Dropshipping eCommerce store is a business model where you can sell products to your customers without ever actually stocking the items yourselves. You can sell the products to customers, set the product price as per your choice, and don’t even need to pay for the inventory until its sold to the customer.
In simple words, dropshipping is a method where you can sells products to your consumers, but the products moves directly from the wholesaler to the final consumer without being handled or stored by you.
The difference between dropshipping and the standard eCommerce model is that the eCommerce seller doesn’t stock or keep inventory of any products. Instead, the seller purchases products as needed from a wholesaler or manufacturer to fulfill orders of its customers.
How does dropshipping work
Dropshipping enables you to sell products through your online store without keeping inventory, which are then fulfilled directly by the supplier. The steps involved in dropshipping are as follows:
- You publish dropshipped products on your online store.
- The customer places an order on your website.
- You receives details of the order and order manually or automatically to the dropship supplier.
- The dropship supplier packages and ships the required products directly to the customer with your branding.
This is an attractive business model as you don’t need any warehouse to store the products and it can be done from any were even from your home.
Advantages of Dropshipping
Dropshipping is a highly lucrative business opportunity for anyone wants to start their online store. The good thing is that it doesn’t have a barrier to entry and anyone having little or no investment can easily enter the market.
The benefits of a dropshipping store are as below:
1. Less capital is required
The biggest advantage to dropshipping is that it’s possible to launch an eCommerce store without having to invest in inventory. Traditionally you require to invest in inventory first before even starting an eCommerce store.
In this method, you don’t need to purchase a product until you have made a sale and customer has paid for that product. So without up-front inventory investment, its possible to start the eCommerce store with very little capital money. And also as you have not purchase any up-front inventory, the risk involved in dropshipping business is very less.
2. Easy to start
Starting an eCommerce store with dropshipping is very easy to start as you don’t have to deal with physical products. Apart from this you also don’t have to worry about managing or paying for a warehouse. packing and shipping your orders. tracking inventory for accounting reasons. handling returns and inbound shipments etc. All these are handled by your dropship supplier.
3. Start from any location
Because you don’t have to deal with inventory and managing warehouse, you can start a dropship business from anywhere. You can even start it with your home as long as you have an internet connection and facility to communicate with your customers and suppliers.
4. Wide selection of products to sell
As you don’t have to deal with products directly, you can sell wide range of products from multiple suppliers. As long as your suppliers stock an item, you can list it for sale on your online store at no additional cost.
5. Easy to test and scale
Using dropship method you can test different products with your customers and check which products are selling more. You can check your customers preferences and add the products category accordingly.
As in dropshipping business all the orders are fulfilled by your suppliers you can scale this business as much as possible. Traditionally in retail business more sales means more work, but with dropship you can get more business and most of the task will be done by your suppliers.
The only thing you need to look after in case of more sales is additional customer support tasks.
Disadvantages of dropshipping
With all the advantages of dropshipping business, there are some disadvantages also. Here are the few disadvantages of dropshipping:
1. Low profit margins
Since you don’t have to manage the inventory, the overhead are low so are the profit margins. Because its easy to get started, so there will be many competing stores selling the same products in rock bottom prices.
For every sale you make, most of the money will goes to the supplier and you will earn very less. To cover the cost of your marketing and advertising you will need to sell more and more.
2. Inventory issues
As you don’t have any control over the inventory of the products and its handled by your supplier. It becomes difficult to keep track of the items that are out-of-stock, and even more when you are sourcing from different suppliers and they are fulfilling different merchants.
The inventory of dropship suppliers can change on daily basis, so its very hard to keep track of the out-of-stock items.
3. No control over supply-chain
In standard eCommerce model, if a customer complain about a product defect and returns the same product back, you can address the problem yourself.
But, in the case of dropshipping model, you are dependent on your wholesale supplier you are the one who has to handle the customer service.
Also if your supplier make mistake in fulfilling the orders, you will have to take the responsibility and apologize for the same. So basically, you should be ready to accept the responsibility for the mistakes you have not done.
4. Problems in Shipping
In dropshipping eCommerce model, problems in shipping can occur sometimes, especially when a customers has ordered multiple products and these products are available only with different suppliers.
Then in this case, you will have to bear multiple shipping cost to send these products to the customer. Also its not wise to pass on these cost to your customer.
How to Create Your dropshipping eCommerce Store
Creating a dropshipping eCommerce store can be done in few steps
- Find Dropshipping Products To Sell Online
- Find Dropship Suppliers
- Select a domain name and register it
- Create your Dropshipping store
- Promote your eCommerce Store
#1. Find Dropshipping Products To Sell Online
The first and the foremost step to create your own dropshipping online store is to find the products to sell online. Choosing a perfect product to sell online for a dropshipping business is slightly different than traditional eCommerce business.
