Interested in starting your own business? The digital world has lucrative opportunities for you. With dropshipping, you can start your own business and climb up the social and economic ladder. Hold that thought! What is dropshipping? You must have heard about this term, but did not care to find out the details. Perhaps you thought it is a complicated technological concept. For starters, Dropshipping is an excellent online business opportunity.
Joining the eCommerce revolution is not going to be a cakewalk! You would need to filter out the products you wish to sell and the source through which you would get the product from. Most importantly, you would need to find out ways to reach out to the prospective customers.
Here’s a complete guide on Dropshipping. If you are considering Dropshipping as a serious business opportunity, this post will cover everything you need to know. Read the guide carefully!
Launching an e-store/online store can be a daunting task. The whole process of marketing the products, inventory management, shipping, and order fulfilment may seem too overwhelming. With dropshipping, you can skip most of these steps and straight head towards success.
Dropshipping is a process through which you ship the products directly to the customer. A third-party vendor/supplier is involved in between. Experts call it the ‘retail fulfilment method’. Were you able to grasp the concept? If not, then we have the perfect example for you.
Let us assume you started a business. The first step would be to order products from the supplier. You get the minimum order quantity to acquire the products at a wholesale price. Now, you wait for a customer to place an order. During this time, you have stored the products in a physical space. After the order has been placed, you process their order, pack it, and then ship it to the customer’s address.
Dropshipping works differently.
The customer orders the product from your store. You pass on the order details to the dropshipper. The dropshipper receives the order, charges an amount for the product being sold along with a minimal dropshipping fee.
The dropshipper packs the product, ships it to the customer, and your work is done. There is no need to store the products or worry about the shipping process.
In the Dropshipping process, you are selling the products on a website without getting into the hassle of shipping, storing, or fulfilment. Most importantly, you do not have to buy the product before a customer purchases it. There is little investment and the return is quite rewarding.
Now that you are aware of the concept, let’s give you a detailed explanation on how dropshipping works in the real world.
How Does Dropshipping Work?
Do you know the history of dropshipping? It started in the 60s and even 70s. There was no internet at that time! Mail order companies used dropshipping model on a large scale. In the 90s, internet came into the picture and made dropshipping easier and more advanced. Online shopping was introduced to the interested buyers. It was a slow process but the users liked the idea. However, there were some challenges even then. People were afraid to disclose their credit card details online.
As time flew, more and more people embraced the idea of online shopping. We have entered 2020 and this is when online shopping has become extremely popular. In the early 2000s, eBay and Amazon came into the picture. People were happy that they could buy items online without going to a physical store. Online shopping made life easy and stress-free. Working individuals were happy to order essential items online.
In the year 2010 to 2018, AliExpress and Shopify were born. Dropshipping became cheaper and driving traffic to sites became a child’s play. That’s the history of dropshipping. Earlier, in 2000s, the model was not as pocket-friendly. In today’s world, dropshipping has become an excellent business opportunity. You do not have to make a huge financial commitment. In fact, you do not even need a physical office to store the items.
Let’s get down to real business. Many of you want to know how dropshipping works.
Before dropshipping was introduced, there were two models in eCommerce.
First step is to create a unique product before you bring it to the arena. If you cannot create a product, you can buy it in bulk to maintain the inventory. What is the guarantee that the products would sell out? Is there any assurance that all the products would get sold out? The answer to both the questions is a firm NO!
When you indulge in dropshipping, you are solely responsible for the marketing aspect. You do not have to worry about inventory, packing the product, and shipping it to the customer. The conventional retail model is gruelling for entrepreneurs. Additionally, most of the eCommerce stores are using dropshipping method to ease out the process.
In dropshipping, you play the role of the middleman who only cares about attracting customers and getting the best products on-board.
How does dropshipping work? The customer goes to your website and places the order. It is your duty to add products that would sell! Even if they are not selling, you have nothing to lose. But, as a determined entrepreneur, you can do various things to attract the customers.
Once the customers buys the products from your store (at a retail price), you forward the same order to the supplier and pay them the wholesale price.
