How to start dropshipping in 2021?

Dropshipping is a business model popular with new internet entrepreneurs where you can sell products to your customers without having any inventory. In the dropshipping model, you don\’t have to pay for the products in advance, so it\’s potentially a good solution for people with limited cash. This solution not only lowers operating costs, but also frees up your time that you can spend on customer acquisition.

However, contrary to popular belief, starting dropshipping is not a quick way to earn money.

Sure, it seems like easy money – you sell other people\’s goods and participate in the profit sharing – but when you consider all the downsides, obstacles, and the day-to-day management of online sales, it\’s not easy.

However, when you approach it the right way and apply the information I have provided in this article, you can build a successful business and a sustainable source of income.

What You Need to Know Before Dropshipping:

What is dropshipping?

How does the dropshipping business model work?

Dropshipping: how to get started in 2021 (step by step guide)

What is dropshipping?

Dropshipping is a business model that you can use to run an online store without physically storing the goods. After the sale, the supplier will send your products from their warehouse straight to the customer\’s door.

How does the dropshipping business model work?

There are three parties involved in the dropshipping business model:

  • supplier (manufacturer / distributor / wholesaler),
  • seller (you),
  • customer.

The role of the supplier in the dropshipping model is:

  • product development and / or inventory management.
  • shipping products to customers on behalf of the seller.
  • replacement of defective products and replenishment of stock.
  • selling products to the retailer (you) at wholesale prices, assuming the risk of unsold inventory which will generate additional storage costs.

The seller, that is you, is responsible for:

  • selling the supplier\’s products on their website, under their own brand.
  • selection of the offered stock and marketing of these products.
  • determining the price of products and the amount of shipping costs (depending on the size) – the appropriate pricing policy will provide you with a satisfactory amount of profit (the customer pays the retail price set by you, you pay the supplier\’s wholesale price, and the difference between these values ​​is your profit).

The dropshipping business model assumes that the customer buys products directly from you – the seller. If questions or problems arise, the buyer always contacts the seller from whom he purchased the product (unless the shipping company is labeled and not yours).

To sell products in the dropshipping model, you just need to register an account with the selected supplier. It is difficult to find a complete and up-to-date list of dropshipping companies. If you use an e-commerce platform in the SaaS model, the producers of such a system often offer ready-made integrations with dropshipping wholesalers.

However, remember that such integrations have many limitations – it is worth checking whether it is possible to regularly update key data about products (inventory, prices, descriptions, photos, etc.).

However, a good place to start looking for wholesalers for to work with may be:

  • supplier databases such as: Dropship Direct, Alibaba, AliExpress.
  • Using a supplier directory that is integrated with the online store, such as Oberlo.

Dropshipping: how to get started in 2021 (step by step guide)

If you\’re ready to start a dropshipping business to compete with retail giants and multiple stores in the dropshipping model, go through all of the steps below.

Follow 8 steps to start dropshipping:

  1. Define your time and financial possibilities
  2. Choose a niche – what product to sell in dropshipping
  3. Conduct a competition study
  4. Find a dropshipping supplier
  5. Build your online store
  6. Set up a business
  7. Create a customer acquisition plan
  8. Analyze and optimize
  9. Define your time and financial possibilities

As with any other business, dropshipping requires considerable commitment and a long-term perspective. If you count on tens of thousands of dollars income in the first few weeks of part-time work, you will be disappointed.

By approaching your business with realistic expectations, in terms of necessary investments and potential profit, you will not quickly get discouraged and give up.

When starting a dropshipping business, you will have to invest a lot using one of the two most valuable currencies, which include:

  • time,
  • money.
  1. Investing time in your own dropshipping business

Bootstrapping, i.e., investing equity capital, is the approach I recommend, especially for beginner dropshipping entrepreneurs. This business path has the following advantages:

  • You will learn how the company operates internally and externally, which will be critical to managing others as your business grows and scales.
  • You will get to know your customers and the market in detail, which will allow you to make better decisions.
  • You will be less likely to spend large sums of money on projects that are not critical to your company\’s success.
  • You will develop some new skills that will make you a better entrepreneur.

Realistically, most people aren\’t able to quit their jobs to spend months developing their new online store. It may be a bit more difficult, but it is possible to start dropshipping even if you are still working a 9 to 5 job – assuming you set up the right sales terms regarding customer service and order fulfillment time.

Once your dropshipping store begins to grow, you can become self-employed full-time, as long as your cash flow and profitability allow it.

Each entrepreneur has unique features and skills, but in general, it can be assumed that in 6 to 12 months you will be able to generate a minimum level of income per month, allocating 15-20 hours a week to building your online business.

