When you google digital nomad jobs or ways to make money online, you will surely find heaps of results that tell you to start a dropshipping business. But what exactly is dropshipping? How does it work and how to run a successful dropshipping business?
A couple of years ago I was working for a young entrepreneur as a virtual assistant. He always had spontaneous ideas on how to add new income streams and enlarge his little empire. So I wasn’t too surprised when he called me one day and said excitedly:
“Denise, I want to try something new. I want to start a dropshipping business and I need you to help me!”
“Uhm, sure. But just to warn you, I have zero experience with the whole dropshipping thing.”
“Yeah, that’s fine. Me neither. But I have a feeling that we will make this a huge success!”
Four weeks after this call we launched a Shopify store. Another ten weeks later, the first proper income report read something like USD 1,300. Today, my former client makes more than 95,000 USD per month (!) with his dropshipping business.
Would you call that a success? I sure do!
What Is Dropshipping?
In case you are at the very beginning of your research and are looking for digital nomad jobs that make a decent income, let’s quickly look at the meaning of dropshipping.
The dropshipping experts at Shopify define it like this:
“Dropshipping is a retail fulfillment method where a store doesn’t keep the products it sells in stock. Instead, when a store sells a product, it purchases the item from a third party and has it shipped directly to the customer. As a result, the merchant never sees or handles the product.”
In other words, if you open a dropshipping store, you never have to stock and distribute the products you are selling. You simply buy it from a third party and let them handle the logistics.
Benefits of Dropshipping
- You don’t need much start capital to launch your business because you don’t need to stock up on inventory. (It is, in fact, one of the cheapest online businesses you can start with no experience!)
- Since the entire business model runs online, you can manage it from anywhere in the world. Perfect for every (aspiring) digital nomad!
- It is easier to start than a normal retail business because you don’t have to worry about things like a warehouse, stock level, packing, shipping, or handling returns.
- You can be very flexible in terms of your products. If one product doesn’t sell at all, you can easily switch to another one because you haven’t purchased large amounts of it.
Disadvantages of Dropshipping
- Since it is so easy to start a dropshipping business, you will have many competitors which can lower your margins. You need to have either a great product or outstanding customer service or a great marketing strategy to stand out and be successful.
- If your supplier has any type of internal issues, e.g. temporary shipping delays, your customers will blame you. So you need to go for reliable partners only.
Is Dropshipping Worth It?
As you can see, dropshipping has not only benefits. There are a few (significant) downsides to this business model, too. However, my experience shows that with the right approach, the outcomes of a dropshipping business are far greater than the input and the risk you are taking.
Dropshipping is indeed a fantastic way to make money and I’m convinced that you can overcome the problems if you are willing to work hard and plan carefully.
Just in case you still don’t believe in this business model, check out this video by Mike Vestil explaining how he was able to make more than 1.5 Mio USD in only 12 months with dropshipping on Shopify:
How To Start A Dropshipping Business Step-By-Step
To give you an overview, here are the main steps you need to take when you want to start a dropshipping business.
Step 1: Select Your Niche
Of course, you could try and sell all kinds of random products from different niches. But I can assure you it is going to be way harder to be successful with it.
When you focus on one niche only, you can become an expert in that area. You will find the best products and the best suppliers. Potential customers will soon realize that you know what you are talking about and are more likely to trust you and buy your products.
What You Should Consider:
- You should go for products with attractive potential profits. The effort you have to put in to sell a 10 USD product is about the same as the effort required to sell a $900 product. If you go for higher-priced items, your margin will be higher, too.
- Make sure you focus on products that you cannot easily buy on every corner. It needs to be important enough for people to go online and search for it.
- However, it should also be a product that triggers impulsive buys. Selling motorbikes might bring in much profit but people will usually think long and hard before they make such an investment.
- Another fact to consider is shipping costs. If you want to sell your products mainly in the USA but all of your potential suppliers are in Russia, the shipping costs (and time) per item will increase. Although you won’t have to deal with that issue directly, your customers won’t be too happy about these additional costs.
