Starting a dropshipping business website is a great way to get started in ecommerce with relatively low startup costs and no inventory risk. One of the best parts about dropshipping is that you can run your business from anywhere – it’s 100% digital.
Keep reading to get an overview of what dropshipping is, the pros and cons of dropshipping, and how to start your own ecommerce dropshipping business.
What is a Dropshipping Business?
A dropshipping business is an online retail store (also referred to as an ecommerce merchant) that doesn’t keep an inventory of any of the products it sells. Suppliers hold all products and ship those products directly to consumers when they’re purchased.
As an ecommerce merchant, you’ll receive payment from customers for the products they buy on your website, and then, you pay your suppliers to fulfill the orders. You never touch any products.
Bottom-line, you maintain the website and supplier relationships, but the suppliers handle the inventory and fulfillment.
Benefits of Dropshipping for the Business Owner
Dropshipping allows businesses to save money on inventory and shipping costs. As a dropshipping merchant, you won’t have to worry about maintaining product stock or fulfilling orders.
Another big benefit is that you won’t have to make large upfront investments to purchase inventory. Furthermore, you can change the products you offer and the suppliers you work with to meet your goals.
This flexibility makes it easier for you to expand into new markets or try out different products to increase profitability without having to invest significant amounts of money.
Negatives of Starting a Dropshipping Business
Competition is high in the dropshipping industry, which makes it more difficult to be successful. Your business will need a strong online presence to get website traffic and sales. You’ll be 100% responsible for spreading the word about your website and convincing people to buy.
Another negative is a lack of control over your supply chain. Yes, you’ll sign contracts with suppliers to formalize relationships and expectations, but your entire business will be at the mercy of your suppliers’ ability and consistency in fulfilling orders and meeting customer expectations.
For example, you won’t have control over shipping and fulfilling customer orders or returns, which can lead to customer dissatisfaction and negative customer reviews. In other words, by not physically holding the products you sell and managing the shipping and returns processes, you’re adding risk, That’s why choosing the right suppliers is so critical.
Expenses You’ll Incur When You Start a Dropshipping Business
You won’t have to pay for inventory, but there will be expenses that you’ll need to pay – either once or on an ongoing basis. To start your ecommerce dropshipping business, you’ll need to have funds available to pay for:
- Internet connection
- Website hosting
- Email hosting
- Domain name
- Website design (if you can’t design your site yourself)
- Logo and other brand identity design
- Marketing to promote your new business
As you start selling items, you’ll also need to pay payment processing fees, taxes, and ongoing hosting and marketing expenses. While your startup fees and ongoing fees will be low, they won’t be nonexistent.
What to Sell Through Your Dropshipping Website
It’s important to offer products on your ecommerce merchant site that are profitable for you. Consider the target audience you plan to sell to, what products they’re most interested in, and evaluate if those products represent a profitable niche.
Start with a focused niche. You can always expand later, but if you try to sell everything to everyone at first, you won’t succeed.
For example, a dropshipping website that sells electronics may be more profitable if it sells only small electronics that don’t cost a lot to ship. Think of it this way – it costs a lot less to ship earbuds than a television.
With that said, popular items for dropshipping businesses include clothes, accessories, food, home décor, beauty products, jewelry, watches, and more.
Look for products that have a lot of demand but low competition. These should be the most profitable. Do some research on consumer trends in your niche market so you can build a dropshipping website tailored to what your customers want and need.
How to Promote Your Dropshipping Website
Starting a dropshipping business is easy, but it won’t be successful if you don’t promote it effectively.
The first strategy to pursue is maximizing word-of-mouth. Recommendations from friends and family are one of the most successful ways to promote your business. Reach out to everyone in your network and ask them to share your new website with their contacts.
In addition, digital marketing is a must to promote a dropshipping website. Facebook, Instagram, and TikTok advertising are great options as is Google AdWords. In addition, consider investing in influencer marketing, search engine optimization (SEO), content marketing, and email marketing.
Find the Right Suppliers
Research companies that work with dropship merchants and compare prices, merchant fees, shipping times to customers, and the quality of products they sell. Do your due diligence so you know exactly what each company offers, and make sure that any supplier you partner with is reliable and dependable. Look for online reviews from other merchants, and get everything in writing!
You may want to work with a dropshipping marketplace that sources products from a variety of manufacturers – both domestic and imported – or you may want to work directly with specific manufacturers and importers.
Don’t make this decision too quickly. Your suppliers can make or break your business, so get all of the data you can before you choose.
Create a Website
Use a platform like Shopify or WooCommerce and WordPress to create an online store where you can promote the products you’ll sell and accept orders. Both are easy to use and there are many affordable freelancers who can help you design your website using either tool.
I recommend these tools because they come packed with the features you’ll need to run an ecommerce dropshipping website, including product and category pages, product search, payment processing, and more. They also work on desktop and mobile devices.
Secure a Payment Processor
To accept payments for the products you sell on your ecommerce site, you’ll need to set up an account with a payment processor. Two of the best choices are PayPal and Stripe. Both charge similar fees and make it easy for people to pay you using credit cards, debit cards, or bank account transfers.
PayPal and Stripe also reduce your risk because you won’t have to store private financial data. Transactions through these payment processors are secure, which gives customers peace-of-mind when they make purchases.
Key Takeaways about How to Start an Ecommerce Dropshipping Business
Before you get started with a dropshipping business, it’s important to do your homework. Once you’ve done your research, run the numbers to see if starting a dropshipping business is right for you. If everything looks good, then take the plunge and start investing in your new entrepreneurial venture.