How to Start a Dropshipping Business

Whether you have just discovered this concept or have known about it for a while, dropshipping has been around for quite some time and is a proven business model. You may have a small investment budget set aside for something and want to know how to start a dropshipping business, whether for a bit of extra income or perhaps with a goal to eventually work for yourself.

Regardless of your goals and objectives, dropshipping is considered by many to be an easy business to get into with low start-up costs. This can be true, however, the results will differ for everyone.

There are so many factors involved with creating a successful business, and dropshipping is no different. Your success will be influenced by your niche, competition, product selection, pricing, content, marketing, traffic, and most importantly; you.

Yes, it does require work, but it can also be a passive source of income or even your complete source of income depending on your success.

How to Start a Dropshipping Business

Dropshipping Business Model

Dropshipping is a fulfillment method.

It is a business model that you can structure your entire business around, but it is ultimately the practice of another party fulfilling your orders.

It is the practice in which a store does not keep the products it sells in stock.

The products are held by another party, who assumes the role of fulfillment. A retailer will sell products on their website, while the fulfillment party will hold those products and ship them to the retailer’s customers.

In short; you sell a product on your website, don’t hold any stock, and another party will handle the shipping and delivery for you.

how does dropshipping work online

Does this business model sound slightly similar to eBay?

eBay aren’t dropshippers in the most quintessential sense, as the buyer already knows that eBay isn’t the one selling the goods and are just middlemen facilitating the sale. Some consumers don’t even realize this, and just think of eBay in the most simplest sense; a marketplace.

While eBay and dropshipping are different on face value, when you look at the business model and order fulfillment the structures are extremely similar:

eBay

  • Consumer visits website
  • Consumer buys something
  • eBay informs supplier
  • Supplier packages item
  • Supplier sends item
  • Customer receives item
  • eBay receives a fee in return

Dropshipping

  • Consumer visits website
  • Customer buys something
  • You inform supplier
  • Supplier packages item
  • Supplier sends item
  • Customer receives item
  • You receive your profit margin in return

The main differences are that your customers will not know that you’re dropshipping, because it looks like the goods on your website come directly from you.

On eBay, the consumer knows that there are “Sellers” and that eBay doesn’t have or sell the stock.
They will also receive a fee for facilitating the sale rather than putting a markup on the product and keeping the difference.

Ebay won’t have much or anything to do once the sale is made while you may have to liaise with your supplier or provide customer service to your buyers in the form of emails, phone calls, or live chats.

Amazon is also technically dropshipping as well in some instances, although they do actually have their own products and warehouses for order fulfillment in addition to what other people sell on their platform.

So you see, dropshipping has been around for quite a while, in one form or another.

It’s a proven business model that can greatly reduce your overhead expenses and save you a lot of time in the process. Without the need to hold physical stock and the ability to outsource crucial business elements to other parties, you could save money on other areas such as warehouse rent and then focus more on driving sales. The barrier to entry is very low as well, and you can easily build an online store with no technical knowledge using platforms such as Shopify or WordPress.

Dropshipping Business Opportunities

Dropshipping can be done using many different methods and platforms. You could even strike up a deal with a local supplier or manufacturer in your area and have them dropship their goods while you sell them on your eCommerce website. If you did it this way, there’s a high chance that you would be the only or one of a few retailers that dropship these products which then reduces your competition by a large margin in comparison to the more common ways of dropshipping. Some companies don’t advertise or make clear that they dropship, but it never hurts to ask them so just go for it if you’re interested. Aside from this, we are going to focus on two of the most common ways to do dropshipping:

Dropshipping From a Supplier

When an eCommerce store sells a product, they then buy that product from a supplier, who then sends the product directly to the end customer within a generic package.

How is it Done?

The most popular method of doing this is when an eCommerce website stocks products which are actually from AliExpress.

