Ecommerce Basic 101: All you should know about Dropshipping Business

Published by kelvin Ehiozefe on

The concept of owning our own business and being successful is a dream that we all share. But when considering some of the high-end demand for setting up or managing a tradition startup it’s easy to quickly become discouraged.

The upfront cost, time to launch, and a legion of other details make it seem as if our business may never come into limelight, let alone successful.

start-up Freight

Img Source: SaleHoo

But as the internet continues to evolve, it has become more possible for people to communicate with each other like never before.  And as an entrepreneur, the prospect of being able to tap into a worldwide market for your business is now a possibility that once was not possible at all.

And as such, there is a growing trend among entrepreneurs today to dispense with the traditional forms of launching a business. It’s called Dropshipping, a phenomenal concept of doing business that has made me reminiscence on what I once thought was impossible.

Dropshipping being the new wave of the future, specifically in regard to being able to start your own business without all of the initial outlay and investment that a conventional business requires makes it a phenomenal technique. Though it is often said that dropshipping won’t make you a millionaire overnight, it can thus provide a stream of revenue that you can nurture into something tangible over time with the right strategies and investments.

With so much been said about dropshipping, the best information is scattered everywhere on the Internet, and it’s become very difficult to tell what works and what doesn’t. But not to reduce your hassle I’ve created this guide with you in mind.

I’ve taken everything you need to know about dropshipping and packed it all into this guide. Please don’t be in a hurry; try as much as you can to digest every bit of this post, reading from the beginning to the end.

 TABLE OF CONTENT

  • Introduction
  • What is dropshipping
  • Can we then say that dropshipping another make money online scheme
  • Who is dropshipping meant for?
  • How does dropshipping differ from affiliate marketing
  • What are the benefits of dropshipping?
  • Are there any negative side to dropshipping to be mindful of?
  • How to start dropshipping today?
  • How to pick the best product and niche to dropship in
  • What are the best tools for researching a product for dropshipping
  • How to make sale dropshipping
  • What are the best sales channels for dropshipping
  • How to find suppliers or wholesalers
  • Knowing the Dropshipping supplier to avoid
  • Spotting legitimate supplier
  • How much can one possibly make through dropshipping

What is Dropshipping?

Dropshipping is a supply chain management technique in which the seller does not keep items in supply however instead transfers the consumer orders as well as shipment information to either the product owner, another retailer, or a major dealer (wholesaler), who after that ships the products directly to the consumer.

It places all the power into the hands of the entrepreneur. Providing a rapid and accessible way for any entrepreneur to generate an income and fulfill their dreams of establishing a wildly successful business.

Dropshipping Business

Img source:chinabrands.com

Can we say dropshipping another make money online scheme?

YES. Since the main appeal of dropshipping is to enable anyone with the dream of owning a business online kick start their dreams, droshipping falls into this category. And because of its flexibility, most entrepreneurs who choose dropship do it as a side hustle while having a major job that provides steady income.

Who is dropshipping meant for?

Dropshipping is meant for anyone who is willing to stand tall over the huddles of being a webpreneur. But however, just like managing a traditional retail outlet comes with its merits and demerits, dropshipping is no exception.

So for anyone looking for a get-rich-quick scheme on the internet, dropshipping should be out of your radar. In a simple term, dropshipping isn’t for everyone, even though nearly everyone can set up a dropshipping business in just a few clicks.

What makes dropshipping differs from affiliate marketing

From the hustler side of these two dropshipping and affiliate advertising both seem like rewarding ways to make cash overnight. Nevertheless, it’s important to not forget that these two models require consistent effort so as to be well-established.

With dropshipping, the inventory is cared for by the manufacturer, which is also responsible for the dispatch of the item directly to the client, for your benefit. In dropshipping, you set your own prices and run your own advertising strategies.

So far as affiliate marketing is concerned, the exact same process happens (the retailer carries inventory and ships the merchandise). Nevertheless, as you’re still in charge of promotion, you do not get to set the item price and only get a commission.

PROS of Dropshipping

  • Low-risk business model
  • Individual management of Customer Care
  • Gives the opportunity of building an advantage
  • Various Odds of attracting new customers

CONS of Dropshiping

  • Slim profit margins
  • Little or no control over inventories
  • Difficulties in addressing customer challenges

PROS of Affiliate marketing

  • Almost no prices for being an affiliate
  • The gain is made from commissions
  • A valuable source for passive income
  • No need to worry about Customer Care
  • Individuals can remove the affiliate link

CONS of Affiliate Marketing

  • Payments may be delayed
  • Little to no control over pricing and products

Why would anyone choose dropshipping over affiliate marketing?

