Dropshipping is an amazing business model for new and seasoned entrepreneurs, because it lets you gets started with a small investment, generate passive income and work from anywhere.
This is how to begin your first drop shipping business. All you need is a computer, an online store and some basic marketing knowledge. Now, if you’ve heard about drop shipping, you may have come across one of these sketchy video ads selling an incredibly expensive course promising to show you how to get rich overnight. And that’s exactly why I've created this guide. There’s a lot of information going around the internet about drop shipping, and as I tell you about the world’s most trusted e-commerce platform, I think it’s incredibly important to set entrepreneurs up for success. So today this is going to arm you with drop shipping knowledge and strategies that you can trust. Then take you step by step on how to set up your first drop shipping business on Shopify.
What is drop shipping?
Drop shipping is a fulfillment model that allows you to buy directly from suppliers and manufacturers who will then ship the products directly to your customers. This let’s drop shippers, focus on marketing and customer service instead of warehousing and logistical challenges traditionally associated with running a drop shipping business.
In digital entrepreneur communities drop shipping has become such a notable model because it has so many benefits for those just starting out. For one, less capital is required and without the need to spend thousands of dollars upfront on inventory, drop shipping is really accessible and less risky way to get into the world of e-commerce.
It’s also a lot easier, since you don’t have to deal with packing and shipping, tracking inventory or paying for a warehouse, there’s a lot less to worry about than other forms of e-commerce. Since you don’t have to worry about these functions it’s also easier to scale. Traditionally with retail businesses, if you were to receive three times the number of orders, you would have to do three times the amount of work. And that's just not the case with dropshipping.
Since you don’t have to buy in bulk right away. It’s also easier to test the market. A lot of drop shippers will actually list and sell an item to test the market before buying it in large amounts. As any seasoned entrepreneur will tell you, that validating your idea will save you a lot of heartbreak later. The biggest risk is building and selling something that no one wants.
Lastly, in today’s economy, the ability to work from anywhere is really, REALLY attractive. Dropshipping does have a few challenges that are important to note. First is competition. Not having your own copyrighted branded products does leave you open to competition. Secondly supplier errors will happen, leaving you to take responsibility for mistakes that you didn’t make. Number three is lower profit margins. Since drop shipping products aren’t exclusive, it can be hard to command sizable profit margins. number four is little to no customizability with drop shipping what you see on the suppliers site is often what you get. Lastly longer shipping times. With drop shipping don’t expect two day shipping. While it can widely vary shipping can take anywhere from 19 to 35 days. However, Epacket shipping can significantly reduce this, and that’ll be further down in your notes. Those are the pro and cons of dropshipping, now this is how the model actually works.
How Does it work?
First, we have manufacturers, who are the ones that actually create the product. They then sell it in bulk to wholesalers and sometimes directly to retailers. Next, we have wholesalers, who buy products in bulk from the manufacturers, mark them up slightly, and sell them to retailers. Lastly, we have retailers, who are the ones selling products directly to the public at a markup.
Drop shipping isn’t listed in the traditional supply chain because it operates as an invisible service. Here’s how it works: As the retailer, you choose the product, set the price, add it to your online store, and run advertisements to attract customers. When a customer sees your product and pays the retail price, you then notify your supplier, pay them the wholesale price, and they ship the product directly to your customer.
Here’s an example, let’s say you’re selling resistance bands. You find a supplier that sells them for $15 with shipping included. Then you put them on your online store for $40 with free shipping. Now, when a customer places, an order, you pay the supplier $15 and they’ll ship the product directly to your customer, using information that you’ve collected, then you get to keep the $25 in profit. Customers wouldn’t just go to the manufacturers because wholesalers typically have what are known as minimum order quantities, meaning they only sell in bulk. Also, they will typically only sell to legitimate businesses and not give wholesale prices to the public. Secondly, people aren’t just buying your product. They’re buying your marketing, the trustworthiness of your site, and typically the lifestyle that your brand represents. Thirdly, most suppliers don’t focus on marketing and will typically require more effort to find than the average shopper is willing to expend.
How to set up a dropshipping store?
