Dropshipping business is the best way to earn six figures a month. Where you can create an e-commerce website like amazon/Flipkart regardless of handling inventory shipping products.
statistics says that in the year 2020 dropshipping buisness reached a mark up to USD 149.4 billion and the prediction says that it will cross USD 557.9 billion till 2025. one can find a lot of opportunities in this field.
In this article, you will get to know the overview of dropshipping business.
What is dropshipping business?
Dropshipping is a business model in which you can create an e-commerce store without ever holding any inventory or concerns about shipping. When someone order from your website, your supplier will ship that product to the customer’s doorstep. You’ll never need to worry about storing, shipping, packaging, and about warranty. You have to do the job of marketing the product you want.
How does the dropshipping business model work?
There are three main players in this model, the manufacturer, the retailer(you), and the customer
First, start with Retailer, Retailers sell manufacturer’s products from your website under the name of your brand. You have a duty of marketing products and getting the commission on every single product. Plus, you’ll responsible for their shipping cost so set prices that make you profit.
Next, the manufacturer’s role in creating products, handling products, and shipping products on behalf of the retailer’s name, replacing the product which is under warranty, and restocking them.
Lastly, the main part from where you are going to make money is customers. They buy the products from your customer which will redirect to the manufacturer for shipment.
Why would they buy products from drop shippers instead of Aliexpress
where they can buy at a cheap price than dropshipping stores. You know, I was wondering about this quite sometimes you now, I
think I know the answer. There is some reason which satisfied my question.
1. They don’t know about Aliexpress
2. They know about Aliexpress but simply don’t like it or don’t trust it
3. In Aliexpress same product is listed many times with different prices, that’s why customers get confused but there’s no issue like this in dropshipping store.
4. Dropshipping websites are built neat and clean so it looks more trustworthy.
5. Customer can’t tell difference between a dropshipping store and an actual e-commerce store.
Besides, there are more reasons people like to buy from dropshipping stores. Dropshipping stores build trust and provide a nicer shopping experience. Sometimes customers prefer smaller specialized shops for online purchases. If the store is filled with amazing products in a specific niche, visitors will not leave empty-handed.
Dropshipping Vs Retail shop.
First of all retail shop has biggest disadvantage is a limitation. Limitation of product in inventory, customers, lack of geographical area in terms of marketing. There will be always a capping of customers or products you can sell. Unlike a shop, there is no such problem that exists in a dropshipping store, there is no limit to how much you can sell.
Reminding the fact of products in manufactures inventory. Borders don’t apply to the dropshipping store. You can do anything anywhere you want.
The second big problem is money, it needs a lot of investment to run a shop which includes rent, employees salary, electricity bill, cost of the product for buying which has no guarantee it will sell. Again dropshipping tackles that problem you can start with a small amount which can become a hundred of thousand dollar business. Where you won’t be able to track the money you are handling.
Can you make money dropshipping?
Hell yeah, you can make a lot of money through dropshipping like Tim Kock who made $6667 in the first 8 weeks while doing 9-5 jobs, working as part-time business. He thinks if he can do it, then anyone can do it.
There are more examples out there who are literally running multi-million dollar businesses. Once you made your first sale then there is no one gonna stop you from making money.
Can I skip the website building part and jump straight to marketing?
Yeah sure, If you don’t want to build a store from scratch, you can simply buy it for sale on Exchange. Exchange is a marketplace where people who want to skip website building part and want to invest in a fully functioning business or those who want to sell their online store at a meaningful price.
The Exchange has great collection of online stores, including dropshipping stores of varying price ranges and niches that you can choose according to your budget and interest. So Exchange is the best platform for both buyers and sellers of dropshipping stores
While choosing online store keep these things in mind-
1 The Cost -Keep in mind that you are not only buying the store also investing in it to grow. So choose your budget that can allow your pocket. See if there is room for negotiating a better deal.
2 The design – Check if it looks like it was designed by a professional or a new entrepreneur who’s looking for quick money. If the store looks clean, professional, easy to navigate, and fully functioning it may be worth purchasing.
3 Niche-You probably don’t want to work within any micro niche website or any product which are seasonal. However, if a store is within an evergreen website with trending products within it, then go for it. Brod topic niche like fashion works better than any other micro- niche like men’s wear.
4 Age of website– Always choose an older website because an older website has a better chance of ranking in search engines than a new one. Luckily Exchange gives you a filter to choose a website according to its age.
