Step-by-Step Guide on How to Start a Dropshipping Business in 2021

December 23, 2020

If you want to learn how to start a dropshipping business, you’re in the right place. There are a few crucial steps you need to make to have a successful e-commerce business. You should focus on a specific market, research your competitors, and find adequate suppliers. After you launch, implementing different advertising strategies will enable your business to reach as many customers as possible, while optimizing will maximize your profits in the long run.

If you’re new to sales, you probably don’t know how credit card processing works. Unlike some different types of businesses, drop shipping won’t have a physical presence. If you’re expanding or planning to build your store from the ground up, applying for a merchant account may be necessary.

What Does Drop Shipping Mean Exactly?

If you’re new to sales, you’re probably wondering, What is dropshipping? It’s a streamlined form of business that enables sellers to accept consumer orders without having to keep an inventory or stocking up on the product. When consumers make a purchase, the products are shipped by a third-party supplier, not by the store. The buyer pays the prices you set, while you pay the wholesale value to the suppliers, and the difference between the two becomes your profit. Since your drop shipping business will only accept cards, know that following PCI compliance regulations is crucial for keeping your customers’ data protected.

How to Start a Drop Shipping Business – Important Steps to Take Before the Launch Day

One of the most common mistakes business owners make is failing to research the market adequately. So how do I start a dropshipping business? Here are some necessary steps you should take before you even launch your e-commerce business.

Start by Carving Out a Niche for Your Business

You should decide what you’re going to sell well before starting a dropshipping business. While many people recommend picking a niche that interests you, you should also consider whether that would make your business profitable. Finding the right niche is crucial, so take some time to explore the best options. The best ideas are usually profitable, and making money is something we’re all passionate about. If you’re looking for a safe choice, fashion, fitness, beauty, jewelry, backpacks, and purses are always viable. Unless you plan to sell some consistently trending products, there are many ways you can make sure your choice is sustainable:

  • Look at the Google Trends – This is an easy way of finding out if your niche is on a downward or upward trend. However, some niches may have good projections, but the insufficient search volume can’t warrant their popularity. More information is needed to determine whether or not it’s viable.
  • Use SEO tools – Search engine optimization tools are incredibly effective in finding out what potential customers are typing in the search engine when looking for specific items. Through the use of keywords, the website will have higher traffic and ranking, making the business more visible to potential buyers.
  • Browse a website with a similar niche – Depending on what a business is selling, it may have organized trending or best-selling sections, which show you what products you should be adding to your store right away.

Checking the Competition Should Be Your Next Step

Once you decide what your business is selling, you should learn all about the market and your competitors, what products they offer, and how they sell them. There are a few different ways to do this:

  • Loop up the product you’re selling – Use Google to search for the product you want to sell and check out the results that show up on the first page. These first ten results will give you a good idea of who your competition is at your specific location. If you’re selling a product in a different place from where you are, use third-party tools like Ahrefs or SEMRush to gather the information.
  • Find niche competitors – Websites like SimilarWeb or Alexa can help you find competitors that didn’t show up in the general search results. These two platforms will generate a summary of the desired website, including traffic and audience information, which marketing methods they’re using, and more.
  • Check out their social media – Analyze your top competitors by checking out their social media marketing, which ads they use, the number of their followers, what they are doing right or wrong, and how you can differentiate.
  • Learn which products sell the mostBuzzSumo enables you to see which competitor’s items generate the most sales. The website shows which content incentivized the most social media interactions and gives you ideas you can implement in your own business, either through blogs or other marketing forms.

A Supplier Is Crucial for an Online Store

Before you can sell any products, you must register with a supplier. Finding the right supplier is easy if you use Shopify’s Oberlo. The platform enables you to search for products you want to sell and generates a list of all the possible suppliers. You’ll be able to see each supplier’s ratings, reviews, and how long they’ve been using the platform. After you find five or six you like, contact them and get all the vital information, such as minimum order quantities.

After narrowing down the list to two or three suppliers, you should place a sample order. Compare the results and make the final decision based on product quality, packaging, and shipping time, always keeping in mind what potential customers will expect from your business.

 

How to Start a Dropshipping Business

After you figure out what you’ll be selling, check the market, and find the right supplier, you can finally start a dropship business. You’ll need to find a platform where you can set up and customize your store’s look.

How Do I Set up Dropshipping? Create an Online Store

Setting up a store is the next step. You can use many platforms to create your business, and while they can be similar, they often provide different features. Some of the most popular platforms include:

  • eBay – Selling anything through eBay will require you to pay a fee. Items you list have a price, and eBay will get a percentage of what you sell them for. The standard auction listing is good for selling unwanted items, but not so much for running a business. If you already know how to do dropshipping, other options are better for setting prices.
  • Amazon – When selling an item through Amazon, you’ll pay a fee per item, as well as some additional fees. Once again, this system is not so good for a business, but luckily, the company introduced a professional account option. If you’re selling over 35 items per month, you can get a monthly subscription, eliminating the need to pay a fee for every single item sold.
  • Shopify – This platform offers a monthly subscription, with prices depending on the features you want to access and your business’s potential size. While Shopify had over 200 million shoppers in 175 countries last year, it doesn’t cover everything. If the platform doesn’t suit you, check some Shopify alternatives.