If you want a serious business out of dropshipping, it is important you set it up the right way, as most suppliers won't work with you, unless you’re a legally registered business, at which point you’ll gain access to wholesale prices. MAKE YOUR BUSINESS LEGAL MOST IMPORTANT STEPS TO MAKING YOUR BUSINESS LEGIT. 1. Decide on a business structure 2. Legally register your business 3. Set up a business checking account and credit card 4. Abide by the tax regulations in your region READ THE ARTICLE PROVIDED TO LEARN MORE ABOUT THIS ^ ______________________________________ AFTER THAT, FIND THE BEST DROP SHIPPING products TO SELL!!! It’s recommended that you look for a NICHE MARKET. A niche market is a segment of a larger market that has it’s own preferences, identity, and needs. Niche markets are so powerful for dropping shipping because they help you differentiate and ultimately reduce competition. EXAMPLE - Smartphone accessories for traveling content creators. Summer and other year round warmer states/countries. NOW THESE ARE SOME GENERAL CATEGORIES TO GET YOU STARTED⬇️ 1. Hobbyist Products Like cell phone camera lens 2. Business Products Business clients will sometimes be more price sensitive, but they will almost always order in large quantities then individual consumers. (Business Cards for example) 3. Products with repeat purchases If you sell products that needs to be repurchased frequently, then you can grow rapidly by establishing a loyal customer base. (For example pills or something like toilet paper) Guide Lines to Narrow Your Focus and help you⬇️⬇️⬇️ 1. Pricing When picking a product you want you pick something that’ll you’ll be able to sell between the $40 and $200 price range. That’s because this price range will allow you to maximize profit without having to provide extensive presale support. Also impulsive buyers generally buy things that are between these prices. 2. Minimum Advertised Pricing This is when suppliers require that resellers price their product at, or above a certain level. If you can find a niche where this is enforced. It’s going to save you a lot of headaches and price wars with competitors later down the road. YOU NEVER WANNA BE CAUGHT IN A SITUATION, WHERE YOUR AT A RACE TO THE BOTTOM. 3. Marketing Potential How many ways can you brainstorm being able to market this particular product? If you can’t think of many it’s going to be a big barrier to customer acquisition down the line. 4. Accessories When people commit to making a larger purchase, they are less price sensitive to high margin upsells. Think about it… When you brought a $600 phone, buying that $40 case and $20 screen protector seemed like a no brainer. Call this the, do you want fries with that effect? Accessories can be a great way to upsell your customers and increase that average order value and revenue long term. 5. Selling a product that is hard to find locally will increase your chances of success. The reason for this is simple… when people can’t find a product at a store in town, they turn to the internet. 6. Smaller is often better The smaller the item is the easier and cheaper it is to ship to your customers. Now that you know how to find a perfect product, it’s time to turn to online tools. To be clear there are TONS of UNIQUE WAYS TO FIND PRODUCTS, but these are some that have worked for SHOPIFY THEM SELVES. 1. Start with Google It’s a great place to start for brain storming product ideas, as it will give you insight into what people are actually searching. Googles auto suggest feature will give you even better insight into long tail keywords. Example - “best phone that” 2. Another tool for market research is “answer the public”, which will give you insight into actual keyword phrases that people are searching for on search engines. 3. Online stores and trending products Another resource for brainstorming product ideas is simply going to online stores and checking out their curated product lists. LIKE⬇️ Amazon’s new and interesting finds eBay’s trending on eBay Alibaba’s first look at next season’s products can be GOLD MINES for products 2. Check out social shopping sites Like Pinterest, Fancy SSENSE, Wanelo and Etsy. Social shopping sites incorporate social aspects, like product sharing and user engagement features that give you insight into how a product is popular at a glance. ______________________________________ Create a mind map Mind maps are incredibly effective at getting information in and out of your brain. Mind maps, stimulate great ideas by using a powerful graphic process that unlocks the dynamic potential of your brain. While it may be old fashion, if it’s not broken, don’t fix it. ______________________________________ Keyword tools It’s much easier to fill an existing demand than it is to create a new one. So once you have a short list of product ideas, it’s important that you VALIDATE THEM WITH HARD DATA! To do this you need keyword tools like SEM rush, Uber suggest, or Google’s Keyword planner to gain insight into how many people are searching for the particular product. If you’ll be selling primarily in the US it’s important that you focus on the local search volume and ignore the global results, as that’s where most of your customers will be. If a search term has many variations that actively searched for, that’s a really good sign that this market is fairly deep with a lot of variety and interest. Keep an eye on the Allin