While affiliate marketing can bring profit to your company without needing to endure many expenses, it has many financial inconveniences which may make you think twice before proceeding with this model, i.e. you could easily get rid of money if you rely on other companies.

For that reason, even in the event that you choose to progress with your affiliate marketing business, you would want to add one or several dropshipping elements to be able to make it even more profitable. Some of the reasons for which running an Internet shop is more suitable in terms of cash flows are:

  • The costs you set are greater than the commissions you get with affiliate marketing
  • With dropshipping, you can get more from physical products than with affiliate marketing
  • Dropshipping provides you with greater success on the online in regards to advertising campaigns
  • for those who have an online shop, affiliate companies will send visitors to your webpage
  • Dropshipping provides you more client loyalty
  • With dropshipping, the prices of goods are low (it’s possible to set affordable rates for clients while also getting high-profit margins)
  • The daily workload isn’t so time-consuming
  • Dropshipping permits for building a wider audience
  • Reviews and higher-order volumes can allow you to know if the item can easily be sold.

What are the benefits of dropshipping?

  1. Easy to set-up: Unlike any other conventional business you don’t need to be a business guru or have any prior business experience to start dropshipping. All you might need to get started is learning some of the basic details of setting up and learn the rest as you get along.
  2. No need for inventory management: Since everything is done online, there’s no need for a warehouse for stocking products or renting out a brick-and-mortar storefront to display products. No effort or cost incurred in the storage or in the upkeep of the merchandise. This affords you the time needed to look after sales and maximizing more gain, once you’ve found suppliers and gotten everything set up.
  3. Greater opportunities for growth: One of the benefits of dropshipping is that the costs don’t skyrocket when you scale. Because of this, it’s easy to keep growing at a pretty fast rate. You don’t have to hire a huge team either. Unless you want to assemble a small team at some point, you can do almost everything all by yourself.
  4. Less start-up Capital required: What’s more, with dropshipping, starting a business is easier and quicker than ever. The main spending you’re ever going to worry about is only going to revolve around the costs required for establishing your shop online – still, you can get started even with minimal funds. And the most exciting path to this is that as your business grows, your costs may even get fairly lower – especially when compared to traditional business expenses.
  5. It is easy to manage: Apart from being a very flexible career, dropshipping doesn’t require you to make any commitments, you can manage everything with little hassle. Right from your laptop, you can build/manage an entire business still in your pajamas and you might not even need to make any high-level investments in assembling a team.

    Are there any negative side to dropshipping to be mindful of?

    1. Slim Profit margins: Like I told you before dropshipping won’t make you a millionaire overnight, but it can provide a stream of revenue that you can grow over time with the right strategies. This issue of slim profit margin is more problematic especially when you’re dropshipping in a super-competitive niche. However, with niches with lower competitions, you may have better margins.
    2. It can make order processing difficult: Though dropshipping from setting up might seem to be very straightforward business; the customer orders, you process, and your supplier fulfills but however there is a little gap in the process if you were sourcing products from multiple suppliers. Each of these suppliers might use a different shipping solution, which might present a problem for both you and your customers.
    3. It thus makes customer service more challenging: This is one of the biggest disadvantages of dropshipping. Because you’re just the storefront, when orders go wrong or suppliers fail to deliver, it can be very difficult to sort such orders and that can, in turn, present some level of problem with customers.

    How to start dropshipping today?

    I am going to say this again, unlike starting any other conventional business setting-up a dropshipping retail business doesn’t need so much to get through with. You don’t even have to be a business mogul to have a successful dropshipping business. However, that doesn’t imply we can afford to overlook some of the basic procedures of starting a new business like researching your niche and funds budgeting.

    Infarct, that’s the two main concepts that running a successful dropshipping business is built on. Trying to skip these aspects could mean disaster for your retail business. So also, in starting a dropshipping business aside having the fundamental tool like a computer system with internet, an online store, you need have a prior understanding of exactly how to market online, what product to sell or what product would be more profitable for you to sell.

    NicheScraper

    How to pick the best product/niche to dropship in?

    One out of a million reasons why many dropshipping businesses are unsuccessful is the mistake of choosing the wrong dropshipping niche. This is one of the most common mistakes many dropshippers make. In the bid to quick start their dream business they enter into oversaturated niches without knowing it making it almost impossible to differentiate themself from competitors.

