The art of dropshipping has taken the world of e-commerce by storm. Due to COVID-19, e-commerce sales in 2020 increased dramatically to $861 billion, up over 44.0% year over year, according to Digital Commerce 360 estimates. As the world becomes more accustomed to online shopping, there is no better time than now to start a dropshipping business.
In this article, you’ll learn how to start a dropshipping business from scratch. We’ll explain everything from what dropshipping is, how it works, and how to choose a product to start dropshipping with.
What Is Dropshipping And How Does It Work?
Dropshipping is when the retailer (you) does not keep goods in stock. Instead, you transfer customers’ orders to the manufacturer, who then ships them to the customer.
In other words, you’ll never need to store or even ship a product. You’re the middle-person of a transaction.
By design, this method leaves you, the “retailer,” with a low-risk and inventory-free business model. Just about anyone can start a dropshipping business since it doesn’t require a high budget. Now, as we mentioned, there are three different players in the dropshipping business model: the manufacturer, the retailer (you), and the customer. Let’s break them down.
The customer of a dropshipping transaction came to your online store to buy your product. They’ll place an order on your online store and pay the retail price for your listed product.
The Retailer (You)
As the retailer, you are responsible for selling the manufacturer’s products on your online store. The rest is up to you, which is one of the most appealing aspects about dropshipping. You’ll control the success of your store and brand by marketing your product in different ways and setting the prices that will make you profit.
In the dropshipping business model, the role of the supplier is simple. They create the product that you will sell on your online store. Not only that, but they are responsible for shipping the product to customers on the retailer’s (your) behalf.
Why Dropshipping Is Worth It
Overall, dropshipping features a low-risk business model with huge profit potential. The ability to control your marketing strategies with website-hosting fees acting as your only actual expenses is hard to pass up. But your success is up to you. Sure, dropshipping is a low-risk and high reward by design, but you’ll only get out of it what you put into it. That means dedicating consistent time to following these four steps.
- Finding a Good Dropshipping Product
- Finding A Supplier
- Building Your Online Store
- Marketing Your Dropshipping Website
Step 1: Find A Good Dropshipping Product
The first step in creating a successful dropshipping business is finding the right product. The product alone can save you a lot of time, money, and energy if chosen correctly. Not only that, but a winning product will always sell itself. Now, you’re looking for products that fulfill three requirements:
- High demand
- Low competition
- Provides an answer to a solution
There are a few tools you can use to find out where products with high demand lie. But we’ve found that the two most popular are Google Trends and EcomHunt. EcomHunt provides hundreds of dropshipping products with supplier links. Google Trends shows how frequently a given search term is entered into Google’s search engine. By analyzing different products on Google Trends and EcomHunt, you can determine both if a product’s demand is high and if its market is growing.
The next step is to ensure that the product has a low number of competing retailers. The more competition there is to sell a product, the more you’ll have to spend on advertising.
Lastly, checking to see if your product has a high SEO difficulty score will give you an idea of how many other retailers are also selling your product, and if it truly provides an answer to a solution.
A high SEO difficulty score means that people search for your product on Google a ton. In other words, you’ll be at a disadvantage when creating your online store because it will be more difficult for your website to rank on the first or second page of Google Search results. But have no fear, there are ways to analyze the SEO difficulty scores of different products.
Using UberSuggest To Analyze Your Dropshipping Product
UberSuggest is a fantastic tool created by Neil Patel, a renowned entrepreneur, and marketing expert. The tool allows you to analyze a Google search phrase. This feature will enable you to determine how hard it would be for your website to rank on the first or second page for a said phrase. In other words, you’ll be able to determine whether or not the dropshipping product you’re considering selling is worth your time and energy to market.
Using UberSuggest is simple. First, you’ll need to create an account through Google. Doing this will allow you to use the free service, which enables you to view a limited amount of analysis. For a monthly or annual cost, you can access the full service, which does not limit the number of results you can pull from the application.
Once you’re all signed up, you’re going to enter the name of the product you’re thinking about dropshipping into UberSuggest. For this example, we’ll use beach balls.
As you can see, the first result is “beach balls,” followed by a few analysis factors. To keep things simple, we’ll focus on what we think are the most important for your dropshipping store. The VOL and SD.
The VOL is simply the estimated number of times people search for a said phrase on Google. In this case, people search for “beach balls” roughly 33,000 times per month. That’s great. A lot of people search for this product every month. There’s only one problem…
The SD is what we’ve been discussing, the search difficulty of your product. As you can see in the screenshot above, the SD for “beach balls” is 58 and highlighted orange. This combination is not good. You see, to choose a dropshipping product with high demand and low competition, you need to select a product with a lower search difficulty score. How? By narrowing it down.
Ideally, you’ll want to scroll down your UberSuggest search results and find a different product with an SD score highlighted in green. The lower the SD score, the higher your chances of ranking well in Google search results.
