E-commerce has gained massive popularity in recent years. Especially after the COVID-19 crisis, a lot of brick and mortar stores are switching to an online market space to sell their products. Explore vacancies in e-commerce here.
It might not be too challenging for you if you’re planning to move your physical store online. You already have all the startup inventory you need along with a customer base that already knows about your business.
However, things can be a little too intimidating for those new sellers who want to work virtually by starting their store online. With a limited budget and little to zero experience, these entrepreneurs are always on the lookout for opportunities that can help them earn substantial profit without risking their money at the start.
Dropshipping is an extremely profitable and cost-effective business model for such Gen Zers and millennials. Since you don’t have to buy or handle opening inventory, anyone can start a dropshipping business with limited finances.
What is Dropshipping?
Simply put, a dropshipping business is a retail fulfillment method where a shop doesn’t need to store inventory it sells. When the dropshipping store receives an order, it buys the product from the third-party vendor and has it delivered directly to the customer.
How Does Dropshipping Business Model Operate?
All in all, the biggest difference between a dropshipping model and a conventional retail model is that the dropshipping store owner doesn’t stock or own products. Instead, they purchase things from the supplier and get them shipped to the customer directly without any intervention.
In other words, you don’t have to engage with product handling at any stage. Interesting, isn’t it?
Why Build a Dropshipping Website?
Unlike the retail business model, the dropshipping business model is accessible and cost-effective.
With the dropshipping business model, you can easily test different business ideas without thinking about financial loss.
Here are a few reasons why the dropshipping business is the best option available for aspiring entrepreneurs.
It is Easy to Set Up
Building a successful dropshipping business is easier as you don’t have to deal with physical products. When you start a dropshipping business, you don’t have to worry about acquiring a warehouse or tracking inventory for accounting reasons.
Apart from that, packing and shipping your orders and handling returns and inbound shipments isn’t your responsibility either.
Less Capital is Required
The biggest perk of starting and running a dropshipping business is that you don’t have to invest thousands of dollars upfront.
With the dropshipping business model, you don’t have to purchase a product unless you have received an order. This enables you to add more products to your product range.
Needless to say, there’s less risk involved in starting a dropshipping business than a traditional retail business model.
Low Overhead Expenses
Since you don’t have to purchase inventory and invest in a warehouse with a dropshipping setup, this will significantly lower your overhead expenses.
Many people start and run their dropshipping business from the comfort of their home. And all they need is a laptop and a working internet connection to run a business.
Yes, there are a few recurring operating costs. But they’re still too low if you compare them with your conventional brick-and-mortar stores.
You can run your dropshipping business from anywhere. As mentioned above, anyone having a laptop and an internet connection can start a dropshipping business with the least possible investment upfront.
Easier to Scale and Test
The Dropshipping business model enables both new and seasoned online sellers to test the viability of different business plans.
Besides, most of the work to process orders will be handled by the suppliers, meaning you don’t have to spend hours and hours in front of your computer to handle the additional workload.
Here are seven steps to building a successful dropshipping business
- Choose a Niche for Your Dropshipping Business
The first step to creating a profitable dropshipping store is to select the right niche. Make sure you choose the product range in which you’re genuinely interested.
Remember, choosing the wrong niche will result in discouragement because it takes plenty of time for a dropshipping store to scale and return rewards. And if you’re not passionate about your niche, you’ll end up feeling exhausted and disappointed soon
Things to consider before choosing a niche for your dropshipping business
- Choose a niche with high-priced products: For a dropshipping business owner, the hard work revolves around customer acquisition and marketing. The good thing is that the amount of work needed to sell a $15 product is the same as selling a $1500 product. So, it’s better to choose a niche that has high-ticket products to increase your chances of earning more profit
- Look for products that are not too expensive to ship: The biggest perk of building a dropshipping store is that the delivery and returns will be handled by the supplier. But if the cost of delivery is too high, it will act as a buyer’s repellant. Choose a supplier that offers a free delivery option so that you can attract more sales
- Your product range should trigger impulsive buying: Your products should be compelling enough to attract buyers with disposable income and financial stability so that they can make a purchase instantly
- Choose in-demand products: Make sure you use keyword research tools to check whether your chosen product range is searched by potential buyers
- Choose products that you can white-label: Add more value to your dropshipping store by rebranding your product range. Look for products that you can easily white label and sell with customized packaging and branding
- Sell something that is not readily available: Increase your chances of getting more exposure by choosing products that are not commonly available to your target audience
- Conduct Competitor Analysis
The biggest mistake potential drop shippers make is they select a product range that has little or zero competition.
Yes, you should look for products that are unique and exclusive, but a product range having no competition at all signifies less demand for that particular product line. Also, low competition could be a sign of high shipping costs or inadequate profit margins.
