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How to Start a Dropshipping eCommerce Business

By the end of 2021 ecommerce sales accounted for 13% of total sales in the U.S. Worldwide over 2 billion people shop online, at least part of the time. The ecommerce industry is growing at a rate of 17% year-on-year with dropshipping accounting for one of the fastest-growing ecommerce sectors. 33% of ecommerce stores ship via dropshipping and the numbers are expected to increase, making dropshipping a viable venture for entrepreneurs who want to start a new business.

Setting up a dropshipping business isn’t as easy as winning with a Play Croco casino login but it is something that you can do with a computer, connections to suppliers and some marketing basics.

Dropshipping

Dropshipping is an ecommerce business model in which the seller either buys products wholesale from manufacturers or pays for the product when it’s ordered. The vendor promotes the products on his website, facilitates the sales and then notifies the supplier who ships the item to the buyer. 

The advantage to the supplier is that he is only responsible for storing and shipping. The advantage to the seller is that he does not have the responsibility of warehousing or shipping items but only sells them.

In summary, in a dropshipping business:

  • You feature the supplier’s products on your ecommerce website
  • A customer buys the products via your website
  • You send the order information to the supplier and pay the supplier for the item and the shipping costs (if you’ve already bought the product in bulk, you pay only for shipping)
  • The supplier packs and ships the product to the customer.

Successful

Dropshipping is a successful business model. It makes it easy to start an ecommerce business. And, within the business model you can make money dropshipping and add to your revenue on a regular basis.  

As a vendor, your main responsibilities involve marketing and interacting with the customer. It’s easy to add new products, your start-up costs are minimal (website and Internet connection) and you can often provide your own label so your customers don’t know that the product is coming from a supplier.

Don’t forget that the dropshipping business is highly competitive. Working with manufacturers and suppliers is not always smooth sailing and ultimately, your business depends on whether or not they are reliable in fulfilling the orders. But if you are prepared to put in the time and the effort, learn marketing techniques and stick it out, you can succeed. Just be mindful that there are many things to be cautious of, for instance, registering your company through a trusted firm like Your Company Formations Ltd is vital to ensure you get the highest quality services available. Carry on reading for more things to be aware of.

Getting Started

To start a dropshipping business, you must

  • Register the new company. But if you are prepared to put in the time and the effort, learn marketing techniques and stick it out, you can succeed. Just be mindful that there are many things to be cautious of, for instance, registering your company through a trusted firm like Your Company Formations Ltd is vital to ensure you get the highest quality services available. Carry on reading for more things to be aware of.
  • Determine your product/products. Create a relationship with the manufacturer/supplier so that each of you knows what to expect from the other.
  • Set up your business – register your business name and set up a business structure, register with the tax authorities, obtain any needed business licenses and permits such as a seller’s permit, state tax license, etc. You can hire the best business formulation agency such as Incfile for the easy registration process. This guide on Incfile Review 2022: Is Incfile Right helps you know more about this firm.
  • Develop your business plan to identify your target audience and the product(s) that you want to market to them. Some considerations include recommendations to focus on selling items that are familiar to you and that you know about that interest you so that you feel confident about your product.
  • Identify a niche via Google Trends and Adwords so you will know what the search volume is for different types of products. That will allow you to narrow down the decision about which products you want to sell.  Products that have a higher search volume are selling more. You might also want to check the “best selling” lists on large ecommerce marketplaces like eBay and Amazon to see what products are selling the highest volume.
  • Research the competition in the niche that you’ve identified in search engines, on ecommerce platforms and in social media to see how potential competitors are selling that product. You want some competition because that indicates that there is buyer demand but not too much competition because that will make it hard for you to stand out.
  • Evaluate the profitability of your product. Consider the cost of purchasing the product, paying the costs of shipping and your profit margin. Can you sell the product and make a profit? At that cost, are you competitive with others selling the same product? Those questions will help you evaluate whether you can make money dropshipping this particular product.\
  • Find a supplier. You need a supplier who has experience in the dropshipping business, whose fees are reasonable, who promises fast shipping, can prove that he has good quality products and can provide referrals that attest to his reliability as a dropshipper. The Fulfillbot is the best dropshipping supplier, they can help you find the best price products and fast ship orders!
  • Decide whether you want to work with a dropship marketplace (a business that works with ecommerce dropshppers) or a manufacturer. Working with a manufacturer may be more economically sustainable but it can be complicated. It’s suggested that you start out with a dropshipping supplier and, once you have gained experience, move on to a manufacturer.
  • Set up your ecommerce platform. You can either create a store on a major ecommerce marketplace such as eBay or Amazon or build your website from scratch.
  • If you’re building your own website, do your keyword research and learn how to build a platform that will meet recommendations for SEO performance before you build your website. That way, from the beginning, your website will be noticeable in SEO results.
  • Optimize and market your site. You need to send out emails, explore paid ads and establish a social media presence for your ecommerce store. Try to do at least one marketing activity every day to get the word out about your product(s). There are online courses that you might want to take to learn how to market but you can also find helpful YouTube tutorials and other information online that will help you get started.
  • Consider whether you want to invest in order to grow. Some people prefer to wait until they see money coming in before they invest back into the business while others explore options such as a business line of credit, ecommerce grant, inventory financing or other business loans in order to give themselves a boost.

Setting up a dropshipping business isn’t as easy as it sounds but as ecommerce becomes more and more a way of life for shoppers around the world, it can be a good business model for experienced businesspeople and novices alike.