How to start a dropshipping business in 6 steps

If you want to go into business and sell products, but you don’t love the idea of renting a warehouse or office space, who can blame you? After all, if you plan to sell items on an e-commerce site, the whole point is to save on overhead, right?

That’s why the dropshipping model is perfect for you. In this type of business, entrepreneurs don’t stock products, which means they don’t need a place to store them. Dropshippers receive orders from customers, take their cut from the purchase, and send the orders off for fulfillment from distributors, who then send the items out to the buyers.

As if not needing to stock products isn’t good news enough, drop shippers don’t even have to worry about shipping. The perfect business model? It just might be.

Read on to learn how to start a dropshipping business, if it’s right for you, and how you can get started in six easy steps.

How to become a dropshipper in 6 steps

Welcome to our simple, six-step dropshipping guide on starting a dropshipping business. This model is meant to make the starting and running of a sales business easy. It should come as no surprise that getting this initiative off the ground is fairly simple, too.

1. Find a niche for your startup

Before you start your dropship online business, you have to determine what you're going to sell and to whom. When you start out, your store should have a coherent theme. Later on, your store may become the next Amazon, eBay or AliExpress. But initially, viewers could be confused by or mistrust a small business ecommerce site that sells a wide range of seemingly random items. Build rapport with your future clients by offering targeted products, whether that’s poetry books, silicon phone cases, or sustainable fashion items.

Remember that since you don’t hold inventory, you can have multiple suppliers. If you’re thinking of starting a sustainable fashion boutique, you could source clothing from several designers in this niche.

2. Do market research and competitor analysis

Dropshipping is nothing new, and it’s a popular model because it can be very low-risk with high rewards. Learn what other dropshippers are selling and avoid items that are already saturating the market. Doing this analysis will help you determine a market niche with potential.

3. Choose your dropshipping suppliers

It’s time to get social. Whether you approach big manufacturers via email, attend local trade shows or, literally knock on doors, you’ll have to take the first step in approaching suppliers offering the dropshipping products you wish to sell.

4. Build an e-commerce store

You’ll need a website to host your e-commerce dropshipping business so put your creativity to work and make an online store that will be attractive to customers in your niche. Consider your target audience and the products you sell, and let these cues guide how you design your site. Don’t forget to choose an easy-to-remember domain name.

You should also make sure that the site is intuitively navigable and contains quality product photos. If you need a hand getting started, hire a professional web designer or developer. This can save you yet another headache, especially when integrating an e-commerce platform (like Shopify).

5. Register your business

A dropshipping business may be unique in nature, but it’s a “regular” business in the eyes of the law. Be sure to register your company correctly to avoid legal and tax-related issues. We encourage you to do your own research, but registering a dropshipping business generally entails applying for an Employer Identification Number (EIN), getting a bank account and a sales tax ID, and securing any permits and licenses you may need.

6. Market your ecommerce website

Once your e-commerce business is up and running, you’re ready to find your target customers. Set up accounts on all of the top social media platforms, and use Linktree URLs in your bios so you can direct your followers to your e-commerce site and other content on social media and the web.

Use your social media accounts to give your followers an idea of the feel of your dropshipping store and the products you offer, and promote sales here as part of your marketing strategy. You could even consider running a sponsored post with an influencer or taking out a Facebook Ad.

Make sure that your e-commerce site is set up to find and keep customers. You can do so by ensuring your content is rich in keywords for search engine optimization (SEO), and by establishing an opt-in mailing list, through which you can push out email marketing campaigns to your customer base.

Why should you start a dropshipping company?

You can see how dropshipping businesses are easy to get off the ground because they’re low-risk and don’t need an inventory. They’re also profitable and scalable.

The dropshipping market is projected to be worth more than $196 billion in 2022, which represents over 23% growth from the previous year.

As the demand for your particular business increases it, too, can grow exponentially and easily. All you have to do is meet the demand of customer orders coming in. Having a good relationship and excellent communication with reliable suppliers will help ensure you can handle more traffic.

Dropshipping best practices

We’ve been touting dropshipping businesses as being easy to start, but that doesn’t mean you won’t hit snags. To get your operation running as smoothly as possible from day one, consider the following best practices.

• Be realistic about shipping times: Talk to your suppliers about how quickly they can get products out to customers, and accurately represent these time periods on your website. No one likes waiting for a late package so set realistic expectations on shipping speed.
• See products before you sell them: If you sell products without ever seeing them, you won’t be familiar with their quality, and you’ll find it difficult to write product descriptions and address customer FAQs. Smart business owners see and test out any products they sell.
• Consider all supplier fees to set prices: Remember that in the dropshipping business structure, you don’t keep all your profits because you must pay your suppliers. Consider how much you’ll owe suppliers for products, fees, and shipping costs before your set prices on your website. You want to ensure your business will earn large enough profit margins.

Start shipping today

Now that you know the basics of how to start a dropshipping business, you’re ready to get started. Being a new entrepreneur is scary for anyone – but if you have a solid team or customer base, you have a great foundation.

Don’t forget to create a killer social media campaign to support the launch of your new business. Add a handy Linktree in your bio so that all your followers can become potential customers – and vice versa.