How To Start A Dropshipping Business In 2019-The Ultimate Shopify Drop Shipping Guide
Looking for the best advice on how to start a dropship business with Shopify?
Finding the right and best product to sell on Shopify can be a real challenge. When you identify a good product, you don’t want to end up spending a fortune even before you know for sure that it will sell. Instead, you require a cost-efficient way to first test the market and find out if potential customers actually love your product and ready to pay a reasonable price for it. Dropshipping lets you do just that!
Dropshipping is a retail fulfillment method wherein a web store does not actually keep the product that it sells in stock. Instead, the store purchases the item from a third party (dropshipping supplier) when an order is received by it and this product is then shipped directly by the supplier to the customer. As a result, the store merchant actually never stores, packs, sees, ships, or handles the product. The dropshipping supplier handles all this for the store merchant. The merchant just drives web traffic, gets sales and profits, and manages customer relationships.
Let us now find out how Shopify dropshipping works and why the world of entrepreneurs is in love with this model of selling products online in a three-step journey.
- A customer visits your online stores and makes an order for a product that costs them $60.
- You then place an order with a dropshipping supplier for the same product, and it costs you $20.
- The Shopify dropshipping supplier then directly ships the order to the customer of your store.
You earn a gross profit of $40 while the entire process of shipping is invisible to your customer. You don’t have to share this profit or pay commission to anyone. It is entirely and solely yours!
How Does The Dropshipping Business Model Work?
There are three important players in the model of Shopify dropshipping business: the product manufacturer, the retailer (you), and the customer (who places an order with your web store).
Manufacturer: The role of the manufacturer is to create products and carry inventory. It is also the responsibility of the manufacturer to ship products to customers of your web store on your behalf. Not only this, the manufacturer is also responsible for restocking products and replacing defective products. In other words, the manufacturers sell products to the retailer at wholesale prices while being fully aware of the fact that the entire risk of unsold inventory lies with them.
Retailer: The retailer, in the dropshipping business model, sells the products of the manufacturer on his web store under his brand. The dropshipping retailer is responsible to choose the bestselling products on Shopify and create awareness for these products on different marketing channels. The retailer is also responsible to manage inquiries, feedback, and complaints (if any) of the customers.
Customer: The customer purchases the products directly from the Shopify dropshipping retailer. Customers contact the retailer directly if any issues or questions arise.
Benefits Of The Shopify Dropshipping Model
The Shopify drop shipping model has a number of advantages, including but not limited to:
Easy to get started: If you want to sell products online and enter the world of eCommerce but don’t have the resources to manage supply chains, manufacturing, and order fulfillment then Shopify dropshipping is ideal for you.
With Shopify dropshipping, you don’t have to ever worry about:
- Paying or managing a warehouse
- Creating shipping labels
- Packing and shipping orders
- Handling inbound shipments and product returns
- Tracking inventory for accounting and other purposes
- Restocking products and managing stock levels
Less capital to get started: Undoubtedly, one of the biggest advantages of dropshipping is that you can launch a Shopify dropshipping eCommerce store without having to anything a fortune in inventory up front. In traditional retail models, retailers have to invest thousands of dollars just to purchase inventory. However, you don’t have to purchase a product with the dropshipping model unless a customer places an order and pays for it.
Flexible location: You can run your dropshipping Shopify store from just about anywhere. You don’t need to spend anything on buying or leasing a property. All you need is a reliable and stable internet connection and a laptop, desktop, or Smartphone to communicate with the customers and dropshipping suppliers. The best thing is that you don’t have to even quit your 9 to 5 job as everything about order management can be handled by you with just a few clicks even while remaining on the move or having a work break.
Low overhead: In a dropshipping model, the overhead expenses are quite low since you don’t have to deal with warehouse management or inventory purchases. You would be surprised to know that a significant number of successful dropshipping businesses actually operate from a home office with a laptop for less than $100 a month. There is no denying the fact that these expenses will increase over a period of time as more orders and sales would happen but then your profit margins would also increase.