The customer buys the product from your site at the price of $250. This is the price that YOU have set. When you forward the order, you pay the wholesale price to the supplier. The wholesale price is much lower than the retail price. You keep the margin and the supplier ships the product to the customer.
What is YOUR role in this? You just need to find good products and market the business. Inventory, shipping, and packaging are chores that the supplier would be responsible for.
Understanding Supply Chain – Sometimes you would come across the word ‘supply chain’ in this business. This may sound complicated to a novice, but it is basically how the product goes to the customer from the supplier.
In technical terms:
‘Supply chain is the flow of goods, money, information, and services from suppliers to end customers.’
YOU are the middleman – the retailer. Dropshipping will work efficiently if everyone joins hands and work in harmony.
- The manufacturer creates the product.
- The manufacturers sell this product in bulk to suppliers or wholesalers.
- The wholesalers and suppliers sell the products in bulk to the retailers.
- The retailers sell the product to the customers.
It is a chain that works efficiently and creates a sync! If you understand the basics of dropshipping and can get customers onboard, then it will be an excellent business for you.
Dropshipping is easy.
- Start off with setting up a store on your website. Make sure it is user-friendly and easy to navigate.
- List the products that you wish to sell. You need to do a lot of homework for this! Knowing your audience will help you to march towards success.
- Next step is to drive traffic to your store/website. How will you do that? Digital marketing allows you to garner attention.
- When you make a sale, the supplier will get a heads up.
- You will pay the supplier (wholesale price).
- The supplier will ship the product to your customer.
- You will handle the customer service aspect.
Tip 1: Make sure you place a valid number/email address on your store. Building trust can help you get more customers.
Tip 2: Choose hot-selling products. Do not be in a rush to add products to your online store. Doing homework on what products sell faster allows you to get more leads.
We will tell you more about finding and selecting the best products. Let’s take a look at the pros and cons of dropshipping.
The Pros and Cons of Dropshipping
Before entering in the business arena, you need to calculate risks. We have gathered the pros and cons of dropshipping. This will enable you to get familiar with the risks and the benefits of becoming a part of the dropshipping model.
Majority of the novices want to make quick money online. Please know that dropshipping allows you to make money easily, but it requires a little more knowledge and some homework from your end.
Let’s quickly skim through the pros and cons of dropshipping.
- As a novice, you do not need a lot of money for investment. There is no need for startup capital here. Conventional retailers start the process by purchasing the products and then, they wait to get lucky some day. There are some conventional retailers who are doing fabulous in their business, but there are many who fail to garner attention of prospective clients. Since you are starting your business, it is safe to opt for dropshipping as there is little investment involved.
- Say no to endless hassles. In the conventional business model, you have to purchase the products in bulk and wait for customers to buy the product. The real headache starts when you have to package the product and then ship it to the customer. It requires a lot of effort, money, and even time. You need excellent time-management skills here. With dropshipping, you are just the middleman. Add products to your store, sell it online, get customers onboard, and pass the order to the supplier. You do not have to worry about shipping, packaging or even storing the product in a physical space.
- You do not have to buy expensive products to get more customers. In case you wish to expand the product list for the customers, you can test some expensive products with your target audience. This allows you to check whether the target audience is interested in expensive and exquisite items or not.
- There are no labour costs involved in the business. If you start a business, purchase the products in bulk, and then handle the packaging/shipping, it will require labour. You would need to hire people for each of these tasks. When you opt for dropshipping, you are the owner, the decider of what products your site should sell, and the only person who gets to keep the margin. Basically, you are saving the labour costs. Our advice is to market your business efficiently. Digital marketing solutions will help you to get more customers. How will they find you online? How will they find a particular product on your site? This would require some good online marketing skills. Perhaps you could hire someone on freelance basis and get more traffic on your site.
- Since the product reaches straight to your customers, there is lower risk of losses. The supplier ships the item to the customer which means the product is taking a direct route. This helps in reducing losses as you are not handling the product. The product’s journey becomes less tiring and it straight goes to the buyer.
