Now a days Drop shipping is an extremely popular business model for new entrepreneurs. It’s possible to start a drop shipping business in e-commerce with limited funds. In this article, we will cover, how to start a Drop Shipping business with few simple steps.
Drop shipping allows you to purchase the item from a supplier as someone places an order with your store. The beauty of building a drop shipping business is it removes the backend inventory management.
Benefits of Drop Shipping
The main advantage of the drop shipping model is that you don’t need to own any stock. Instead of, you sell virtual inventory that being stored and shipped directly from suppliers to customers.
- Zero Capital Need to Get Star: You don’t need to buy any product inventory, you only pay for the stock you sell. So, the risk of spending a lot of money on unsold stock item is zero.
- A wide range of Products: With Drop Shipping business you can offer a very wide variety of products. This is a plus point because wide range product selection is one of the key factors that influences customers’ purchasing decision.
- Time Saving: Having suppliers dropship for you, basically means that they are taking care of of the practical operations for you. The only things you have to focus on listing products, marketing, optimizing, supporting customers etc.
- Scalability: When you’re Drop Shipping a product with single quantity or multiple products with huge quantities, the amount of work is same for you. You just need to transfer the order information to your supplier. That means a Drop Shipping business is highly scalable and is virtually limited by the processing capacity of your suppliers. If your suppliers have limited stock or can’t handle the huge volume of your orders, you can source another dropship supplier.
Disadvantage of Drop Shipping
- High Risk: All business has some risk. Physical aspects of the business like high packaging quality, quick handling and shipping times and stock availability are out of your hands. Sometimes you need to rely on your dropship suppliers, who are often times from the other side of the world and have a different business culture than yours. There are also a lot of moving parts which are out of your hands.
- Low Profit Margins: The most challenging part is that dropshipping world is a very crowded space. The crowd increased during the last few years. Sellers must find a unique competitive product rate in order to stand above the competition.
- Shipping Time: Shipping time is a vital factor in an online shoppers buying decision. Drop shipping your orders from suppliers instead of managing your own logistics to minimize the slower shipping time.
How To Start
If you are ready to start a online business that can compete with retail giants having a limited budget, then follow the steps below.
Step 1: Select niche products that you can sell with big margins
Before start always keep in mind that, you can’t expect to become a successful drop shipping entrepreneur by competing with eCommerce giants like Amazon, eBay or Alibaba. Your best chance for success is to focus on selling niche products. Here are some key points to consider when selecting your niche:
Seek attractive profits – When you’re running a drop shipping business model, your key focus is on marketing and customer acquisition. So, the amount of work required to sell a $5 item is virtually same as to sell a $1000 item. You have to select a niche with higher-priced products.
Low shipping costs – The main advantage of drop shipping business is your supplier or manufacturer will handle the shipping, if the cost is too high, it will act as customer’s penalty. Find some idea that is inexpensive to ship like free shipping or some attractive offer in order to attract more sales.
Try to find out what products people are actively searching – If you don’t know what products people are searching before start to plan drop shipping, then will be in a big trouble. Use Google’s Keyword Planner and Trends to search your potential niche.
Sell something exceptional products that aren’t readily available locally – Select something that your customer can’t find down the road.
Step 2: Finding a secure drop shipping suppliers with high quality products
Making partnership with the wrong supplier can ruin your business. If your suppliers mess up, it’s your responsibility to make it up to your customers, not suppliers.
Contact the Manufacturers – In most cases, the drop shipping suppliers are located overseas. Communication with them is extremely important. If you are not 100 percent confident in the communication abilities of a potential supplier, try to search another supplier.
If you get the exact product, the best approach is to call the manufacturer directly and talk with them.
Try to learn from other entrepreneurs who have walked this path earlier. There are plenty of information sources available on internet.
Step 3: Build your eCommerce website
The easiest way to launch a website that supports a drop shipping business model is to use a simple e-commerce platform. You don’t need an expert to start up and running, and it has plenty of plugins to help increase sales.
If you have a minimum budget that would allow you to hire a web design and development company to create a custom solution, as a beginner it will be a wise decision for you.
There are many WordPress plugin to create on line store like WooCommerce.
Step 4: Create a customer acquisition plan
Say, you have great product and a website, but without customers looking to buy, you don’t have a business. There are several ways to attract potential customers using social media. But the most effective option is to start a Facebook ad campaign. Facebook allows you to place your offer directly to a highly targeted audience. It will give you the ability to compete with the largest brands and retailers immediately.
For long-term, you can focus on search engine optimization and email marketing. Collect email address and set up automatic email to reach your special offers and discount to your customers.
Step 5: Analyze and Optimize
You need to analyze all the data and metrics available to grow your business. Google Analytics traffic and Facebook conversion pixel data is the best option for this purpose. If you are able to track every single conversion it let you to scale what works and eliminate what doesn’t.
You need to continuously test new opportunities and fine-tune current campaigns that will allow you to know when to optimize or shift campaign spend.
It’s your time to take action and put what you learned into practice.
You may also like: Create Multiple Websites in Woocommerce [Step By Step]