Easy to scale: In a traditional retail model, you would usually have to hire more employees or get the work outsourced if you receive more business. On the other hand, you can simply forward details about more sales to the supplier in a dropshipping model. You would not be expected to spend countless hours to manage orders even if they surge by as much as 30 to 50 percent or even more, as most of the work to process orders is to be borne by the suppliers and a big majority of the tasks to be handled by you are automated or just a few clicks away.
Wide range of products: The Shopify dropshipping model of eCommerce web stores allow you to showcase a rich and wide range of products to your potential customers. Moreover, you have the complete freedom to add, edit, or delete products at your will. This means that you can add new products that are believed to be huge hits and you also have the choice as well as the freedom to remove a product that is experiencing low sales.
All these and many more advantages surely make dropshipping a very attractive model to both the beginners in the world of online dropshipping and even the established merchants.
What should you do if you want to try your hands on dropshipping but have absolutely no idea what to sell? Well, nothing to worry about!
Fortunately, dropshipping is one of the very few ones if not the only one retail model that actually allows you to test and validate different possible options that you might have.
The first thing you can possibly do is to find out what is already selling. It is best to try out a proven niche with bestselling products to increase your chances of success. To start, you can have a good look at different marketplaces such as eBay, Etsy, Amazon, etc. to collect ideas about their bestsellers.
You can start with browsing through different categories in which you have experience, knowledge, interest, or expertise. It is worthwhile to remember here that you don’t have to be really interested in the product you would be selling as the “interest” can surely be developed over a period of time even if it is already not there. No wonder, even owners of the most successful Shopify dropshipping eCommerce stores don’t sell everything they are passionate about.
There are different reasons why merchants sell products on their stores:
If a product solves problem like nothing else ever had (or in better ways) or if there is a low competition niche or enough opportunity to market a product in innovative and different ways, you must grab it with both hands.
Finding these rewarding opportunities does take a lot of time, efforts, and brainstorming. You may make use of tools like the Google Keyword Planner.
Every now and then, a new trend comes along with the wonderful opportunity to create a business and turn it into an empire. Whether it is de-stress blankets, therapeutic essential oils, gummi bears, smart plugs, pet-friendly gloves, or hypoallergenic waterproof mattress — new trends come and go while some stay on forever. Catching these trends may not be the easiest jobs on the face of the earth but it might be worth jumping in if you see something new emerging or try your hands on at least testing it.
For this, you may try out resources like Google Trends or Pinterest or even the trending videos of YouTube.
It is important to brainstorm extensively. Once you have a list of 4-5 products or niches that are likely o help you make enough profits and you would be interested in, you can then proceed to evaluating their potential before testing them.
Evaluating Your Idea
Once you have an idea about whether you would be going to sell it or the niche you will be targeting, it is time to carefully and comprehensively evaluate it. After all, you should be assured that it is the right and most viable idea for dropshipping.
For this, it is best to first measure demand and then competition followed by a comprehensive analysis of the product idea.
But firstly, we need to be sure that the product or type of products can actually be dropshipped. If the product is highly niche, there may not be enough suppliers that offer dropshipping. However, the thing to be happy about is that you would find a dropshipper for almost anything but a quick search on Google still does no harm.
So, you may quickly Google “cappuccino coffee dropshipper” to find out what comes up. Remember, we are not going to just dive in the results that would come up and we are only checking if things are even possible in the first place. Once we have identified that there it is surely possible to find a dropshipping supplier for cappuccino coffee, we would get on with the task of measuring demand for this product idea.
There are countless ways to measure demand for a specific product or a group of products but for this purpose of this article, we would be using basic tools to get a general idea of demand. The fact that dropshipping allows us to swiftly measure test ideas means a quick validation (instead of over-analyzing data) followed by testing would be good.
The next step here is all about checking how the niche or product is being talked about on platforms and channels like social media (such as Facebook, Twitter, or Instagram). A product or niche that enjoys a huge majority of people talking about or sharing their photos and thoughts about is an ideal product or niche. The more engaged and passionate people are on different channels about a product or niche, the more chances are that the product or niche is a good find. This is indeed the kind of target audience that any Shopify dropshipping retailer would love to have as they are expressing their interest about it.
