How to Start a Dropshipping Business in 8 Simple Steps
Our readers always come first
The content on DollarSprout includes links to our advertising partners. When you read our content and click on one of our partners’ links, and then decide to complete an offer — whether it’s downloading an app, opening an account, or some other action — we may earn a commission from that advertiser, at no extra cost to you.
Our ultimate goal is to educate and inform, not lure you into signing up for certain offers. Compensation from our partners may impact what products we cover and where they appear on the site, but does not have any impact on the objectivity of our reviews or advice.
No inventory, storage space, or massive amounts of startup capital required, dropshipping has become an appealing revenue model to many looking to make extra money online.
It used to be that you had to stock inventory if you wanted to sell products online.
But with the arrival of dropshipping, anyone can start a product-based business without having their own physical inventory.
Dropshipping has quickly become one of the most popular online business models, and for good reason. According to Statista, in 2016 there were 1.66 billion global digital buyers. By 2021, that number is expected to grow to 2.14 billion.
Dropshipping lets people manage physical businesses without having a warehouse or full-time employees. It’s the 21st-century solution to building a flexible product-based business.
What Is Dropshipping?
Shopify defines dropshipping as “a retail fulfillment method where a store doesn’t keep the products it sells in stock. Instead, when a store sells a product, it purchases the item from a third party and has it shipped directly to the customer. As a result, the merchant never sees or handles the product.”
In other words, when you use dropshipping, you can create and sell products without ever having to keep inventory on hand. Not having to buy inventory is one of the best parts of starting a dropshipping business.
It allows you to tap into the growing online market without making massive initial investments in product or finding space to store it. You can also skip the upfront cost of shipping materials and freight charges as a dropshipper.
To start a dropshipping business, all you need is a market, a buyer, and a way to reach your customers.
How to Start a Dropshipping Business in 8 Simple Steps
Starting a dropshipping business doesn’t need to take weeks or months of planning. With a little determination and persistence, you can launch within a few days.
1. Choose a niche.
First, you’ll want to select a type of business or niche.
Examples of niches include health and beauty, fashion, electronics, outdoor living, children and toys, or household products. As a beginner in dropshipping, it’s important to be specific with your business and test new lines before expanding your niche.
For instance, if you choose to enter the fashion industry, decide if you’re going to sell children’s, men’s, or women’s items. You can scale down further and sell women’s shoes or be even more specific and pick a certain type of shoe such as heels, flip flops, or sneakers.
Selecting a specific niche for your dropshipping business will help you focus on the right customer as you build your brand.
2. Choose a platform.
You can list products to dropship on a number of platforms including eBay, Amazon, Etsy, or your own website. List the same items on multiple sites to expand your reach.
Shopify is another popular option. You can integrate your Shopify account with your own website or a third-party site from Etsy. Shopify has affordable options for new dropshippers and also offers premium features like abandoned cart targeted marketing.
Even if your following is small in the beginning, you can decide to build your own website and use it to sell and grow an email list. At the same time, you can list your products on sites like Amazon or eBay to boost exposure. These platforms are popular and reputable, and people search them directly every day for products like yours.
Ultimately, building your own website and using a specific marketing strategy to draw customers to your storefront will give you the best profit margin. You won’t have to pay the hefty listing and seller fees that come along with Amazon and eBay.
Related: How to Make Money on Amazon
3. Choose a product.
Once you’ve selected your niche and where you’re going to list your items, it’s time to pick the specific products you want to sell. Use your niche to help you decide.
Are you going to sell wedding dresses, sunglasses, or toddler toys? Depending on your dropshipping suppliers, you might be able to list a whole line of items within your niche.
Don’t get too carried away at first. The goal is to start small and cater to one audience. In time, you can expand your products to fill in the gaps within a broader niche.
