In this new article, we are talking dropshipping and offering you 10 steps to start a successful dropshipping business in our beginner’s guide
We will be covering:
- Identify Your Products
- Finding Suppliers
- Test the Products
- Prices, Terms & Conditions
- Customize Your Product
- Setting Up A Website
- Getting Money
- Using Free And Cheap Online Resources
- Popularize Your Business
- Broaden Your Product Range
Let’s get started!
How to Start a Successful Dropshipping Business: Beginners Guide
Have you ever heard of dropshipping?
It is a simple online business that does not require much investment or infrastructure.
At the same time, it is a very lucrative business model that can earn you high profits.
If you are interested in entering online retail and wholesale, consider dropshipping.
Scores of entrepreneurs worldwide as well as in the USA are already making big money by creating successful dropshipping businesses.
There are several genuine and proven reasons why you should consider dropshipping as an online business.
I will explain these in this beginner’s guide.
Facts & Figures
Online retail is a big hit in America.
Statistics garnered from various reliable sources prove this beyond any reasonable doubt.
Major global and homegrown e-commerce giants rule American online businesses.
Amazon, eBay, Walmart, Kroger, and Target to name a few.
Yet there is ample scope for any entrepreneur or beginner to enter this field.
This is the right time to enter the e-commerce field if you wish to become an entrepreneur or already own a brick-and-mortar store in the USA.
The US alone recorded $517.36.5billion in e-commerce transactions during 2018.
Department of Commerce estimates that Americans spent $513.61 billion online in 2018, an increase of 14.2 percent over 2017.
Ecommerce forms an ever-growing slice of the retail market in 2018 It accounted for 14.3 percent of total retail sales in 2018 compared to an increase of 12.9 percent in 2017 and 11.6 percent in 2016.
Ecommerce accounted for 51.9 percent, of all retail sales growth, the department further says
If these figures are tempting enough, read further as I explain what dropshipping means and how you can start a successful dropshipping business.
What is Dropshipping?
Dropshipping is a simple online business that can be started with little investment. In simple words, it is an online business where you buy goods directly from the manufacturer or supplier at very low wholesale or bulk rates and sell them to customers at high profits.
- You need not invest in expensive infrastructures like offices, warehouses, and logistical facilities to enter dropshipping.
- Dropshipping eliminates the need for stock goods.
- Products you sell through dropshopping are bought directly from a factory or wholesaler.
- The only investment you need is for setting up a website to display products from various manufacturers and take orders from customers.
- When you get a confirmed order, you place it directly with the manufacturer or bulk supplier.
- A customer pays for the goods while placing the order using a credit card, debit card or net banking. This means, your money is assured.
- You will place the order on behalf of the customer and pay the lower amount to a manufacturer or distributor.
- The difference between the wholesale and retail rate is your profit.
- The manufacturer or distributor ships the order directly to the customer, thus saving delivery charges.
- Some manufacturers and other suppliers also allow you to brand the product. This means, you are buying and selling the product as your brand, though it is made by someone else.
If these are sufficient reasons for you to start a dropshipping business in the USA, you need to take certain steps.
Here I will briefly explain these steps.
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Steps To Open A Successful Dropshipping Business
Similar to opening a brick-and-mortar store, there are various steps you need to take before opening a dropshipping e-commerce business.
Generally, dropshipped products are made abroad and hence, astute planning is necessary.
Unless you take these steps, you may land in financial doldrums and cause a bad reputation for yourself and the business.
Step-1: Identify Your Products
It is important to decide what you wish to sell online.
Amazon and eBay among others have millions of products but they have invested billions of Dollars.
Since this is not possible, you can enter e-commerce and dropshipping by identifying specific products only.
For example, you can start selling a broad range of mobile accessories including covers, chargers, USB cables, power banks, and other essentials.
Another example would be imported bathing soap.
Yet another example, footwear for women and men.
The choice is extremely wide and depends upon the particular market you wish to serve.
Dropshipping allows you to expand the portfolio of products available from your website.
If you want, you can offer thousands of products or serve a particular niche market.
Once you have identified the type of market you want to enter with a dropshipping business in the USA, the next is to find manufacturers and suppliers that will sell it cheap.