- Have a look at your competition. If there isn’t any competition at all, it might be a sign that there is not enough demand for your products. If there are competitors, check what they are doing and how you can do better. Do they have a terrible website design? Maybe they have very bad customer reviews? There should be something you can improve. If there are only top players out there, it will be hard to compete and stand out.
- If you pick a niche that you are passionate about, even better! That will help you stay motivated and encouraged.
Check out this post for more info on how to find the best products for a dropshipping business.
Step 2: Find Suppliers
Once you have identified a profitable niche, you need to go and find your future suppliers. That sounds easier than it often is. Suppliers are great in manufacturing and distributing. However, they are not particularly good at marketing or search engine optimization.
So be prepared to dig a little deeper to find the best suppliers for you. I strongly suggest you google not only for your niche, product, or keyword but also use one of the following search operators:
- Niche, product or keyword + “supplier”
- Niche, product or keyword + “warehouse”
- Niche, product or keyword + “wholesale”
- Niche, product or keyword + “bulk”
- Niche, product or keyword + “dropship”
Write down all the potential suppliers you can find and add their contact details. After that, make sure to contact them and ask anything that is still uncertain to you. That could be product or shipping related questions.
Make sure they are able to produce and ship enough quantities of your product to satisfy your customers’ demand.
Please bear in mind that these are the places where most people start their dropshipping business. That means that there is much competition for these products which can decrease your margin.
If you have found the perfect supplier(s), open an account with them.
Step 3: Build a Store
Now it’s time to build an e-commerce website where you can distribute your products. In case you have a sizeable budget you could hire an experienced web developer and get a custom design for your store.
However, strongly advise you to go for the easier solution: A professional e-commerce platform such as Shopify.
What are your advantages of this platform?
- You don’t need to be a techie to create a beautiful and working online shop. It is intuitive to set up and manage.
- There are plenty of apps that can be integrated that help you increase your sales.
- It is perfect for beginners because it is all plug-and-play and takes care of all the important technical requirements behind your dropshipping business.
- You don’t need to invest as much money as you would with a customized version. It is very inexpensive and therefore the perfect option for everyone new to this business model.
Click here to get your 14-day free trial period with Shopify.
How to set up a Shopify store
Since Shopify is by far the most popular and established e-commerce platform out there, I will quickly walk you through the process of creating a store with them. It is also the platform I used when I set up my client’s dropshipping business, so I can highly recommend it from my own experience.
- Create an account.
- Choose a theme and install it. Shopify offers many themes (i.e. the layout and design of your store) for you to choose from. Some are free, some require a one-time payment. Simply go for one that you think showcases your images and texts the best.
- Edit your store. Now it’s time to customize your new store as you wish. You can change colors, typographies, upload your logo, set up the menu, and much more. Don’t worry, Shopify makes it super easy to adjust the layout anytime. Remember, the look of your store should reflect your brand.
- Fill your product pages. Upload your product pictures and texts. Make sure you write everything marketing friendly. Tell your potential customers why they need to have this product and can’t live without it anymore.
Extra Tip #1: Don’t use the product descriptions you get from your supplier. Everyone will use it so it is going to be hard to stand out. Professional copywriting will make your texts unique and convince your customers to buy your products.
Extra Tip #2: Video reviews are particularly popular and help you sell the product.
Extra Tip #3: More is less. Don’t spam your pages. A clean design often looks way more professional.
- Add these “static” pages. Apart from your product pages, your store should also have the following pages:
- “Contact Us”: Make sure your customers can easily contact you via email, chat, or phone. Professional customer service is crucial to any business.
- “About Us”: Give your visitors information about your brand, the story of how it was created, and the people behind it. Potential customers are more likely to trust shops when they have more background information.
- “FAQ”: If customers ask the same questions over and over again, put them on the FAQ page. That helps them to get their answers straight away and prevents you from too many inquiries.
