What is a Dropshipping Business?

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Considering how the opinions of society have changed in recent years, we can almost guarantee you’ve thought about starting your own business. Whether it’s to lose the boss breathing down your neck or to have the freedom of working from home, the majority of us have at least played with the idea. However, only a small percentage actually go ahead and do it. After this, an even smaller percentage find success.

For most, the idea of failure is enough to prevent us from taking the first step while others are a little worried about the logistics of it all.

• How am I supposed to store all my products?
• Do I need to visit the post office every day to ship to customers?
• Do I need to spend thousands of dollars on a website?

In the end, we put the idea to bed and get on with the usual nine-to-five job that we seem to hate. Today, we’re going to be discussing one of the legitimate business ideas that has gained traction in recent years. Not only does it resolve all the common issues we’ve discussed, but it also allows you to do so at an affordable fee. As you can see from the title, this solution is called ‘dropshipping’.

The Basics

If you’ve never heard the term, you’re probably wondering ‘what is a dropshipping business?’ and this is a fair question. Essentially, it’s a business where you don’t have to worry about stocking products or sending them out to your customers. Instead, you work with a manufacturer and sell products on their behalf while earning a commission. With a high-quality website (more on this in a moment), you build interest and point visitors towards your online store. As soon as they purchase a product or two, your job is done because the manufacturer receives the order and ships it out to the recipient. How amazing is this?

With private label shipping options alongside customizable invoices, the customer has no idea you’re dropshipping and this allows you to build a reputation within the niche. Below, we’ve broken down the process so you have step-by-step instructions to get started. From here, you’ll see the pros and cons of the idea so you can assess whether it’s right for you!

How Does It Work: Step-by-Step Instructions

Step 1: Choose a Supplier – To start, you’re going to choose a supplier and, with that, a niche for your business. At first, we recommend looking into the industries you feel passionate about because this will help. Although you might say ‘I’ll sell anything’ now, you need a business that’ll keep you going even when the times get rough.

If you want to cover a range of niches, look into the many suppliers available. As well as looking through online directories and lists of sites willing to allow dropshipping businesses, we also recommend looking through local directories if you prefer this route. Ideally, you need a company who knows how dropshipping works because this means they have processes in place to welcome you to their team.

When researching, ask some questions including the time it takes to ship, the shipping methods on offer, their quality control processes, whether you can use their product photos, and if they offer any warranties. At this stage, we also recommend ordering a couple of items so you can check the quality and ensure you’d be happy associating your name with the products.

Step 2: Choose Your Products – At this stage, you need to be careful because there should be a balance between products you like and products that’ll sell when you start advertising them. While it’s all well and good choosing products you can write about and sell well, this instantly becomes redundant if there’s not enough interest in them.

In order to find products that are popular at the moment, feel free to look through the completed listings on eBay as well as carrying out your own research. Remember, these products will be a reflection of your brand and you need to sell them every single day. If you aren’t in love with the brand and you don’t think the products are any good, how are you supposed to persuade others to buy them? At all times, you need to feel genuinely excited about what you’re selling.

Step 3: Create Your Platform – Normally, this is where a significant amount of people drop away. After choosing a niche and their products, they then realize that starting a website requires too much effort or money. If you go it alone, the process is much easier than it used to be but you’ll still need to invest time so it works like a reputable store. However, this is why we recommend one platform in particular; Shopify (What is Shopify About? A Complete Guide)

On Shopify, we have a fantastic platform for all those looking to start an e-commerce store. Regardless of your industry, you can take advantage of all the superb tools they have available including those designed to build your website and generate interest in your brand. Instantly, you’ll have access to thousands of different themes for your website and you can even choose your own domain name. Without requiring a degree in IT, you can get your store up and running without all the stress and pressure that used to come with the process.

Not only will Shopify help you to sell on their own platform, they offer opportunities to add a ‘Shopify Buy Button’ elsewhere on the internet. Even after this, you can sell on Facebook too and this could come in handy considering it’s now one of the most-visited websites on the internet. If you haven’t yet tried Shopify, we highly recommend testing the free trial because you might just be surprised with the results.