    When you’re choosing a profitable niche for dropshipping, there’s a lot to consider.

    • Niche popularityyou need to know the search volume of your targeted niche, how many people are in need of your product. Who are those already in the market and who are the key players? Keep in mind that incredibly popular niche may be very difficult to break into as a new dropshipper
    • Is your niche product-based?
    • How sustainable is the niche?
    • How can you add value to this niche – this should be your anchor.
    • Does your Niche have existing retailers or suppliers?
    • Is your niche another business fad?
    • Is your Niche Oversaturated or under saturated? – A typical niche should be moderately saturated, but with a reasonable number of retailers and an audience that’s not too big or too small
    • Is your niche born out of personal feelings or emotions or from courteous business researches?

    How to find the right product to dropship

    If you have successfully decided on the specific niche you wish to enter, another crucial business decision every dropshipper must make is selecting the right product to dropship in. This step is consider most delicate as selecting the millions of products that various wholesalers make available would be a complete waste of time if your consumers are not interested in them.

    Believe me; your best bet on making any sale would be on offering high-demand dropshipping products that will drive people to your storefront. Most times, your audience can help you decide which products you should carry.

    What are the best tools for researching a product for dropshipping

    I am going to say this again; the success of every dropshipping business begins from the right type of niche you target and the product you select. Your ability to select and effective market a winning product will determine whether your dropshipping business will survive or be tanked.

    Many entrepreneurs have been able to scale their dropshipping business to 7- figures monthly with only a single high converting product. It is therefore highly imperative to every dropshipper to implore the best practice in selecting a winning product to sell. Some of these tools I have listed here will assist you tremendously in this regard;

    • Google Keyword Planneris a free tool from Google that provides keyword ideas and traffic estimates to help online advertisers build a search network campaign. When it comes to dropshipping Google Keyword planner can be very handy to dropshippers in identifying products that are being searched for frequently. A high search volume means a product is performing well. But one of the downside to Google keyword planner is that the data it produces are not always very comprehensive, so you might still want to supplement the results you get with results from other tools.
    • SemRushBecause the data you obtain from Google Keyword planner is not as comprehensive as you may want it to be, here comes another exception tool dropshippers can use to get incredible analysis on a search keyword. SEMrush is free and premium software that is proficient in finding a profitable keyword. It is one of the most widely used SEO toolkits by top-performing marketing giant. It is often referred to as the “SEO POWERHOUSE”.
    • Google Trendis another free online tool by Google that analyzes the popularity of searched queries in Google Search across various regions and languages. The beauty of Google trends is the super exceptional visual graph of search volume for a specific period of time. This further helps you understand the performance of a product over a time frame in a specific region. 
    • EcomtHuntthis one of the best product hunt tool I have ever made use of. Ecomhunt offers two membership plan, that is the free and the pro plan. The free plan gives members access to two product hunt on a daily basis with limited data but the pro plan gives you full access to unlimited product hunt and data.
    • Pexdaif you want to save time in finding the hottest-trending product to sell online, Pexda is one of the best product research tools any drop shipper can use in finding the right product to sell. It. On a daily basis, Pexda manually adds winning products for its subscribers with the intelligence to narrow down their ad expenses while maximizing their profit. Pexda is a complete tool not just for dropshippers alone but for anyone who serious about making money online.

    How to make sale dropshipping

    Just like any business, you would need a robust marketing strategy to get buyers. And some of few basics of selling on the internet as it may apply to drophipping;

    • Product demand – it will be a complete waste of effort if your product won’t have sufficient demand, so making sale might be impossible
    • Selling at lower prices than your competitors – everyone loves to save a few bucks on a choice product. As a dropshipper you can undercut your competitor by dropshipping products at rock-bottom prices
    • Gain the rights to exclusive distribution or pricing – As a dropshipper you don’t manufacture the product dropshipping in, the next best thing is to acquire exclusive access to product distribution
    • Add more value than what is usually obtainable – this is substantively one of the major anchors of most dropshipping business. If you ever want to succeed with dropshipping adding value is the surest way
    • Keep an Updated Marketing plan – you might not be a marketing veteran with a double MBA but this is something you must have a clear knowledge of.
    • Know your Competitors – don’t say it is not necessary if you ever want to sell a product online, you need to study your competitor and look for a clean edge to differentiate yourself from them

    What are the best sales channels for dropshipping

    When you’re done with niche and product selection, it’s time to choose a befitting sales channel. A sales channel is a platform you use to sell products. It can be a Shopify storefront, a custom dropshipping website of your own, or a seller account on a product site like eBay.

