Dropshipping is a great business concept if you want to launch your business with a small financial investment. By outsourcing production, storage, and shipping to a third-party supplier while focusing on advertising their products, you can save costs. Shopify is one of the most common platforms recommended to start dropshipping, and this is a step-by-step guide for you to start your dropshipping business today!
What is a Dropshipping Business?
Dropshipping is a business model that allows business owners to sell goods from their online store that have been produced, stored, and shipped by other drop shippers. Since products are typically only charged to the business owner after a sale, there is almost no risk of overstocking.
Dropshipping is an ideal option for new business owners. It frees up time that can be spent on marketing and gives small businesses a low-risk opportunity to test out new product concepts (and product lines) without having to buy and pay for the item upfront.
Starting Your Dropshipping Business With Shopify
Step 1 - Find A Profitable Dropshipping Niche Market
There’s a good chance that other merchants will sell your products unless you’re dropshipping private-label goods or using a print-on-demand business model. So how can business owners stand out in a competitive industry? As a business owner, you achieve this by finding a profitable dropshipping niche.
A segment of a larger market known as a niche market is defined by its specific demands, preferences, identity, or interests. Niching allows smaller businesses to lower the level of competition that develops in markets when commodities are easily available.
For example, there will be a tonne of competition if you sell tea. But your competition suddenly becomes much less severe if you sell slimming teas. If you narrow your focus even more and, for example, sell slimming teas to millennials who want to detox their bodies, there is even less competition.
However, it’s not as simple as defining a highly specific target. You must confirm that there is a market for your idea of a product if you wish to identify a profitable niche.
To find a profitable niche market for your dropshipping business, you can use some tools like Facebook Audience Insight, Google Keyword Planner, Google Trends, and other research analysis tools.
Following Shopify’s best dropshipping products research, some niches will be most profitable in 2023:
- Health and personal care
- Wardrobe and accessories
- Kitchen and grocery
- Home and bedroom
- Office products
- Tools and home improvement
- Camera and cellphone accessories
- Gaming
- Car Accessories
In case you are not interested in the niches above, you can research other niche markets. Additionally, you can take note of some tips:
Look for accessory-heavy niches – You’ll benefit from much better profit margins and fewer price-sensitive customers if you select a niche with lots of accessories.
Find customers with passion – You will discover people who are ready to buy if you can provide a product-based solution to a painful issue.
Look for trendy products you can’t find locally – While it’s good to have a hard time finding anything locally, you also need to make sure there is a sizable market for the item.
Aim for niches with low product turnover – Selling a product line with low turnover makes it possible to make long-term investments in an information-rich website.
Consider selling consumable or disposable products – If your product requires frequent reorders and you can keep your consumers satisfied, you’ll be well on your way to creating a successful company with frequent revenue. Making an informed choice will require knowledge about a product’s demand, competitors, and suppliers.
Step 2 - Define Your Target Audience
You’ll want to find out more about your dropshipping store’s target market once you’ve identified it. Understanding your target market will help you make better decisions about what new items to sell, what sales channels to focus on, how to market your brand, and much more.
It can be helpful to ask yourself the following questions when you define your target market:
- Who benefits the most from my product?
- What makes my product different from my competitors’ products?
- Who is discovering my products? How are they discovering them?
You don’t have to do deep studies to identify your target market, but you should be careful of who you are marketing to.
Step 3 - Find Dropshipping Suppliers
There are many dropshipping suppliers to pick from, but if you want your checkout process to be fully automated, you should use Shopify dropshipping apps. The Shopify App Store is where users can find Shopify’s dropshipping applications.
When you use Shopify to sell drop-shipped goods, information about your orders is given to your third-party supplier for shipment. The supplier identifies the transaction as complete and, if available, can add a tracking number before sending the order directly to your consumer.
Step 4 - Build Your Shopify E-commerce Store
After logging in to your Shopify account, you need to set up your domain name. Remember to keep the domain short, different, and available, and consider a unique domain extension. Then start to build themes and import your products to your Shopify online store.
Refer to the Shopify Product Listing for more details.
[H3] Step 5 – Market Your Dropshipping Business Store
To make your first sale from your dropshipping store, you’ll need an effective marketing strategy. The main advantage of dropshipping is that, since order processing and shipping are largely automated, you have more time to devote to your advertising campaigns.
The key to growth in dropshipping is differentiating your brand through the careful selection of products that appeal to your target market because products tend to be easy to find from various online stores.
