Are you seeking an online business platform to sell products with zero investment and without the burden of maintaining a warehouse and stocks? If yes, let me tell you, you must start a dropshipping business store. It is an online business model where you can generate high returns by selling other brands’ products and services. It’s a rapidly growing market during and after the Covid-19 pandemic.
Table of Contents
In this article, we are going to discuss what dropshipping business model is, how it works, the steps to start a dropshipping business, its pros & cons, and most importantly its different platforms.
What is Dropshipping Business Model?
It is a model in which sellers use an online storefront to promote and sell the products of the dropshippers. It is also referred to as an Order Fulfilment or Supply Chain Model.
Moreover, in this online business model, there is no need to have product stocks in actual. You get the Showcases of the product from dropshippers.
The practice of direct mail was first introduced around 1928, but it lost momentum due to the Great Depression Era (between 1929 and 1939). After that, Toyota introduced his just-in-time (JIT) supply chain in the 1950s. The advantage of JIT inventory management were immediately apparent. Modern drop shipping business models reflect a key JIT supply chain problem by eliminating expensive inventory transportation as well as storage costs for retailers.
In addition, the person who wants to sell the products of other companies is known as a “Seller” and the companies are known as “dropshippers”. The person who purchases the product is known as the “Buyer or customer”.
How Does a Dropshipping Business Model Work?
To understand the working model of this business easily, you just need to read and understand the following general sequence:
- First, the seller signs an online agreement with the dropshipper.
- Second, the seller sets up an online store for the products of the dropshipper as well as starts selling.
- Third, the buyer purchases the products from the online store.
- Fourth, the seller receives an order as well as the buyer gets an order confirmation.
- Fifth, the seller, then, forwards the order to the dropshipper usually done automatically through different software applications.
- sixth, the dropshipper packs and ships the order to deliver to the buyer.
- Seventh, the customer receives the product.
- Finally, the seller receives the commission for the sale from the dropshipper.
How to Start a Dropshipping Business in 6 Steps?
Let’s understand this with the help of a video made by Shopify itself.
Here are some simple steps to start:
1. Research industries & find a product to sell online
This model is a combination of passion and profit. For getting a high profit, you must research eCommerce industries, manufacturers, and suppliers online to find the best product according to your niche.
In addition, we suggest you to make a list of the best-selling or trending products and the suppliers you want to work with.
Top 10 dropshipping companies in the world
|1. AliExpress||6. Sunrise Wholesale|
|2. Doba||7. Salehoo|
|3. Dropship Direct||8. Wholesale Central|
|4. Worldwide Brands||9. Megagoods|
|5. Wholesale 2b||10. InventorySource|
Top 8 trending dropshipping product categories in the world
|1. Clothing||5. Beauty & Cosmetics|
|2. Shoes||6. Home Decor|
|3. Jewelry||7. Electronics|
|4. Furniture||8. Toys|
2. Analyze your competitors
It is a must to analyze who your competitors are, what they sell, and which location they select to sell the products that you’re also planning to sell.
You have options like Ahref and Semrush sites to check information about search results in different locations across the world.
Furthermore, you may also use Alexa or SimilarWeb to check the ranking of the websites of your competitors.
With the above popular sites, you can also hunt the content and audience reach of your competitors over social media channels such as Facebook, Instagram, LinkedIn, Pinterest, Tumblr, and so on.
3. Choose your supplier
Shopify and AliExpress are the most recommended and preferred suppliers to start with because they have good reviews and ratings.
- You should select 5-6 such suppliers and start contacting them one by one. The questions you need to ask them would be related to the minimum & maximum order quantities, their shipping times, product refund policy, and their terms and conditions.
- After contacting them and discussing all related questions, you can shortlist 2-3 suppliers that stand for your niche better. To test their efficiency and working model, you can simply make a sample order with them and compare their shipping times, product quality, packaging, and other details.
Finally, the above process will lead you to the best supplier that suits you.
4. Build your online store with Shopify
It’s again a very important step to building an attractive eCommerce store so that you can attract more audiences. However, there are some important components that you need to consider here.
