How to Start a Dropshipping Business From Scratch (Step-by-Step Guide)

E-Commerce - Last Updated on February 8, 2024 by Jussi Hyvarinen

How to Start Dropshipping Business From Scratch (Step-by-Step Guide)

Jussi Hyvärinen

I'm Jussi, with over 25 years of expertise, I help entrepreneurs navigate the online business world. My services include tailored recommendations, step-by-step tutorials, and insightful reviews to help steer your business aspirations. Please reach out if you need assistance with your online business plans or have any questions.

Dropshipping is a retail fulfillment method where you sell products online without keeping an inventory, with items shipped directly from the supplier to your customer when an order is placed.

So, you want to start a dropshipping business but don't know where to begin? Don't worry, you're not alone. Dropshipping has exploded in popularity over the last few years as an easy way to start an e-commerce business without major upfront costs or risks.

In this comprehensive guide, I'll walk you through everything you need to know to launch a successful dropshipping business in 2024 step by step.

What is Dropshipping?

Dropshipping is a retail fulfillment method where you sell products online without keeping inventory.

Here's a simple breakdown of how the dropshipping model works:

  1. A customer places an order for a product on your online store
  2. You forward the order details to your supplier
  3. The supplier ships the product directly from their warehouse to the customer
  4. You keep the profit margin between the wholesale and retail price

The main benefits of dropshipping include:

  • Low startup costs: No need to invest in inventory upfront. You only pay for products once a sale is made.
  • Easy scalability: You can instantly add new products to your store without having to purchase and store inventory.
  • Low overhead: Avoid warehousing, logistics, and shipping costs since the supplier handles fulfillment.
  • Wider product selection: Offer more products than you can feasibly stock and ship yourself.
  • Flexibility: Run your dropshipping business from anywhere with an internet connection.

Clearly, dropshipping offers significant advantages for e-commerce entrepreneurs, especially those just starting out. Now, let's look at how to start your own dropshipping business.

How to Start a Dropshipping Business?

Building a profitable dropshipping business takes research, planning, and consistent effort. Here are the key steps to follow:

1. Choose a Dropshipping Niche

One of the biggest mistakes new dropshippers make is trying to be everything to everyone. Focusing on a niche helps you better understand your target audience, find reliable suppliers, and market your products effectively.

Consider niches like:

  • Pet supplies
  • Hobby and craft supplies
  • Home and garden decor
  • Toys and games
  • Sports and fitness equipment

When selecting a niche, look for:

  • Passionate audience: A niche with an enthusiastic audience makes marketing and selling easier.
  • Growth potential: Look for upward market trends using Google Trends and keyword research tools.
  • Low competition: Avoid extremely saturated markets like phone cases and fashion jewelry.
  • High search volume: Use tools like Google Keyword Planner or Semrush to assess demand for related keywords.

2. Find Reliable Suppliers

Finding the right suppliers is a make-or-break for running a profitable dropshipping business. Look for suppliers that:

  • Provide fast order fulfillment within 1-3 business days.
  • Offer reliable shipping with tracking numbers.
  • Have good product quality and presentation.
  • Provide excellent customer support to you and your customers.
  • Offer competitively priced wholesale products.
  • Integrate with your e-commerce platform using API or plugins.

Some top supplier platforms include AliExpress, SaleHoo, Spocket, Dsers, and Printify. Thoroughly vet suppliers by ordering samples to assess product quality and shipping speed.

3. Set Up Your E-commerce Store

How to Start a Dropshipping Business image 1

You need an online storefront to start selling. Shopify and WooCommerce are two top options.

Shopify makes it easy to set up a beautiful, fully hosted store. WordPress plugins like Dsers integrate with Woocommerce sites. Both platforms integrate with top suppliers.

On your store, focus on:

  • A fast, easy checkout process
  • Mobile responsiveness
  • SEO optimization
  • Secure hosting and SSL certificate

Also, provide policies like shipping, returns, and privacy to build trust.

