Dropshipping is a retail fulfillment method that is becoming increasingly attractive for entrepreneurs who are looking to minimize their risk. For business owners who want to know how to dropship, this article offers 10 easy steps on getting started in building an effective and convenient dropshipping business.
Dropshipping is a popular retail fulfillment method, especially in today's successful ecommerce marketplace. Entrepreneurs who want to open an online retail business but don't want to handle the cost and risk of carrying the inventory on their own will often opt to start a business that utilizes dropshipping. Getting started isn't difficult, but you do have to know the basics about how to dropship.
1. Why Choose Dropshipping
The first step in learning how to dropship is to explore and understand why entrepreneurs choose this method. There are several benefits to dropshipping that lead business owners to choose it for customer order fulfillment. The main draw, however, is the fact that this method allows a store owner to not have to purchase or keep inventory on hand. Rather, the merchant purchases the necessary inventory from a third party when needed, and the third party ships out the merchandise to the customer.
The merchant never actually handles the products he or she is selling; the products go from the direct manufacturer or wholesaler directly to the customer. However, the customer doesn't purchase them from the wholesaler. The merchant who has the dropshipping business sells the product to the customer. This usually takes place through a website, since without physical inventory, there is usually no physical brick-and-mortar store. However, some retailers may keep sample merchandise on display in a physical location for customers.
2. Understand The Key Players
3. Decide What You Want To Sell
Dropshipping is a service, but to use it, you have to set up a viable retail business that can reach customers with the products you have chosen to sell. The first step, then, is to determine what type of merchandise you will sell. The type of products you offer will help you make all the other major decisions that follow, from your retail outlet's name and branding to the format you wish to use to sell your products and reach your customers.
You may already have a product category in mind, such as outdoor and camping supplies or smartphone accessories. However, if you simply want to start a dropship business and aren't already dedicated to a specific product range, you can use a variety of methods to explore the merchandise you could sell. You can research retail trends online to find out what products are currently in demand, especially in terms of ecommerce. You could also conduct a survey, either online or in person with family and friends, asking people about the types of products they would be interested in purchasing online. Rather than trying to satisfy a very broad market, where competition may be untenable for a small business, it can be helpful to narrow your product line to a niche area where you can focus your efforts and create a unique retail business.
4. Find Your Suppliers
Once you have decided the product line you wish to sell, you need to locate manufacturers and wholesalers who can provide you the product as well as dropship it to your customers. You want to make sure that before you set up shop and go live with your retail business that you can actually fulfill your customers' orders.
The first place you may wish to start is by directly contacting the manufacturers of the products you wish to sell. They can often provide you with a list of the wholesalers that they sell to, giving you resources for which wholesalers you may also wish to work with.
If you don't want to do the research on your own, you can also make use of what is known as a supplier directory. These services are either subscription-based services, where you pay a monthly or annual fee for access to their directories, or require a one-time payment for lifetime membership. Some examples of dropship directories include Worldwide Brands and Wholesale Central.
5. Set Up Your Online Shop
Although dropship services can be provided by retailers who display samples of merchandise in a physical store location, the most common way that entrepreneurs get into dropshipping is by setting up online ecommerce shops. Nowadays, this is made even easier by the fact that there are platforms available specifically for setting up ecommerce businesses. That means you don't have to worry about starting from scratch and reinventing the wheel in setting up an online store.
Other Practical Considerations
Although setting up dropshipping requires essentially just the simple five-step process described above, there are several other considerations you shouldn't overlook when you are setting up your retail business.
One of the most important technical considerations is to ensure that you are set up to do business legally. That means you'll need to establish a taxpayer ID for your business and also adhere to any state and federal laws regulating the business you wish to set up. You will likely need to ensure that you are legally set up to do business even before you begin to contact suppliers. Many wholesalers want to know the specifics of who their customers are, so you will be required to provide your business information when you set up an account with them or place your first orders.
Simply setting up a website doesn't ensure that customers can find you. You'll want to think about how you plan to market your business so that you can gain visibility, especially as an online business. Online businesses are popping up all over, and cutting through the noise to get to your core customers can be a challenge. Consider what strategies you'll use for finding, targeting and retaining customers. Social media is a powerful tool for online business marketing, as is blogging and your website content.
Many entrepreneurs who set up dropship businesses are looking to make a profit without a lot of up-front investing. That means your operating budget is an important thing for you to take into consideration. Think carefully about how you will price your products, and also what amount you plan to invest in other peripheral activities such as marketing and promotion. In addition, you will need to calculate any expenses that you will incur from contracting out services you can't do on your own, such as accounting or advertising. Once you have covered all your bases, you'll be well on your way to embarking on a successful dropshipping business.