Step-2: Finding Suppliers
There are two excellent websites where you can find companies and wholesalers that will readily offer you very attractive and low prices for various goods.
- Visit Alibaba.com for starters.
- Register your company as a buyer/ retailer.
- Search for the products that can be sold from your website.
- Find prices and compare between various suppliers/manufacturers.
- Finalize the products you wish to sell on your website.
- Shortlist suppliers that offer the best products and offer great prices.
Step-3: Test the Products
Upon finding the right kind of goods to sell from your website, you can approach the seller through Alibaba.com.
The website offers a simple trade inquiry form.
Here, you can request product details from the suppliers chosen.
- If you are unsure about the quality of the product, request samples.
- Often, samples of cosmetics and non-durable products are supplied free for you to test.
- In the case of durable items like power banks, for example, the supplier may ask for a small fee. Others may provide a sample free.
- Request excellent pictures and specifications from the supplier.
Should you be satisfied with the product quality, the next step is to negotiate prices.
Step-4: Prices, Terms & Conditions
This is the most important part when you are starting a dropshipping business.
Since some manufacturers, wholesalers, and other suppliers may not be well known, you need to get prices, terms, and conditions that favor your business.
- Send online inquiry forms to selected suppliers.
- Use the ‘Negotiate’ feature on Alibaba.com and other similar websites to bargain for prices.
- Ensure the prices you get are low and allow you to compete fairly with e-commerce giants.
- Find terms and conditions related to returns of goods from customers and refund of money.
- Get correct details about product warranties where applicable.
- Ask for freebies where possible. For example, you can ask a power bank supplier to include a recharging cable for free.
- Finalize terms and conditions regarding delivery to your customers.
- Request for customization of wrappers, bags used to pack the orders. This creates an awareness of your brand among customers.
- Find payment details and delivery schedules. This is important because some shippers charge different rates for air, sea, land, and express shipping.
- Never commit to booking bulk orders since this involves spending and blocking lots of money. If you are unable to supply the booked quantity, you can lose heavily.
Step-5: Customize Your Product
Customizing your product simply means giving it your brand.
Most bulk sellers willingly offer the service.
It also allows you to create your own brand.
- Look for suppliers that offer free customization for single orders.
- Never go for suppliers that will offer customization only if you place bulk orders.
- You may have to provide a good logo and brand name for customization.
If you wish to sell customized products, mention the brand on your dropshipping website.
Give an excellent description of the brand and extoll virtues of your products.
This has to be done very carefully since any faulty product or frequent complaints can damage your brand reputation among customers.
Step-6: Setting Up A Website
Once you have taken the above steps, the final one is to launch your website offering various products by online retail.
- Buy a great-sounding domain name for your online store.
- Get hosting and other requirements for the online store.
- Add relevant WordPress Dropshipping plugins
- Post excellent images and a brief description of the products on your website.
- A good ‘About’, ‘Vision and Mission statements, and a brief description of terms and conditions tend to assure online buyers: include these on your website.
- The website should also include customer care links.
- Include the facility of sending an instant order confirmation to customers by SMS and email.
Step-7: Getting Money
Receiving money from customers is the most important part of your business.
Hence, you need to set up a safe and secure payment gateway on your online store.
- Create a VeriSign verified payment gateway by signing up with reputed service providers such as CC Avenue.
- Approach your bank and get them to link an account to your online store.
- Where possible, also offer customers multiple payment options. You could also consider accepting payments on store cards issued by Walmart and others.
For many entrepreneurs, this may not be possible.
Setting up a sophisticated website for a dropshipping business can cost a lot due to the features you need to include.
In such cases, go for free and inexpensive online resources that enable you to start a dropshipping business.
Step-8: Using Free And Cheap Online Resources
Thanks to the boom in e-commerce, you can also launch an online store using various resources.
- Shopify: Allows you to own a virtual store for a small subscription.
- Facebook Business: There are several dropshipping businesses that offer the entire spectrum of services- from booking orders to advertising, customer care to payments on Facebook.
- Create an app that allows shoppers to place orders from their smartphones. In 2018, over 79 percent of online sales in the USA were from mobile devices.
- The website should also include customer care links.