1. A buyer purchases a product from an eCommerce website

2. The eCommerce website purchases that exact same product from AliExpress, using their buyers delivery details that were supplied upon purchase on the eCommerce website

3. The AliExpress seller then packages and sends the item to the eCommerce websites customer

4. The customer gets their package, presuming its come from the eCommerce website

5. The eCommerce website makes money on the price difference between the cost of the item+delivery on AliExpress, and what they sell it for on their own website

Example:

AliExpress Cost

Item: $8
Delivery: $2

Total: $10

eCommerce Website Cost
(What the customer sees)

Item: $19
Delivery: Free

Total: $19

Gross Profit for the eCommerce website: $9

In this example, the eCommerce website needs to spend $10 to sell this particular item to a customer.
They markup this particular item to $19 on their own website, so they would have $9 in gross profit resulting from a sale of this item.

Dropshipping From a Manufacturer

When an eCommerce store sells a product, they buy the product from the manufacturer, who then sends the product directly to the end customer within a generic package or even a branded one with the store’s graphics.

How is it Done?

This is normally done using Print on Demand services, such as Printful.

Printful actually makes the products that the customer is purchasing.
They can be made to order or you can even have X amount commissioned which sit in their warehouse for a fee.

1. A buyer purchases a product from an eCommerce website

2. The eCommerce website purchases that exact same product from Printful, using their buyers delivery details that were supplied upon purchase to the eCommerce website

3. Printful then produces and sends the item to the eCommerce websites customer

4. The customer gets their package, presuming it’s come from the eCommerce website

5. The eCommerce website makes money on the price difference between the cost of the item+delivery on Printful, and what they sell it for on their own website

Example:

Printful Cost

Item: $8
Delivery: $2

Total: $10

eCommerce Website Cost
(What the customer sees)

Item: $19
Delivery: Free

Total: $19

Gross Profit for the eCommerce website: $9

In this example, the eCommerce website needs to spend $10 to sell this particular item to a customer.
They markup this particular item to $19 on their own website, so they would have $9 in gross profit resulting from a sale of this item.

What’s The Difference Between AliExpress and Printful?

  • Mostly Based in China
  • Longer Delivery Times
  • Usually Generic Packaging
  • No Branding
  • Sell Whatever is Available
  • You Have to Rely on The Seller
  • Identical Products to Competition
  • Based in USA and Europe
  • Shorter Delivery Times
  • Can Customize Packaging
  • Create Your Own Brand
  • Make Your Own Products
  • Printful is Established and Reliable
  • Unique Products to You

Both options can be integrated with Shopify and WordPress to allow for automatic order placing, which is amazing and can save you a lot of time.

If you’re doing AliExpress dropshipping you can use this tool and integrate it with a WordPress store.

If you’re using Printful you can use this app for Shopify and this plugin for WordPress.

We don’t want to come across as bashing AliExpress, they do offer quality products and have very good and efficient sellers on their platform. There’s nothing wrong with reselling products from AliExpress, as long as you provide value to your customers and have the appropriate measures in place to comply with the rules and laws of the countries involved (yours and your customers).

Printful enables you to create your own brand. You can make your own designs and then put them on Printfuls products, which are generic and specifically designed for this purpose.

If you’ve ever wanted to start a t-shirt business or fashion store, this could be what you’re looking for.

There are plenty of successful AliExpress dropshipping stores out there, just like there’s plenty of successful Printful dropshipping stores. Both platforms can provide an effective model for you to dropship, so your choice would more come down to which model you prefer.

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Dropshipping Business Plan

You need to plan your dropshipping business out and carefully analyze each section in order to build a sustainable and successful business. Simply selecting a bunch of products that you like the look of and throwing them up on a hastily made website is going to do you no favors. Take your time, go through each and every stage, and don’t be afraid to go back a stage in order to make tweaks and get things right. Coming up with some dropshipping business ideas can be challenging, so don’t rush things or be afraid to revamp your ideas if you think they’re not sustainable.

At some stage, before you launch, you will most likely need to register a business in your country. There are around 200 nations in the world today, each with their own set of rules and regulations regarding setting up a business. We can’t possibly detail the process for each and every one, so perform your own research for the requirements applicable to you. Once this is sorted, you can follow this 13-stage dropshipping business plan from left to right

Choose A Niche

Choose A Product to Sell

Select Business Model

Choose A Source

Supplier/Manufacturer,
Printful, or AliExpress

Determine Your Pricing

Develop Your Brand

Create Your Store

Get on Social Media

Create Content

Launch Website

Get Traffic

Make Sales

After Sales

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