Dropshipping, an order fulfillment method in which businesses do not have to worry about stocking products. Instead, they focus on sales and pass the order to their supplier, who delivers the goods to the customers.
The idea seems quite great if you wish to create a source of income. Taking a percentage of each sale without bothering with logistical problems like warehousing or shipping sounds attractive, right?
Well, the reality is a bit different. There is a plethora of off-putting obstacles one encounters, and the dropshipping difficulties force many aspiring entrepreneurs to step away before they actually accomplish anything.
First of all, you have a lot of competition. Brands that have already established themselves have had a head start, and you will likely struggle to find your place on the market.
Building a brand from scratch is also a problem. The credit goes to the supplier rather than the middleman. Sure, some customers may appreciate the shopping experience, but most shoppers will pay attention to the product rather than how the delivery took or what the package was like.
Finally, since you are not manufacturing the goods yourself, you have to rely on a supplier. Essentially, dropshippers are between a rock and a hard place. They have to depend on a supplier to take care of potential problems and make promises to customers about things that do not depend on the dropshippers themselves.
Nevertheless, despite these obstacles, there are multiple examples of how someone with no prior ecommerce experience managed to create a thriving dropshipping venture after playing their cards right.
This guide will walk you through some of the key elements of starting a dropshipping business on Shopify, including tips to find a reliable supplier, designing the website, and how to come up with niche ideas.
The supply chain term may seem fancy, but it is more or less a process that covers steps between manufacturing products and getting them to the customers. Covering every little detail would be too intense, and it is certainly not the purpose of this guide.
No, what you need to be familiar with are three significant players of the dropshipping supply chain. Those three are retailers, wholesalers, and manufacturers.
According to the Oxford dictionary, a retailer is a business or a person who sells goods or services to the public, and these goods and services are meant for consumption, not reselling. Thus, if your business fulfills orders via the dropshipping method, you can call yourself a retailer.
Wholesalers typically sell goods to retailers in large quantities but at low prices. First, wholesalers get in touch with manufacturers and buy goods in bulk from them. Then, wholesalers resell the goods to retailers, who in turn resell the products to the public.
Usually, wholesalers collaborate with many manufacturers simultaneously and work in specific niches, such as video games, drones, dog treats, etc., or run a dropshipping venture.
Just like the name suggests, manufacturers create products but do not sell them to the public. No, they work with retailers and wholesalers because the two order goods in bulk.
Overall, if you are looking to purchase goods in bulk, working directly with a manufacturer is the best approach. However, keep in mind that there are minimum requirements involved most of the time, i.e., a manufacturer selling to you only if you order a specific minimum amount of goods, or that you will purchase from them instead of the competition in the future as well.
It may come as a surprise not to see a dropshipper mentioned among the players. Well, that’s because all three can be dropshippers.
For example, if manufacturers agree to send their products to a customer directly while collaborating with you, it can be considered dropshipping. Retailers are in a similar boat, the difference being different prices. Unlike wholesalers, retailers do not have direct access to a manufacturer.
Remember that dropshipping is not equivalent to wholesale pricing. In some instances, the process refers to having companies deliver products in your place instead. If you want to get the best possible deal as far as prices go, you need to work with reliable wholesalers or manufacturers.
Working With Suppliers and Wholesalers
Knowing which products to dropship is not enough to succeed even if you are confident that the product itself is popular enough to bring you profits.
First and foremost, you need to find a reliable supplier with high-quality service. A dropshipping business is not sustainable without a supplier because a business will run out of products to ship.
You may discover vendors and wholesalers when looking for a supplier. The two are different. Vendors usually offer specific products and advertise the goods on dropshipping websites. In addition, buying from vendors is more expensive. Unless you intend to sell unique products, it is recommended to stay away from vendors.
Meanwhile, wholesalers supply products in bulk, meaning that it is easier to negotiate a better deal. For example, the more you order, the lower the price will be. You will find that most wholesalers develop their own sites, though some still prefer to use third-party platforms or even applications to promote available products.
So, how can aspiring dropshippers find reliable suppliers? Overall, suppliers do not bother too much to promote themselves. A lackluster online presence adds to difficulties finding a trustworthy supplier, so keep in mind that you will need a lot of time for it.
The language barrier is another issue. The right supplier may be located on a different side of the world, like Asia. And it may be more than just the language barrier, but cultural differences as well. If you plan to work with a supplier closely (which you should), it may take a while to overcome such obstacles.
Regardless, the aforementioned problems should not stop you from finding a dropshipping supplier if you know how to look for one. Here are some ideas to find the best supplier you can find.
Step #1 – Researching available options
As soon as you have decided on the niche you want to dropship, go to Google and look up the list of available suppliers. When you need to choose between a local supplier and a supplier from overseas, going with the former seems like a better option for supplying domestically. However, if you plan to dropship internationally, then an overseas supplier does not sound like that bad of an idea.