4. Select Profitable Products to Sell

Carefully select which products you'll sell in your dropshipping store. Avoid saturated products. Look for:

  • High-profit margin: Markup products at least 2-3X the supplier cost. Use a profit margin calculator.
  • Winning products: Trending or unique products gaining social media and search traction.
  • Passionate niche fit: Ensure products align well with your overall niche.
  • Light and small: Inexpensive products to ship help maximize profit.

Use tools like Google Trends, Ecomhunt, and DSers to find winning dropshipping products. Create engaging product listings with titles, descriptions, images, and videos.

5. Market and Promote Your Store

You won't make sales without traffic and marketing. Some top strategies include:

  • SEO: Optimize your site and content to rank organically in search engines.
  • Paid ads: Run targeted Facebook, Instagram, and Google Shopping campaigns.
  • Email marketing: Build an email subscriber list to market to. Offer incentives like discounts for signups.
  • Social media: Engage your niche audience on Instagram, TikTok, and Pinterest.
  • Content marketing: Write blog posts and create videos to attract organic traffic.
  • Influencer marketing: Partner with relevant social media influencers to promote products.

Focus on select channels best suited for your niche at first. Expand efforts as you scale the business.

6. Fulfill Orders and Delight Customers

As orders come in, stay on top of communicating with your supplier to ensure timely and accurate fulfillment.

Follow up with customers to resolve any issues. Gather feedback to improve processes and your product selection. Automate order processing using platforms like Dsers or Oberlo whenever possible.

Providing an excellent customer experience helps generate word-of-mouth referrals and repeat business.

7. Analyze Performance and Optimize

Consistently evaluate your dropshipping business performance using key metrics:

  • Profit margins: Are your net profit margins healthy?
  • Customer acquisition costs: How much does it cost to acquire a new customer?
  • Lifetime value: What is each customer worth over the long term?
  • Conversion rates: What % of store visitors become paying customers?

Use Shopify reports and Google Analytics to identify top-selling products and profitable marketing channels. Eliminate underperforming products and reallocate your marketing budget to what works.

You'll maximize sales and profitability by constantly optimizing your processes and strategy.

Dropshipping Business Expenses

When calculating startup costs and ongoing expenses, plan for:

  • E-commerce platform subscription: Shopify starts at $29/month for basic. WooCommerce has web hosting costs. Good web hosting like Siteground starts at $2.99 per month.
  • Domain registration: Typically $10-15 per year from registrars like Namecheap.
  • SSL certificate: Required to secure customer data on your site. Included in Siteground web hosting.
  • Payment gateway fees: Transaction fees average 2-3% plus a small fixed amount per sale.
  • Marketing costs: Factor in paid advertising and influencer budgets.
  • Email services: Email marketing tools like Mailchimp start around $10/month.
  • Accounting software: QuickBooks Online starts at $25/month.
  • Trademark registration: Protect your brand name for around $225-275.

Register as a Business

Most dropshipping businesses can operate as sole proprietorships when starting. This means your business income gets reported on your personal tax return.

You may want to form an LLC or corporation for limited liability protection. Consult a lawyer or accountant to determine the best structure for your situation.

You may also need to register for US state sales tax collection if you sell tangible goods. Speak with an accountant about your business's relevant requirements and processes.

Finding Dropshipping Products to Sell

Amazon movers and shakers

One of the most important tasks when starting a dropshipping business is finding high-quality products that will sell. Here are some tips:

  • Browse top suppliers like AliExpress, Dsers, and Spocket to view their product catalogs. Look at best-selling items or search within your niche.
  • Check Google Trends, Amazon's Movers & Shakers list, and Kickstarter to identify rising trends and hot products.
  • Search hashtags related to your niche on Instagram and TikTok to see what types of products are gaining traction.
  • Use e-commerce analytics tools like Helium 10 for keyword research to assess demand levels for specific product keywords. A high search volume indicates interest.
  • Check Google Shopping ads for your niche to see the types of products competitors are advertising and promoting. Their ad history can provide valuable insights.
  • Join related Facebook groups or subreddits to view and discuss the products people buy.
  • Attend relevant trade shows or exhibitions to discover new products.