- It is a possibility that there will be shipping delays. Logistics can be a hassle. Since you are the middleman, you have no control over the tracking number and delays. This could be a major drawback. However, it also depends on the supplier you are choosing. If the retailer and supplier have a good understanding, then the business shall flourish. Hence, you should opt for a trusted supplier.
- There is stiff competition out there. Perhaps the products you are selling is being sold by other competitor websites. There is a fix to this! Do your homework and see what the competitor sites are doing. Are they selling the same yellow dress at a lower price? It is possible that they are doing the same thing to beat your business! If you are in this dropshipping business, choose unique products and keep the pricing competitive. The more you sell, the more you earn.
- Since you are the middleman, you have no control over the packaging. There are home-bakers and accessory stores who add special notes, thank you cards, and even a free gift to build trust. The supplier will be packing the product and sending it straight to the client. You have no say of what goes with the packaging. Well, this is just for those businesses who wish to add a special touch to the product package.
Tip: If you are just getting started, focus on selling different/unique products. There are many sellers out there who are marketing the same products. When you choose unique products, you are able to stand out as a business. Why should the buyer purchase the product from your website? Are you giving out the product for free? The answer is NO. Hence, make your website a customer-friendly platform. Find a niche and add products to your website.
The biggest benefit of dropshipping is that the storeowner will only purchase the product when the customer hits the ‘pay’ button. Why waste your money buying products on wholesale? There is no assurance that these would sell out or not. When you purchase in bulk, your last option is to sell the products at half the price. Plus, it will only take up space in your office/home.
Select the products wisely. Pick unique items and put them on sale. If you are still wondering what jewellery piece would sell or what t-shirt is trending, put it on your store and witness customer behaviour.
Speaking of selecting the products, you must first ‘find’ the best products. Let’s take a look at the next section.
Finding The Best Products
There is a tough market out there! In case you are just getting started, getting products from Amazon, Etsy or Ebay will not work. The popular products are hard to sell, especially when you are new to this field. It will surely sell if you set a low price, but there will a very thin profit margin. Is it possible for you to market a popular product and add a special touch?
If you are not into selling popular products, find the not-so-popular ones and put it up for sale. How does it work?
Picking a niche is the starting point. You need to analyze and understand the niche market. When you select niche products, customers are attracted to your platform. For example: If you have a blog that talks about pet health then you could have an eStore with pet accessories, food, snacks, and toys. When you are focused on a particular niche, you are able to garner more attention.
There are retailers who are also getting attention by placing buyer guides on their platform.
Finding the right products is not a cakewalk. Please know that popular products will sell, but you will not get a large profit margin. Sell products that give you at least 30% profit margin. If you are selling a popular product, it is possible that you have to keep the price low to sell more products. Perhaps every other seller in the market is selling the same product at a cheaper price, but you need to be smart and pick niche products.
This was just a broad idea for you to find the right products. Here’s an elaborate explanation on HOW you can find the right products that sell.
#1 Sit down with a pen and paper or a laptop. The first step is the brainstorming session. If you have a team, you can sit and list down the products that you wish to drop ship. In case you are running out of ideas, look at other online stores and see what they are selling! How are the target audience/buyers reacting to the products? Check the reviews, ratings, and even tags on social media. You can get an idea about the least selling, top selling and trending items online. At the first juncture, you must understand why certain products are selling like hot pancakes and others are not doing great.
#2 Get a digital media expert onboard. Someone who has deep understanding about what the target audience is searching for can give you a glimpse of what would work. What are the keywords that people search for? Perhaps it could be dog collars, bulletproof vests, or even diving equipment. You can get product ideas from social media platforms such as Pinterest or Etsy.
#3 Don’t just think globally! Your aim is to reach out to more customers, but you must first start with your local neighbourhood. What are the locals delirious about? Find out what they need and then drop ship the products on your platform.
#4 What is the product price range? You want to become rich SOON! But, you need to find products that are lower-priced. When the products are of low price, the conversion rate will be higher. If there are luxurious and expensive items such as electronic gadgets, people think twice before purchasing. eCommerce experts believe that $75 to $150 is a good price range. You can start with this range and then move ahead.