Title and how many results return for a particular term. This will give you a really good idea of how much competition you will face in this niche. Allin title is for example “sportswear men” If you’re your using SEM rush, this process will be so much easier as their tool Market Explorer gives you insight into competitors, keywords audience, interests and demographics, all at a glance. ______________________________________ Google Trends Once you’ve used all the trends that was just mentioned, head over to Google trends to gain more insights. Look at the search volume over time. Ideally the niche you’re entering should be growing. Then look at the top and rising terms. This will give you a snapshot about which related search terms are growing the fastest and which related search terms are currently the most popular. After that look at the geographic concentration, which will let you know where people are located when they search for a particular term. This is really powerful as it will give you insight into where your customer base for a particular niche are most heavily concentrated. Lastly, take a look at seasonality. This is crucially important. If demand for product radically shifts at different points in the year, you’re going to want to know about it. Note: If you’re starting a single product store, make sure to really take your time to evaluate your product choice fully as it’s really gonna make the difference between your store sinking or swimming. ______________________________________ Evaluating Competition Once you picked your product you’ll want to take time to conduct a competitive analysis. Too much competition, will make it tough for you to acquire traffic and compete against established players. Too little competition, can indicate a tiny market size, which will really limit your potential for growth. To conduct a competitive analysis run a Google search and take note of the top ranking sites. For example “women jewelry”. Make sure to take a look at how they present themselves with their messaging, imagery and design. Since backlinks are a large ranking factor for search engines, running your competitor’s websites through link Explorer, is going to give you a really good idea of how hard it’s going to be, to outrank them. Zero to 50 linking root domains will likely be the low end for most worthwhile markets. 50 - 250 linking route domains will likely be the sweet spot for individual drop shipping entrepreneurs. As it offers the best work to reward ratio and likely shows a decently sized niche market. If there are over 250 linking root domains, unless you’re an SEO Ninja, it’s going to take some serious time and commitment to build that amount of unique links. This isn’t necessarily a deal killer, but be prepared to go up against some serious players. ______________________________________ Finding a Supplier Two of the most common approaches are to find a supplier manually by using supplier databases. And the second is to use a Shopify app that instantly connects you to thousands. For the latter we is recommend Oberlo. A marketplace developed by Shopify that connects you to products to sell. This makes finding a supplier so much easier. You can browse AliExpress and import products to your store with a click of a button. Here’s some other handy features that this store features that this route offers access; 1. to millions of products 2. 2. fulfilling orders automatically 3. easily monitoring inventory levels. 4. Calculating inventory margins automatically 5. shipping and tracking orders 6. measuring delivery performances NOTE: Here’s a pro tip, when looking for a supplier in a Oberlo look for one that have Epacket shipping. Epacket is a shipping option offered by third party logistics provider ls that allows merchants to provide fast and affordable shipping for light packages. While using an app like Oberlo is undoubtedly simpler for new drip shippers. These are some compelling reasons as to why you might want to find a supplier manually. The first is lower shipping times. By finding a supplier manually you can look for one that’s in a geographic location that you are targeting. And the second is control. By finding your own supplier, you’ll have more control over packaging, branding, and quality. It’s important to note that finding your own supplier can take quite awhile, sometimes weeks. And you’ll also need to qualify the supplier yourself… if you’re going to go this route, it’s critical that you’re able to differentiate between legitimate wholesale suppliers and retail stores posing as them. A real supplier will buy directly from a manufacturer and will be able to offer you significantly better prices. Here are some red flags. Ongoing fees! If a supplier asks you for an ongoing fee, just for the privilege of doing business with them they’re likely are not legitimate. And the second is they sell to the public. If a supplier sells to the public, they’re probably not legitimate, as a real wholesaler requires a wholesale account that you need to be approved for. If they’re selling to the public, they’re definitely selling at inflated prices. There are a few ways to find suppliers manually. The first is Google, but know if you do this, you’re going to have to search extensively. Wholesalers are traditionally terrible at marketing and promotion. So you’ll probably have to go into the double digits of the Google Search Results pages. Try