Choosing the Right Products for Dropship

Once you've identified potential products to sell, you need to vet them carefully to choose items that will maximize sales and profitability.

Follow this criteria when evaluating products:

  • Healthy profit margins: Look for at least a 50% markup between the supplier cost and your retail price to make a decent profit after platform fees and other expenses. Use a profit margin calculator to run the numbers.
  • Lightweight: Opt for smaller, lighter products that are cheaper to ship to customers. Bulky or heavy items eat away at your margins.
  • Not easily breakable: Avoid fragile items prone to damage during shipping. This saves you hassles with replacements and unhappy customers.
  • Evergreen niche: Choose products related to hobbies, interests, and needs immune to changing seasonal trends. For example, pet supplies over holiday-specific goods.
  • Positive reviews: Make sure the product has mostly 4 and 5-star reviews from other dropshippers or platforms like Amazon. Many positive reviews indicate satisfied customers.
  • Supplier reputation: Thoroughly vet suppliers on criteria like product quality, fulfillment speed, consistency, and support responsiveness. Order samples if needed.
  • Easy to photograph: Select visually appealing products easily showcased online with product photography. This helps boost conversion rates.
  • Trend potential: Keep an eye out for unique or novelty products gaining momentum on sites like TikTok that could go viral. Capitalize on trends early.
  • Compact shipping: Opt for flatter, smaller items that won't get dinged with dimensional weight shipping fees and are cheaper to ship internationally.

Pay close attention to these factors when curating your online store's product selection. Avoid products priced too low or too large and expensive to ship profitably.

Dropshipping Supplier Vetting Checklist

How to Start a Dropshipping Business image 2

Here are crucial criteria to assess when vetting potential dropshipping suppliers:

  • Quality: Order product samples to inspect the quality firsthand. Check for defect rates and accuracy.
  • Cost: Request current wholesale pricing. Calculate your profit potential after fees and shipping.
  • Reliability: Ask for client references to check their reputation for consistent, timely fulfillment without backorders or stockouts.
  • Order processing: Understand exactly how to submit orders and important guidelines like minimums. Look for platform integrations or APIs to automate and accelerate processing.
  • Lead time: What's the turnaround time from order submission to shipment? 1-3 days is ideal.
  • Shipping options: What shipping couriers and options are available? How much does shipping cost? Can customers get tracking info?
  • Packaging: Does the supplier use nondescript brown boxes or custom-branded packaging with your logo and branding?
  • Return policy: What is the process if customers need to return defective or damaged products? Who covers return shipping costs?
  • Customer support: Aside from support offered to you, does the supplier provide multichannel support for your customers?
  • Dropshipping experience: Do they have a history of successfully fulfilling orders for many other dropshipping clients?
  • API integrations: Does the supplier integrate with e-commerce platforms like Shopify and WooCommerce via API or apps to streamline order processing?

Vetting suppliers thoroughly upfront prevents nasty surprises later on and ensures you provide a great customer experience. Take the time to carefully evaluate potential partners using this checklist before adding them to your supply chain.

Building Your Ecommerce Website

Your e-commerce website is the foundation of your dropshipping business. It needs to deliver a seamless shopping experience that fosters trust and conversion. Follow these best practices when building your online store:

Choose a User-Friendly E-commerce Platform

Opt for an all-in-one platform like Sellvia that handles hosting, security, scaling, themes, and integrations out of the box. This simplifies setup compared to self-hosted options, which require handling individual components.

Design a Fast, Mobile-Friendly Website

Use a clean, distraction-free theme and optimize images for fast page loads. Ensure your website looks great and functions smoothly on all devices using a mobile-first approach. Load speed impacts conversions.

