What is dropshipping?
Dropshipping is a business model where stores don’t control or have their own inventory.
When orders are received, you send the order to a supplier. The supplier then accepts the order and ships the product directly to the customer on your behalf.
Not having to have a large upfront investment is why dropshipping is a great way for entrepreneurs to start their 1st online business.
How Does Dropshipping Work?
Here is a step-by-step overview of the dropshipping business model.
- A customer places an order on your online store or website.
- You then send the order to the supplier.
- The supplier fulfills the order and sends it directly to the customer on your behalf.
Pros of dropshipping
- Easy To Get Started
- Less Capital Required
- Can work from anywhere.
- Easy to test different products.
- No inventory is required.
Cons of dropshipping
- More prone to errors.
- Not as easy to brand or customize products.
- Lower Profit Margins
- Cannot control inventory
How to start a dropshipping business
Find a winning dropshipping niche
The initial step to building a successful dropshipping business is to find dropshipping products and who your objective customers are. You can do this by using one of the many dropshipping product research tools.
There’s no lack of advice on the best way to do this. Some say going to your passions and interests to sort out the best dropshipping products to sell, while others say you should just sell what people want or need and is currently profitable.
We recommend a mix of both.
For example, if you practice meditation and are also passionate about spirituality or astrology. You can combine these two categories into one store. This allows you to build a brand around both since they can serve one type of buyer.
Do market research
When it comes to competitive research, we recommend two methods to help analyze your competitors and product trends.
Niche and Keyword Research
Get going by making a rundown of item catchphrases in your expected business sectors. For instance, if you’re doing research in fitness or activewear. Such catchphrases included terms like “athleisure,” “workout clothes,” “stockings,” “exercise garments,” “yoga pants,” and so forth. These terms will also help you find suppliers for your products, for this example you would be sourcing from dropshipping clothing suppliers.
Enter these keywords in Google’s Keyword Planner to find out about how much volume they’re getting, and you’ll find that “tights” and “yoga pants” are getting the most searches.
Accomplish something almost identical when you’re deciding your specialty. Start things off by recognizing potential business sectors (preferably utilizing your own mastery and interests), then, at that point conceptualize watchwords for those business sectors. Take the most mainstream slogans, and burrow further to get more bits of knowledge into their presentation extra time.
That brings us to the next step…
Determine Product Trends
Getting keyword information is fantastic, but you also need to consolidate that with pattern information to determine if the trend is growing or on the decline. So, you go into Google Trends and type out the keyword phrases to do your research.
Typing in your keywords, you will see based on time how the trends are going. Are they on an upwards trend? Monthly, yearly, and 5 years or more? This can give you a good idea of how the market is in your category or niche.
Remember this progression when you’re searching for outsourcing thoughts. Enter your keywords into Google Trends to decide if an item is moving up or down. On the off chance that it’s the last mentioned, you might need to return to the planning phase.
Find the best dropshipping suppliers
To make sure we cover the best suppliers, we’ve also made sure to specify which supplier we choose and why. Below is a list of our top picks for suppliers to use for your dropshipping store.
You can checkout a more in depth guide on choosing the best dropshipping suppliers here.
How to build drop shipping store
The next thing you need to start a dropshipping business is to create and set up your store. For this we use the best ecommerce platform for dropshipping, Shopify.
This will be where you send traffic, sell products, and take payments.
Shopify makes it easy to build and launch your ecommerce website. It’s an ecommerce platform that lets you sell anything online, sell in multiple currencies, and easily manage products and accept payments.
If you want to save time you can simply purchase a prebuilt dropshipping store with Brandafy and we will have you set up and running within 24 hours. That way you can start testing products and launch your online business without having to create your own store.
If you’re looking to build a store from scratch, you can start off with a Shopify 14 Day Free Trial. Shopify has a complete guide on building a dropshipping store. For other great tips on building your dropshipping store, you can read our article “Helpful dropshipping tips for store owners“.
Decide on a business structure
If you’re serious about your online business, you’ll need to set up a genuine business. We’re not attorneys and can’t offer legitimate guidance, but rather we can give you a once-over of three usually utilized business structures:
An LLC offers protection of your personal assets from your business. This type of business structure will protect you if anyone decides to sue your business. That way you have less liability at the personal level.
Most large companies are set up as C corps, which, when done appropriately, offer the most protection. They’re not as straightforward as LLCs and also are subject to more taxes but they offer more protection than a standard single-member LLC.
So which should you pick? Once more, we’re not legal counselors and would encourage you to talk with one. We recommend LLC’s as that’s how we structure most of our businesses. It’s the easiest to set up and the taxes are more straightforward which is great for beginner entrepreneurs.
Note: The EIN (employer identification number)and business structures we’ve discussed above are mainly for businesses within the United States. If you are a business outside the US please visit this guide here.