Customize Your Business to Suit Your Niche

Depending on the platform you use to run your business, there are plenty of ways you can customize the store’s look. Choosing a domain name is crucial for building a long-term brand. You can even use some of your niche’s keywords you researched before, and make sure you get a .com domain. Other things like the theme and look can be changed over time, and free options work just fine for starting. After making some money, you can spend more on a specific theme with a better design.

How Much Money Do You Need to Start a Dropshipping Business? Can You Do It for Free?

If you’re starting with little to no capital, drop shipping is one of the best e-commerce business models out there, especially great for small business ideas. You can launch for only $40, which includes platform fees and domain costs. As your business grows, you’ll spend more, but this will certainly pay off in the long run. In the meantime, take a look at how to find the best credit card processing for a small business.

Can you start a dropshipping business with no money? This is actually one of the most commonly asked questions. While there are e-commerce platforms that you can get without spending a dime, they don’t provide all the necessary services you’ll require, like hosting, for example. Many platforms offer a free trial period, after which you must subscribe to get all the features your business needs.

Check out this video explaining how you can launch a business with $100 and grow it to earn over a million dollars in revenue.

Create a Marketing Plan for Your Store

Now that your business is set, it’s time to promote it. Marketing plays a crucial part in making your business plan successful. If you’ve just started, you probably don’t have too much to spend on promotion. Luckily there are a few great advertisement ideas that won’t require you to spend a fortune:

  • Get Facebook and Google ads – Facebook charges on average around .97 cents per click for each ad, which isn’t too much if you’re new to social media marketing. Create an ad for a few different products and see what item incentivizes the most clicks. You can also run some Google shopping ads. These target specific long-tail keywords, as customers entering these, are more likely to buy something. Pricing competition is more common here, but it may be a good idea to try it out.
  • Content creating – Creating a constant stream of content will help build traffic for the long term. Blogging about your niche, starting a podcast, or even a Youtube channel is a great way to promote your brand and get the word out.
  • Hire influencers – If you have a tight budget, this is an affordable way of reaching your target audience. Influencers already have lots of followers, and it’s a fact that people tend to trust them more than traditional advertising. When negotiating a deal with an influencer, go for an affiliate fee instead of a flat price. You won’t have to spend a lot, and you’ll both earn more off of each sale.
  • Engage with communities – Social media platforms and online forums are a great way to engage with people interested in your niche. The approach is crucial here, and you shouldn’t focus too much on selling a product. Try to build consumer confidence instead, and more people will want to buy from you.
  • Try out mobile ads – Mobile advertising refers to connecting a customer to your business through mobile phones. This includes encouraging website visits, signing up for exclusive deals, starting a VIP text club, and providing customer support through a live chat.

Optimizing Is a Never-Ending Step in Running a Business

After you finish building the website, the brand and choose a marketing strategy, you should analyze the results. Even if you do everything right initially, you’ll need to adapt to the ever-changing marketplace. You’ll find that specific strategies are less successful than others, and you’ll reallocate your resources into the ones that show satisfying results. Similar to how you checked on your competitors, you’ll use various analytics to evaluate which options bring the most traffic. As your business grows, you can always invest more money into different strategies or adjust them to maximize the revenue.

Opening a Merchant Account Is Good for Future Days

You’re probably wondering, What is a merchant account? It enables your store to accept and process payments through credit and debit card fees. To set up a merchant account, you’ll need to look not only for an acquiring bank but also for a credit card processing company. These provide various credit card processing services, such as payment gateway and credit card virtual terminals, both of which are great options for an e-commerce business.

Besides providing merchant services, credit card processing companies offer excellent financial consulting, which can be very useful for optimizing your brand and marketing. Look into the average credit card processing fees, and you’ll easily find the right merchant processing company that will help you optimize your budget.

How Profitable Is Dropshipping?

Dropshipping is quite profitable and will continue to be so in 2021. The e-commerce industry is thriving, with a 7% yearly growth in the last decade. Numerous transactions worldwide add up to over 4 billion dollars in profits, making this type of business attractive for experienced sellers and newcomers alike.

The most important thing to remember is that your business needs to grow before seeing some significant returns. For example, let’s say your goal is to make $10,000 a month, and your commission is 5%. You’ll need $7,000 worth of product sales each day to meet this goal. At the end of the day, if you focus on developing your business, over time, you’ll be rewarded with a dependable source of income.

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