What exactly is dropshipping? How does that work? And, is it a good venture for you? Stick reading until the end. You’ll find a simplified explanation of a business model that can bring you profit with less effort.
What is dropshipping and how does it work?
Dropshipping is a new online selling business model. Instead of keeping a personal inventory for your goods, the warehouse of the item’s wholesaler keeps it. When you make a successful sale, the wholesaler will ship your sold products from their warehouse straight to your customer’s address. This means you’re free from the responsibility of storing, packaging, or shipping your products as your supplier will do that for you.
Why is dropshipping a good business idea?
Dropshipping is a low-risk business. Aside from the costs of renting space just to store goods for selling, you only pay for the products you put up for sale. You also won’t spend a lot of money for investment in creating products and the cost of employees for packaging and shipping goods.
Dropshipping only requires entry-level entrepreneurship skills. You can start alone by giving time to the business during your evenings and weekends. Most of the processing steps in managing sales and orders are automated. All you have to do is make a few clicks and your business goes up and running!
5 steps in starting a dropshipping business
1. Choose what products to sell
First, you have to research which products are trending or are in high demand. Then study which demographic has a high consumption rate. This will give you a clear idea of what product to sell to guarantee a profit. Google Trends and Ubersuggest are very useful tools.
If you randomly choose a product without proper study, your cash flow will be slow. Worse, you won’t make any sales at all.
2. Analyze your competitors
Now that you’ve chosen a product to sell, look at your competitors. Learn from their techniques on why their product(which is similar to yours) sells so well. Analyze their losses as well. Why did some of their products sell badly? You can start by:
- Typing in google the product you want to sell.
- Click on the first name and the other brands that are far from the top.
- Observe and analyze their marketing tactics (Alexa and SimilarWeb are effective tools).
- Learn from both their successes and mistakes.
3. Find a supplier for your chosen product
You’re near the end of starting your dropshipping business. So look for suppliers at Shopify. You can also use Oberlo to give you in-depth advice on which suppliers to get into a contract with.
When choosing a supplier for your product, always review their services first. Check the condition of their storing facilities. Inspect the quality of their goods. Search for reviews on their delivery services. And lastly, the cheapest wholesale price possible for maximum profit.
4. Create your store
If you want to start from scratch, think about your domain name. What would be a nice catchy store name that customers are sure to remember? You can use free business name generators if creativity isn’t your forté. Also, avoid using your own name for your domain.
Don’t want a unique store name? Post your products at Shopify instead!
5. Market and advertise the store using your available resources
Creating a social media page can work the same as creating a unique online domain. It’s also easy to do! A Facebook page or Twitter account of your store can reach hundreds to thousands of potential customers. Start by creating your page/account. Then upload your business logo and pictures of the products. After that, put money into the page/account and let Facebook or Twitter handle the advertising!
So have you decided to take up the dropshipping business? What products to sell do you have in mind? Be sure to always study the market first before you start taking out cash.