Showcase Products Attractively

Curate visually appealing product listings combining high-quality photos, engaging descriptions, customer reviews, and videos when possible. This drives interest and sales.

Prioritize Easy Checkout

Minimize steps during checkout and offer guest checkout options. Allow customers to check out quickly with minimal friction. Also, accept multiple payment methods.

Highlight Customer Service Channels

Display live chat, email contact forms, FAQ pages, and phone numbers prominently throughout the site. This provides convenient support access to build trust.

Share Shipping, Return and Exchange Policies

Be upfront on product pages about shipping costs, delivery timelines, and your policies related to returns, exchanges, refunds, and warranties. This avoids confusion.

Transparency and excellent user experience remove friction during the buying journey. Follow e-commerce best practices when designing your dropshipping website to maximize conversions.

Creating Compelling Product Listings

You need to sell customers on your products. Effective copywriting and visuals make your product listings shine.

Write Engaging Titles and Descriptions

Craft concise, keyword-rich titles using power words that speak to the benefits customers want. Use conversational descriptions that convince shoppers to buy while accurately representing the product.

Showcase Products with High-Quality Photos

Include multiple photos showing the product from different angles, in use, and next to objects for scale. Hire professional photographers or use supplier images if permitted.

Add Lifestyle Images to Build Desirability

Increase perceived value by using aspirational lifestyle images that customers can relate to and envision themselves using the product.

Incorporate Product Videos Where Possible

Embedding short video demos grabs attention in a sea of static images. Videos boost engagement and Click-through rates.

Feature Customer Reviews and Ratings

Display Ratings, reviews, and Q&As to provide social proof. Peer validation builds trust. Automate or import reviews using apps if needed.

Highlight Specs and Technical Details

Don't just describe the product attractively. Also include key technical specifications, materials, dimensions, compatibilities, or requirements so customers can evaluate fit.

Summarize Key Benefits

List core benefits prominently using bullet points at the start of descriptions. Address common questions and paint an aspirational picture of ownership.

Outline What's Included

Detail everything included in the package, quantities, sizes, etc. This sets clear expectations to prevent returns from misunderstandings.

Link to Related or Accessory Products

Suggest complementary or accessory products on each listing using contextual links and recommendations. This encourages higher-order values through add-on purchases.

Following these product listing optimization strategies will lift your conversion rates and average order value.

Dropshipping Business Marketing Strategies

Now that your online store is ready, it's time to drive traffic and sales through marketing. Here are proven strategies to get your first sales and scale up.

SEO (Search Engine Optimization)

The goal of SEO is getting your website and products to rank highly in relevant Google searches. This brings targeted organic traffic. Focus on:

  • Keyword research to identify high-demand search terms buyers use to find your types of products. Optimize your pages and content around these terms.
  • Content marketing by creating blog posts and guides around your niche and products to rank for informational searches.
  • Technical SEO like site speed, mobile optimization, semantic HTML markup, internal linking, and meta tags.

Mastering SEO takes time but provides free, interested traffic. It should be a cornerstone of your digital marketing strategy.

Google / Bing Shopping Ads

These ads put your products directly in front of people searching for what you sell on Google and Bing. You only pay when shoppers click your ad. Make sure to:

  • Set competitive bids and budgets for your target keywords.
  • Create keyword-optimized titles, descriptions, and images.
  • Track conversions to assess performance. Adjust targeting and bids based on results.

Shopping ads complement SEO by capturing demand Google hasn't sent organically to your site yet. They work very well together.

Facebook and Instagram Ads

Run paid ads on Facebook and Instagram to reach highly targeted audiences. You can even create lookalike audiences that resemble your existing customers. Test:

  • Different age, gender, interest, and location targeting options to find your ideal buyers.
  • Various ad formats like carousel, video, and collection.
  • Unique ad angles like promotions or aspirational lifestyle-oriented messaging.

