What is Dropshipping Business: The Complete Guide

Dropshipping business
Dropshipping process

Starting a dropshipping business is one of the easiest ways to make money online in 2020. The growth of Amazon, eBay, Etsy, Shopify, and other platforms allows everyone to create an online store for just a few dollars. But with a very low entry fee, the popularity of dropshipping has exploded in the last 10 years, which means that many markets are extremely competitive.

If you are planning to start a dropshipping business, either to have a second activity or to leave your full-time job, you can save time and prepare for success by following a few simple steps that I’ve prepared for you. it is one of the best online business ideas.

In this comprehensive guide to dropshipping, I will show you how to start a simple dropshipping business in 5 easy steps:

SUMMARY

What is dropshipping?

Find a niche and choose your product

Find the right Software or Marketplace

Find your first customers

What is dropshipping?

Drop shipping is about listing and selling products without storing them yourself. No fixed storage fees, no stockpiled garage, and no missed product for sales. You create partnerships with suppliers who receive orders from your website, package products and send them directly to customers on your behalf.

You add value primarily through your marketing, customer service, and advertising, and you outsource logistics, storage, packaging and shipping to the supplier. You will have to choose the right supplier (we will see this later), but once done, you will not have to worry about logistics anymore.

You will not spend your time coding, but you will still have to offer one or more products. You will also need to undertake market research, develop a site, configure your CMS (software to manage your site) and your plugins (mini software to take care of specific actions), then engage in marketing by going from SEO ( Knowing how to please Google) and content marketing.

Let’s now explore some of the potential advantages and disadvantages of a dropshipping company.

What are the advantages of dropshipping?

Beyond the dream of seeing your income increase when you enjoy the sun lying on your beach in a remote tropical paradise, there are countless other benefits to running a remote managed dropshipping business.

Here are some advantages:

  1. Low installation cost: As you do not have to cover the cost of manufacturing your own products or buying wholesale products, you can start selling almost immediately, without significant investment.
  2. Low operating expenses: By choosing dropshipping, you can eliminate the costs (and risks) associated with storing physical goods between countries and continents. You will save on the costs of freight services, port operations, storage, warehouse employees, packaging and labeling.
  3. Increase Cash Flow: As you do not store the product, you only pay for this product after it has been sold and you have already received the payment.
  4. Infinite inventory: you access a virtually unlimited number of suppliers around the world. It could also mean a simple expansion into new markets.
  5. Free your time: yes, the main interest. You sell and, ideally, brand and market the product, but you do not manufacture it. This allows you to focus on strategy, marketing and, of course, enjoy your margarita in the shade of the palm trees.
  6. Conduct real-time market research: If (despite your best marketing efforts) one of your products still does not sell, the lack of stock to delete means you can remove it from your offer immediately! Constantly adjust your products to market demand in real-time.
  7. Work Anywhere: Free yourself from your office or employee connections and enjoy the opportunity to work from anywhere. Admittedly, it’s not just dropshipping for that, but remote work is still fantastic. Always tempted?

The benefits are fabulous, but the story is not over. To get an overview, let’s also look at some of the disadvantages of dropshipping.

The disadvantages of dropshipping?

Some of these disadvantages may only concern certain sectors and others are risks that can be remedied simply by taking the right steps. Nevertheless, it is important to know them for the good development of your company:

  1. Less control, different risks: By sending your orders to an external supplier, you can increase the risk of dissatisfied customers if suppliers fail to pack correctly or deliver on time, for example. These problems are hard to avoid, especially at the beginning of your business. So be sure to choose a quality partner from the start. 
  2. Minimal margins: you will buy products at a reduced price and you will sell them at a profit. However, when you start, you will not have the volume necessary to offer significant discounts.
  3. Less competitive prices: Any easily accessible market risks competition and price competition. So, you have to choose the cheap one. Anything that is too easy to access will be seriously threatened with disruption.
  4. Difficult to create a unique offer: you will also be very careful about how you add value to your dropshipping business. If you only connect buyers to a wholesaler, you provide relatively little value. If you add a brand, a guarantee of quality, a customer service, a certain simplicity, etc., you are in a stronger position. It’s difficult but not impossible.
  5. Easy to copy: This also brings us to the previous point: you will need to create your own added value over time, but especially at the beginning you will be really easy to copy. When you open your shop, it may be better not to talk too much about it.

These are risks that should not be taken lightly. There are obvious solutions to these problems, some of which are discussed later in this article, but you must be fully aware of these problems.

