Definitive guide to running a dropshipping business

Much like every other business, learning about dropshipping business is not going to be easy and the first step you take to venture into it will be fraught with many unfamiliar factors. Even more daunting if this is your first time venturing into e-commerce.

However, if you are serious about venturing into a dropshipping business so that you can expand your business and create a more sustainable income, then you will want to consider reading and following this guide.

We will be discussing the different aspects of the dropshipping business, which has grown in popularity recently, such as how to start and run your own dropshipping business, how to find a supplier, set up your dropship store and scale your operations. 

What is dropshipping and how does it work?

Dropshipping is a business that has been around for a while, it started in the 60s and 70s but it was not until the Internet became available that the dropshipping business kicked off. Dropshipping is a business model where e-commerce entrepreneurs sell their products without having to carry any inventory. So when a store owner receives an order from a customer, the store owner will then contact their supplier and ship the ordered product to their customer’s doorstep. Dropshipping businesses can be run entirely online, so it makes this business model very accessible to people with good Internet connections and a laptop.

What are some of the advantages of dropshipping?

Low cost

The dropshipping business model offers quite several advantages, especially if you are new to the e-commerce industry. One such advantage is that the dropshipping business model requires no cost to start. But of course, the costs come kicking in when you launch your business with a website and run ads to push your product out. But to put it simply, it’d make a great business model for anyone with tight funds and experience in setting up their own e-commerce business.

You get to test the products

You may have some doubts or hesitation about which particular products or niches will be successful for your dropshipping business. One of the perks of the dropshipping business model is that you get to test and find out which products or niches will be successful. Once you have found them, you can commit to becoming the dropship for the particular products or niches.

It is scalable

When you have found the successful products or niches, and the winning formula for your dropshipping business, you can easily ramp up your operations and start making more profits. This can be further expanded into establishing your brand on the market as a reliable and go-to dropshipping business. 

Is dropshipping profitable?

The answer to that question is definitely “yes”. If done right, your dropshipping business can make tons of profits. Though the margin on individual sales may not be huge, your overhead cost is very low. This is because you don’t have to carry inventory, which means you don’t have to worry about storage or any other facilities required to avoid the inventory from spoiling. So even if you are selling a few products, you will be able to obtain a healthy and good amount of profits due to low overhead costs.

But just like any other business, there will always be other factors influencing your dropshipping business. But it does present a great opportunity to those seeking to start their own business or just want to have a side income.

How to set up your dropshipping business?

Find a reliable and trustworthy supplier

The first step in dropshipping is to find yourself a reliable and trustworthy supplier. There are several places you can find and look for supplies but we recommend you to use AliExpress because it is considered an international e-commerce platform and it connects you to both buyers and sellers from all over the world. In addition to that, AliExpress also offers a wide range of products at very competitive prices in comparison to other e-commerce platforms such as Amazon and eBay. 

Both Amazon and eBay are good platforms to find suppliers, the same goes for the product range on both platforms. They offer a wide selection of products, from toys to household and electronics but the prices lean slightly toward the costly side. 

That is why we recommend AliExpress to find suppliers because it offers just as many products ranges yet at better prices. Finding suppliers is one thing, choosing the right suppliers is a whole different thing.

That is why we have prepared a guide to help you find the right and best suppliers for your dropship business:

Choose reputable sellers with positive feedback

When finding suppliers, you can’t just pick the ones that appear on the screen. What you need to do is to check what others are saying about the supplier you’re looking at in the comments and their rating on the platform. 

Check and compare prices

Another factor you should pay attention to is the pricing. You will notice some suppliers will have very competitive price tags that are too good to be true, in those cases you might want to tread carefully. Either they are new suppliers trying to gain a foothold on the platform and market or they are another scammer out to snatch money from you. So make comparisons and check what others say about them.

Check for product authenticity

This one is crucial because fake products run rampant on online platforms. Especially if you are planning on selling branded or makeup products. 