Because the profit margins in a dropship products are lower, not every product is suitable for dropshipping. Generally, a good dropshipping product to sell online should have a higher price tag.
You should consider following while selecting a dropship products:
- Choose a niche with lots of related products – As the profit margins are low, to cover the marketing expenses and get success in dropshipping the key is to cross-sell products. If the selected products has lots of related products, you can offer your customers to buy these products at checkout, to gain more sales.
- The average cost must be above $50 – Similarly to get some decent profit per sale the average value of the products must be above $50, as profit margins are lower in dropshipping business.
- Sell products that are timeless – Try to select products that that doesn’t become absolute with time. Timeless product doesn’t changes too often with time and require less work and are easy to maintain list on website.
- Look for personalized products – People tend to pay more for the personalized products where they can customized a product as per there choice. For example, a custom printed t-shirt is always premium and costly then plain one.
- Look for consumable products – Consumables products like cosmetics, cleansers, food products etc are popular products for dropshipping as they lead to regular repeat business.
For more in-depth information on how to find the perfect product to sell online, you can check my previous article How To Choose A Perfect Product To Sell Online.
#2. Find Dropship Suppliers
Finding a good dropship supplier is crucial for the success of your dropshipping eCommerce business. Remember a bad supplier can ruin all the hard work and credibility you have achieved whereas a good one will multiply it many fold.
Finding a right dropship supplier is not an easy task, as starting a dropship business is easy and popular, so many fake dropship supplier have emerged online. Sometimes middlemen, distributors or suppliers will pretend to be real dropshippers.
There are certain features of a real dropship supplier, that you should consider while selecting supplier for your eCommerce store:
- Don’t Sell to the Public – Real dropshippers don’t sell their products directly to the public and they are more interested in selling to businesses only.
- Require an Application – Real dropshippers requires you to fill an application to join and will approve you after verifying it. If you can sign up only with your name and email, chances are they may not be real dropshipper.
- Have Ancient-Looking Websites – Most real dropshippers have very old and ancient looking website as they don’t sell directly to public. They are more focused on improving their shipping and product quality.
- Offers a Better Profit Margins – As real dropshippers are either manufacturer itself or procure products directly from manufactures, so they offer better profit margins from middlemen or fake dropshippers.
While selecting a dropshipper for your online store, you should consider following
- Automated Processes – Many dropshippers integrates directly with your eCommerce store and offers automated process to order products online. They also provide automated process to check real-time status of the products inventory.
- Low MOQs – Dropshipping suppliers with low or no minimum order quantities are idea as you don’t have to purchase more products upfront. The real advantage of dropshipping is that you don’t need to purchase inventory upfront.
- Great Communication & Support – A dropship supplier that answers your email and provide phone support are crucial for the success of your online business. You should work with a supplier who answers your queries promptly and make your life easier.
- High-Quality Products – You should work with a dropship supplier that provides high quality products as you want the products that is loved by your customers.
- Fast & Reliable Shipping -You should select a supplier with fast & reliable shipping as it is crucial for your business growth and customers don’t like to wait long for their orders to arrive.
- Located in Your Target Area – The dropship suppliers located near your target area means your customers will receive their order faster and it also benefits in duties and taxes applied to the products.
- Return Policy – You should offer a dropship supplier who offers some type of return policy as return ratio is higher in online purchases. You should make sure how your supplier manages returns or if they expect you to handle it.
- Competitive Shipping Costs – Good dropship suppliers makes a deal with shipping companies and offers you lowest possible shipping cost, always look for shipping cost of supplier so that you can save on shipping expenses.
- Unique Products – Since dropshipping is en easy business and you need to stand out to beat the competition to gain some profits. So always looks for the suppliers that offers unique products.
- Branding Options – Dropship supplier that offers some kind of branding like your logo on the shipping box or the receipt box helps you in building your brand. Always ask the potential suppliers about the branding options they have.
There are number of ways to find dropshipping suppliers, some of them are listed below:
- Contact the Manufacturer Directly – The best way is to contact the product manufacturer directly, if you know the manufacturer of the product. This way you can avoid the middlemen and may get the products at best price. If the manufacturer doesn’t offer dropshipping they will introduce to their wholesale supplier.
- Online Directories -There are many directories available online have a database of the wholesale suppliers and distributors that are organized by industry, market and niche. Some of the popular directories are Alibaba, Wholeasale central, SaleHoo, AliDropship, Doba, IndiaMart, Oberlo etc.
- Get Referrals – You can also get dropship supplier form the referral of the people you trust like your family and friends. They will surely recommend you the suppliers that they trust.
