💦Getting Started With Dropshipping
Dropshipping gives you the flexibility to start a small business with little to no upfront cost.
Dropshipping has become popular with the rise in eCommerce businesses. It’s a viable business for first-time entrepreneurs because it provides a low-risk way to test product ideas without paying upfront. If you’re wondering how to start dropshipping, we'll get you on the right track. But first, what is dropshipping?
What Is Dropshipping?
Dropshipping is an order fulfillment method that give you the flexibility to ship products from a third-party supplier directly to your customer. This means you’re the middleman and don’t need to stock the physical inventory.
For example, you find a third-party seller that sells cheap baby monitors. You create a product listing on your eBay or Amazon seller account and figure in a markup to turn a profit. You’ll only need to order the products from the supplier when someone orders from you. Then, you ship directly to them.
It’s a great side hustle to bring in extra monthly cash without substantial capital costs. You’ll also be able to test out different products to see which ones have the highest demand and profit.
But dropshipping is not a get-rich-quick scheme. Only 10% of dropshippers succeed in their first year. If you approach dropshipping the right way, you can increase your income and build a highly-profitable business in the long run.
How to Start Dropshipping
Here’s how to start a dropshipping business:
Choose a Niche: There are many profitable dropshipping niches to choose from. Some are fashion, car accessories, baby products, smartphone accessories, health and beauty products, and gaming.
Conduct competitor product research: Even in a side hustle, it's still important to research your competitors. You'll want to research their prices, social media, customer reviews, etc. This helps you know where to start and what to improve.
Find a reputable supplier: Some suppliers aren’t legitimate and can land you in trouble. Others may take more time to deliver products, and some items may be of inferior quality. You can find suppliers on sites like AliExpress, Wholesale Central, SalesHoo, and SupplyMeDirect.
Build your online store: You need to decide whether to build a custom eCommerce store or list on a marketplace.
Make product listings and market your store: Now it’s time to start selling. Market your products with dropshipping automation tools, social media, and word of mouth.
Prioritize effective bookkeeping: Most entrepreneurs make the mistake of blending their business and personal finances. This makes accounting more difficult, causes confusion, and leads to future tax problems with the IRS. It's best to separate your business and personal finances from the onset. Learn how to do that here.
Analyze business periodically: Take time to analyze the business to track progress and see how you can improve.
Dropshipping Automation Tools
Dropshipping is easier when you can automate some processes, especially if you have a 9-5 and can't commit full-time. Here are some dropshipping automation tools that will help you:
Use Mailchimp to send automated emails like welcome messages, order confirmations, tracking information, customer feedback requests, and delivery notifications. You can send up to 2,500 emails monthly for free.
Use CommerceNavigator for bookkeeping. To succeed in a new business, you must track your income by separating it from other personal expenses. You can manually track sales and expenses for free or use the AI-powered Premium Plan to save time and money.
Use Zapier or Shopify Flow to automate common eCommerce tasks like customer support tickets, customer organization, etc.
Use DSers or WooDropship to source dropshipping items, manage suppliers, and make payments in bulk. This can allow you to place hundreds of orders in seconds.
With these tools, you already have a solid foundation to start a successful dropshipping business.
Understanding the Risks
It's important to consider that the dropshipping market is an extremely crowded space. For most founders, this is okay because of the minimal capital required to get started. What many sellers may be more concerned about is their reputational damage, which can be especially huge on marketplaces like Amazon and eBay.
With dropshipping where you don't physically have the inventory, there's naturally a lack of control over many aspects of your business. Be sure to:
Partner with legitimate suppliers. Ensure your suppliers share the same quality and delivery standards. If customers receive low quality products after the promised delivery date, they won't be very happy. They'll likely leave bad feedback, won't shop again, and may even complain to the marketplace or your payment processor.
Plan for stock shortages. The pandemic has shown us that sudden stock shortages can cause huge headaches for buyers and sellers alike. Consider asking your supplier upfront how much quantity they have on hand. You may even consider having multiple suppliers on certain items or keeping minimal quantities of your own stock.
Educate yourself on marketplace rules regarding dropshipping. While most marketplaces allow dropshipping, they maintain strict policies to ensure the satisfaction of buyers.
eBay, for example, allows you to fulfill orders directly from a wholesale supplier, provided that the item is safely delivered during the promised time frame, but does not allow for purchasing items from another retailer or marketplace and having them ship directly to the buyer.
Amazon maintains a similar policy, emphasizing the importance of not having other retailer or seller names on shipping labels or packing slips, maintaining quality and delivery standards, and ensuring proper handling of returns.
Enter CommerceNavigator
Now you know how to start a dropshipping business. Being a dropshipper can be difficult in the first year. It’s important to constantly track progress, especially with finances. CommerceNavigator helps you automate the process, so you can focus on building your new business without worrying about the financial side. Click here to learn how it works.
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