WHAT IS DROPSHIPPING AND HOW TO WORK TO EARN MONEY?
Starting dropshipping is the perfect way to get started in e-commerce without risk.
And it is that online sales already exceed 3.50 billion dollars each year. So don’t wait any longer and discover how to dropship and earn money with little risk.
In this article, you will learn everything about starting a dropshipping business. We will explain what a dropshipping business is, how to find the right business ideas and how to start it properly. Do not miss it!
What is a dropshipping business?
Dropshipping is a very popular business model that consists of selling products through a supplier in charge of storage and logistics management of the order.
The great advantage of dropshipping – some write it as “drop shipping” or “drop shipping” – is that it does not require inventories or large initial investments. Once you’ve made a sale, your supplier will ship the products from their warehouse, directly to your customer’s doorstep.
While a normal store has to purchase the product in advance and store it until it can be put up for sale, dropshipping allows you to sell products without having to buy and store them first.
Up to 33% of the entire eCommerce industry uses dropshipping as a primary inventory management model.
Dropshipping is not something new. In fact, a company like Zappos started using it in 1999. And other big e-commerce companies like Amazon and Sears have also been using this business model for a long time.
Either way, if the big brands don’t catch your eye, look to the regular guys, like this Mexican who has made his way in this tricky industry. Every day people like Marcelo share their success stories as dropshipping distributors in the different forums dedicated to the world of eCommerce.
But the most important fact is this: today, as many as 33% of the entire e-commerce industry uses dropshipping as their primary inventory management model.
Small-scale e-commerce entrepreneurs love dropshipping because they don’t need to maintain inventory, which translates to lower initial investment. In addition, not having to manage a stock also allows you to concentrate all your efforts on what is most important: attracting new customers.
How dropshipping works
Now that you know what dropshipping is, let’s move on to our next explanation.
To start a dropshipping business you must first understand how dropshipping works:
- As a dropshipper, the first thing you need to do is set up a dropshipping store with DSers , where you are going to display the products you want to sell.
- If people like your products, you will probably make sales. Sales that you will collect directly, even if you do not have the product in your stock .
- When you make a sale, as a dropshipper you have an obligation to complete the order by sending an order to your supplier. At that time, you have to pay the supplier for said product at cost price.
- Once you make the payment, a process begins whereby the supplier is responsible for sending the product to the buyer.
- The key to this business is that the final sale price is higher than your cost price, so that margin will be the profit that remains for you.
Seen in this way, understanding how dropshipping works seems very easy since it is enough to make a good promotion to make sales without advancing any money. But throughout this article, you will see that not everything is a bed of roses in dropshipping.
The good thing is that if you dropship with Shopify, and use apps like DSers, managing your online store is going to be a lot easier. And not only that but the entire process is also streamlined because this application works as connective tissue between suppliers and your online store, where products are displayed and customers can buy them.
This app makes it easy to import products directly from suppliers to the store; and helps manage any changes in inventory or prices, so there are no discrepancies between what is shown in the online store and the actual characteristics of the item in the market.
How to dropship?
There are three key players in the dropshipping model: the supplier, the merchant or retailer (you), and the customer.
The role of the dropshipping vendor includes creating products, managing inventory, shipping products to customers on behalf of the retailer, replacing defective products and restocking.
By starting a dropshipping business, you, as a retailer, sell the supplier’s products on your website under your own brand. You will be responsible for choosing and marketing those products. In addition, you will also be responsible for managing customer inquiries and complaints.
Finally, making money with dropshipping is possible since the customer buys the products directly from you as a retailer. Your relationship with your provider is kept confidential.
Can you make money with dropshipping?
Surely you are wondering how much you can earn with an online store.
Dropshipping can be the most profitable business model of all since you will not be responsible for the manufacturing and shipping costs.
And, since you don’t assume investment risks, if your idea fails you can quickly move on to testing the next one. Without losses!
