Dropshipping is a term you might herd so many times if you love eCommerce. Dropshipping is a simple business model that allows the retailer to sell globally with a small investment.

According to Oberlo, there are 2.15 billion global online buyers in 2021 and surprisingly around 23% of online sales are fulfilled through dropshipping businesses, worth around $85B dollars per year.

Dropshipping is a booming business strategy for new and seasonal entrepreneurs since anyone can start with a small investment, no inventory holding, earn passive income, be less risky, easy to change product categories, and sell anywhere.

What is dropshipping?

Dropshipping is a fulfillment method in which the drop shipper (seller) does not need to keep product inventory, instead has an online store where they inform the manufacturer or supplier to send a product directly to the customer whenever they get an order.

Because the seller does not need to have any products in stock or maintain warehousing facilities, dropshipping has become a simple way to sell worldwide and generate fair income. It's also easier to test any product on the market because you don't have to buy things from suppliers and pay them until you receive a customer order.

How does dropshipping work?

There are few parties involved in dropshipping

1. Retailer or drop shipper or seller who directly sells products to customer

2. Manufacturers or suppliers who allow drop shipper to sell their products

Let’s see how it working

1. Choose the product that you want to sell

2. Select supplier

3. Set price - Set your profit margin

4. Upload products to your online store

5. Do marketing of your store to attract buyers

6. Customer purchase at a retail price that you have set

7. You notify your supplier and pay the wholesale price to them

8. Your supplier will deliver the order directly to the customer

As a customer, you might have the question that why not purchase directly from the supplier rather than paying a high price to drop shippers. Well, the best answer is suppliers or manufacturers typically don’t deal with individual buyers, either they are selling to wholesalers or retailers. Another thing is that they won’t focus on the marketing side so they hire drop shippers to expand their business.

This is the complete cycle of dropshipping. We will discuss this further in more detail but let’s understand some challenges associated with the dropshipping business.

Is dropshipping challenging?

Dropshipping, like any other business, comes with its own set of challenges. Competition, supplier errors, lower profit margins (depending on the product to sell), minimal customizability, and a long delivery period of 19 to 35 days are some of the critical challenges.

The biggest challenge is competition because if you are a seller and selling general products like everyone is selling then, why customers wouldn’t purchase from big eCommerce players like Amazon, Flipkart, eBay, Walmart, etc.

As a result, you'll need to come up with extremely niche products that are in high demand and have little competition. The product selection process is difficult because there are so many options to choose from.

Suppliers can also cause problems, such as not having products in stock when customers give orders, supplying faulty products, taking a long time to deliver, payment issues, and other legal issues. It’s better to have all terms and conditions predefined and clear.

Earning 6 figures from dropshipping is a myth or reality?

That totally depends upon the kind of products you are selling. It might be difficult to generate that much revenue for an initial period from 6 months to 1 year even if you are selling very niche and high-margin products. That is why every drop shipper should know marketing. Must be aware of all platforms, tools, and techniques to promote their store so it helps you to generate traffic in the store.

Selling a generic product that everyone is offering won't help you make a lot of money, but selling niche items that solve problems for specific segments will give you a big chunk of money. In short, effective store marketing and unique products that satisfy the needs of a particular segment can help you earn six figures.

How to start Shopify dropshipping- The complete guide

1.) Find the right product

The one and only challenging task in dropshipping business is to find the right product. You really need to double down on finding niche products that have high demand and low competition. It’s meaningless to find products with no competition. Shopify isn't just for selling physical eCommerce products; you can offer services also. Let’s see two examples.

Airbnb

Airbnb is the best example of a company that sells its package to a very specific customer base. They are offering really attractive trip packages to anyone who is interested in traveling.

Pets world

Store specially designed for pet lovers. They are selling foods, treats, chews, pet health products, and different kinds of related supplements. Targeted to niche segment; pet owners

What you should look for?

• Do not choose a generic product that has little or no margin to gain

• Pricing - According to Shopify experts, pricing range between 40$-200$ good as people prefer to buy more.

• The product shouldn’t be too larger and heavy to sell

• Do not sell products that are easily locally available

• Find a product that includes accessories, such as a water bottle, a portable safe, a digital luggage scale, a multi-bag stacker, space bags, and so on, together with a large travel bag.

• Don’t choose perishable and fragile product

How to find products?

Google

One of the best sources to find out niche products. You can search products on google and analyze how many sites are ranking to get competition ideas. You can even read various blogs that give you top trending niche product ideas with the target audience and competition level.

Use keyword tool

To determine how many people are searching for products, you can use Google Keyword Planner, Moz, Ahref, SemRush, and other tools. You can get product demand ideas by using keyword tools.