#3. Select a domain name and register it
You need to choose the name for you dropship business and register the domain name for it, before creating your affiliate store. A domain name is the name of your dropship eCommerce business where your customers can access your store and click on any product to navigate to retailer’s web store.
The name of your store should reflect the business you are doing as it makes your customers easy to find you. I recommend adding ‘store’ or ‘shop’ in your business name because you will need to find an available domain name, and it’s easier to find an available one when there are several words in the name.
A domain name are often any combination of letters and numbers, and is used in combination of the domain name extensions,like .com, .org and more. The domain name must be registered before you’ll use it. Every domain name is unique. No two websites can have identical domain name.
The steps to purchase a domain name are:
- Choose a reliable domain registrar (like NameCheap, GoDaddy).
- Search for the desired domain on domain availability checker tool.
- Choose the best available option.
- Finalize your order and complete the domain registration.
- Verify the ownership of your new domain.
How to choose a domain name for Affiliate eCommerce Stores
- Use the name of your brand or product – If you already have a brand name for your eCommerce business, I advise you to stick to that brand name for your website.
- Pick a short name – A short and memorable name goes a long way in building a brand as it is catchy and easy to remember.
- Pick a keyword-rich domain name for long-term SEO benefit – A keyword-rich domain name helps in getting backlinks on anchor text that matches the website content and can in-turn help a website to rank higher.
- Pick a word that is easy to understand – A name that is free of any lingual or grammatical errors will help your store to be remembered by people and thus help it to transform into a stellar online brand.
- Stick with .com if you can – It is best to have .com domain for an affiliates eCommerce store.Even after now that so many new extensions has come up, .com remain the undisputed king.The reason for this is that your visitors expect and have more comfort with .com domain.
- Don’t buy trademarked domains – You may face some legal problems by buying trademarked domain name. You can search for U.S. trademarks at www.uspto.gov and make sure no one owns a trademark before buying a domain name.
- Avoid numbers and hyphens – People often forget hyphens while typing domain names. Avoid having numbers and hyphens while buying your domain name.Numbers can mislead people about whether the numbers is a digit (3) or a word (three).
- Check availability on social media sites – When you have selected desired domain name, check if that is available on social media sites like YouTube, Twitter, Facebook, Instagram, Pinterest, Google+ etc
Choosing your domain name is a long-term investment. Try to purchase your domain for at least five years if possible. This is the ranking factor that helps search engines and see you as a more reputable and trustworthy business.
#4. Create your Dropshipping store
Now that you have decided the product you want to sell, dropship supplier and also purchased the domain, now its time to create your dropship eCommerce store.
One of the more popular solutions for dropshipping store is Shopify. Let’s learn how to create a dropship eCommerce store using Shopify.
Sign up for a free trial
Go to shopify.com, and on the main page you’ll see an option to sign up for a free trial. Enter your email address and hit the button Start free trail.
Shopify will ask you a few questions to setup your store like whether you have an existing store and then have you enter your name and address—you should add your business address if you have one.
Shopify will automatically create a new store for you like
yourname.myshopify.com and you’ll be redirected to your dashboard.
Install the Oberlo App to Your Shopify Store
Click on the button Add app to add Oberlo app to your store. On the next page click on the button Install app to install the app on your store.
You will be redirected to the Oberlo drop shipping dashboard. Here you can search for the products you want to sell in your Shopify store.
Select Products to Sell in Your Store
After the Oberlo app is installed on your Shopify store, you can search the products, in few simple clicks. Its always good to start by exploring a variety of products related to your business idea (or ideas) and see what you come up with.
To search a products in Oberlo app, click on the menu Search Products on the left and search for the term on the search bar above. You can also select the categories from the drop-down,
For example, I am searching for the led bulb, so I will start by typing Led Bulb. This returns more than 2 Lakh products to browse through:
You can narrow down the search by filters like Price and Order count by using Oberlo’s Filters, which appear to the left of your product search results.
As you search products, you can see ratings and reviews for every item, this can help you decide if an unverified seller is a good risk or not.
Select and Import Oberlo Products to Sell
After you have decided the products to sell on your store, you can select those products in Oberlo dashboard by clicking the button Add to import list appear when hover on the product:
This will add the product to the Oberlo’s import list. Please keep few things in mind while selecting a product:
- Write product descriptions – Even if the selected product comes with product description. you should write your own version to connect with your customers and your brand.
- Review pricing – Although Oberlo automatically sets a suggested retail price, but you should check the profit margins and check the prices with your competitors sellers.
- Communicate shipping times to customers – It’s good to include the estimated shipping times in your product descriptions.