Some ideas for marketing your dropshipping business are here:
Find your target audience on social media
It’s easy to maintain costs within your budget because paid advertising campaigns sometimes contain variable costs. It is simple to target individuals who are most likely to be interested in your product because audiences are categorized based on factors like their hobbies, online behaviour, and which accounts they follow.
However, there are still many things you can do on social media for free, even without a marketing budget. You can gain insights into your target audience’s main problems, the kinds of content they typically share, and the language they use to communicate with one another by analyzing accounts, threads, and online forums where they visit. All of this information can help you better brand your items.
Make an SEO (Search Engine Optimization) campaign
The method of using search engine data to improve the content on your website to drive traffic to your online store is known as search engine optimization (SEO). Almost a third of all web traffic comes from search engines, making increased visibility very valuable to small businesses.
Use email marketing to reach your existing audience
Users already show interest in your products when they sign up for your emails. The goal of effective email marketing should be to keep that attention and encourage conversions into sales.
However, it goes beyond that. An ongoing channel of communication with your customers is made possible via email marketing. An effective email campaign can help you connect with your customers on a more personal level by providing them with helpful information about your products.
Tips For Making Dropshipping Business Run Smoothly For Beginners
Own your supplier’s mistakes by:
Take the blame. Under no circumstances should you blame your dropshipping supplier for the mistake. It will only confuse you and make you look like an amateur. The customer has no idea the drop shipper even exists. Instead, you should take responsibility for the issue, extend an apology, and inform the customer of your plans for fixing it.
Make it up to the customer. Depending on how serious the issue is, you may want to offer the customer something upfront as payment. This could include a shipping charge refund (one of our personal favourites) or an upgrade if the customer requires the shipping of a new item.
Have the supplier pay to fix it. You may have to assume responsibility for the error, but that doesn’t mean you need to cut into your profit margin. Any trustworthy supplier will cover all costs associated with correcting its own mistakes, including shipping charges for returned goods. However, it is unlikely to cover any extras or changes you provided to your customer. These public relations and marketing costs need to be taken into account.
Manage your inventory levels by:
Using multiple suppliers
One of the best dropshipping ideas for increasing your order fulfilment percentage is having access to several suppliers with overlapping inventory. There’s a strong chance Supplier B has the item in stock if Supplier A doesn’t.
Furthermore, it’s risky to rely just on one supplier to provide your product. The future of your online store may be at risk if they choose not to work with you, increase their prices, or stop business.
Even if you don’t discover two suppliers with the same inventory, if they serve the same dropshipping market or category, both will probably stock the best-selling products, which are your main concern.
Pick your products wisely
After your product has been validated, focus on selling mostly goods that you are certain all of your suppliers carry. You’ll always have two viable options for fulfilling any product you carry if you do it this way.
Use generics to your advantage
Even if they don’t have the same product, two different suppliers might have interchangeable, near-identical goods. For smaller accessories and product add-ons, this is especially true. Write a general product description that enables you to fill the order from either supplier if you can validate that the two products are almost comparable to one another.
Be careful to include the model numbers of both suppliers in the model field as well. In this case, you can send an order invoice to either supplier without making any changes.
Check on item availability
A drop shipper does not necessarily carry an item regularly just because it lists it on its website. Talking to a salesperson about the availability of the goods you’re thinking about selling is an ideal plan.
Are these things always in stock, or at least 90% of the time? Or does the drop shipper only have a small number in stock and often manage to get the item reordered from the supplier? Avoid keeping the latter category of products in stock.
Deal with out-of-stock orders
Despite your best planning, you are going to get customer orders that you are unable to fulfil. Offer a free upgrade to a similar yet better product rather than informing the buyer that the item is out of stock. Your customer will probably be happy, and you can keep the relationship going.
It’s okay if you don’t make any money off the order; if your customer cancels the order, you wouldn’t have made any money either.
Fulfill orders intelligently
Routing orders to a preferred supplier
You can direct all orders to that supplier by default if they stock most of the things you need and are easy to work with (excellent selection, superior service, etc.). This is especially simple to put into action because all that is required is to automate the process by adding your supplier’s email address as a recipient for any new order confirmations.
Routing orders based on location
You can easily route the order to the provider closest to your customer if you work with several suppliers who each have the bulk of your products in stock. In addition to speeding up delivery to your consumer, this also reduces shipping costs.
Routing orders based on availability
You’ll probably need to route each order based on which drop shipper has the item in stock if you stock an extensive inventory of goods distributed across multiple suppliers.
Routing orders based on price
This is great in theory, but it might be challenging to know which supplier will be the lowest until one has a significantly better price. Real-time shipping costs, supplier prices, and potential drop fees must all be taken into account by any automated system. So while not impossible, it can be difficult to implement an accurate automated system to accomplish this.
