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How to Start a Dropshipping Business?

15747 4 mins article
Date Created: Dec. 29, 2020 19:03:12 Last Edited: Oct. 29, 2021 11:39:32

Dropshipping is an extremely popular business model for new entrepreneurs, especially Gen Xers and Millennials. It does not need a high financial capacity, cuts operational costs and saves your time. Therefore, you can concentrate on customer acquisitions, sparing stocking, or handling any items you are selling. 

You can apply the dropshipping model on an e-commerce website where you sell products and purchase them from third-party suppliers and manufacturers. Then they will deal with orders. You can start it by following the steps.

 

1. Select a niche

The selected niche should attract public attention and gain interest from you. If not, it would be difficult to open a market. You may easily feel discouraged because it will take a lot of works until successfully scaling a dropshipping business.

Here are some points:

  • Seek attractive profits. Select a niche with valuable products. Whether you sell a $20 item or a $1500 one, the required workload is essentially the same. All you need is to focus on marketing and customer acquisition when running your store.
  • Low shipping costs. Find certain goods which are cheaper in shipping costs. CJ supports free shipping to your customers. It takes the cost as a marketing expense to generate further sales. It is convenient for you that your supplier or manufacturer handles the shipping of products. But it will discourage your customers if the shipping fees are too high.
  • Impulse buyers with disposable income. When focusing on attracting attention to your website, you need to ensure that the selling products should catch their attention. 
  • Keep active. Use Google's Keyword Planner and Trends to check some common search terms and make them related to your potential niche. 
  • Create your brand. Your dropshipping business will be more valuable if you can rebrand them. You can brand your selected products with customized packages and brands.
  • Sell special things. Pick up something your customers can't find down the street. That way, you will become more attractive to a potential customer.

2. Carry out competitor research

Remember, you will compete with other drop shipping operators as well as retail giants, like Walmart and Amazon. There is a common misunderstanding that most look for a product with no competition. That means there is no demand for it.

There are many reasons why a product might not have a lot of competition, like high shipping costs, bad suppliers, manufacturing issues, or poor profit margins. Look for products with competition. It shows there are high demands and the business model is sustainable.

3. Secure a supplier

Partnering with the wrong suppliers can ruin your business. So please do not rush. Perform due diligence. Most dropshipping suppliers are overseas. So communication is extremely important in terms of response speed and mutual understanding. If you are not 100% confident with them, keep looking.

People are using Aliexpress and eBay. But their dropshipping suppliers are experiencing a lot of troubles on the platforms. So most of them are changing to other platforms like CJ Dropshipping. 

Try to learn from other entrepreneurs' paths in the past. There are plenty of information sources available, from business and tech blogs to this subreddit about dropshipping. It's a popular topic that can help you avoid costly supplier mistakes.

4. Build an e-commerce website

The quickest way to launch a website is to use a simple e-commerce platform like Shopify and WooCommerce also available on Etsy, eBayWED2C, etc. They support a dropshipping business model. You don't need a tech background to get up and running.  And you've got a lot of apps to help increase sales.

If you have a very limited budget to start your business, you can try the websites which don't need any extra memberships or monthly fees, such as WED2C, which joined in cooperation with CJ presently. It also allows you to share products (including descriptions and images) to Facebook to sell without any extra fees.

Even if you have a large budget that would allow you to hire a web design and development company to create a custom solution, it's much wiser to use one of the plug-and-play options, especially at the beginning. Once you are in the developing phase and the revenue starts coming in, you can then explore additional customization of the website.

5. Make a plan for customer acquisition

Getting a great product and a website is fantastic. But you don't have a real company without customers wanting to buy. There are many ways to attract potential customers. However, starting a Facebook ad campaign is one of the most successful alternatives.

This enables you to bring sales and revenue from the very beginning. And it can lead to rapid scaling. Facebook lets you bring your product directly before a highly targeted audience. This will give you the opportunity to instantly compete with the biggest brands and retailers. If you don't know how to start ad campaigns on Facebook, websites like WED2C can allow you to share products from them directly. 

You do have to think long-term, and you can also concentrate on search engine optimization and email marketing. From the start, collect emails and set up automatic email sequences providing discounts and special offers. It is an easy way to leverage your existing base of customers and generate revenue without additional spending on advertising and marketing.

6. Analyze and optimize

You need to track all the data and metrics available to grow your business. This includes traffic from Google Analytics and conversion pixel data from Facebook if that is your main channel for customer acquisition. By monitoring every single conversion — understanding where the customer came from and what direction they took on your website that finally led to a transaction — you can scale what works and remove what doesn't.

Please constantly seek new opportunities and fine-tune current campaigns, allowing you to know when to spend the campaign optimizing or shifting it.

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