Dropshipping: where to start?

Now that we are fully aware of the advantages and disadvantages of dropshipping, it’s time to make the decision! If you have a certain computer skills and want to create value with a strong branding and marketing strategy, do not hesitate. If my latest warnings are right for you and you want to create a great store, brand and customer experience, let’s go!

Assuming you’re still reading because you’re curious, let’s take a look at the best approach to creating your dropshipping business – from finding your winning idea to your supplier and your first customers.

Find a niche and choose your product

It’s the very foundation of your business, so it’s better to be strong! You need a niche: it’s something your shop will focus on.  Or maybe it’s a relatively unknown and underused topic or product: ideally a combination of both!

You will be much more likely to succeed if you have an advantage over the competition, even if it is only your expert knowledge. An “Expertise” in a subject or type of product that really fascinates you. One of your current hobbies, for example.

Maybe you like to get some very unusual art or do you particularly like to photograph birds? Or maybe you’re a new parent, but do not want to give up your passion for golf. These are two great niches because they are at the intersection of two categories. If you are an expert in both areas, you immediately have a competitive advantage. This type of approach is a great way to learn dropshipping

Explore many ideas, choose the best

Try to find some ideas to explore. The next step is to search for keywords and search for existing products (high-quality bird prints? Baby golf stroller?). These are the same SEO techniques you would use to decide what to blog and promote. Here is a nice article to help you find interesting keywords.

Looking for a reasonable amount of research per month on a range of keywords. Ideally, you’re looking for a niche without too much keyword competition to reach potential customers on the first page of Google.

You may need to search for four or five ideas before finding a really good one. So take a pen and paper and spend some time on this issue. With dropshipping, the costs of starting a bad business are not huge, it’s essentially your time that is at stake. But you can certainly save yourself a lot of trouble by doing your research properly.

Find the right software (CMS)

Whether you already have an online store or are looking to get started in dropshipping; It is absolutely essential to decide the best balance between the ecommerce management system (CMS) and your marketplace.

These services will share information day after day and compatibility issues can cause incalculable problems. Shopify, for example, has its own dropshipping app, Oberlo. It’s pretty impressive, but you’re stuck in the Shopify ecosystem. If you have sufficient knowledge, you can use WordPress using WooCommerce, much more customizable than Shopify.

WooCommerce has its own dropshipping plugins: you have for example AliDropship or WooDropship. AliExpress is a subsidiary of Alibaba, the Chinese e-commerce giant. The site offers hundreds of thousands of products at wholesale prices. It is therefore ideal when you start in the dropshipping.

AliExpress can be a key part of your journey with dropshipping. You have to do your research when you choose a marketplace and remember that you choose a marketplace and you need a provider on the same marketplace. You will need to know the customer support, the shipping costs and the channels on which you can sell.

Find your first customers

Your dropshipping store needs visitors and customers to flourish, you will not know how to do dropshipping without customers! To start, keep things simple and focus on the marketing channels most likely to get you sales.

You have to think about possible marketing channels, and if you have access to an unusual or unorthodox channel or if you have skills, do it! It’s a great way to get your first customers. However, in this case, I would recommend content marketing because it does not require any financial investment and will give you results over time. You are probably able to do a decent job.

The key points to remember here are:

  1. Create great content that answers unanswered questions about your products or questions already answered better than what is currently done.
  2. Have a target keyword in mind for each article.
  3. Invest at least 2 months in content marketing. It takes time to work well.

The key is to provide true value and useful information that will allow customers to return to your site.

Try this and make sure you find the right balance between creating good quantity content and tweaking your strategy if necessary. It’s a fantastic way to create customers for your shop and ultimately learn how to do dropshipping.

Note that I do not speak here paid commercials, because you will invest hundreds or thousands of dollars in various tests before seeing your first profits. Assuming you see them arrive.

The advantage of starting with organic (free) traffic is that you will have a number of regular sales and thus a minimum income. Once you have earned these revenues, you will have enough means and experience to try the paid advertising.

Ready to jump into dropshipping?

It’s possible to start a business with little investment, no office, and make high profits with dropshipping, but (although it may seem glamorous), it’s important to remember that creating a dropshipping business has the same risks as the creation of any e-commerce. You need to build a solid marketing operation and add value somewhere in the process.

That said, dropshipping is a newcomer to the online e-commerce space. A few years ago still, finding an idea of ​​dropshipping was not given to everyone. The time has come to examine this business model.

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