After measuring demand, it is time to measure competition and find out the top competitors for your selected niche or product. It is important to note that healthy and intense should encourage and not discourage you. This is simply because it is always a good decision to enter into a really competitive market than entering a dead one. The presence of intense competition means people are making money. In other words, everyone wants to have a piece of the cake if it is good and everyone will throw it in the garbage if it is stale and redundant.
Analysis Of The Product Idea
To get started, you may start clicking the top search results that may even mean clicking the top advertisements (paid advertisements). You must additionally visit Alexa.com or SimilarWeb to measure demand based on competitor data.
You can even use Twitter and Facebook profits to measure engagement level of the target audience and use BuzzSumo to find out the pages with the most shares on the stores of your future competitors. It will also help you find the traffic of your competition and the sources of traffic. This data will help you to gather idea on how to market your product and even validate your product.
Questions For Which We Must Have The Answers
Before we put the product or niche to testing, it is highly suggested to identify and explore questions for which we must have the answers. This will help us in more than just a way and ensure that our journey from selecting the right product and/or niche to the would-be popular and bestselling product or profitable niche is easy, smooth, and rewarding.
Is the product easy to find locally? If yes, this makes the product a bad offer. If it is hard to find locally, it is a wonderful opportunity.
Who is the target audience? What is the unique selling proposition of your product? If your audience is between 25 to 45 years of age (the primary earning population) and the product has an unmatched unique selling proposition, it might be a viable option. If your product satisfies the basic needs of the target customers, it would more or less always be a good idea.
Is the product easy and small to ship? Small products are usually easier to ship and associated with smaller shipping costs.
Is there a potential to cross-sell with other products or are there a lot of accessories? Complementary products associated with the purchase of a product (for instance, chargers, head phones, power banks, battery, tempered glass, etc. with the purchase of a Smartphone) can increase the average order value for a Shopify dropshipping mobile store. This will also leave ample scope for more orders for related and complementary products with the same store in the near future.
How To Set Up A Shopify Store-How To Make Money On Shopify
Now that we have found ways to measure demand and competition and analysis of the product idea, let us now find answers to questions like how to start a Shopify store and how to make money on Shopify.
The first step is to sign up for a Shopify store. You get an option to start a Shopify store for free for 14 days. You will be asked to select a name for the store (that can always be changed later) and provide some details about the store or business. You will be then logged into the Shopify store wherein you can add or edit products, view daily sales, fulfill orders, add sales channels, configure storefront, and much more!
Once this has been done, we are required to choose a theme for the store to give it a professional look. We can customize this theme within the theme editor at any point of time in the future. Thereafter, it will be the time to add a few popular and bestselling products and then proceed to setting up the payment gateways. You may select Shopify payments as the primary payment gateway for your Shopify store. It lets you accept credit cards like VISA and MasterCard on your Shopify eCommerce web store. Alternatively, you may choose a different payment gateway depending on your geographical location or preferences.
Finding Best Shopify Dropshipping Suppliers
Primarily, there are two methods of finding the best Shopify dropshipping suppliers:
Identifying the best Shopify dropshipping suppliers through Oberlo is a great and easy way to identify the best Shopify dropshipping suppliers.
Doing Your Own Research
You may instead decide to perform your own research and make use of Google and online wholesale directories to find and contact potential suppliers to work with. This is a time-consuming activity but a good choice for Shopify drop shipping retailers that want more customization and control of the product they intend to sell.
Oberlo is a Shopify application that lets you easily find and add products to your dropshipping eCommerce store (with just a few clicks) from different suppliers serving a wide variety of niches. Products come with photos and descriptions and order processing can be performed with a few clicks while the dropshipping supplier handles the rest.
You have access to products from two different marketplaces with Oberlo:
- Oberlo Supply
An online retailer hub that primarily comprises of Chinese sellers, AliExpress allows you to add products, photos, and descriptions easily. Furthermore, you can add your own markup and process each order in Oberlo.