So yes, you can make money dropshipping, as many of our successful merchants continue to do.
Dropshipping ABC: Sell without stock online
Why start a dropshipping business?
Starting a dropshipping business with no money is a great step towards entrepreneurship.
We explain its advantages and why starting dropshipping is one of the best decisions you will make.
- You will only pay for the products you sell
- You will not have to bear the cost of creating and shipping products, inventories, etc.
- Most of the order processing steps are automatic and require just one click.
- Dropshipping business opportunities are endless, you just need to take the first step.
Advantages and disadvantages of dropshipping
Although it is an accessible, profitable, and easy-to-implement business activity, therefore with many advantages, it can also have some drawbacks that you should be aware of.
We think it’s important that in an article explaining what drop shipping is we also discuss what the pros and cons of dropshipping are.
Let’s go to the mess!
The main advantages of dropshipping:
- You do not need to invest a lot of money : the initial investment in many online stores is one of the great barriers that put many entrepreneurs back. If you have little money to start, you will love dropshipping.
- A business with fewer fixed costs : as there is no need to buy stock, the store will not have many fixed costs, except those of the web, hosting , Internet connection… And variable costs are linked to sales. This means that variable expenses only increase when sales do.
- It has great growth potential – Another reason why many dropshippers get into this is because with effort and professionalism the business can easily scale and become a big business.
- You do not have to prepare the orders : one of the most tedious tasks and ones that add less value are those related to order management, packaging, sending to the courier company, etc. You avoid all this with dropshipping because your supplier takes care of it. You just have to charge your client, pay the supplier and give the order of dispatch.
- You will hardly have personnel expenses : almost all dropshipping stores only have the entrepreneurs themselves as workers. Management is less complex; and since it is not necessary to have a warehouse, it is not necessary to have employees who are in charge of management.
The disadvantages of dropshipping:
- You depend too much on suppliers : if you choose to work with a supplier that is not serious or does not fulfill its commitments, you may run into problems. Keep in mind that as a dropshipper you will be ultimately responsible for the transaction. This means that if a customer buys a product from you and it arrives late or is defective, you will be responsible for the changes or returns. On certain occasions, dropshippers have to keep a defective product paid out of their own pocket (because the wholesaler sometimes ignores the matter and it is up to them to return the money to the end customer).
- There is more and more competition – It is a business that has attracted many quick and easy money seekers, so the competition is fierce. And these wars between competitors usually end with price drops in order to generate orders. In addition, in many cases, your own supplier also sells directly at retail, which may end up competing with you.
- You have to do a lot of positioning work : if you do not control search engine positioning well, do not use SEO tools , or do not have money to carry out online advertising campaigns, it is better not to get involved, since sales —at least at first— they can only get there by doing the SEO and SEM right.
- You earn less money than with a normal online store : the margins are lower than if you sell products that you have previously paid for and stored in your facilities. Since you earn less money, you need to make more sales to get the same profit as with a conventional online store.
Dropshipping: How to get started in 6 steps
Step 1: Choose your dropshipping niche
The truth is that what you sell matters.
So to help you choose, we’ve created lists of trending products. Here are a few ideas:
- 20 product ideas to sell online
- 20 innovative and creative products to sell online
- 20 innovative Chinese products to sell in your online store
- 10 unique products to dropship
- The best trending products to sell online
If you prefer to use your own dropshipping business ideas instead of checking our lists, you can use:
- GoogleTrends . It is ideal to know if the popularity of a niche over time. However, by itself it is not enough to determine if a business is viable or not. Some niches may be on an upward trend, and may not have enough search volume to warrant profitability.
- Google Keyword Planner . It helps you see the volume of one and the competitiveness of the keywords within your niche. However, with the free version, you will see that the ranges are very wide, so consider paying for this or other SEO tools .
- Browse popular websites within your niche. This can help you understand which trends you should currently include in your store and see which products are currently selling best.
