I’ve created this article for people who want to learn how to start a dropshipping business. A dropshipping business is one that enables you to sell products without holding the actual inventory in your store.
You sell the item to customers on the retail price and then pass the order to your manufacturer or supplier who delivers the product to your customer. Then the supplier ships the product to your customer under the name of your business.
When you pay a wholesale price for an item, you earn profit as the end game. Your duty is finding customers, setting up a local website and handling customer support.
Starting a dropshipping business can be an excellent venture if you have the right information at hand. Dropshiping is so popular because the drop shipper does not need to hold stock.
The drop shipper does not require to part with a vast sum of capital for stocking up the store like conventional retail shops. You, as the drop shipper do not need a vast space to conduct business.
Requirements for starting a dropshipping business
Like any other business, you need to inspire yourself, have the right mental state and learn to manage your time properly. The following steps are almost universal when starting a dropshipping business wherever you wish to venture.
- choose a dropshipping niche that can make profit
- Finding a reliable manufacturer or supplier
- Obtain a business permit
- Select a platform for your enterprise
- Implement customer acquisition criteria
1. Choose a Dropshipping Niche
Select a market segment which is not fully saturated. It is not easy to find an unsaturated niche but with the invention of new products now and then makes it possible to get new market segments.
You will need to do due diligence not to make a mistake of entering a very competitive niche that will give you a hard test. The following tips will help you choose a profitable market segment.
- Determine the profitability of the niche – You need to venture in a profitable market segment because the objective of any business is to make a profit. Explore several business ideas and narrow them down depending on the profit margins and pick the one with the highest profit margin or potential.
- Start with your passion – explore your hobbies and find out which ones you can turn into business opportunities. A venture that you are passionate about will be easy for you to research, manage and expand.
- Research about the competitors – Almost every market will have competition, and you need to determine the amount of competition in the niche you plan to join. Check whether you can compete and what gives you a competitive edge against other entrepreneurs.
- Try to identify the gaps – identify products that you rarely find because other people might also be looking for the same products. Deficits that exist are the potential business opportunities around that you need to bridge.
Your dropshipping product should have the following features for you to succeed.
- I would advise you to deal with portable products that are easy to transport to customers to avoid incurring additional shipment costs.
- Deal with products that are not too cheap because the profit margin will be negligible while highly expensive products will reduce your customer traffic. Deal with average priced products affordable to a wide range of customers.
- Choose products that are not seasonal like holiday products because you will only sell them on seasons and kick you out of business when there are no holidays.
- Do not try to introduce a product that is experiencing stiff competition since you will only fail.
2. Find a dropship supplier
Getting a reliable supplier is the next hard task for you.
It would be best if you had a manufacturer or supplier who will deliver your product to your customers on time, maintain the quality of products and provide storage for the products on your behalf making sure you do not experience stock out.
Features of good suppliers
- Look for a supplier who can be a drop shipper to ship your product to our customers
- Your supplier should not overcharge you for shipment, storage and packaging services.
- Choose a supplier after exploring their delivery time and only deal with suppliers who do not delay deliveries to retain customers.
- Look for a supplier who has experienced staff who can offer advice to customers.
3.Obtain a business permit/sales tax ID
The next step is obtaining a business permit or a sales tax identification as per the set business guidelines of various countries.
Operating your business without the right documents from the local authorities and tax agencies opens grounds for litigation that may cost you.
4. Choose a selling platform
You have a supplier and a product to sell but do not have the marketplace to sell your online product. You either opt to use an existing platform or design your platform.
The following considerations are handy while selecting a platform.
Advantages of an established online platform
- Setting up an account and commencing a business is easy
- Attract massive customer traffic which can turn out to be profitable
- Customers trust established online platforms
Shortcomings
- Established platforms charge fees on every sale which may reduce your profit
- You face stiff competition from other online marketers on the same platform.
- You do not have control of these platforms.
Most online entrepreneurs prefer creating their platforms. The following are the reasons why you need your platform.
It limits competition from other vendors on the platform
You have full control of the platform, and you can redesign or re-brand when you want.
They are more profitable because you do not need to pay fees to anyone after establishing the platform.
The shortcomings of establishing your platform
- The initial cost of designing a platform is quite high
- You do not enjoy massive customer traffic compared to an established platform.
5. Implementing a customer acquisition strategy
The final step to make your business successful is attracting customers. Advertising comes into play where you need to persuade customers to purchase your products.
There are multiple strategies that you can use to lure customers into buying your products. One of the best ways to attract customers is by creating a list of email addresses which you can use to communicate regularly with your customers
Final thought
Online business has come a long way, and technology is still taking it to far heights. With the above online business ideas, you need to have the right focus, be optimistic, embrace challenges, and you are good to go with your dropshipping business.