Request an EIN number for your business
Make sure you request your EIN from the IRS. This is required to open any bank account or credit card under any business name. At the end of the year you must report your business income to the IRS for tax purposes.
Applying for an EIN is free and can be done so online.
Get your finances in order
One common mistake entrepreneurs make when starting a business is using personal bank accounts for business purposes. Not only can this be confusing but it can open you up to huge liabilities. If you’re ever audited by the IRS and are using a personal checking account for business, your personal account can be fully open to any business liability.
You’ll want to keep your business and personal finances separate as much as possible. The best way to do that is by opening up new accounts in your business’ name. You’ll want to open the following:
Business checking account
Before you ever make any payments or get your first sale, you need to make sure you open a business checking account. All of the sales and payments you make should be done through this account. This way, you have a much simpler way of tracking expenses and revenue.
You aren’t required to have one, but we highly recommend having a business credit card. Having a business credit card will allow you to have a backup source for funds for any extra expenses or orders that need to be paid. Since you’ll purchase plenty of products from providers, you can pile up some reward points and travel miles as well so you can benefit from usage. We’ve tracked down that Capital One has the best travel rewards program and that Fidelity Visa/American Express offers the best money-back program.
Collect sales tax
Taxes are something you need to consider if you’re selling any type of product online.
Shopify provides a tax guide manual if you need step-by-step instructions for any country, both US and outside of the US.
How To Create A Business From Outside The United States
It can be complex, but it’s possible for international merchants to incorporate a business in the United States, giving them access to US-based drop shippers and customers. The merchant will need to come to the US to complete the necessary paperwork, have a trusted business partner in the US who can act on his behalf, or hire an agency to set everything up.
How To Get Traffic To Your Store
There’s plenty of ways to market your business and get traffic to your online store. We can cover this subject alone for hours and hours. But today, we’re going to cover the main ones we should focus on when trying to get traffic to our store, beginning with the free ones and ending with paid traffic. Having an effective marketing and sales strategy is crucial when launching your dropshipping store.
Pinterest is one of the best social media platforms when it comes to organic reach. Not only can you reach more people but it’s a very visual platform, which makes it fantastic for promoting products.
If you have a blog or post content on any other form of social media. Simply sharing a pin or post can get you a huge amount of engagement and shuttle visitors into your ecommerce store. If you’re not on Pinterest, we highly suggest you create an account and familiarize yourself.
Featured or Guest Blog Posts
One of the most inexpensive ways to get traffic to your online store is with guest posting on a blog. To do this you have to find blogs that post content related to your product niche or category. You’ll then reach out to the owner of the blog and ask if you can write or publish a guest post. This will assist you with getting seen by blog traffic and web indexes.
SEO – Organic Search
Most people think SEO or Search Engine Optimization is some super complicated science that only tech gurus know. But essentially, it’s what the algorithm does to rank you in search engine results like google and bing.
For the purposes of dropshipping, we want to focus mainly on making sure your results show up accurately in search engines and that we target for the specific keyword phrases, SKU’s, product titles and anything that identifies your product details.
You can find a great overview and checklist here https://help.shopify.com/en/manual/promoting-marketing/seo to help guide you in the process of setting up your dropshipping business.
Bing Shopping & Bing Ads
Although not as popular as google shopping. Bing shopping is much more affordable and can allow you to expand your audience. Bing also has bing ads so you can run search intent-based ads to target new customers who use bing search instead of google. You can integrate your Shopify store with bing shopping easily with their integration app.
Google Shopping is the best free source of traffic you can get. You can now officially list all your products on google shopping with a few clicks. Anytime someone searches a product on Google, they’ll be able to find your product in the google shopping product feed. As of this year, you can simply add your channel directly from your store to quickly upload all your products on google.
Google Ads is arguable the best ad platform when it comes to intent-based searches. When people need to buy something the first thing they do is search for it on google. For this reason, anyone who is looking to target intent-based buyers should definitely have google ads on the top of their list for paid traffic.
Facebook Ads for eCommerce can be pretty tricky. It’s great for retargeting. For example, if someone visits your store but doesn’t complete checking out. You can show them an ad on Facebook to remind them to complete their purchase.
Facebook Ads are probably one of the best ways to target customers for e-commerce. They do however require a different strategy than google ads. For Facebook ads to work correctly, you’ll be more focused on remarketing as your main strategy.
In other words, when someone visits your site from google or any other source, you’ll want to use Facebook ads to tell them “hey, we saw you visited and forgot to buy. Come and finish checking out”.
If you’re trying to find new buyers on Facebook, we recommend having a funnel setup so you can guide your customer through the purchase journey. Facebook ads usually take multiple contacts with each person before they eventually purchase. That’s why Facebook ads are the best for retargeting your customer.
If you’re new to Facebook Ads. You can visit and learn the official Facebook Blueprint.