Prepare a list of potential candidates and check what each of them has to offer. Read testimonials if there are any, check the prices, delivery policy, and other relevant information that could make a difference in your journey in becoming a dropshipper.
Step #2 – Checking supplier technology
Once you start checking each supplier individually, spend some time on their websites to find out whether they are using outdated technologies. An old website is not necessarily a sign of a poor supplier, but collaborating with suppliers that invest in technology makes more sense, right?
Working with features like order history, custom data feeds, in-depth product catalogs, and order placing via email is more convenient than not having access to such advantages.
Lastly, investing in automation and other technology is a sign that a supplier is serious about their work, which increases the odds of them being reliable.
Step #3 – Getting in touch
It is likely that you will need to cut some potential suppliers from the list after finishing the research phase. But the fewer options you have at the end, the better.
The next step is to contact the suppliers. Send them an email or make a phone call and make sure that you talk to the person in charge rather than a middleman.
Ask relevant questions about the services and gather as much information as you can. Get contacts from prior or current customers so that they can tell you what it is like working with a supplier without being too biased.
Of course, you need to make sure that a supplier is willing to work with you. A good supplier should be interested in expanding their network because it leads to more profits. If they are reluctant to strike a partnership deal, consider that as a red flag.
Establishing contact early and keeping in touch with a supplier regularly will help maintain good relationships and build trust. Moreover, if you are on good terms with a supplier, you can expect to get answers and problems solved faster because, at the end of the day, both you and the supplier are working towards the same or similar goals.
Step #4 – Ordering from suppliers and competition
Witnessing a supplier’s quality first-hand is a rule of thumb you should follow. Order goods directly from a supplier and figure out how long it takes for a product to arrive, what the packaging is like, and whether the customer support reacts quickly and provides solutions to delivery problems.
If there is a dropshipper who is already working with your potential supplier, you can consider ordering from them as well. After all, you will likely be in direct competition with this dropshipper, and it would help to know the level of service your potential competitors are offering.
All in all, do not rush picking a supplier. As a dropshipper, you will rely on another party to provide you with products, meaning that it is important to find a reliable supplier.
Sure, there is an option to cut ties if a supplier ends up disappointing you, but remember that finding a new supplier will take a lot of time again, not to mention the potential harm a poor supplier will do to your brand. A few misplaced orders, damaged goods, or poor delivery times may result in negative customer reviews on your website.
Finding a profitable niche
It is no secret that finding a lucrative niche is one of the hardest steps in starting an online business. The right niche helps brands attract an audience, determines marketing strategies, and enables product creation with customers in mind.
However, the niche picking process is trickier in dropshipping. Aspiring dropshippers ask themselves whether they should go with something they are passionate about or whether it is better to choose a product that is popular locally rather than globally. Not to mention that there are no guarantees of picking a niche and profiting from it.
Picking a product randomly will not work. You need to follow certain guidelines to increase the odds of picking a proper niche.
Since your goal is to sell goods to people, the first thing you need is demand. Even if you have an amazing idea, it will not get you far if there is no demand for it. Thus, you need to research the market and determine whether there is any point in pursuing your potential niche idea. There are two sources for that – social media and Google Trends.
Researching social media
Let’s start with Facebook. According to Statista, Facebook has more than 2.7 billion active monthly users. On average, an adult person spends about 40 minutes on the platform.
You can use Facebook Audience Insights or another free tool to learn about the platform’s user behavior. The goal is to determine the interests of different demographics and find out how big of an audience would potentially be interested in your niche.
Yes, Facebook is not the be-all and end-all internet channel, but with such a massive user base, you can get an idea of how popular a product could be.
For example, if you wish to dropship dog treats, use insight tools to find out how many dog lover groups there are and how many members the biggest groups have. If possible, join these groups yourself and look at the engagement rates. Just because a group has a few hundred thousand members, it does not mean that it is active.
Besides Facebook, you should also keep tabs on other popular platforms. Instagram also has hundreds of millions of active users, though it is more visually driven, and gathering relevant dropshipping data on Instagram may not be that simple. But then again, it can still reveal some popular trends.
Speaking of trends, Twitter is also worth a shout. You can check daily trending posts and enter general or niche-relevant hashtags like #dropshipping or #ecommerce to get inspiration from other dropshippers.
Checking Google Trends
Google Trends are another method to search raw figures and determine where your potential business idea stands. Many brands use Google Trends for their marketing strategies.
Search interest over time is one of the biggest Google Trends advantages. While it may not be possible in every case, you still want to enter a niche that is on the rise rather than declining. In other words, a niche with more search results over time.