Step 4: Add Your Products – At this point, you should have contacted the manufacturer and asked if they’d be happy to welcome you to the team. In addition to this, you should have a beautiful website ready to welcome shoppers and help them become owners of cool new products. With this, the only thing left to do is add the products to the store.

To get started, we recommend having a conversation with the manufacturer as to what details you should include in the product description as well as whether you can use their photos for the profile. At this stage, try thinking like a shopper; when you’re on a website, what do you like to see? With high-quality photos taking centre stage, you also need to consider the layout of the information in the description box because a cluttered look simply will not sell.

Step 5: Get Started – What is a dropshipping business? Well, you now have one. With all your products added, make sure you’re happy with how it looks and then press the magic button on your online store. If we can bring your attention back to Shopify for a moment, the more advanced memberships allow for a blog, gift cards, fraud analysis, 24/7 support, discount codes, and professional reports so this is why we recommend it so highly. With these features, you stay in control of your business and there are opportunities to grow in the coming weeks, months, and years.

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Benefits of Choosing a Dropshipping Business

Should you choose a dropshipping business? For us, we like a good pros and cons list because this allows you to weigh up your options. First up, what are the major benefits of choosing this type of business?

Very Little Capital Required – Of all the benefits, this has to be the main one because you hardly have any costs. With your own website, you may need a professional designer as well as your time to research but this is all. With Shopify, you pay for the membership and nearly everything is done on your behalf. Once you’ve invested the time finding your niche and designed your website from templates, you can get started with no need for stock and no need for storage space. Ultimately, we could all get started as long as we have a laptop and internet connection.

Simple Startup – With no need to buy stock or keep it anywhere, this is one of the easiest home businesses to start. Rather than worrying about finding a location, setting up shipping policies, designing your packaging, learning your ordering process so you never run low on stock, and tracking all inventory, you can do everything online with no
headaches.

Flexible Variables – If you’re looking to get away from the monotony of working in an office every day, a dropshipping business would be perfect because you can work from anywhere in the world. As long as the order goes through to the manufacturer and you have an internet connection to keep in touch with clients, you could work in your living room all day or even on a sunny beach somewhere.

Opportunities to Scale – If you were to sell your own products, scaling upwards would mean an investment into a larger facility, more staff members, etc. With dropshipping, you wouldn’t need to do anything to scale upwards. If the brand really takes off, you might add a few more products to your store and introduce different departments but the manufacturer is still packing and shipping everything for you.

Passive Income – Once you have a reputation and you automate the emailing system for when customers order from you, you can take breaks whenever required. Even when you’re on vacation, your website will still be attracting visitors and you can make money. With a physical business, somebody will need to replace you.

Drawbacks of Choosing a Dropshipping Business

Extreme Competition – With the process being so easy and cheap, you’re going to be up against some very good online stores. Before you get started, you need to ask yourself whether you have the passion and determination to succeed. If you do, there are still over seven billion people in the world so the market can never really be ‘too saturated’.

Tracking Inventory – When working with a manufacturer, you need to stay in regular contact with them so you know how much stock is available. If you continue selling long after they run out, your customers have to wait until they come back in and this could affect your reputation.

Margin Rates – Finally, entering the market as a beginner can make it hard to earn a good margin between your retail selling price and your wholesale buying price. In fact, some businesses take a hit over the first few months before then earning a reputation thus allowing for higher margins and more profit for your business.

Summary

What is a dropshipping business? Hopefully, you should now have everything you need to make a decision. Is this business right for you? If you aren’t too worried about the drawbacks or believe you have solutions for each, a dropshipping business can be very successful. Remember, you’ll need to work hard to beat the competition and Shopify will make the journey many times easier so feel free to continue your research and see our blog post What Is Shopify About? A Complete Guide

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I hope you enjoyed this post and if you have any questions about dropshipping or want to leave your own personal experience with dropshipping, leave a comment below.