- “Shipping”: Information like how long does it take to ship the item, what delivery service do you use, how much does it cost, is there a tracking number, etc. are very important for our customers.
- “Refund and Returns”: Clearly state under which circumstances customers can return an item and get a refund.
- Install apps and analytics. There are quite a few apps available which you can integrate into your Shopify store, for example, Oberlo or Yotpo. Have a look around and see what you need. Also, make sure to install Google Analytics which helps you track important visitor’s data.
- Before you launch your store, run a test. Make a purchase to see if everything works the way it is supposed to be. Any functionality issues? Do your analytics track properly?
- Launch. Whoohoo, your first Shopify dropshipping store is ready to go live and earn you some money ;)
Ok, so those are the basics you need to set up for your store. I remember that we spent days working on small details like heading sizes and colors. When we launched the store it still wasn’t perfect in terms of design and layout. But that wasn’t necessary. It worked well the way it was.
So don’t worry if there are still a few minor things left to fix. As long as there are no content errors or anything important missing, you can still do that later.
Step 4: Promote Your Business
Having a beautiful Shopify store is just one part of running a successful dropshipping business. You also need to promote your store so people will actually find you. There are several ways to do so, for example:
- Social Media. Create social media accounts and promote your products and niche there. Make sure it doesn’t come across too salesy but provide actual value to the community. Don’t try to be all over the place. For the beginning, decide on one or two channels and focus on that. The most promising ones to drive traffic are usual Facebook, Instagram, Twitter, and Pinterest.
- Paid Ads. If you have the budget you could also consider paid ads. Very popular ones that drive much traffic if done correctly are Facebook ads and Google Adwords.
- Learn about SEO tactics and apply them to your store. For instance, use keywords that potential customers are looking for on Google, so your chances increase that you will show up on the search results.
- Content Marketing. Provide additional information that goes beyond selling your products. For example, if you sell trekking backpacks, you could write articles about what’s important in a good backpack or any innovations on the market. When you create product reviews, make sure to not only include benefits but also the negative parts of it. This builds trust and creditability.
- Email Marketing. Build an email list with either existing customers or people who visit your store. Send out regular emails, for instance with MailChimp, providing useful information to your subscribers, such as helpful articles or new product releases in your shop.
Step 5: Monitor and Adjust
Now that your dropshipping business is up and running and you are busy bringing traffic to your store, you are still not done. You always need to monitor the performance of your business.
Become friends with Google Analytics and monitor your numbers closely. Analyze what works well and what doesn’t.
- Where are your customers coming from? For example, if Pinterest is a good source of traffic, increase your activities there.
- Which products sell particularly well? Promote them even more.
- Are customers returning a certain product more often than other items? If so, there might be quality issues or a misleading description on your product page.
Maybe you are lucky enough and your shop will go through the roof straight away. But chances are you will have to experiment a lot with products, suppliers, and marketing strategies before you make your first real revenue.
This is completely normal! You need to hang in there and don’t stop trying. I remember how many hours we spend two years ago on analyzing and improving our strategy. But as soon as you have found a way that works for you, it will all be worth it.
If you need some more motivation and confirmation that this is indeed a very profitable business model, check out these incredible dropshipping success stories.
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Ready To Start Your Dropshipping Business?
I hope these steps were helpful and you got the idea of how to start a dropshipping business. I think it’s obvious that this was only a rough guide and there are also many small steps you shouldn’t forget about, e.g. register your business in your country.
If you want to start making money online with dropshipping, I can highly recommend you using Shopify as an e-commerce platform. It is the perfect way to set up a store if you are a beginner and completely new to this type of business.
Don’t make your new career more complicated than you need to.
To get even more help check out this post that gives you 25 brilliant tips for your new eCommerce business!
Apart from that my biggest advice is: be patient! Dropshipping is a lot of trial and error. At the same time, it is a brilliant online business that is super inexpensive to start and has the potential to generate you an income you have always dreamed of.