    Choosing the right sales platform is fundamental to the success of your dropshipping business. As the type of sales platform you use has a way of determining how you sell. For dropshipping there are a handful of sales platforms to choose from.

    A dropshipper is however at liberty to use multiple sales channels if he/she so wishes, but in the true sense that can, in turn, make the workload of dropshipping a little bit tedious than usual. As newbie dropshipers, it’s always advisable to start out with just one sale channel and as you grow you can start using others as well. Here are the 3 most rated sales channel for dropshipping;

    Supplier_Resource

    Img Source: corporate.pseg.com

    How to find suppliers or wholesalers

    Just as finding the right niche and product is crucial to your dropshipping business. Finding the right dropshipping supplier is paramount to the success of your business. Many suppliers may seem great when looking at their reviews and product offering, but once one begins to research more about their businesses, they may seem to be not as clear as initially thought.

    One of the explanations for this could be represented by the raw materials they use, the way they do business, or how they deal with returns. In cases like this, it is necessary to talk to these suppliers and get to know how they do business before committing to them.

    Although you can always decide not to use a provider after issues arise, though the damage might have already been done and the brand could have been harmed.

    2 basic methods of fishing a dropshipping supplier

    • Direct outreach to product manufacturer – this is one of the easiest and most effective methods of finding a dropshipping supplier. Immediately you are able to select a niche and product you want to sell, find out who makes those products and contact them directly. Ask them for their list of wholesale distributors. This gives you an official list from the manufacturer themselves, so you know you’ll be working with legitimate businesses.
    • Using supplier directories Supplier directories host wholesalers in all kinds of niches. The two main benefits to Supplier directories are security and convenience. These Supplier Directories are secure because they often screen wholesalers before listing them, and they’re convenient because you can look up wholesalers by niche or product type. Examples of some Supplier directories: Wholesaler Central, wholesale2B, Doba, DropshippingMe, Dropsipper, Sunrise, Oberlo, SaleHoo and Worldwide Brands, etc.

    Knowing the Dropshipping supplier to avoid

    It is hard to know which dropship suppliers to choose, with many retailers posing as wholesalers. There are some tell-tale signs that a provider is to be avoided at all costs. Aside from bad reviews, negative feedback, and cheap quantity products, there are additional factors that may anticipate a poor dropshipping supplier.

    If a dropship supplier insists on monthly or ongoing fees, doing business together is a bad signal. Ongoing fees could mean a supplier is part of a directory, instead of a single supplier.

    It is normal to have pre-order fees that increase slightly depending on the size or complexity of an order or decrease with bulk ordering. A clear study will highlight suppliers that charge higher than normal pre-order fees and therefore should be avoided.

    A dropshipping supplier that wouldn’t want to sign any form of contracts with you or says it’s not necessary is fake. Such a supplier must be avoided

    Spotting legitimate supplier

    Now that we have been able to pinpoint some tell-tale about the bad guys it’s a little bit easier to spot the legitimate one. Some simple criteria of spotting a legitimate dropshipping supplier;

    • Legitimate dropshipping suppliers have a minimum order size. Especially for newly accepted drop shippers
    • They have an application process in place.
    • They have pre-order fees.
    • You can never go wrong with their experienced staff and a dedicated support team.
    • They wouldn’t go overboard to compel into working with them

    How much can one possibly make from dropshipping

    Like I had previously stated dropshipping is one of the most incredible models of doing business, but however it wouldn’t make you a millionaire overnight, but it can thus provide a stream of revenue that you can nurture over time with the right strategies and investments.

    Don’t get it twisted dropshipping is a serious online business, you should never approach it as a get-rich-quick scheme but you can take it as a side hustle while adding value to your preferred niche.

    And to conclude…

    As a new wave of the future dropshipping is one of the best ways to start a business. It’s incredibly flexible and easy to start; you can begin with just a computer, a little bit of money and a courteous understanding of how internet marketing is done. Trust me you need this knowledge if you want to make a profit.

    If you have any idea to share, I encourage you to cheerfully do so via the comment section or contact me privately via the contact tab of this blog. Thanks for reading.


    kelvin Ehiozefe

    Hi, my name is Kelvin Ehiozefe am an online entrepreneur and a Content writer. I write about Business start-up, Blogging, Lifstyle and Technology

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