5 Monthly income of website-Before seeing the income of the website, you need to ask two questions is ‘how much money it was making at its peak and how much money it is making now?’ This will help you understand if the dropshipping business is growing or dying.
6 Penalization-You have to double-check the website hasn’t been penalized. A penalized website may harder for you to rank in search engines. You can use tools like is my website penalize. And also check if any of their Facebook ads were banned?
1. Understanding the Paperwork
Starting Dropshipping business mean first you have to go through a lot of paperwork. A solo beginner may find it very difficult, to ease this step I strongly recommend hiring a local CA who is well-known in Dropshipping business.
# Select and register your business name in the business structure
There are three types of business structure you can register with. I recommend you to go with sole proprietorship. Because it is to done with it.
Sole proprietorship -. If the owner’s company owes a debt and you are unable to pay it, it can affect the owner’s personal assets such as a house. Taxes are paid by the business owner and reported on the business owner’s personal tax return
Limited company (.LTD): It’s a safer way than a sole proprietorship because it acts as a shield between owner and company. If someone sues the company or it can pay its debt, The owner’s personal assets are safe. For
tax purposes, it is the same as a sole proprietorship
Corporation– A corporation separates the legal and tax-paying entity from the owner. They know as shareholders. Corporation has to pay separate tax according to profit and loss. Once profit reported is divided into shareholders in the form of dividend income.
# If you are running your store in USA or Canada which happens in most of cases.
Acquire an employer identification number (EIN) for tax purposes.
Depending on where you do business and what you are selling, you may need to acquire business licenses and permits from your federal, state, county, and local government.
Dropshipping business licenses
In addition to the general operating license that may be required for you to start a dropshipping business in your particular state, there are a handful of other business licenses that are necessary for selling online.
Seller’s permit: Many states require you to obtain a seller’s permit if you’re selling products that can be taxed. As is the case with most types of business licenses, whether or not you need a seller’s permit and how you get one will vary based on your state, so you’ll want to consult your local business agency or department of commerce for more information.
Sales tax license: Similar to a seller’s permit, a sales tax license is required for you to charge and collect sales tax. The state and city you live in will dictate the specific type of sales tax requirements and licenses you need to meet, so again, you’ll want to consult local government agencies to ensure that you’re meeting the proper guidelines.
Home occupation permit: Finally, in some locations, you’re required to obtain a home occupation permit for running a business out of your home. Often, this applies to online sellers who are shipping products from their homes, however, the details vary based on location. Therefore, you’ll want to consult your local government agency to determine whether or not this type of license is required for your dropshipping business.
Most people say that you’ve chosen the niche that you’re passionate about but It’s the half-truth, It depends on two terms Passion and profit. Even if you are not Passionate about the niche, once you start to earn it will be a lot easier to get passionate
By using Google trends you can see the search volume of that product. It is better to go with non-seasonal product as example of winter jacket which is only has high selling in winter. Make sure that the product you choose has a minimum of 800-1000 search volume
Use ubersuggest to find search volume as well as for new keywords and competitiveness. ubersuggest tool will help you to identify the potential of your business.
Another way to find out the trading product is to find the product in demand by checking ” best selling products” on a major eCommerce platform like Amazon and eBay.It may help to find your profitable niche.
Browse popular websites within a niche. For ex. suppose your niche is about fashion , the fashion store like Myntra organize their store often according to the trend which helps you to understand what you should be adding to your store.
3 competitor analyses:
Once you decide the final niche to work, it’s time peep into competitors to educate yourself by how their store look like, what they sell , how they sell.
First step is to search the product belong to your niche on Google, you will some shopping ads on top of result page. There will be a lot of big ecommerce stores like mazon and many other dropshipping websites Now as we know they are competitors, so first open every store in a new tab by visiting each store you get a hell of information about pricing, their discription, their images but don’t use as it is.
By copying competitors domain name and pasting it in ubersuggest tool you will be able to keywords, number of monthly visits
Social media hunt, there are high chance to appear Ad on Facebook about the product you were searching . Visit that Ad , follow top pages of top brand. Analyze How many followers do they have? How do they market their brand? What can do to stand out against them?
Know your competitor’s content and what performs better for them by using a tool called BuzzSumo. This tool will give you insights into the best content that gets most social shares to find new blog post ideas. This will help you to monitor competitors best-performing content
- Subscribe to newsletter and media of your competitor to learn how they engage with their customers.
- Add to Cart one of their product and observe how effective their recovery emails and retargeting ads are get
- Monitor their check-out page and fulfillment options. These will help you to understand how to manage your shipping process
- Compare competitor’s pricing structures. So you get to know how much the market is willing to pay.
