For e-commerce businesses, dropshipping can be an attractive and beneficial option. Dropshippers handle tasks like order processing and shipping, allowing retailers to sell products without maintaining physical inventory and enjoy benefits like lower overhead costs. Additionally, by signing up for a dropshipping business, almost anyone can become a retailer with minimal upfront investment. Getting started with such a venture also does not have to be tricky if one follows a few simple steps.
1. Assess the suitability of dropshipping
Dropshipping is just one of the ways of running an online store. While one can start a dropshipping business with little to no investment, they must consider its drawbacks and check whether it is the right option for them. Dropshipping can be the ideal model for retailers with solid marketing skills and a flagship product around which they can build their business. On the other hand, those who are not prepared to face heavy competition and minimal control over product quality might not find dropshipping to be a suitable option.
2. Spend time on research
Today, e-commerce businesses face incredible competition, with retailers constantly vying for the same group of customers. So, when starting a dropshipping business, retailers need to identify a niche when it comes to their store and product selection. This requires some research that would tell them about the consumer demand for the products they want to sell. Choosing a niche can help them identify a definitive target audience and, subsequently, the right kind of products to sell. Ideally, a niche with high consumer interest and low competition will yield positive results for retailers opting for a dropshipping business model.
3. Assess the competition
Once one determines the product they want to sell and their target audience, they must thoroughly assess the competition and their operations. One can start by researching the market and shortlisting the top competitors. Then, one must track their competitors’ websites and progress closely. If one finds competitors’ tactics to be consistently profitable, one can make adjustments to their own site to follow suit.
4. Find the right partners
When running a droppshipping business, the supplier is a key partner to consider. The dropshipping supplier will carry out order deliveries and have control over product quality. They will also get a commission for each product sold. So, for retailers, it is vital to choose a supplier who has a reliable dropshipping track record in the market. Additionally, the supplier should not be excessively rigid or unreasonable when negotiating commission rates. One can spend some time assessing their options and choosing a supplier that ticks all the boxes.
5. Build an e-commerce store
If wondering how to start a dropshipping store, one can either hire experts who know how to build an e-commerce platform or use proprietary software that can handle this task. Regardless, one can expect to follow a few basic steps in the process.
- Picking a template and website design
- Ensuring the site reflects the chosen brand identity
- Connecting the site to the dropshipping platform
- Adding products and descriptions to the site
- Setting prices and mentioning shipping rules
- Ensuring that the site is transparent
- Optimizing the flow of adding products to the shopping cart and checking out
- Going live with the website
6. Consider the business structure
There are various types of business ownership structures, including sole proprietorship, LLC, and C corporation. The right structure for any business is determined by the amount of risk and liability the owner is willing to shoulder. Also, before starting an online dropshipping business, one must ask themselves whether the venture will be their primary business entity or a side hustle. This also influences the choice of ownership structure.
Additionally, when choosing a business structure, one must speak with lawyers and chartered accountants to ensure they understand the legal implications and obligations and the process of setting up finances for the venture. Retailers must also remember to create a separate business bank account that controls the finances of their dropshipping business.
7. Register the business and market it
Registering the business under a trademarked name is the next step in setting up a dropshipping business model. Once the business is registered, one must invest time and money in marketing it. Different communication options, including social media sites, email marketing, and touchpoint marketing tools, can be used to spread awareness regarding the business and e-commerce platform.
8. Be patient
Dropshipping is known to be a relatively low-risk, high-reward e-commerce model. That said, when starting a dropshipping business, one should not expect great results immediately, as the market can get competitive. To see profits, one has to be patient and willing to commit their time and money towards growing the venture. Retailers must take time to understand what works and what doesn’t. This will help them avoid wasting their capital on aspects of their business that will not help it grow.
9. Monitor KPIs
One must set certain targets and monitor the performance of their online platform once it goes live. Parameters such as repeat visitors, average traffic, average sales, and range of products seen and purchased can be a few Key Performance Indicators (KPIs) for the e-commerce platform.