- Include the facility of sending an instant order confirmation to customers by SMS and email.
Step-9: Popularize Your Business
Popularizing your dropshipping business can be really tricky.
You will need excellent Search Engine Optimizers and content writers that will blend the right keywords and search words in product descriptions.
SEO will help you move up the long list of online stores that sell a particular product.
- In such cases, use free resources on Shopify to popularize your dropshipping business.
- If you opt for Facebook Business, popularize it by getting family and friends to like the page and get others to like it too.
- You can open a separate blog for your dropshipping business. Several free blog sites are available nowadays. Post content relevant to your sphere of business and include links to your dropshipping website.
- Invite affiliate marketers to sell your products.
- Post some of your products on popular websites such as Craigslist.com or similar sites like Craigslist: It helps gain some mileage through free publicity.
Step-10: Broaden Your Product Range
Once you have a dropshipping store up and running, keep adding newer products.
This ensures a customer remains interested in your business.
You stand better chances of making higher profits with more product offerings.
As we have seen, it is very easy to start a dropshipping business in the USA.
You can enter this profitable business with large capital or just a small investment.
However, dropshipping has some disadvantages too.
Flipside of Dropshipping
While dropshipping allows you to compete with online retail giants, there are some cons of this business too.
- Dropshipped items take fairly long to reach a client, once an order is confirmed.
- In most cases, it is not possible to track an order to provide delivery schedules to clients.
- While you can offer countless dropshipped products, getting customers can be very slow since shoppers prefer reputed online stores.
- The biggest problem can be faulty and damaged goods that are returned by dissatisfied customers. Unless you have proper agreements, the manufacturer or seller can refuse to replace damaged goods and refund money. Hence, you may have to compensate an aggrieved buyer.
- Profit margins for dropshipped items tend to be low for most products. Since you will compete with online giants, maintaining prices lower than theirs is imminent.
- Dropshippers cannot launch sales and promotions, unlike giant online stores due to already low prices in the market.
- It is not possible to offer products from topmost brands to customers through dropshipping. They come at a high price and leave you very negligible margin.
- In exceptional cases, getting clearance from appropriate government agencies may be needed for specific items.
How to Start a Successful Dropshipping Business: Beginners Guide: Wrapping-Up
Dropshipping is a very lucrative business.
That is the main reason why major dropshippers are flourishing in the US and Europe.
To start a dropshipping business in America, it is not necessary to have huge capital or large investment.
The continuing boom in e-commerce and online sales in the USA is reason enough to start a business in the USA.
Using free resources and by exerting extra efforts, you too can start a successful dropshipping business.
That’s all for now.
So are you a dropshipper? Are you looking to start a successful dropshipping business?
Let us know in the comments section below.
Regards Dexter
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Fernando
I have always been interested in having an eCommerce that uses dropshipping, unfortunately it is difficult to do this in my country due to the slow import process that can last up to 30 days.
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Lisa Sicard
Hi Dexter, I used to have one, it’s how I started my blog 🙂
I did not like the inventory problems. People would order and then I would find out items were out of stock. I had one dropshipper that offered real time inventory tracking and that was wonderful! But the other 8 dropshipper I had did NOT offer it. It made customers upset to find out after ordering that things were on backorder. It was a medical scrub website.
I’d like to do it again someday but would need items that I would know the inventory at any given time.
Lisa Sicard recently posted…It’s Time to Make Your Business Great and Here’s How
ringtonesdump.com
Starting a dropshipping business is a great way to dip your toes into becoming a business owner. Since you don’t have to stock the items that you’re selling, it’s perfect for aspiring entrepreneurs who don’t have a lot of money to throw into a business. Plus, creating an e-commerce website is easier today than ever before due to all of the e-commerce platforms on the market designed with beginners in mind.
Digital roy Academy
Good one:) Thank you:)
Timothy Yates
I am very interested and, in fact, have tried to start a dropshipping store a couple of times. However these have failed miserably. So for the last several weeks I have been trying to find as much information that I can on the subject only to find general descriptions. Do you know of a “place” that I can find easy to follow, step by step, how to? All of the “platforms ” I have come across only give very general information, nothing detailed, which is what I think I need. Or maybe a mentor that does not charge an arm and a leg?