Rising terms are another benefit of the tool. Google Trends will also provide you with niche-relevant queries and reveal which of them have been on the rise recently. Knowing which terms are the most popular will help you with search engine optimization – another important element of creating a successful dropshipping business.
Then there is geographical concentration. For instance, if you plan to dropship skiing equipment in the United States, you can determine the concentration of potential customers in every state and see which areas of the country you should target.
Lastly, seasonality. It is crucial to understand how a demand for a product changes over time. Take the skiing example we mentioned in the previous paragraph. It is natural that the search results should peak around winter. In some cases, you may be reluctant to dropship certain products because they are not evergreen but popular only throughout a particular season.
Measuring the competition
It is not that simple to conduct competition research. If there are too many dropshippers who operate in your niche, you may find it too difficult to get enough market share and overtake already established brands.
Meanwhile, if there are very few competitors, this could signal a small market with few opportunities to grow and profit.
Keep in mind that while some dropshippers rely on paid advertisements like Google Ads or social media ads, the majority of them still focus on SEO. Thus, paying attention to organic traffic should be the go-to method when researching the competition.
Look for brands that are at the top pages of Google and other search engines. Browse through their websites to determine the quality of the services and figure out how realistic it would be to reach the same results or even overtake some of these brands.
Starting a Shopify Dropshipping Store
As soon as you have a niche and a supplier, you can look to set up your store. For dropshipping, Shopify is the go-to platform thanks to its customer service, mobile-friendly themes, security and reliability, flexibility, integration options, and a hassle-free setup process.
Think of a store name
Coming up with a name for your store is the first thing you need. You will also be using the same name for the domain.
If you lack creativity, hire someone who can come up with a brand name for you. If you are set to do it yourself, you could get some inspiration from other businesses. Some use acronyms (BBC for British Broadcast Corporation); others combine two words and create a mash-up (Netflix from “internet” and “flick”).
Mythology, literature, symbolism, geography, and foreign languages could work as a source of inspiration as well. Just make sure that you are not infringing copyright and different laws when registering a business name.
Create a Shopify account
Creating a Shopify account is pretty simple. You need to visit the platform and use the signup form to create a profile. Enter the required information and click the button that tells you to start a free trial. Shopify will also ask you to enter a unique store name that you had to come up with in the first step.
Optimize the account settings
Before you launch the store, make sure to visit the Settings page on Shopify. Here, you can authenticate your account by providing Shopify support with your URL.
Updating the billing information by adding your credit card information and address is also necessary. You will need to update the Shopify plan as well because a free trial will not cut it if you intend to run a proper dropshipping store.
Finally, Shopify settings allow you to change other relevant information, including a personal email address, a customer-facing email address, and the store owner’s profile.
Launch the store
Launching the store follows next. Once you take care of the domain and account settings, you can finally let the website go live. However, before you do, confirm that the content on the website is not missing. Also, double-check for spelling and other potential errors. That should not be a problem because the amount of content early on is not that big most of the time.
Add relevant plugins
Available plugins are one of the things that make Shopify stand out from other platforms. The default Shopify version is solid, but you should look to expand available website features by incorporating various plugins and improve the customer experience. Some of the best plugins for Shopify include:
DSers: DSers is another worthwhile plugin that lets you find appropriate suppliers, place orders in bulk, auto-sync tracking numbers, manage the stock and shipping, enable automatic pricing, and even manage multiple stores from the same DSers account.
btwn: Word of mouth marketing is effective, and btwn is the tool to launch your own referral marketing strategy to leverage already-loyal customers and encourage them to bring more traffic to the website. There may be other similar tools, but btwn does not require any fee. Users pay only for the performance.
Export Orders Pro: Keeping tabs on data is one of the key elements of running a profitable dropshipping venture. Export order pro: order report automation generates information you can send directly to your suppliers.
LiveRecover: According to Baymard, roughly 70 percent of all online shopping carts get abandoned. If you want to reduce the abandoned shopping cart rate on your dropshipping store, get the LiveRecover plugin.
LiveRecover employees manually check with customers who did not complete the transaction and find out why that happened. And since LiveRecover is not forcing a sale, about half the customers respond to their text, which translates to conversions.
Opinew: Trustpilot reports that nine out of ten consumers consult prior customer reviews before making a purchase. By adding Opinew, you can import customer reviews directly from platforms like Amazon, eBay, and AliExpress.
The plugin is easy to use and customizable, so matching it with the theme of your Shopify store should not be a problem either.
Okiano Google Ads: Okiano integrates with Google AdWords and Google Shopping to simplify the PPC marketing campaign by automatically optimizing and enhancing your Google Ads, keywords, and even extensions.
Users can create ads on the site automatically and upload them to their AdWords account. The application is bound to increase sales.