Business Name & Website: If you’re building a brand with a long-term goal, it’s necessary to select the company name. Once completing this, you can set up an elegant website with a domain name (.com for worldwide) that matches your brand name.
One more thing, you should avoid using your own name for the domain. It’s because you won’t face any issues in case you sell your brand to someone else later.
Sign up for Shopify and choose a theme: Shopify is the most preferred eCommerce platform in the market that is used for setting up the online store. It is popular for its comprehensive eCommerce qualities such as new features, resources, tools, applications, and so on.
Shopify is very user-friendly and you will find the platform best for your online store. Shopify Guru facility (Free) is also present to talk personally and get yourself to escape if you are stuck somewhere.
With signing up, you also require a theme that is easy to navigate. There are options available for both free (Minimal Vintage theme) and paid themes.
5. Market your store and products
Once you set up your online store, you should start marketing immediately to get traffic and conversions.
In addition, to lower the competition and become a great brand, you need to apply certain marketing strategies. Some of the examples are – social media marketing, search engine marketing, paid ads and campaigning, influencer marketing, email marketing, or content marketing.
For getting a better result, your website, social media sites, and the online content you are posting should be optimized efficiently.
Therefore, to track your website and social media sites, Google search console, Google Analytics, and several other tools can be used to analyze your online traffic Return on Investment (ROI).
What is the Future of Dropshipping Marketing?
It emerged in the year 2006. However, if we look at the stats of search engine results (Google Trends), the term dropshipping marketing has become popular since 2017.
Here is some important reports and statistics:
- According to Oberlo, the online shoppers were 1.32 billion in 2014, 1.79 billion in 2018, and it reached 2.14 billion by the end of 2021.
- In 2020, according to the same report, eCommerce retail sales worldwide were recorded at 16.1% and it is expected to grow to 20.3% in 2022, and 23.6% by 2025.
- If you talk about 2017, the model fulfilled 23% of all online sales globally.
- 27% of all the online retailers have adopted the this model because of its popularity.
- Selling products through the model is around 18.33 more profitable than selling them through their own online stores.
- Also, dropshippers can get 50% more profit than those who keep their stock inventory.
The above data is enough to convince us to opt for this innovative business as the profit has been climbing for a couple of years.
Pros & Cons to Start a Dropshipping Business Store
There are several advantages and a few disadvantages that you must aware of before you start a dropshipping business store.
Let’s understand this in details.
This model is highly accessible for sellers seeking to start an online store with low-cost, low-risk, and earn-steadily. It has time flexibility and you can do this part-time as well as full-time. Optimization of the online promotion and marketing of selected products are considerable and continuous tasks. You may hire digital marketing agencies to get this job done more efficiently.
In addition, you just need to set up your online store and no doubt, it will take a few months to gain attraction. There will be an investment of time initially and with time and proper management, you will easily be able to convert your audience into clients.
Frequently Asked Questions
What is dropshipping and how does it work?
Dropshipping is a business model where a store owner sells products to customers, but instead of keeping the products in stock, the store owner purchases the products from a supplier who ships the products directly to the customer. This allows the store owner to sell a wider range of products without having to invest in inventory upfront.
What are the advantages of starting a dropshipping business?
Some advantages of starting a dropshipping business include low start-up costs, easy scalability, and the ability to test and sell a wide range of products without having to invest in inventory. Additionally, dropshipping allows for flexibility in terms of location, as one can run the business from anywhere with an internet connection.
How do I find a good supplier for my dropshipping business?
Finding a good supplier for your dropshipping business can involve researching suppliers online, checking their reviews and ratings, and reaching out to them directly to inquire about their product lines, prices, shipping times, and return policies. Additionally, you can use dropshipping platforms like AliExpress, Oberlo and Salehoo.
How do I market and promote my dropshipping store?
There are several ways to market and promote a dropshipping store, such as search engine optimization (SEO), social media marketing, paid advertising, influencer marketing, content marketing and email marketing.
How do I handle customer service and returns for my dropshipping store?
Handling customer service and returns for a dropshipping store can involve setting clear policies and procedures, communicating with the supplier to resolve any issues, and providing excellent customer service to build trust and loyalty with your customers. Additionally, you can use automations and customer support software to help you manage and track customer service inquiries.