3 Find the suppliers
There mainly are two suppliers
- Dropshipping Marketplace
- Manufacturers and imposter
I would highly recommend beginners to go with them. These businesses exist to work with drop shippers. They offer a wide variety of products. They buy products in bulk in wholesale basis from manufacturers and imposter. Then they sell these to dropshipping merchant. Here are some big names in the dropshipping marketplace that integrates seamlessly with eCommerce platform.
There is two free dropshipping marketplaces you must choose.
Manufacturers and imposter
Even though working with dropship marketplace offers an easy way to business. But you can make real money or can give low price where you can stand out against you competitor, because there is no middle man(dropship marketplace) can cut out the margin.
But that’s half part, manufacturers typically have a minimum order volume threshold so beginners may not able meet it. and they don’t seamlessly integrated with your e-commerce platform which means it will be drag adding and managing inventory.
Consider these things before choosing manufacturers
- Track record: Make sure they have experience and reputation in dropshipping industry. Ask for referrals so you can ask other buisness owner’s about the history of Manufacturers.
- Shipping time – Usually customers expect the product to arrive within one week and not more than two weeks. So confirm it before choosing manufacturers.
- Sample unit – Do your manufacturer give you a sample unit? It is reasonable to request to check the quality of the product.
- Fees: Check if there are additional fees for working with them.
Building dropshipping business store
There are few things you must have before you start to create a website
Domain name: Domain name means the name of websites that will give identity to your store. Keep in mind that choose the domain name according to your niche ex, if you are working on a T-shirt niche, your domain should like Wowtshirt. And always choose a short domain. You can buy a domain from Namecheap for around 6$/year. Check Out NameCheap
Signup for Shopify– why shopify? Because it is a leading eCommerce platform that is easy to use, unlike woocommerce. With new tools, features, and app being added regularly it makes life easy. Even more, if you are stuck at something Shopify guru will personally help you to solve the problem.
When selecting a theme go with a free minimal white background theme which is easy to navigate, clean and eye-catching. Theme can be changed over time. Once you start to make money you have the option to buy
• Download Important app and extension
1 Oberlo: This is a free app required for adding products to your store from AliExpress with the help of a small chrome extension called oberlo. Don’t confuse you have download the app on the Shopify website from the store and overextension on chrome which is available in Google.
2 loox : Everyone including you and me first see reviews before buying any product. If there are no reviews on the website then no one has gone trust you. So how to tackle this situation. Simple get look app, it will import reviews from AliExpress to your e-commerce platform.
Marketing your shopify store with different platforms.
At this point, we have our fully functional website ready to take orders. Now doing everything we can do to get paying customers.
It doesn’t where you are marketing, it does matter whether you are marketing aggressively and optimizing a site for search.
So don’t be scared to put yourself out there
Now let’s start.
Email marketing: For email marketing, you must have a MailChimp plugin to collect your customer’s emails and reach out to them once or twice a week about new product alerts, sales, and content on your website.
Facebook ads and Google ads: You can post your ads on Google and Facebook to get quick results. Both his ability to reach the high and targeted audience. Star with a low budget once you got some data you can decide which product is a best seller and you can retarget that audience who engaged with your website.
Social media: Posting content on Facebook, Twitter, Instagram, and other media platforms is cost-effective. Once you gain some the follower’s nothing can stop you from getting orders
Influencer marketing: At the beginning, you may not afford to pay influencers their rates but you can offer them affiliate commission instead. This is the best way to reduce your risk plus you will gain your social media following and email lists.
SEO: Search engine optimization should be the backbone of your all marketing strategy. Adding long-tail keywords and building a number of backlinks can boost your rankings in search engines.
The last step for the dropshipping business is optimization. Once you are done building a website, brand, and marketing, it is time to analyze and track all of the efforts you’re putting in. You can see pricing and navigation of competitors and see if you can modify bit things to complete with them
Connect your website to your Google analytics. It will give insights to optimize your dropshipping store. While running dropshipping store you want to see where your traffic comes from and how many actually convert, so you can improve the conversation rate. Also, it will give an insight of store which part or product or page people are most interested. Google Analytics helps you to create retargeting audience list which will improve conversion rate.
Now It’s Your Turn!
Overall the most important part of any business is trial and error. You have to try new things and eventually, it will fail too. But you have learned from it because it doesn’t matter if you fail tries, there will be one try that will change your entire story