- Check the volume of product orders. Search for products based on their order volume to discover the popularity of a product. But don’t rule out a dropshipping business simply because their order volume isn’t as high as other products, it may simply be because they are newer products.
Step 2: Analyze your competition
The second step to start dropshipping and start a profitable business is to find out who your competition is, what they sell, and how they promote their products. There are many ways to do this:
- Search for the name of one of the products you want to sell on Google . The top ten results will give you a good benchmark of your competition in a certain location. If you are selling products in a different location than where you are, you may use third-party tools to collect data. Use tools like SEM Rush or Ahrefs to get information about search results in different locations around the world.
- Analyze social networks. Look for niche Facebook ads and social media pages for successful brands. How many followers do they have? How do you market your brand? How much of a following does your brand have? What can you do differently to stand out? What can you copy?
Familiarize yourself with your competitors’ content and look for patterns on what works best. We recommend that you subscribe to the newsletter of your competitors, to keep abreast of their content.
Step 3: Choose a supplier to start dropshipping
Check the comments, ratings, and how long the provider has been on the platform to choose a good provider.
When you have a list of five to six potential suppliers, contact them and ask about minimum order quantities and shipping times.
We also recommend you make a test order and compare results. Compare delivery times, product quality and packaging.
Step 4: Create your online dropshipping store
There are some important elements that you must take into account to make your dropshipping business. Among them:
- Choose your domain name. This is important if you want to make money from dropshipping in the long run. You can use free business name generators to simplify the process for you. Go for general names to avoid having to change it in the future. Also, avoid using your name as a domain for your store in case you decide to sell it in the future.
- Sign up for Shopify . Shopify is the most complete e-commerce platform on the market. With features, tools, resources, and apps being added regularly, you’ll find it very easy to use and therefore run a business on their platform. Also, if you have any questions, you can contact a Shopify expert, who will personally advise you for free.
- Install DSers. DSers makes it easy for you to find dropshipping products online. You can find the perfect products for your market in a few clicks.
Step 5: Promote your dropshipping business
To make money from dropshipping, you have to market your business like there is no tomorrow.
This is a crucial step in your business plan.
If you are going to start dropshipping, you probably have a super tight budget for your store. So we give you some ideas to set up your dropshipping business without money or with little investment:
- Facebook Advertising : It can be tempting to spend $500 on Facebook ads. But you should keep your budget low at first so you can experiment. You don’t even know what your best-selling product will be right now. Create multiple ads to determine which product sells best. Choosing segments removes Canada, Australia, the United States, and the United Kingdom, this will keep your ad costs lower.
- Content Marketing : If you’re on a tight budget, take advantage of content creation to drive traffic to your store for free . You will gain more visibility and position yourself as an expert in your niche.
- Affiliate Marketing – If you can’t afford to pay influencers, you can offer them an affiliate commission. This reduces the risk that the influencer may or may not be suitable for your dropshipping business.
- Social Media Marketing Plan : Social media is a perfect and free way to gain visibility and traffic. So take advantage and don’t wait any longer to use social networks to promote your dropshipping business.
Step 6: Analyze your results and constantly improve
Once you’ve spent time building your website, branding, and marketing, you can start analyzing the results of your hard work.
For example, if you use third-party tools for email marketing or social media reporting, set up automated weekly or monthly reports so you can analyze this information on a regular basis.
The reality of starting dropshipping
So, there you have it! We have covered everything on how to start a dropshipping business.
Just one more thing. Getting started in dropshipping takes time and effort, so stay away from e-commerce gurus who tell you that you will get rich in a matter of weeks. Dropshipping may be an inexpensive way to start, as hardly any investment is required, but the high level of competition means that to succeed you have to put in a lot, a lot of effort. So cheer up your adventure and get to work!
If you have questions, feel free to leave a comment or reach out to us on social media.
And remember, the best way to find out how to get started in dropshipping is to start a dropshipping business.