Focusing on one product and concentrating on specific customers will allow you to communicated with your customers effectively thus standing out from the competition.
In the beginning, as you launch a store in a new niche. It is difficult to understand what segment of the customers you should focus on. However, after working for some time and you gain experience, with the customers. It becomes easy to identify the most profitable segment, and this helps you to add value to your products. As you find the customers, try to always focus on meeting the needs and solving the problems of those customers. Remember, if all the people are your customers, then no one is your customer. With specialization, you will be able to differentiate yourself from others. Charge premium prices if you want to and develop your marketing strategies to be more productive.
It’s always a desert before it becomes a flood!
The same way you build some other thing of value, you should also build your drop shipping business, and this takes a certain level of commitment and investment. Some people assume dropshipping is a fast means to prosperity and end up being frustrated when reality hits them that they have to work hard. Usually, the first few months are tricky as you will have to struggle with doubts, run into many issues with the website where you may end up with zero sales despite having a great website. All these are normal for a dropshipping business. However, it is essential to mentally prepare for a start that is challenging and lessen the expectations to make a lot of passive income overnight.
Pros of dropshipping
When you are about to find quality dropship suppliers. Then you will then realize that dropshipping is extremely attractive because running the business can be done from anywhere. All you need is an electronic device and an internet connection and you are perfectly good to go.
As a result if you are totally new to ecommerce with a little budget. Using dropshipping as a stepping stone in getting started and transition to more lucrative business models will be the best decision to take.
Let’s consider the benefits of dropshipping then.
The setup costs are practically good
Considering the bare minimum investment that’s required to start a dropshipped online store. If you are on a free open source shopping cart platform.
There’s is nothing like upfront inventory cost. Nothing like warehouse costs to bother yourself with. There is almost zero overhead. Is there any business model that is free to start like dropshipping?
It’s simple to setup shopping cart
Today there are a lot of literally hundreds of services out there to help you setup an ecommerce store in less than a day. The right option for you will strictly depend on your budget, what features you will be needing and how extensible you will need your ecommerce platform to be.
There is little risk involve
The beauty of you venturing into dropshipping is that there is practically no risk. Because you will be investing so little money upfront, meaning there will be very little to lose.
Reason been that your business is inventory less, there’s no pressure on you to make sales. You won’t be the only one bearing the overhead of storage or shipping.
In addition, you may carry a huge variety of products in your store because you won’t have to store any of it! You mày choose to carry 1 product or 1000 products online. It doesn’t matter! Once you are able to figure out what you really want to sell, you might basically find a dropship supplier to supply it.
It can be done from anywhere
A dropshipping business can be run from anywhere you are. There is no need having an office or a warehouse or even any employees at all. As a result of this freedom, you will have enough time to concentrate your efforts on growing your business instead of taking care of inventory and overhead.
However, dropshipping is still one of the most scalable ecommerce business models out there. Why? Because your overhead does not in any way grow linearly with sales.
Cons of dropshipping
Your customer service might difficult to be controlled by you
Customer service and your online reputation might make or break your business. Internet, social media, news of a botched transaction will spread extremely fast so it is important that you maintain a good image for your store.
This means that word travels fast.
With dropshipping, unfortunately you will have very little control over your customer service. Since you are not the one in charge of product fulfillment, you won’t be able to control when a customer will receive their product.
When a customer wants to return a product, it’s a pain because you will have to make sure that you get your money back before you will provide a refund. But the solution inevitably will involve either raising prices or simply taking a profit hit at the expense of your customer satisfaction.
You won’t be getting the lowest price
Many people open up a dropshipped online store with the misconception that they will receive the same wholesale price as everyone else for their products.
In reality however, dropship distributors do charge extra fees and/or tack these fees onto the quoted wholesale price. Just put yourself in the distributor’s shoes for a moment and ask yourself these questions. Do you prefer to sell a large quantity of products all at once to a store or do you prefer to sell one, two to individual customers and be forced to individually ship and package each product?
The distributor is the one that will do all the work here and this will certainly reflect in your wholesale price. When your wholesale prices are more higher than a traditional store. You will not be able to compete effectively on price unless you decide to take a good sized profit hit. Additionally, lower margins will affect your ability to advertise on sites like Facebook and Google. Apart from that, less profit per sale also will make customer service problematic.
There’s a need to charge higher shipping costs
Using two or more dropshippers means that two or more companies will be making separate shipments to your customers. Meaning that two or more companies will be charging you their own different shipping costs.
Probably I’m a customer and I buy products from your store from three different distributors. You will have to charge me a more higher shipping cost just so you may break even. The only way to stop this is to only use one dropship distributor which might not carry the breadth of products that you need.
Dropshipping can be a logistical nightmare
Don’t think that since the distributor is the one doing all the work that you will be free to sit back and relax. Unfortunately, you will need to deal with your customer base. You will the one answering all the questions. Also you will be the one to apologize when an order doesn’t arrive on time.
The problem is that when you are using different distributors, to get the entire order to the end customer might be a logistical nightmare. All distributors dotheir different shipping times and they will be shipping from completely different locations. When a customer orders products across three different distributors, they will end up receiving three different packages at different times.
When an order is specifically time sensitive and there’s need to be rushed. You will have to make sure that all your distributors will deliver the product on time. In effect, you are the one that will stake the reputation of your online store to link yourself to all your distributors in a single chain.
The customer is STILL always right!
The fact that the internet is involved in this business should make it fairly transparent. But the rise in social media use presently has made the reputation of drop shipping business more critical to your success. Mistreating customers is a bad idea for the business especially in this digital era and the entire world will know in no time including the potential customers. The truth about the drop shipping business is that you will always lose money on specific orders purposely to make customers happy and you are not expected to pass this to your customers at any point. This is the only way quality in service is measured. The secret lies in providing quality products to the present customers since when these customers are satisfied. They will probably spread the word and refer other people to your business
Don’t give up!
Dropshipping business has helped many people; black people included, gain prosperity. However, one has to know all that this business entails for them to be successful. The above guide outlines everything one needs to know about starting a successful dropshipping business. Dropshipping business is a great generational wealth venture that will earn you passive income for years to come once you build a strong foundation for it
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