If you have the opportunity to work on your e-commerce project full time, this is the best choice to increase your chances of making a profit and dropshipping success. Especially in the beginning, it is very important to focus all your efforts on marketing for your business to gain momentum.

The experience of many dropshipping sellers shows that it usually takes at least 12 months of full-time work, with a strong emphasis on marketing, to replace the average full-time income.

This may seem like a lot of effort with relatively little benefit, but keep these two things in mind:

  • Once your dropshipping business is up and running, it will likely take much less time to maintain it than working 40 hours a week. The dropshipping model is also characterized by the fact that the investments incurred for its development are profitable in terms of efficiency and scalability
  • When you build a business, you are creating more than just an income stream – you are also building assets that you can sell in the future. Make sure you consider the value of the equity capital you accumulate as well as the cash flow generated – this will show you the true return on investment.
  1. Investing money in your own dropshipping business

It is possible to create and develop a dropshipping company (B2C and B2B) by investing a lot of money, but I advise against this option. Many entrepreneurs have tried both approaches to company development (independent start-up versus process outsourcing / external support) and the most successful were dropshipping activities, where the seller / owner did a significant part of the work himself.

In the early stages of a business in the dropshipping model, it is very important that someone deeply involved in its success leads it. By building a business from scratch, gaining knowledge about how your company works at every level, you will protect yourself from excessive spending on programmers, developers and marketers who are able to absorb most of the profits you generate.

Of course, you don\’t have to do everything yourself, but I strongly recommend that you be the main driving force at the start of your venture.

Despite the relatively low costs of starting and running the business, you will need minimal savings to run your own dropshipping shop. You will spend these funds on operating costs (hosting, automatic integration with wholesalers and other registration fees).

  1. Choose a niche – what product to sell in dropshipping

The niche you choose should be focused on something that really interests you. Choosing products for sale on the Internet is difficult, so you need to do market research. Too wide range that is not precisely targeted will be difficult to sell (you are not a marketplace like amazon).

If you are not passionate about your chosen niche, it will be easier for you to get discouraged because successfully scaling your dropshipping business requires a lot of work. By focusing on more niche and rising products, you can grab buyers\’ attention faster and gain traction without competing with bigger and more established companies.

Niche products often have more engaged customers, which can make it easier for you to sell to specific audiences by increasing awareness of your products. Fitness, fashion, cosmetics, electronics, phone accessories, and yoga-related items can be a good starting point to start dropshipping without spending a lot of money.

Here are some ideas for a dropshipping store centered around a niche assortment:

  • Clothing for small / large dogs.
  • Camping / camping equipment for people who care about ecology.
  • Exercise equipment for those who prefer HIIT training.
  • products for people on a ketogenic diet.

You can also use generally available tools that allow you to pre-verify your dropshipping ideas:

  • Google Trends,
  • Keywords Everywhere or Keywordtool.
  1. Google Trends

Google trends can help you determine if a product is trending up or down, as well as its seasonality. Remember that Google Trends doesn\’t show the number of searches.

So, if you use it, be sure to compare your data with a keyword suggestion tool like Keywords Everywhere / Keywordtool to determine the popularity of your product in search results.

  1. Keywords Everywhere / Keywordtool

This keyword research tool shows you the monthly number of searches for your product and how competitive it is. You can use this information to gauge the popularity of your dropshipping business idea and find ideas for new products.

  1. Conduct a competition study

Now that you know what you are going to sell in your store, you want to take a look at who your competitors are and understand how they work. Your competitors can have great tips for success and can help you build a stronger marketing plan for your dropshipping business.

If your market has many competitors, limit your research to around five other dropshipping companies, including one or two big players such as Amazon, other marketplaces. This will help you stay focused and plan your next steps.

Learn 4 ways to analyze your competitors\’ activities:

  • Google searches
  • Similarweb and Alexa
  • Competition social media audit
  • Subscription to competitors\’ newsletters
  1. Check your Google searches

Search engines are the obvious starting point. Use Google to compile a list of the top five competitors. Start with key search terms in a simple search, such as \”sports shoes.\”

The Top 10 Scores will show you who your top competitors are and how they are promoting their products. If you want to focus on a specific country, you can use a third-party tool like Ahrefs, SEMRush, or Senuto to find keyword data in these areas.

  1. Use competition spy tools such as SimilarWeb and Alexa 

Online tools like these are great for finding (and tracking) your competitors\’ online activities. They provide a list of competition information such as social media profiles, main traffic sources, number of visitors and who *their* competitors are.

  1. Perform a competitor\’s social media audit

Search for Facebook ads in your niche and check out the best brands on the market. See how the company communicates with its clients, how it designs its social channel, how much engagement it achieves. Follow the best companies on Facebook and be inspired by their actions.