Let's imagine you want to sell a "Travel adaptor," which is a fair niche product. In Ubersuggest, type this keyword to see how many people are looking for it. You can also get different keyword suggestions for your website.

Explore eCommerce seller

Going to an eCommerce marketplace like Amazon, Aliexpress, Flipkart, etc. to explore your product is a smart approach to start. You may have noticed that they display their most popular product on the first page in order to attract visitors. These are high-selling products, so you can do some research and make a list of them.

Choose from a variety of product categories, such as stationery, clothes, electronics, cookery, and so on. Once you explore products, you will get their selling volume and customer review. You can then choose your product based on that data.

Social shopping site

Social shopping site also gives you good insights about trending products. Shoppers used to share their experiences regarding products. These sites are the best trustworthy sites to take as a reference. Ex: Pinterest, Wanelo, Fancy, Etsy, etc.

Google Trends

Google trends help you to find customer base and search volume for any products. Google Trends is updated on a regular basis to reflect current trends, making it a useful tool for finding niches.

Social media

Social media is a powerful tool. The most effective way to engage people. In general, social media influencers promote products to their fan base. There are niche product accounts on social media; simply look at what's trending so you can come up with a few product ideas.

2.) Evaluate competition

Once you finalize your product, now it’s time to analyze the competition level. That competition evaluation gives you a hint about how hard or easy to sell products. You can search for your product on google and observe top-ranked websites.

Find out what they are, which kind of products they are selling, how they market their products etc. You can use tools like Ubersuggest to figure out backlinks to have competition ideas. More backlinks suggest more competition.

Social media is great for competition analysis. You can go to Facebook advertisements to find a niche, as well as social media profiles for well-known brands. Check how many people do they have as followers? What methods do they use to promote their brand? How do they engage visitors? What can I do differently to set myself apart from the competition? What are the things they're doing well that I should try to imitate?

3.) Find a supplier

You need to be more careful while choosing your supplier. Ask some of the questions to your supplier:

• Do you offer dropshipping?

• Do you offer private labeling and product customization?

• Is there any ongoing fee?

• How should I send you the order once I receive it?

• What are order processing and product damage policy?

• What is the order delivery time?

How to find a supplier?

• You can go to Shopify to find out the supplier

• Use Oberlo - This platform gives you supplier’s data

• Google helps you to find suppliers, just search according to your preference and prepare a list of them

• You can even explore the supplier directory. They may charge a fee for data access.

• Use platforms like ECOMHUNT and Aliexpress to find supplier data

Things to take care

• Make sure you qualify supplier yourself

• Make sure that they are not selling products to the general public directly

• Don’t give ongoing fees just for the privileged to do business with them

• Always look for the Epacket shipping option - Make sure they have 3rd party logistic provider

• Know their order fulfillment system

4.) Marketing

The majority of drop shipper newbies experience one issue at first: traffic to their store. They might have a beautifully designed store but couldn’t able to drive traffic in the store. Without traffic, your all efforts are wasted. Better to know how to market the product.

Shopify experts suggest that every seller must spend 75% time on SEO for at least 6 months to do branding of the store. Learn and use all marketing channels that help you to promote the store.

Before marketing a product, You need to decide value proposition to your product like price, quality, features, benefits, the solution to a problem, customer service, convenience, etc. so you advertise better. Your unique value proposition makes you different than your competition.

How to do marketing?

1. Decide target audience

2. Draft a message accordingly that grabs the attention of your target audience

3. Analyze best advertising platforms to use like paid advertising, SEO, influencer marketing, affiliate marketing, content marketing, email marketing, etc.

4. Execute your marketing strategy

5. Measure the performance of your marketing efforts

Shopify recommends not to sell the product at a cheaper price than your competitor’s price because it’s losing a game and eating margin.

Try to get testimonials, reviews, and ratings from your users as it creates trust in your product and people prefer more to buy. You can offer free shipping and money-back guarantees.

Organize a loyalty program for your regular customer and offer discounts and coupons to them.

Conclusion

Starting out a dropshipping business requires a little bit of work at the initial level like selecting a niche product among too many products and choosing a supplier is a challenging task. Dropshipping business has their own set of advantages like you can start with little money, no inventory and warehouse required, flexibility to change product, etc. With having a little bit of marketing knowledge you can get some sales also. A platform like Shopify helps you a lot to start a dropshipping business as you can build a fast, secure website in very less time. One of the best platforms to build an eCommerce online presence.

If you want to start out a dropshipping business, we at TerraShop help you with everything from custom dropshipping store development to full fledge marketing service. We are the best certified Shopify partner to call for this service.