4. Build your brand and following.
Next, you’ll need to brand your items, unless you decide to sell under another company’s brand. It’s not a bad thing to find established brands that allow dropshipping. But if you choose this, you may struggle to scale your business in the long run because they typically charge a high percentage on each sale.
You can simultaneously build your own brand and your following on social media. Start by creating business accounts on various social media platforms and sharing relevant information daily. If you’re consistent, people will start to notice you and your brand. Take the opportunity to grow an email list to market your products as well.
The best social media platforms to build a following on include Instagram, Facebook, and Pinterest. Find out where your target market spends their time online and grow your social presence there. Remember to engage with your audience by being genuine and authentic. That will help them connect with and trust you, which will make them more inclined to buy your products.
Related: How to Become a Social Media Influencer
5. Research your competitors.
New dropshippers often overlook this step and fail to keep up with their competition. The online market is massive, but that doesn’t mean it’s endless.
To figure out who your competitors are, do a quick Google search for specific keywords related to your products. Those that show up in the first 10 spaces are your biggest competition.
Take a close look at the categories and variety of items your competitors offer. Do they have in-depth content like a blog explaining how to use their products? You could start a blog to market your products as well.
Use the data on their websites to analyze your competition. You don’t want to copy your competitors, but you should learn how to make your product, brand, and website better by learning from established brands. You’ll find many strategies and ideas as you research your competition.
6. Choose your dropshipping suppliers.
Choosing reliable dropshipping suppliers is the key to your success. Be sure to research, test, and compare products when possible.
If you’re dropshipping from outside of your resident country, it’s imperative that you see and touch the product first. You don’t want to receive refund requests or bad reviews for selling low-quality products. A $35 vacuum is worthless if it’s a knock-off that doesn’t do the job.
See if you can get a sample of the product, which you can use in marketing photos and materials. Make sure to budget for this in your start-up costs.
You can get started with dropshipping suppliers like Alibaba or Oberlo. Research manufacturers directly to find out which one works best for you. Some might be willing to place your brand on the product and dropship directly to your customers.
If you’re not ready to brand products as your own, then consider distributing products on behalf of an established brand. Many manufacturers prefer to keep their brand on the product and have dropshippers market and sell them. This is especially helpful for new dropshippers to establish trust in their niche.
7. List your items and sell them.
Now that you’ve chosen a product, suppliers, and a platform, it’s time to list your items online and start selling. But there’s still more to do.
When you list an item on Shopify, Etsy, or any platform, you’ll need to write a unique title, create detailed bullet point descriptions, and choose a competitive selling price for every item. This is where your competitor analysis comes in handy because the data can make your product listings better.
Don’t get discouraged if you don’t sell an item the first day you list it. Dropshipping businesses can take weeks or even months to take off. If you don’t have much time to put toward your business from the start, it could take a year or more. You’ll need to be patient and determined during this stage.
8. Watch your results and learn how to improve.
Just because your products are listed for sale doesn’t mean the hard work is over. In dropshipping, the competitors, demand, and product offerings are always changing. That’s why it’s so important to learn what works and what doesn’t.
You can continuously improve your dropshipping business to cater to your target audience and sell what they want. If you don’t know what they want, revisit your social media channels or email list and take a poll. It may help you think of new products to fulfill their everyday needs.
Listening to your audience and providing what they need is the best way to grow a successful dropshipping business.
Related: How to Start an Online Thrift Store or Consignment Shop
Learning How to Dropship the Right Way is Half the Battle
Dropshipping makes e-commerce seem easy, but it still takes work and persistence to see success. As long as you stick to the basics and don’t stray from your business plan, your work should pay off.
Choose a niche and stick to it. Don’t be afraid to list your products on more than one platform, inspect the quality of your product before going full scale, and learn from your mistakes and successes. Knowing how to dropship the right way can mean all the difference between a time-consuming hobby and a full-time, home business venture.
To learn more about how to get started with dropshipping, sign up for Shopify’s free training: how to start a profitable dropshipping store.