various search queries and make sure to use keyword modifiers, like bulk distributor, reseller and warehouse. For example men sportswear distributor. Also when you find supplier, don’t judge them by their website website. WHOLESALERS are absolutely notorious for having poorly designed 90’s style websites. Another popular way to find wholesalers is through supplier directories. Now these are online databases with pre-vetted suppliers and they usually charge a onetime fee for access. Some of the most NOTABLE SUPPLIERS DIRECTORIES are worldwide brands, Doba, saleHOO, and wholesale central. As mentioned it’s IMPORTANT that you have your legal documents in order as a lot of legitimate wholesalers were require proof that your a illegal business before allowing you to apply for a wholesale account and revealing theirs prices. HERE ARE THINGS MANY SUPPLIERS MIGHT REQUIRE⬇️⬇️⬇️ Per-order fees - to cover the cost of shipping and packaging Minimum order sizes - which is the lowest number you’ll HAVE to purchase on your first order. When qualifying suppliers here are some questions you should definitely ask. DO YOU OFFER DROP SHIPPING? DO YOU OFFER CUSTOMIZATION? CAN YOU PUT MY COMPANY’S LOGO ON THE PACKAGING? DO YOU OFFER PRIVATE LABELING? ARE THERE ANY FEES? HOW SHOULD I SEND YOU ORDERS AS I RECEIVE THEM? HOW WILL YOU INVOICE ME FOR ORDERS? DO YOU ACCEPT CREDIT CARD PAYMENTS? WHAT IS YOUR POLICY FOR DAMAGED OR MISSING ORDERS? HOW LONG DOES IT TAKE FOR ORDERS TO BE PROCESSED and SHIPPED? ARE YOU THE MANUFACTURER OF YOUR PRODUCTS? When qualifying a supplier, make sure to look for these things. ______________________________________ EXPERT STAFF Top-notch suppliers will have knowledgeable sales representatives who really know the industry and their product lines. ______________________________________ DEDUCTED SUPPORT REPRESENTATIVES Quality suppliers will assign you a representative that’s responsible for taking care of any issues you might encounter. ______________________________________ THEY’RE INVESTED IN TECHNOLOGY While, there are plenty of good suppliers WITH OUTDATED websites, features such as an online catalogs, searchable order history, real-time inventory, and customizable data feeds are a pure luxury for an online merchant and they can really help you streamline your operations. ______________________________________ CAN TAKE ORDERS VIA E-MAIL Well, this might seem like a minor issue having to call in every order or manually place orders on their website can make processing orders a lot more time intensive. ______________________________________ CENTRALLY-LOCATED A centrally located supplier can save you a lot of money on shipping fees long term and allow you to promise consistently faster delivery fees times. ______________________________________ ORGANIZED & EFFICIENT Some suppliers have amazing staff and guest systems that result in efficient and mostly error free fulfillment, but there are orders that will literally botch every fourth order. The trouble is it’s difficult to know which is which until you start working with them. If you’re not using the Oberlo app, which fulfills orders automatically. Every supplier is going to have a different communication method, which they prefer for fulfilling orders. Weather they prefer excel, email, instant messaging, or have their own unique login system. Don’t worry the supplier will help you get that all set up. Shopify has an option to help automate this process, by adding a custom fulfillment service in the backend. Regardless of weather you’re using Oberlo, or finding your own supplier, it’s definitely recommended that you test the product before selling it! Although you’ll probably have to pay for samples, but this is a small cost to make sure that your customers will be satisfied. Regarding payment, the best majority of suppliers we’ll accept payment in one of three ways. 1. Credit Cards 💳 2. PayPal 3. Net Terms Which means you have a CERTAIN NUMBER of day TO PAY THE SUPPLIER for goods you purchased. If you go with net terms, you may be required to give them some documents as they are effectively lending you money. Sometimes your supplier’s gonna mess up. It happens. And when it does, it’s important that you take responsibility for their mistakes and remedy the issue by providing customer support. The internet has always been a fairly transparent place, but the rise of social media has made your BUSINESS REPUTATION VERY IMPORTANT. IF YOU DON’T TREAT YOUR CUSTOMERS WELL, THEY’LL OFTEN LET THE ENTIRE WORLD KNOW, INCLUDING POTENTIAL CUSTOMERS. The biggest customer service risk for drop shipping merchants is having tunnel vision on per order profits and losses when fulfillment issues go awry. It’s critical to accept that drop shipping can get a little messy. You’ll be paying to clean up these messes and you shouldn’t try and pass these costs onto your customer. If you weren’t occasionally losing money on individual orders to make your customers happy. We’ll, you’re probably not providing very good customer service. However, just because your take responsibility for their mistake, doesn’t mean you have to pay for it. In these situations, try reaching out to the supplier and seeing if they can help you make it right. ______________________________________ MARKETING YOUR PRODUCTS THE NUMBER ONE FRUSTRATION THAT NEW eCOMMERCE MERCHANTS FACE IS LACK OF TRAFFIC TO THEIR STORES!! Too many merchants