Oberlo Supply is an evolving marketplace of vetted suppliers that lets you swiftly add tens and hundreds of products into your web store within a few minutes. One of the biggest advantages of Oberlo Supply is that you are just required to pay for the orders at the end of a day. These orders are then sent to the concerned suppliers and everything is thereafter handled by them. Another noteworthy advantage of Oberlo Supply is that it provides lower cost per order on a big majority of products in comparison to other marketplaces and directories. This is primarily because suppliers are located globally and thus allowing you to add your own markup.
You will be required to proceed with the installation of the Oberlo app before you can initiate with finding Shopify dropshipping suppliers for your eCommerce store. You can use the application to semi-automate ordering through AliExpress and import products from AliExpress.
Identifying And Working With Suppliers
It is extremely important to differentiate between retail stores that pose as wholesale suppliers and legitimate wholesale suppliers. This is because legit wholesale suppliers purchase directly from the manufacturers and thus offer significantly better pricing.
How To Identify Dropshipping Wholesalers?
You will likely come across a huge number of “fake and malicious” wholesalers depending on the product or niche you’re searching for. Believe it or not, it is a true fact that most legitimate wholesalers are actually poor with resources and marketing and thus difficult to find. On the other hand, the malicious and non-genuine wholesalers appear more often in the search engine result pages. Therefore, you should be extremely cautious while differentiating between retail stores that pose as wholesale suppliers and legitimate wholesale suppliers
Here are some tactics to find out whether a wholesale supplier is legitimate or not:
Ongoing fees: A monthly fee for ordering from them is usually not charged by the real wholesalers. If the supplier is asking for a service fee or membership fee, there are high odds it is a fake and not legitimate wholesaler.
However, it is critical to differentiate between wholesaler directories and suppliers here. Online directories of wholesalers generally charge a fee — either ongoing or one time — so they can screen if the wholesalers are legitimate.
Legitimate wholesalers do charge a per-order drop shipping fee that generally range from $2 to $5 or more, depending on the specific products and the type of shipping involved. Some wholesalers may even have a minimum initial order size that is the lowest quantity or price that you must purchase for your first order. This is primarily done by the wholesalers to filter out window-shopping merchants that they believe would not translate into quality and meaningful business.
Directly selling to public: Primarily, 99.9 percent of genuine wholesalers (if not all) would ask you to apply for a wholesale account and prove that you are running a genuine and legitimate business. They would then approve the wholesale accounts before you can even place your first order. If a so-called wholesaler is providing products to everyone at “wholesale prices“, there are high chances that it is just a retailer that provides items at retail and not wholesale prices.
How To Select The Best Products To Sell On Shopify?
The biggest and most critical hurdle faced by most dropshipping entrepreneurs is the selection of the best niche and products to focus on. And it is quite understandable as it will have short as well as long-term consequences on the success or failure of your Shopify drop shipping business.
You would need one or more of the following to become successful in the world of dropshipping:
Have Access to Exclusive distribution or pricing
One of the best ways to sell a product profitably online without creating your own product is to get in an exclusive tie-up to get access to exclusive distribution or pricing of a product. However, these tie-ups are usually difficult to arrange in the first place but they are not impossible to achieve.
Create your own product
The easiest ways to gain complete freedom and authority over distribution and pricing of a product is to create it yourself. This allows you to charge a premium price and even limit competition. But, this would not be an option if you intend to dropship products as then you will be selling products that are manufactured by others.
Addition of non-pricing value
You can create or even enforce demand for products by providing valuable information that greatly complements the use of products. This will also help you emerge as an industry authority, charge a premium price, and differentiate yourself. In other words, providing out-of-the-box, unique, relevant, and value-adding advice and guidance can help you build a profitable dropshipping business.
Ways To Add Value
Value can be added to confusing and complicated niches in countless ways, including:
- Creating setup and installation guides
- Creating comprehensive buyers’ guides
- Creating in-depth or do-it-yourself videos demonstrating how the product works
- Creating detailed product listings and descriptions
Identifying The Best Customers
All customers just like all products are not the same. It is at times difficult to believe that while some big spenders hardly ask for anything, there are many customers making small orders feel like they are entitled to have a to and fro ride to the moon.
It is important for you to identify the right kind of clients and below you will find some of the best categories of customers.