Constantly test new targeting and creative approaches while scaling up the tactics that convert cost-effectively.

Email Marketing

Build an email subscriber list by offering a signup incentive like a discount code on your site. Send regular promos, launches, and helpful content through email to turn subscribers into repeat customers.

Retargeting Ads

Track site visitors with pixels, then show your ads across Google

Here is the continuation of the comprehensive dropshipping business guide:

Retargeting Ads

Track site visitors with pixels, then show your ads across Google, Facebook, Instagram, and more to people who already visited your store. This captures lost sales from those with existing interest.

Influencer Marketing

Partner with relevant influencers on Instagram, TikTok, and YouTube to promote your products. This expands your reach to engaged audiences. Offer generous commissions or free products in exchange for posts.

Content Marketing

Create YouTube videos and blog content centered around your niche. Focus on answering typical buyer questions and providing helpful information rather than overt sales pitches. Valuable content attracts organic traffic.

Social Media Marketing

Engage audiences on platforms like Instagram, Facebook, and Pinterest by sharing your products, promotions, and relevant curated content. Leverage hashtags related to your niche to expand your reach.

A diverse marketing mix is essential, but concentrate your time on 2-3 core high-ROI channels rather than spreading yourself too thin. Channel selection will vary based on your niche.

Order Processing Tips and Tools

Efficient order processing ensures timely, accurate fulfillment. Follow these tips:

  • Integrate your store with suppliers via APIs/plugins like Dsers for Shopify or Oberlo for WooCommerce to automate and streamline order forwarding.
  • Use multi-warehouse inventory management software to split orders between suppliers based on availability, cost, and delivery time.
  • Install apps to automate post-purchase follow-ups like shipping confirmations and tracking details.
  • Provide self-service order tracking. Aftership is a popular Shopify app for this.
  • Use Zapier or Integromat to connect your e-commerce platform to fulfillment and accounting tools like QuickBooks for seamless financial records.

Order processing bottlenecks can quickly sink your business. Implementing automation and apps streamlines workflows to fulfill orders rapidly and efficiently.

Customer Service Best Practices

Providing exceptional customer service should be a top priority. Follow these tips for happy customers:

Respond to All Queries Quickly

Set up live chat on your store and respond rapidly to questions pre-purchase. Answer emails within 12 hours max. Quick communication builds trust.

Address Issues Proactively

If tracking shows an order delayed, contact the customer first, letting them know and providing a discount code or small gift for their patience.

Make Returns/Exchanges Easy

Accept returns/exchanges for any reason. Provide prepaid return shipping labels and instant refunds upon delivery confirmation by the supplier.

Follow Up Post-Purchase

Check-in a few days after delivery to ensure satisfaction. This allows customers to report issues after inspection.

Gather Feedback

Survey customers to identify problems and improvement opportunities. Feedback helps enhance processes.

Show Appreciation

Follow up with thank you emails. Send surprise gifts or loyalty rewards to delight repeat customers. Small gestures go a long way.

Monitor Reviews

Keep tabs on reviews on your site, Trustpilot, and elsewhere. Address negative ones publicly with an apology and solution.

Amazing customer support wins lifelong, high-value customers through word-of-mouth referrals. Make it a competitive advantage.

Tips for International Dropshipping

If you want to sell globally, be aware of these key factors:

  • Localize your site with proper translations, currencies, taxes, payment methods, clocks, and product details for each target country.
  • Offer cheaper domestic shipping tiers before showing pricier international rates to avoid cart abandonment.
  • Get Used to long shipping times that are typical of international delivery. Manage expectations clearly upfront.
  • Ensure customs duties are pre-paid using DDP shipping to prevent surprise charges billed to customers on arrival.
  • Carefully vet international suppliers for reliable delivery. Test order to every targeted country.
  • Follow local consumer laws for returns, privacy, taxes, and product compliance to avoid issues.

With the proper preparation, dropshipping globally significantly expands your addressable market and growth potential.