So, one of the ways you can check for product authenticity, you can request in-hand images of the products, or product serial numbers to check for authenticity. You may also take a look at the review sections to see what others say about the product’s authenticity. Be careful of reviews by bot accounts though, so only take reviews from legitimate accounts.  

You can also try ordering a single product from the supplier, see if they deliver and if they do deliver the product, you can check if the product is authentic yourself. 

Check the seller’s products

One big sign a seller is authentic and can be trusted is that they usually only sell one type of product instead of one that sells virtually everything sellable on planet earth. Set your search parameters to all product categories, then search for the seller’s name and see if the seller’s name appears in almost every category. 

After you have found and chosen a supplier, the next step is to set up your store, market it and make sales. We have prepared the guideline below for you:

Setting up your store

The next step is to set up your store. If you are still new and have no idea how to set up your store, then we recommend you use Shopify. You may have come across this name often while researching dropshipping and e-commerce. This is because it is an e-commerce platform known for its guidance in setting up your online store and easy navigation. 

Besides those two features, it also offers a wide range of tools that will help you to run your online store successfully. Many apps can be integrated into Shopify to help you automate your business and save time.

Time to market your dropshipping business and store

After you have set up your store, you’ll need to start marketing your business. The most important thing to remember and do is to drive traffic to your store. There are several ways you can do this, but we would recommend you use Facebook ads. 

This is for two reasons; first, it is affordable so it aligns with your budget. Second, it can easily reach your potential customers and possibly an even larger pool of them. You also have the option to use other digital marketing tools such as  Google AdWords, Instagram, and Pinterest, but we believe that Facebook is the best platform for a dropshipping business. 

Increase your sales

Now that you have started driving traffic to your store, you will need to start making sales. You can increase your sales by offering limited-time coupons and discounts to your customers to encourage them to visit your store.

 However, there are also other strategies that you can use to increase your sales such as email marketing, retargeting, and social media marketing. But the rule of thumb is to focus your efforts on converting visitors into customers.

Should your dropshipping business take flight successfully, you will need to start scaling your business operations. 

This is where things will get more exciting for you because you will start to see some growth in your business. There are several ways you can scale your business.We highly recommend these two: automation and outsourcing. 

Automation

Automation means you will need to use digital marketing tools such as Facebook ads or any other digital marketing that can help you automate your business so that you can shift your focus on other matters such as improving your store, etc.

Outsourcing

If you reach the point where you need to scale your business then outsourcing is a must. Because you will need to meet all the demands, reports, and other things that are related to purchasing and managing orders. And outsourcing your operations can lighten the loads without having to hire additional staff. 

What are some other factors to consider?

There are a few other factors that you should consider before starting your own dropshipping business, such as 

Your target market: Who are you selling to?

What kind of demographic are you promoting your products or services to? What are their interests? What needs or issues can your products or services solve for them?

Your niche: What type of products are you going to sell?

The next step is that you need to consider the niche. What type of products will you be selling? Are you going for a specific industry or multiple industries? Are you going to sell products that are popular in a certain country or region or universally popular?

Your branding: How are you going to brand your business?

Branding is also important when you start your dropshipping business because you will want to stand out from other dropshipping businesses so that customers will remember your store. So what colours will you want to use? What is your logo design? How are you going to brand yourself?

All three factors are important and need to be considered when starting your own dropshipping business. But the most important thing is to just get started. Don’t worry about making mistakes and unsuccessful attempts, it doesn’t have to be perfect. What’s important is that you learn from your mistakes and improve. 

Launch your dropshipping startup today

If running your own dropshipping business is something that you have been wanting to do for a while, then what are you waiting for? Now that you have learned and know about dropshipping business, get started today!

And if you are looking for a business payment solution for your dropshipping business, check out Instarem!

Instarem for Business can help support your finances by providing a simple and efficient way to pay and get paid as well as receive payments in multiple currencies.

If you want to know more about how you can get better rates, faster transfers and more efficient money management, login or sign up today! 

We wish you all the best!

*Disclaimer: This article is intended for informational purposes only. All details are accurate at the time of publishing. Instarem has no affiliation or relationship with products or vendors mentioned.