To make your business model sustainable and successful, make sure you choose a product range that has reasonable competition.
- Find a Supplier
Once you have identified your niche and conducted a competitor analysis, the next thing you should do is find the right dropshipping supplier.
Keep in mind, collaborating with the wrong vendor can ruin your business. So make sure you get this step right.
The majority of suppliers are based overseas, meaning you have to put extra effort in to keep effective communication with your suppliers.
Make sure you ask lots of questions to know more about their production abilities and their potential to scale with your business. Also, ask about the number of partners they have, their pricing, and other relevant things and contractual terms you would like to negotiate on.
Jot down a list of suppliers you can work with. You can start researching them online. But make sure you also talk with their support team over the phone to find how their business runs.
There are many online sources, such as dropshipping forums that can help you avoid costly supplier mistakes. So make sure you benefit from those platforms as well.
- Create a Dropshipping Website
Once you have everything in place, it’s time to create and launch a website that supports dropshipping business models.
Steps to Create a Profitable Dropshipping Website
- Choose the Right Platform
Thanks to digitization, there are many compelling and user-friendly e-commerce website platforms that can help you create a profitable dropshipping store.
We suggest you stick to the basic platforms, such as Shopify for which you don’t need to have a technical background. Also, the platform has plenty of themes and apps to help you get started.
- Select a Unique Domain Name/Hosting Plan
Once you have selected the most suitable e-commerce platform for your dropshipping store, the next thing you may want to consider is the unique domain name and a hosting plan.
Make sure the domain name you choose for your dropshipping store is short and relevant.
Hosting, on the other hand, refers to a location where your store will be placed on the internet. There are many options available. Just ensure you pick a company that offers secure and reliable hosting plans. For this, you can check reviews available online or get in touch with other entrepreneurs on available drop shipping forums to see what they’re using to run their stores.
- Hire a Web Developer
Despite the fact that most dropshipping platforms come with themes that are incredibly easy to install and run, it is still advisable to hire a professional web developer to create and test your business website.
A reputable web development firm will have every resource you may need to set up and upscale your dropshipping business. Also, they offer advanced technological solutions that will help skyrocket your sales and conversions.
- Choose the Relevant Theme
Whether you create a dropshipping store using Shopify or use Weebly or BigCommerce to create a store online, you’ll have plenty of theme options to choose from.
Some of them are free, while others come with monthly or annual plans. It’s crucial that you choose a theme that includes multiple conversion and customization options.
As far as the overall look of your website is concerned, make sure all design elements are coherent with your branding.
Customers prefer to spend their time on websites that are not only customer-friendly but also attractive and engaging. So, invest some time in choosing the right theme for your dropshipping store.
- Create a Customer Acquisition Plan
So, you have everything in place. You have a business plan, a list of suppliers, and an intuitive website.
Yes, you guessed that right. YOU NEED CUSTOMERS.
Creating a foolproof customer acquisition plan is critical for your business growth and success. There are several free and paid ways to attract potential customers for your business.
Social media platforms, such as Facebook enable you to generate sales right from the beginning. Similarly, you can also leverage Instagram, Linkedin, and Twitter to scale your business.
In addition to that, you must also benefit from email marketing and SEO to optimize your e-store and increase engagement.
One of the best ways you can optimize your business and increase sales is by optimizing your dropshipping store.
For this, you have to track all of the metrics to track every single conversion. There are many tools available online, including Google Analytics, which will help you keep track of your customers.
With this information at hand, it will be a lot easier for your dropshipping business to identify what works and what doesn’t.
- Implement the Best Digital Marketing Practices to Promote Your Business
Once you have successfully set up your dropshipping store, you’re ready to implement the best digital marketing practices to promote your products and services.
Here, we have highlighted a few emerging digital marketing trends every new and established dropshipping business must follow to grow in 2020 and beyond.
Embed Customer Testimonials on Your Store
The biggest challenge for a dropshipping business is to acquire customers and build trust. Just after receiving a few orders, you can add a section containing your customer testimonials and reviews.
These reviews will act as social proofs that will help your website visitors make their decision.
Leverage Video Marketing
Videos are a great way to market your products online. According to research, one minute of video is equal to 1.8 million words.
Whether it’s your website, emails, or social media profiles, make sure you embed as many attractive and relevant videos as possible to attract sales.
The trend of push notifications is also on the rise. You can use these notifications to alert your customers about product releases, discounts, and more.
The idea is to keep your customers informed so that they feel valued and show interest in your product range and offers.
So, what else do you think is essential to build a profitable dropshipping business? Please let us know in the comments section below!
Ricky Hayes is the Co-Founder and Head of Marketing at Debutify – free Shopify theme, helping dropshippers build high-converting stores in minutes. He is a passionate entrepreneur running multiple businesses, marketing agencies and mentoring programs.