You’ll also want a product with a healthy VOL. Now, don’t think the VOL of your phrase needs to be 33,000. While that would be wonderful, you now know that ranking for the term, “beach balls,” is extremely difficult.
As you can see, after scrolling down a bit, it’s tough to find an excellent alternative phrase for the product, “beach balls.” This dilemma probably means you should choose a different product. Unless you really, really love a challenge.
Like all successful products, yours needs to provide a solution to a problem. If it can provide a relevant solution, it will be in demand.
Step 2: Finding a Supplier
Now that you’ve chosen a great product, it’s time to find a supplier. Finding the right supplier for your product can save you countless headaches down the road. Here are three things to consider when deciding on the right supplier for your dropshipping store.
A supplier’s location is essential in cutting shipping costs and assuring that the product will be supplied within a reasonable timeframe. Because of COVID-19 related shipping delays, domestic (U.S.) suppliers are favorable for faster shipping times.
You need to ensure that your selected supplier can meet product demand. Inquiring about manufacturing capabilities is always advised when establishing your supplier relationship. When contacting a potential supplier, you should inquire about how quickly they can ship your product, and how much of the product they can produce in a specified timeframe.
A supplier with excellent communication skills is extremely beneficial. The right supplier will keep you informed on any delays or harmful situations for your dropshipping business. Furthermore, they usually won’t hesitate to ask for clarification on requirements.
When it comes to reviews, Yelp is king. Yelp should be one of your first stops when feeling out a potential supplier. Read other people/businesses’ reviews and make sure it checks out to your liking.
Step 3: Building a Dropshipping Website
Building a professional website is crucial for success in dropshipping. Impulse purchases can only be triggered if the page is convincing to the consumer. Because of this, you want to stay away from adverts or anything distracting. Your website should be simplistic, clean, and easy to navigate. The quicker and easier it is for your customer to check out, the more sales your site will secure.
Currently, the fastest and easiest way to build a dropshipping site is through Shopify. Shopify has a large selection of website templates and boasts a user-friendly interface.
When creating a website name, it’s essential to check the availability of the URL domain for purchase. Purchasing your site’s domain creates an extra level of authenticity and professionalism. Google Domains allows you to do this very quickly.
Creating a website logo can also assist in differentiating your store from competitors. A site with a professional, clean logo will drive consumer interest in your product. You can use Canva’s free logo maker tool here. Or, if you’re looking for a more professional look, you can always peruse Fiverr’s database of online freelancers to create a logo for you.
Step 4: Marketing Your Site
The quickest and easiest way to market your product is through social media advertisements. The con of this is finding the correct target audience through trial and error, which takes time, and sometimes, money.
You’ll want to launch any number of Facebook ad campaigns with different target audiences. By monitoring how the conversion rate of the ad campaigns compare to one another, we narrow down to our true target audience. The closer you advertise to your true audience, the more profitable your ad campaigns will be.
If you’re unsure of how to use Facebook Ad campaigns to market your dropshipping store, you can find our full guide on the topic here.
It’s essential to make your advertisements as clean and professional-looking as possible. By doing so, you increase the likelihood of an impulse purchase. An impulse purchase or impulse buying is an unplanned decision to buy a product or service, made just before a purchase. One who tends to make such purchases is referred to as an impulse purchaser or impulse buyer.
A marketing budget plan is excellent to have. Tracking how much money goes into each ad is needed to determine which one is more profitable. If you’re unfamiliar with budget planning, you can check out this free low-budget ad strategy.
Most people’s first Facebook Ad isn’t very successful. It’s easy to be discouraged when results aren’t seen right away. Because of this, many quit dropshipping within the first week. But with time and experience, anyone can build a profitable site.
Setting small goals will certainly help in this process. Jeff Bezos didn’t one day wake up and decide to take over 40% of e-commerce sales. Instead, he started by selling books and slowly scaled his brand.
Within the world of e-commerce, the possibilities are endless. Once drop shippers get the hang of the process, many run upwards of ten or more stores at a time. Additionally, this is an excellent way for aspiring entrepreneurs to gain experience in building a brand.
If you want to start your own dropshipping business and are looking for the best platform to do it on, check out our review of the world’s best dropshipping platform here.
Dropshipping is a popular low-risk, low-budget e-commerce method. When optimized and perfected over time, it can prove to be highly profitable. Like all forms of entrepreneurship, the more time you invest in your store, the better results you will see. It’s important to remain optimistic and not be discouraged by early failures. For those looking to continue entrepreneurship in the future, this is a great way to gain experience building and scaling an online business.
Enjoyed this article? Then you’ll love our exclusive interview on The Success Bug Podcast with Noah Tucker, a teenager who’s made millions dropshipping on his online store!