#5 Who is your target audience? You need to set a price as per the location. For a person living in the United Kingdom or The United States, they would consider $75 to be a nominal price. However, a person living in Philippines or India may consider it to be expensive. You need to pick products and a price range that suits the budget of people. It all depends on the location and the age group of the target audience. Perhaps teenagers will not be able to spend $100 on a product. If you are selling the item to working individuals, $100 is a good price.
Tip: Once you have all the product ideas, use Google Trend or a keyword research tool to find out whether that product is trending or not. It gives you an idea as to what your target audience is searching for. You can customize the comparison on Google trends based on location, category, and time range.
Finding the ideal niche is the only task that you need to perform with diligence. Take one product idea and search for the keyword on Google. For example – You are planning to sell ‘crop tops for women’. As per the results page, you will find your competitors and what they are selling. Check the price range and how they are advertising the product. You can also click the images section to find out how many sellers are selling the same product. You would get a brief idea about the price range, the variety, and it will help you to become better in the market.
List the competitor sites and see where they are going wrong/right. You have to make your platform better than theirs! Consider selling the same product at a better price or offering something even more attractive at an affordable price.
The key is to be smart! In case you are not able to compete with the competitor in terms of the pricing, you can cross them off the list. But, you would always find ways to be better than your competitor. Perhaps add products that are unique and are not available on their platform.
AliExpress Dropshipping – You may have heard of AliExpress. It is a marketplace with a massive selection of products. You will find oversees manufacturers on this platform. Hence, the pricing is quite competitive. From menswear to women’s jewellery and even toys, AliExpress has it all.
AliExpress is a platform through which you can find products and sell it on your eStore. You do not have to worry about the shipping, packaging, and inventory. There is no upfront fee or cost. You can simply test the products in your store. There is no financial commitment and baggage that you need to carry on your shoulder.
The good part is that most of the AliExpress sellers have posted good-quality photos that you can use in your store. The buyer checks out the photo and then makes a decision whether they should purchase the product or not.
Tip – Please note that good quality photos matter in this business. If you want to succeed, you must invest time to write hand-written product descriptions. Additionally, the photo of the product needs to be clear and alluring. The prospective buyers want to see the product from every angle.
Go to the categories section of AliExpress. You will get an idea of the products that you can sell.
Choose products that have a good rating. Ideally, go for products that have a rating of 4.5 or above.
Opt for products that have a low price but the margin you get to keep is higher. This will give you some room to tweak the price range. If you find running shoes for women at the price of $20, you can sell them for $50. Make sure the product has a good tag line and a description on your page. Ideally, you can also check whether someone else is selling the product for the same price or a lower price.
Here’s something you should avoid:
- Do not buy fake branded products. This could be a put-off for your customer. They would never buy products from your store because you cheated on them. Additionally, you are not a licensed/legit reseller, so do not get into trouble selling a product with someone else’s logo.
Finding The Best Suppliers
The main question is – Who will drop ship the products from your side? You need to find the right supplier.
The question is – How do you find the best suppliers? You will find the answer here.
- If you are heading to AliExpress to find products, you must opt for a product that has the highest purchase. If more than 300 people have bought the product, it is a legit product. Do not opt for a new one.
- Get a quick overview of the seller. There are quite a few tools that help you to find out the overview of the seller/supplier.
- There is no harm in asking questions before purchasing products. If you find a supplier online, feel free to ask questions about the product. You want to find someone who is reliable and will ship the products well in time. Since you are the middleman, you do not want your customers to complain about late delivery, defects, and so on.
In case the order never reaches your customer, you need to speak with the supplier. There is AliExpress Buyer’s protection that helps out in this case.
If your customer is not happy with the product, it all depends on their expectations. In case the product is damaged, they can click a photo and send it to you. You can also ask for honest reviews. Perhaps you could also give out a partial refund.
On second thoughts, you must always select products and suppliers that have a high rating. When there are good reviews and ratings, you would know that your customers will be satisfied.
Tip: Choose suppliers who are well-aware of the dropshipping model.
If you are choosing AliExpress, you would need to contact every supplier and review their products carefully. This is the most important step before you can upload the specifications and add the photographs of the products.