spend months making the perfect website and creating the perfect brand only to launch it to a world that doesn’t know they exist! The “build it and they will come mentality” DOES NOT APPLY TO THE WORLD OF ONLINE BUSINESSES. Marketing and driving traffic is absolutely essential to the success of your business. And you need to take some initiative to make this happen. This is particularly IMPORTANT during the first 6 to 12 months of your existence, when no one knows who you are!!!! Following your site launch, you need to dedicate 75% of your time to marketing traffic generation and SEO for at least 6 MONTHS. It’s easy to get fishy up in perfecting your site design or logo but marketing is ultimately what’s going to move the needle. ______________________________________ CRAFTING YOUR VALUE PROPOSITION Marketing Basics ⬇️ 1. Start with crafting a value proposition. Crafting a compelling offering is a key place to start because it’s this messaging that’s going to fuel your marketing campaigns. A value proposition answers why someone would buy your product. For example, this is the value proposition of Slack. ⬇️ “Be more productive at work with less effort.” ________________________ Here are some value prop elements that might inspire you. Price Quality Features Benefits A feeling A solution to a problem Exclusivity/Patents Customer Service Convenience ________________________ Once you’ve crafted a compelling value proposition, then it’s time to create a customer profile that will help you focus your marketing efforts. And that’s because there’s a lot of ways to get people to your website but WE’RE ONLY INTERESTED IN ATTRACTING PEOPLE WHO WILL BUY WHAT WE’RE SELLING. So first your need to ask you’re self these questions. 1. What niche market are you targeting? For example, if you were selling cruelty-free cosmetics, your niche market would be CONSCIOUS CONSUMERS. 2. What are your customers interested in? For example, let’s say you’re selling hiking boots. We can reasonably assume your customers are interested in nature. 3. How do your customers behave? 4. What books do they read? 5. What sites do they use? 6. Where do they hang out? If you’re selling cell phone, tripods, chances are your customers hang out on TikTok, Instagram, maybe YouTube. LASTLY BE MINDFUL OF DEMOGRAPHICS - AGE - GENDER - LOCATION - MARITAL STATUS For example, if you were selling sports themed beverage coolers, the demographics might look like middle aged, married men located in American suburbs. Once you’ve completed this it’s time to actually begin marketing. Here’s some of the most common marketing channels that drop shippers find success with. ⬇️ Paid advertising Influencer Marketing Affiliate Marketing Content Marketing Communities There’s so much to cover with each of these marketing channels so for more information look at the videos for each marketing channel!!!! MOST IMPORTANT THING TO REMEMBER IS TO ADOPT THE MENTALITY OF A SCIENTIST AND METHODICALLY TEST VALUE PROPOSITION AND MARKETING CHANNELS UNTIL YOU UNEARTH THE ONES THAT WORK FOR YOU. ITS IMPORTANT TO REMEMBER THAT WVERY PRODUCT AND EVERY BRAND IS DIFFERENT. And there really isn’t a “one size fits all approach.” ______________________________________ CONVERSATION OPTIMIZATION and INCREASING YOUR AVERAGE ORDER VAULE SINCE YOUR SENDING PEOPLE TO YOUR SITE, YOUR GOING TO WANT TO MAKE SURE THAT YOUR PRODUCT PAGES ARE OPTIMIZED BECAUSE YOU WANT PEOPLE TO ACTUALLY BUY! A PRODUCT PAGE CAN REALLY MAKE OR BREAK A BUYING DECISION!!! ______________________________________ HERE ARE SOME QUICK BEST PRACTICES⬇️ 1. Let’s talk price Setting a price slightly higher than your competitors can be a great strategy as it can increase the perceived value of your product. We wouldn’t recommend being the cheapest thing in the market as it will ultimately be a losing game and just slowly eat away at your margins. 2. Trust Building trust will be a girls component of increasing your conversions, reviews and testimonials, customer generated photos and money back guarantees, are all powerful ways of building trust and reversing risk for your customers. 3. Urgency Urgency can be a powerful technique for increasing conversations, using flash sales and letting customers know there’s a limited sale. Like Fashion Nova by letting customers know that there’s a limited quantity of an item can help them adopt a scarcity mentality and put them on a time crunch. And this can really help them make a purchase decision a lot faster!!!! 4. Product Recommendations Using relevant product recommendations to cross sell and upsell your customers can really help to increase the average amount they spend at your store per purchase. 5. Order Minimums Offering free shipping on orders over a “hundred dollars” is a great way to incentivize your customers to add on extra items. 6. Loyalty Programs Offering your customers a discount or a coupon is a great way to get them to keep coming back! IT’S IMPORTANT TO REMEMBER THAT JUST LIKE ANY OTHER BUSINESS. WITH DROP SHIPPING IT’S VITAL THAT YOU HAVE A LONGTERM PERSPECTIVE. BUILDING A DROP SHOPPING BUSINESS IS JUST LIKE BUILDING ANYTHING ELSE VAULE. IT TAKES A SIGNIFICANT LEVEL OF COMMITMENT AND INVESTMENT OVER TIME TO TRULY BUILD SOMETHING THAT IS SUCCESSFUL For some reason, this myth that persists that problem can build a six figure passive income with just a few months of part time work. And that’s just not the way it works.