TikTok and TikTok Ads
TikTok has now become the fastest growing social media platform and is expected to outgrow even youtube in terms of viewership.
When using tiktok to grow your dropshipping business, you have the option of using tiktok ads or simply creating viral content to organically grow your brand. If you’re new to TikTok you can learn how to make money with tiktok with our free guide. For those of you who want to learn how to use tiktok ads for dropshipping you can checkout our TikTok Ads guide here.
Give Away Contests
Something else you should do is have give-away contests. This can work especially well if you sell high-ticket items. You should be able to make a good return since your profit margin will be much higher.
Check this list out for 10+ giveaway ideas that you can try to increase sales for your dropshipping store.
These are just some of the ways you can run traffic without going into extreme detail. If you’re looking to learn more in-depth knowledge you can go ahead and join EcomMentorship.club
Now that we’ve covered some of the basics about getting traffic to your dropshipping store, let’s talk about the most important part of the equation: Increasing Customer Lifetime Value
Analyze and Improve Your Offering
Getting sales with dropshipping is honestly fairly easy. But to become profitable and scale your business past 5, 6, and 7 figures you have to make sure you have all the pieces of your funnel in place to maximize your profits.
Abandoned Cart Emails (free template included)
A majority of customers abandon their checkouts at some point while making purchases online. But simply following up through email or with abandoned cart reminders you can virtually cut this number in half or more.
The best way to make sure you have customers complete their purchase is by simply sending an email telling them to finish their checkout. You can even offer a discount to entice them to come back and complete their order.
If you’re new to email marketing, you can get one of our best-converting templates for abandoned cart emails here.
Upsells and Bundled Products
Want to increase your profit margin? Give your customers the option to create bundled products. You can do this by giving them the option to buy addons or similar products together as part of a package. You can do this using shopify apps that help increase sales.
You’d be surprised to see that up to half or more of your customers will make the bundled purchase. Not only is this one of the easiest ways to increase your average order value, but your customer will be a lot happier that you saved them an extra purchase by offering a product they needed.
Customer loyalty program
Almost every retailer has an incentive program for customers who give their email or signup for a free loyalty program. This allows you to acquire their contact information to easily remarket them via email or SMS with discounts and promotional offers.
Have a live chat or live customer support staff
One of the easiest ways to keep your customers happy is to show them that you care. This can be done by simply answering any questions or concerns.
Now, I know most of us don’t want to have to be answering questions all day. So most of this can be done with a simple chatbot using preformatted questions and answers.
You can also have a virtual assistant answer live chat for you during certain hours. You can find a virtual assistant on sites like Fiverr.com for relatively cheap. Customer support is one of those things that can completely differentiate your brand name or store from the rest.
Common questions about dropshipping
How much money do I need to start dropshipping?
Technically speaking, you can start dropshipping with virtually no money. But let’s cover what exactly you need to start selling online.
With a basic Shopify plan, you will be paying $29 per month after your 14 free trial ends.
You’ll also want to have something to pay suppliers with and reserve funds just in case you receive a refund or chargebacks. For this, we recommend a few hundred dollars.
Our recommendation is to have at least $300 total saved up in funds before you start dropshipping. But essentially you can start with just the price of your Shopify membership after your 14-day free trial ends.
How many products do I need for my store?
Most people think they need to have a large selection of products in their store to start. But that’s far from reality. You only need to have 1 good product that people need or want to start a store. If you can find one good product and verify that it sells, you can simply add related products to offer your customers.
Is a one product store or general store better?
You might be wondering whether one product or a general store is the best option. The truth is your store should be targeting one specific category of products with multiple options. So for example, if you’re selling personal blenders. Don’t just sell one type with no options. You want to sell different types, including sizes, colors, etc. You also want to offer different products that can either go along with or are similar to the main product you offer.
Is dropshipping too saturated?
Absolutely not. New markets and products arise all the time. With the world becoming more digital, there might be more competitors, but people will always spend their money online 24/7, 365. Instead of focusing on selling the same products that everyone sells, focus on building a brand around a product category that you’re either interested or are very knowledgeable about. It’s all about differentiating from your competition and targeting the right customer.
I have traffic, but I’m not getting sales. What should I do?
If you’re not getting any sales but many clicks, you need to see where your trouble lies.
Are you getting any add-to-carts? Why not?
Is your website easy to navigate?
Is your product offer clear when the page loads?
Are customers checking out but not placing their orders?
These are some of the questions you need to be asking yourself if you find your store getting traffic but no sales.
Ecom Upstart Sneak Peak
Now that we’ve covered how to start your dropshipping business. We’d like to introduce you to an upcoming mentorship and course launching soon. Ecom Upstart will help guide you through your dropshipping journey.
The program will offer a private group, weekly live updates, templates for all your marketing, store setup, ads, and more. You can sign up for the prerelease and get a massive discount here.