Implement security best practices
There is no reason to run an online business with insufficient safety or poor fraud protection. The following dropshipping tips can help you protect your customers’ data as they shop online. prevention practices.
Storing credit card numbers
You have to submit to extensive PCI (payment card industry) compliance rules and security audits to hold credit card information. Additionally, you can be responsible for stolen card information if your server is hacked.
The best plan of action is not to keep your clients’ credit card information on file. Offer one or more methods of payment via third parties, such as Shop or PayPal, to speed up the checkout process, lower cart abandonment, and free up your time to focus on marketing and customer support rather than security checks.
You won’t have to worry about any of this if you have a Shopify store. However, be careful to turn off the “store card information” feature in your control panel if you’re using a self-hosted cart or another e-commerce
Dealing with fraudulent orders
When the billing and shipping addresses are different, the great majority of fraudulent e-commerce orders take place. In some cases, the cardholder’s address is entered as the billing address, and a different shipping address is entered for the items. Unfortunately, you’ll miss out on a lot of valid orders if you forbid consumers from shipping to locations other than the billing address.
The good news is that fraudsters often show behaviors that can be easily detected before orders are shipped. These indicators won’t help you identify a fake order on their own, but if you notice two or three of them, you should look into them.
Handle chargebacks quickly
Fraud is typically the main reason for chargebacks, but consumers will also contest a charge if they don’t recognize your company, forget about the transaction, or don’t like the product they received.
You usually have a few days to respond to a chargeback, so you must move swiftly! You’ll need to present proof of the first purchase, delivery tracking information, and perhaps a wholesale packing slip detailing the specific things you bought and delivered to stand a chance of getting your money back.
Unfortunately, you very likely won’t succeed if the chargeback relates to an order with different billing and shipping addresses. The majority of processors will only refund you for fraudulent orders that were shipped to the card’s billing address.
Write an effective return policy for restocking fees or defective items
When a customer needs to return an item, the process will look like this:
- A customer contacts you to request a return.
- You request an RMA (return merchandise authorization) number from your supplier.
- The customer mails the merchandise back to your supplier, noting the RMA # on the address.
- The supplier refunds your account for the wholesale price of the merchandise.
- You refund the customer the full retail price of the merchandise.
But things aren’t always this simple. The following factors can make returns more challenging:
Restocking fees
Restocking fees, which are effectively charged for having to return an item, are charged by some suppliers. We highly advise against passing these costs on to your customers, even if your supplier charges them, as doing so will make your online store appear outdated and unwelcoming.
Even though you might at times have to pay a fee, you’ll make up for that outlay in the number of customers who choose to work with you.
Defective items
Receiving a damaged item is bad enough, but paying extra shipping to return it is even worse. Most dropshipping suppliers won’t pay for return shipping on damaged goods. They claim that since they did not create the product, they are not responsible for any defects.
However, if you want to develop a trusted brand for your company, you must always refund your clients for return shipping costs for damaged goods. This is just a tiny part of the expense of managing a successful dropshipping business.
It often makes sense to just ship the consumer a new product without asking them to return the old one if the defective item is a good deal.
Adopt simple shipping rules
For owners of dropshipping businesses, calculating shipping costs can be quite a challenge. It’s challenging to assess shipping costs for orders simply because so many different goods ship from various places.
Provide great customer support
Running a dropshipping business and keeping track of all your customers’ emails, demands, and returns in an Excel spreadsheet is not ideal. Similar to how managing support through a single email inbox slowly slows down when your team and business expand, resulting in issues and loss of service.
You can consider supporting apps or hiring a supporter to provide customers with greater support.
Consider phone support
Think about the kinds of dropshipping products you’ll be selling when deciding whether to offer phone support for your online store. Be strategic if you choose to provide phone help.
Focus on marketing
Starting with SEO
Your product pages should ideally rank for relevant search terms so that customers may find them on their own through search engines. Although most keyword searches are short-tail, with only two to three words, they are more crowded and competitive, making them difficult to rank for.
Instead, look into focusing on long-tail keywords, which are those that contain three or more words. Long-tail keywords have a lower search volume, but because there is less competition, it is much easier to rank for them.
Using social media channels
Social media platforms are used by many online store owners. It’s full of opportunities for you to reach new customers and drive them to your online store.
In Conclusion
With a dropshipping business, you can easily start an online business and run it from just about anywhere in the world. With this guide, we hope you can start a successful dropshipping business that takes active work to grow so customers are happy and return.