Smaily E-Commerce Integration: Smaily is a free-to-install ecommerce app that automates email marketing. Users grow their email list with opt-in forms provided by the tool. It is also possible to move your Shopify subscribers to Smaily.
The app also has a feature to reduce the abandoned shopping cart rate with its tracking system. And in case you run into a problem, you can contact customer support.
EPROLO: Dropshippers that use Aliexpress should try EPROLO. It takes care of logistical processes like product sourcing and warehousing. In addition, the tool allows businesses to dropship with multiple suppliers since the packages will ship out from Eprolo warehouse.
The application is free with no hidden fees. The developers also have a refund and replacement policy for delivery problems or damaged goods.
Make your first sale
Making the first sale is a significant milestone. Once the dropshipping website is up and running, start working on marketing. Customers will not appear out of thin air. Even if the website receives some traffic, the odds of first visitors spending money are relatively low.
Therefore, you need to focus on targeting the right demographics and working on your marketing strategy. Use the first sale as a source of inspiration and scale the business from there.
Popular Dropshipping Products From 2020
Looking back at some of the most popular and relatively niche dropshipping products from 2020 could help you in 2021 and further down the line, particularly if you lack ideas for your venture. Here are some examples of what was hot in dropshipping last year:
Women’s shapewear is more common, but there are plenty of men who are conscious about their weight and looks as well. The fact that so many people were restricted during the pandemic and had fewer opportunities to have an active lifestyle was one of the reasons behind shapewear’s popularity.
Pet toys are also gaining momentum with each passing year. Novelty toys, particularly if they are interactive, help pets lead stimulated life. It is no secret that there are plenty of people who love their pets, and if there is a way to enrich a pet’s life, even if it is pretty gimmicky, you can expect some owners to try it regardless.
Silicone Food Covers
More and more consumers are becoming environmentally conscious. Products like reusable silicone food covers are great examples of how appealing to a certain demographic can net one quite a lot of profit.
Makeup for Traveling
Traveling may be restricted due to the ongoing pandemic, but space-saving makeup products like brushes are convenient for a woman who wants to travel light and not worry about lacking the means to look attractive.
Multi Layered Necklaces
Accessories have been a popular niche for a long time, but entering a general accessory niche would mean entering a competitive market. Therefore, you need to go for something not as general. Multi Layered necklaces became quite popular in 2020 and have not lost their touch.
As you can see, these five products above are solid examples of how finding a niche and delving a bit deeper to narrow it down to minimize the competition should work in your favor as a dropshipper.
Valuable Dropshipping Tips for Beginners
When you find your rhythm and feel that the idea of dropshipping is worth pursuing because you notice the growth of the business, do not stop. Aim to improve those numbers even more. Here are some additional tips to help you with the venture:
Do your best in the marketing department and advertise your products on as many different channels as you can. Do not limit yourself to just social media and search engine optimization, even if they are effective.
Collaborations with influencers, opportunities to publish sponsored content on blogs, appearances on podcasts, and meeting people in live events ought to attract even more customers to your business.
Offer reliable customer support
Customer support should also play a prominent role. You need to offer exceptional services and solve customer problems. Of course, a lot depends on your supplier because many things are out of control.
However, you should still hire enough employees for customer support to cover the bases from your end. Otherwise, it will not be too long before your website and social media channels get bombarded with negative feedback.
Look at the data
Do not make blind guesses when making important business decisions. If you want to add new products to the store, increase funding for a particular marketing method, make adjustments to the website, or change a supplier, be sure to use numbers from analytics and insights to justify your decisions.
Keep tabs on the competition
Keep track of your competition to see what they are up to. Not only are other dropshippers a good source of inspiration, but they also work as a means to motivate yourself. Seeing others succeed in the same business makes you want to try harder and be on par with other dropshippers.
Succeeding as a Dropshipper
Speaking of dropshipping success, you have to keep in mind that the road to creating a profitable business will not be easy. Whether you like it or not, there will be other brands that have already established themselves, so avoiding competition is not an option.
Ultimately, there are lots of things to learn about dropshipping, and the overabundance of information can be quite overwhelming. However, the important thing is to get started and work little by little toward achieving your goal.
The last two pieces of advice in this guide are the following: create value and have a long-term plan.
By value, we mean that you should not be like other dropshipping businesses in your niche. No, instead, offer different and unique products if possible. Also, setting lower prices would also attract more customers.
As for having a long-term plan, do not hesitate to scale the business and consider what you will do in the future. Working with more suppliers, adding new products, or even having a plan B in case your niche becomes unprofitable.
Every little bit helps when starting a dropshipping project from scratch. And while considerations for the future may not seem like a priority, they are still necessary if you are serious about becoming a successful dropshipper.