How to Dropship Like a Pro – An In-Depth Look at Dropshipping
Dropshipping is a business strategy which has been generating a lot of buzz recently. And it’s no surprise why: though it requires a minimal upfront investment, it can yield a tremendous return. Learn the ins and outs of this business model to determine whether it could be the right option for your eCommerce store.
What is Dropshipping?
First, let’s start with the basics: in the world of eCommerce, dropshipping refers to this simple, direct process:
- A customer places an order through your eCommerce store
- Your dropshipper (vendor) receives the order information.
- Upon receiving the order, you receive money from your customer. You’ll also be charged by your dropshipper, who will usually charge a wholesale price with a shipping fee. They’ll ship the item directly to your customer.
As you can see, this business model is fairly straightforward: your supplier takes care of fulfilling the order, and there’s minimal involvement on your part. Yet, you’re still making a profit on the items you’re selling through your eCommerce site. So, how do you get started with it?
How to Start Dropshipping
We recently published a detailed, step-by-step guide on how to dropship, but here’s an overview of how the process works:
- You develop a niche for your store – the group of products that appeal to a small audience but will allow you to have a broad outreach.
- Next, you’ll select a domain name and host provider for your eCommerce store. Your domain name should be catchy, easy to remember, and give shoppers insight as to what your business entails.
- To actually run your website, you’ll need a content management system (CMS) like WordPress. As one of the world’s most popular website builders, it’s preferred for its ease of use and reliability. Once it’s downloaded, you can then run WooCommerce, the extension which transforms your site into an eCommerce store. Then, choose a theme that fits your store.
- You’ll then add products to your store. Since you’re not keeping any inventory, you’ll have to import products from other suppliers, but this can be expedited through an extension like WooDropship or Ezusy. This automates the process of adding products from online marketplaces like AliExpress – more on that later.
- Lastly, market your dropshipping store. While some traffic will come from organic searches, you’ll also need to develop a marketing strategy and promote your store through channels like Facebook and Instagram.
Developing a Dropshipping Business Plan
The framework above should give you a solid starting point for the how behind your dropshipping business, but you’ll also need to answer the why behind it, along with some other questions. That’s where your dropshipping business plan comes in. At a minimum, your plan should include:
- An Executive Summary: This defines what your business will offer, who comprises your target market, and what will separate you from the competition – or, your dropshipping store’s unique selling proposition. In other words, why does your business exist?
- Company Description: Most dropshipping businesses don’t have to get too technical here, but you should consider including ownership information, business and tax ID numbers, and the name/location of your business.
- Products & Services: Refer back to your niche – what items will you be offering? How do you know they’re trending? It’s easy to get carried away with an immense offering from the beginning, but you’re better off starting small and refining your product mix based on what’s selling.
- Marketing & Sales: How will you drive sales? Which platforms will you use, and how much can you invest in paid advertising?
- Financial Projections: What is your anticipated ROI for the next month, quarter, year, etc.?
Pros and Cons of Dropshipping
As you may have gathered, dropshipping has a number of pros. Some noteworthy benefits of dropshipping to consider are:
- Less capital required
- Easy to start
- Low Overhead
Yet, as with any business models, it’s not without its disadvantages. The cons of dropshipping include:
- Low margins: If you’re in a competitive niche, you’ll likely find it difficult to make a profit when trying to keep up with other online stores are offering extremely low prices. This is why selecting an extremely specific niche is so important to dropshipping successfully.
- Shipping issues: You’re depending on your dropshippers to ship your order, so when something goes wrong, it’s up to you to investigate. You’ll need to make sure you’re working with a trustworthy vendor to minimize issues.
- Inventory problems: When you retain physical inventory, it’s easy to update stock levels. But, if your suppliers don’t update their levels frequently enough, it could result in your customers placing an order for an item that’s out of stock… without you or them knowing it. Some dropshipping stores avoid this dilemma by using a plugin that automatically links their site’s inventory levels to that of their marketplace.
While using WooCommerce isn’t the only way to set up a dropshipping store, it’s widely preferred for a number of reasons. WooCommerce dropshipping makes it exceptionally simple to start, manage, and customize your ecommerce store. While you’ll still need to oversee your business, after setting up your WooCommerce store, it will essentially run itself.
We talked briefly about AliExpress above. It is an online retail service based in China which comprises a number of small businesses and offers products to international buyers. AliExpress dropshipping is preferred among many savvy eCommerce store owners because of its competitive pricing, wide selection, and ease of use. Many AliExpress products are accompanied by photos you can use directly on your site, along with detailed product descriptions.
Getting started with AliExpress dropshipping is simple: using one of the extensions discussed above, you can seamlessly import AliExpress products directly to your site and update the titles, descriptions, and images as you see fit.
In addition to AliExpress, there are other dropshipping suppliers to consider. While not all include the same convenience that AliExpress offers, here are some other dropshipping stores to consider adding to your list of approved suppliers if you have some extra time to dedicate to your business:
- National Dropshippers
- Worldwide Brands
- Wholesale Central
- Dropship Direct
- Sunrise Wholesale
You will also want to check on Amazon and eBay integrations whenever you’re considering a supplier. Some suppliers are find with you selling on Amazon. Others are not. So if that is part of your strategy you need to look for that info up front.
While dropshipping is one of the fastest-growing business models for eCommerce, getting it right demands some thoughtful strategizing. With the tips listed above, you can develop a well-thought out business plan and launch a dropshipping business poised for success.