Oct. 28, 2020 Aashish Kasma

How to Starting Your New Dropshipping Business

Part 1: How to Start a Dropshipping Business in 5 Steps

Part 2: How to Find the Right Dropshipping Product

Part 3: Avoid These Mistakes When Starting Your Dropshipping

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Part 1: How to Start a Dropshipping Business in 5 Steps

One of the positive things about dropshipping is that it offers an entry point for people who don’t have the capital to start a traditional retail store or ecommerce business. .Dropshipping can be used as an opportunity to grow a viable business but it is not a get-rich-quick scheme.

Step 1: Figure out the logistics.

When you’re setting up your business, you’ll want to:

Select and register your business name and DBA (if applicable).
Decide on a business structure that best suits your needs (sole proprietorship, LLC, etc...).
Acquire an employer identification number (EIN) for tax purposes.(for US based business only).
Depending on where you do business and what you are selling, you may need to acquire business licenses and permits from your federal, state, county, and local government.

Step 2: Identify a market and choose a niche.

For more info on choosing a product read our article: How to Find the Right Dropshipping Product

The basic step to learning how to start a dropshipping business will be narrowing down the specifics of your dropshipping business idea.

How to Find a Niche in Dropshipping

Think about what interests you: It’s easier to sell what you know.

Identify a specific market: When you first start you’ll want to focus on a smaller subset of people because you can tailor your business to meet their specific needs.
Keyword research: Use Google Adwords and Trends to see if there is any search volume around the products you wish to sell. But be careful, the higher the search volume, the higher the demand can be for that product.

See what’s selling online: Another way to find products in demand is by checking “best selling” lists on major ecommerce marketplaces like Amazon
Social media engagement: Check to see what people in your niche are engaging with on major social media platforms, like Reddit, Facebook, and YouTube.

Evaluate profitability: Finally, once you have identified a market and a product, you’re going to want to evaluate the profitability of your concept. With dropshipping margins being so low, you want to ensure you can actually make money in your niche.

Step 3: Find the right supplier.

The major players in the industry offer special plugins to make integrating with your ecommerce website a cinch. Although we encourage you to do your own research on dropshipping marketplaces, some names to be aware of include:

Oberlo: Free service that integrates with Shopify
AliExpress: Free service that offers one of the largest dropship product marketplaces
Wholesale2B: Costs $24.99 per month and integrates directly with BigCommerce and Shopify
Doba: Costs $29 per month and integrates directly with Shopify and Volusion

However if you want to use manufacturers and cut out the middle man, then use the following resources:

For domestic manufacturers:

ThomasNet

Maker’s Row

Import Genius

For international manufacturers:

Alibaba

IndiaMart

Sourcify

Step 4: Build your ecommerce website.

If you’re going to be a dropshipper, we recommend building your own ecommerce website. Choosing which platform to use for your business will partially depend on who your dropshipping supplier is, as some offer direct integrations. If you use Oberlo, for example, it makes a lot of sense to sell on Shopify.

Part 2: How to Find the Right Dropshipping Product

How to Find the Right Dropshipping Product

Selling is just the first step, it's not the end goal. To grow your audience and your business your product must be reliable in order to retain customers and you need to generate positive reviews.The most important guidelines are:

Quality & Reliability - Your product must be reliable to retain customers. Quality is just as important because you want to provide a good product, of course, but you want to be able to command a fair price and offer a reason for customers to leave a positive review.
Generate Positive Reviews - It’s no secret that a majority of people look to the opinions of others before purchasing a product, whether it’s on your website, Amazon, or any other 3rd party platform. Those 3rd party platforms use the amount of reviews, and your average rating, as a major part of their algorithm when deciding how often to show your product and how high to rank you. You’ll surely spend time, effort, and some amount of money to bring visitors to your own site so having strong reviews will improve your conversion rate and, in turn, your revenue.
Price range between $150–250 - This price point will give you enough margin so that you won’t need to sell thousands of items just to make the minimum profit to get by. And don’t be too fast to sell low-cost items for $10 since the margin will be quite low and you’ll need to sell a ton to make any money.
Lightweight - Shipping cost can become a huge factor for heavy products sales, especially if you offer express shipping options. An express courier can charge $70–100 for a 20lb package to be delivered from China to the United States. When you sell a product that costs $150, paying an extra $70 on shipping is a conversion killer.
Simple to use - This is very important in terms of returns and product education. When a customer receives a product and is not able to figure out how to use it, they are more likely to return it and you will have to pay for the return shipping cost. These costs can pile up and lower your bottom line profit significantly. Also, if the product is not easily and quickly understood you’ll need to educate the customer and that will take time and effort to design your landing page accordingly. Easy to understand = Easy to sell.
Look for unbranded items- Selling unbranded items is a great idea. This is where there is a ton of room for creating value to the customers while staying under the radar of the bigger players.

For example:This dropshipper received an eBay award for having the “highest conversion rates” for selling UNBRANDED car GPS devices.

Ebay award for highest conversion rate for dropshipping product

The gps listing design created professionally to increase sales

So, if you were to sell “Garmin”or “TomTom” branded devices, you would find yourself competing with big players with no competitive advantage whatsoever. By selling an “unknown” brand – you can offer your customers unique value and bite off the market share of the big players.The big players usually have no interest in unbranded items, as these require work that they are not set up to do – building the brand.

Part 3: Avoid These Mistakes When Starting Your Dropshipping Business

Choosing the wrong niche is one of the major mistakes every drop shipper is making every new day. Choosing your dropshipping niche is a major decision when you are starting your. When you’re ready to open your dropshipping store take care to avoid these common mistakes:

Large and Heavy items

Heavy items are one of the most avoided products in the dropshipping business because heavy product weight means huge shipping costs! And heavy products are also very difficult to return. Customers may think twice before purchasing it from a supplier that doesn’t offer an easy return policy.

Delicate or Fragile Products

Selling delicate and fragile products make poor dropshipping products. They can break easily during shipment and you may be on the hook for refunds or unhappy customers when they open their box only to discover a product in pieces. This could lead to negative reviews and less repeat orders from unsatisfied customers. So avoid adding fragile items like glass, ceramics, etc on your online dropshipping store.

Products That Can’t be Advertised

Advertising your store and products is a major pathway to bring in new customers to your dropshipping store. Examples of such items are drug-related items, surveillance-related stocks, and cannabis items (in most countries) too. Make sure to review the advertising policies of any platform you’re thinking of advertising on; Google, Facebook, Amazon, Instagram, etc...

Find links below to each part in our Series on How to Start Your New Dropshipping Business:

Lucent Innovation is a full-service Shopify web design and development company. We build ecommerce websites that are ready to sell, scale, and grow.--