There are 100K+ trusted and well-known suppliers on AliDropShip. You can choose from millions of products and sell them at a good price. There are other suppliers/online wholesalers/distributers. Some of the names include Kompass, Doba, AliBaba, and Wholesale Central.
Check the following things before choosing a supplier:
- Their reputation
- Quality of the product
In dropshipping business, you need to have an excellent rapport with the supplier. Request for a quotation and understand the terms and conditions of the drop shipper.
Tip: AliDropShip plugin allows you to create your own AliDropshipping store. You get to keep the profit and there are millions of products that are available at a low price. Many entrepreneurs are making a fortune by selling products from AliExpress. Just use AliDropShip plugin to get started!
Dropshipping Mistakes To Avoid
There are some common dropshipping mistakes to avoid. Please know that there is a highly competitive world out there. There is cut-throat competition to climb up the ladder and become successful. You are not going to be successful overnight! It will take a little bit of homework, hard work and smartness.
- Use your SEO and marketing knowledge because the products are not going to sell by themselves. The products are NEVER going to sell on their own. You would need to put in the hard work to sell the items on your store. AVOID being laid-back. A business does not run with a laidback attitude. You have to market the product every single day. Hire an SEO expert or use social media to market the products.
- Since you are not a part of the shipping and packaging process, you have more time on hand to work on excellent customer service. Customers will have queries and will try to find an email, chat support or a phone number to contact your store. Use your time to answer all the queries and provide excellent customer support.
- Do not rely on one supplier. What if they raise their prices? There could be logistic issues later on. Perhaps the supplier might even go out of business. As an entrepreneur (a smart one!), you need to have a backup plan. When you start working with a new supplier, consider placing one test order. How is the packaging? How much time does it take to reach your door? You can place a test order to see whether this supplier is worth your time and money or not. Our advice to you would be to place test orders time and again. This will help you to see the quality of the product, shipment delivery time, and packaging quality.
Words from the Wise
We hope this guide helped you to know everything about dropshipping. Dropshipping, as a business plan, is quite profitable. However, you need to invest time to find the right products for your platform.
Never be in a rush to start an online store. You can take time to find out a niche and select products. Perhaps, you would need to spend time on target audience’s buying behaviour. Formulating a good business plan is not a daunting task. You will get there if you invest time and effort. So, take your time and find out a niche for your platform.
Then, you can move forward and find suppliers/wholesalers who are willing to be the drop shippers. Place a test order so that you can check the quality of the packaging, product, and even the shipping time. You must find out the reputation of the supplier. Since the supplier is the one who will be packaging the product, shipping it, you must be aware of their reputation. Do they have good ratings? Are they having good reviews on the site?
In order to choose the right products, you can do your homework on social media platforms or even check the best-selling products on Amazon or eBay. Even if you are selecting not-so-popular products, choose the ones that have a strong niche such as diving equipment.
When you start using AliExpress and make a few sales, look for ways to grow the dropshipping business. After you have made a few successful sales, it will give you an idea whether the suppliers are reliable or not. You would know how the quality is. Most importantly, you would get to know whether the existing buyers are happy or not.
There are many suppliers on AliExpress who make good use of Skype. You can get in touch with them and ask questions. As an entrepreneur, you have to be sure of their shipping process, product quality, and packaging quality. Another thing you need to keep in mind is whether AliExpress suppliers are using legit photos of the product or not. It should not be copied from any other site. Speak to the supplier if the photo is of the original product.
The buyers should not get a surprise upon opening the product. You have to ensure that the customers are not being handed over a fake or slightly different product. Hence, you should always check with the suppliers if the photos are genuine or not. You can also ask for more pictures of the product.
In a nutshell, dropshipping is a wonderful business opportunity. Make sure the products are perfect, unique and as per the expectations of the buyers. Please note that the buyers are coming to your platform for the products and not for anything else.
If you want a profitable business, focus on selling quality products. Since you are not a part of the shipping and packaging process, you can work well on making your website visible for prospective buyers. Also, you can work on writing artsy and detailed product description. Most of the buyers will check the description and the photos of the product. Make sure these aspects are perfect!