After you have added the products to oberlos’s import list, i recommend importing 10-20 products from different categories in your niche for a startup dropship store, its time to import these products in your Shopify dropship store.
To import products in Shopify’s dropship store, navigate to Import List from the left side menu and you will be presented with the current selected products. To import the products in your store, click on the button Import to store for a particular store.
You can also select several products and bulk import the products by clicking the button Import all to store that appears above the product list.
Categorize Your Oberlo Products
After you have imported the products in your Shopify’s store, the next step is to make any changes if you want in the product description and categorize your products.
You can navigate to Products -> All Products and here it will show all the imported products, If you want to edit any changes you can do so by clicking of the product and then make changes from the product edit form that appears.
To categorize your products, you need to first create a collection. To do so navigate to Products -> Collections and click on the button Create Collection on top right corner. This will open the form to create a new collection. Enter the name of the collection and and a description of the section in the screen
Below the collection image, we can enter the conditions if collection type is automatic, which Shopify uses to add items to this collection automatically based on specific criteria.
Choose a template/theme
In your admin dashboard click on Customize theme button, it will take you to the Themes page. On themes page, scroll down again, and click on Explore free themes.
There will be around 8 free themes to choose from. If you don’t like them you can visit Shopify Store to purchase any premium theme.
Fill in your other pages
After you have entered all your products, you should create other pages for your store like about us and contact us page.
To create pages on the left side menu, click on Online Store, which will open up a secondary menu of options then click on Pages, and when the page with a list of current pages loads click on the button Add page.
Enter the details for your pages on the add page form and click on button Save to create the page.
You can create legal pages for your shopify store in few clicks only. To do so, click on Settings in the left side menu and when the page appears click on Legal and it will take you to the legal pages. To create legal pages from template just click on the button Create from template.
Check rest of your settings
The final step before publishing you eCommerce store is to check over your settings and make sure everything’s accurate.
On your Checkout page, you can specify whether you want your customers to check out as guests or if they’ll need to create an account before checking out.On your Payment Providers page, you can enable different payment methods like PayPal or Credit Cards.On your Shipping page, you can set shipping rates for different zones.
You can do all these changes from the Settings page in your Shopify dashboard.
Add More Products to Your Dropship Store
After your Shopify dropshipping store is live, you should start exploring different dropship products for your store. Curating a good collection of products and promoting them effectively is key to dropship business success.
Apart from different categories of products from Oberlo, you can even try different dropship apps on Shopify store such as:
- Print-on-demand (POD) drop shippers: POD drop shippers like Printful and Printify lets you create and sell custom products online; when ordered, these suppliers print and ship the goods to your customers.
- Specialty drop shippers: Modalyst and Spocket connect you with top dropshipping suppliers of U.S., Canadian and European-made goods; you could also try selling custom-packaged coffees with Dripshipper.
- Aggregate drop shippers: Use dropship automation software like Inventory Source to add entire vendor lines or name-brand products to your lineup.
#6. Promote your eCommerce Store
Now that you have setup your store, you need to market and promote it to get customers to your store and buy your products. Otherwise there will be no use of a store if no-one buys your products from it.
There are many ways to promote your store like content marketing and SEO, Social Media Marketing, Paid ads, Email marketing, etc.
Social Media Marketing
In order to get some traffic to your online from the very beginning of your business, you’ll need to build brand awareness and excitement for your product. In today’s society, due to the increased use of mobile devices and smartphones, the fastest way to get the traffic is via social media.
Popular social media platforms are – Instagram, LinkedIn, Facebook, Pinterest, and Twitter – to name a few. In the starting focus your marketing efforts on the platform where your target audience is most active.
Social media marketing is a great method to driving online traffic because it allows you to directly engage with your customers. So while you not only drive traffic to your website but you can also build a community for your customers.
Another way to drive traffic to your store is by building your email list and using email marketing to communicate to your customers.
As per research, 86% of business persons like to use email while communicating for business purposes. So you must use email as a tool to attract customers from the start of your online store
Here are some resources you can use for email marketing:
- How To Increase Your Sales By Email Marketing
- How to Build an Email List
- 5 types of emails your online store needs to send
- How to make the most of your list
Content Marketing and SEO
Nowadays, content marketing and SEO are the most effective methods to promote your eCommerce stores.
High-quality content helps you rank well and drives traffic to your store. It also builds trust with your visitors which increases sales.
You can learn more about content marketing at Ecommerce content marketing.
So dropshipping is one of the easiest eCommerce model to launch your online store along with affiliate marketing eCommerce store. Do you have any tips for dropshipping eCommerce store? I’d love to hear from you. Do share them in the comments below.