Common Dropshipping Challenges

In my experience, these are the potential challenges when starting out:

  • Fierce competition: Expect competition selling popular products. Differentiate with marketing, branding, and excellent service.
  • Tight profit margins: Pricing and shipping costs take a cut. Manage margins with minimum order quantities.
  • Managing multiple suppliers: Multi-supplier model provides flexibility but adds complexity. Stay organized.
  • Maintaining stock accuracy: Overselling out-of-stock inventory leads to problems. Integrate inventory APIs.
  • Import and customs delays: Shipments crossing borders can face paperwork and customs clearance delays.
  • Long shipping times: Slow deliveries from distant suppliers may upset some customers. Offer faster local options.
  • Quality control issues: Customers get upset receiving damaged or poor-quality items. Vet suppliers diligently.

While certainly surmountable, these are common hurdles to be aware of. Preparation and excellent supplier relationships help overcome them.

E-commerce Platforms for Dropshipping

Choosing the right e-commerce platform is a huge factor in your success. Here are leading options to consider with pros and cons:

Shopify

Shopify main page

Pros

  • Fully hosted, all-in-one solution. Easy setup and use.
  • Mobile responsive templates and drag-and-drop site builder.
  • Built-in payment processing.
  • Integration apps like Dsers.
  • Highly scalable. Handles enterprise-level order volumes.

Cons

  • Transaction fees on top of monthly subscription fees.
  • Limited customization without coding knowledge.
  • Advanced features can get pricey at higher plan tiers.

WooCommerce

Woocommerce main page

Pros

  • Open source WordPress plugin, so free to use.
  • Extremely customizable by developers.
  • No monthly subscription fees beyond web hosting.
  • Access to thousands of plugins.

Cons

  • Requires handling hosting, updates, security, performance, and backups yourself.
  • Steeper learning curve around site development.
  • Limited built-in features. Reliant on third-party plugins.

Sellvia

Sellvia main page

Sellvia is an e-commerce platform that offers a comprehensive solution for online entrepreneurs, especially in dropshipping. Here's a detailed look at its pros and cons based on various sources:

Pros

  • Free Trial and Ease of Use: Sellvia offers a free trial, and its platform is noted for being user-friendly.
  • Fast US Shipping: One of the key advantages of Sellvia is its fast shipping within the US, which is a significant benefit for US-based customers.
  • Quality Products: The platform is recognized for providing access to high-quality products.
  • Automation and One-click Import: Sellvia automates many processes, including order fulfillment and product imports, simplifying operations for store owners.
  • Comprehensive Support and Marketing Materials: Users can access extensive support and marketing materials, including pre-designed marketing campaigns and ad materials.
  • Affordable Pricing: Sellvia offers competitive pricing, with products generally available at lower prices than other platforms like AliExpress.
  • Reduced Risks in Dropshipping: By vetting suppliers and partnering with them, Sellvia reduces the risks typically associated with dropshipping, such as poor branding and low-quality products.

Cons

  • Limited to US Shipping: Sellvia's services are currently only available for shipping within the US, which can be a drawback for businesses targeting a global market.
  • No Direct Access to Suppliers: Users do not have direct access to suppliers, which limits the ability to negotiate prices or customize product packaging.
  • Limited Product Range: Unlike AliExpress, Sellvia offers a more limited range of products. While it claims to focus on best-selling products, this can be a limitation for stores seeking a wider variety.

Try Sellvia for Free

Conclusion

Launching a successful dropshipping business takes consistent work, but this guide provides a complete step-by-step blueprint based on my experience with dropshipping.

The keys are finding a profitable niche, thoroughly vetting suppliers, creating a solid online storefront, sourcing hot-selling products, automating processes, marketing aggressively, and delighting customers.

While it may seem intimidating initially, just focus on taking it one step at a time while sticking to the fundamentals. I wish you the best of luck on your entrepreneurial journey ahead.

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