Use this information to find ways to make your business stand out and improve your social media marketing strategy.

  1. Subscribe to competitors\’ newsletters

Want your competitors\’ updates sent straight to your inbox? Subscribe to their email list and get acquainted with their marketing strategy. You can also learn more about the promotions and offers they use to entice customers to buy.

Learn all about your best competitors: their website, prices, marketing methods, product descriptions, reputation, etc. Arrange your research in a spreadsheet for easy reference when making decisions about your store.

For example, if you want to use email marketing to promote your business, you can check out a spreadsheet to see if your competitors are already doing it and what tactics they are using – all in one place.

  1. Find a dropshipping supplier

Choosing a dropshipping supplier is a key step towards building a successful dropshipping business. Working with the wrong supplier can ruin your business, so it\’s important not to rush this step. Many e-commerce platforms offer a plug-and-play option to find potential suppliers and integrate with multiple dropshipping wholesalers.

You can also search for companies that offer dropshipping cooperation. In a situation where the selected manufacturer / wholesaler does not have an automatic integrator between your store and the warehouse ERP system, you can create a dedicated integration that will allow you to automate most of the services related to sales in the dropshipping model.

If you are looking for overseas shipping suppliers pay attention to communicating with them, both in terms of responsiveness and mutual understanding skills. If you are not 100% sure about the potential supplier\’s communication abilities, go ahead and continue your search.

Ask lots of questions and find out what their shipping options are in case your business grows rapidly. You want to be sure they can scale with you.

One more thing to remember: sell products that you will be able to deliver to the end customer as soon as possible – ideally if it will not take more than a week.

  1. Build your online store

The fastest way to launch a website that supports the dropshipping business model is to use a simple SaaS platform. You don\’t need a technical background to get started and such an e-commerce platform has many applications / modules to help increase your sales.

If you have the budget to hire a web design and development company to create a custom solution, it can really speed things up, and you avoid having to learn design especially in the beginning.

Once you\’ve grown and your revenues start to increase, you can explore additional customization options for your website.

  1. Set up a business

If you are serious about your venture, you will want to start a legal business entity. Most often, entrepreneurs set up a sole proprietorship. An alternative may be a limited liability company

  1. Create a customer acquisition plan

A great product and a well-rounded online store are essential, but without customers who want to buy something, you don\’t have a business. There are several ways to attract potential customers.

Plan ways of acquiring customers:

  • Facebook ADS and Google ADS
  • Content marketing
  • SEO
  • e-mail marketing
  • Social media
  1. Paid ADS (Facebook and Google)

Facebook ads are scalable, products can convert well on them. You can run your Shopping ads on Google and create campaigns for rich keywords that shoppers are more likely to buy for. There is usually more price competition for Google ads, but it\’s worth taking the time to test this out.

  1. Content Marketing

If you want to build a long-term traffic flow for your store, add content marketing to your dropshipping business plan. Create a blog around your dropshipping niche and create content that will entertain and educate your target audience. You can also start a YouTube channel, create infographics, or start a podcast to help spread the word about your brand.

  1. SEO

You also need to think long term, so search engine optimization should be at the center of your attention.

  1. E-mail marketing

Collect emails right from the start and set up automatic email sequences that offer discounts and special offers. It\’s an easy way to leverage your existing customer base and generate revenue without spending extra on advertising and marketing.

  1. Social media

Join groups of people who are passionate about your niche. You can start conversations with potential customers in Facebook groups or online forums. Be sure not to be too salesy when engaging with the community. Try to help and build relationships with potential customers so that they trust your brand and want to buy from it.

As with any successful internet business, keep an eye on which channels work and which don\’t – especially if you\’re investing money in them like paid advertising. As your business grows and improves, you can always adjust your marketing strategy to lower costs and maximize revenue.

  1. Analyze and optimize

After some time of marketing and managing your dropshipping business, you can start looking at the results of your hard work. Analyze mainly the following factors:

  • Sales: What are my best channels? Where should I put more money on my ads? What are my best-selling products? Who are my best clients?
  •  Buyer Behavior: Do People Buy More from Their Computer or Mobile? What is the conversion rate for each device?
  • Profit margins: what products are the most profitable? What are my sales and gross profits from month to month?

You can use tools like Google Analytics and Search Console to measure search traffic over time and improve your search engine optimization (SEO) efforts. Also, if you\’re using a third-party social media marketing app or Messenger, you check reports monthly to make sure your overall strategy works for your business.

When creating a store in a dropshipping model, you want to create a data-driven analytical system. Be consistent with what you analyze over time and measure your store\’s performance with clear KPIs (Key Performance Indicators). This will help you make smarter decisions and take your small business to the next level over time.

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