Dropshipping is a well-known method to make money online. Its popularity mainly comes from the straightforward setup process.
This article will show how to start dropshipping in seven steps, along with some of its best practices. We will also explain the dropshipping Business model and the benefits of starting one.
In addition, this tutorial will compare the pros and cons of starting a Dropshipping Business by creating your own website or using an eCommerce marketplace.
At the end of this article, we will answer some frequently asked questions about dropshipping.
What is Automated Dropshipping?
Automated dropshipping is to use information and task processing technologies to help you handle tasks, especially repetitive ones which you have to do again and again while running a dropshipping store. To simply put, it is designed to free you from lengthy and boring tasks including managing inventory, updating product quantity, syncing or exporting orders, etc.
Also, automated dropshipping can be realized by a third party. Several specialized platforms can help you with their services and functions. The specialized platform is like a combination of technology and labor, making sure that the automated system is doing the tasks right.
Why You Should Choose Automated Dropshipping?
An automated dropshipping business can be a relief to your full schedule. The main reasons are as follows:
1. Save Time
You may complain that you are running out of time for the dropshipping business. There are only 24 hours in a day, but the tasks and work can be piled up just within a minute. When automatizing your business, you can have more time to spend with your family or scaling up your business. Otherwise, you will be drowned in a sea of simple tasks, such as copying information, uploading descriptions or images of products, or checking and tracking numbers, etc. Dealing with these hundreds of simple tasks can be a boring and tedious process. However, if you run the dropshipping business through other platforms like CJdropshipping, things can be much easier.
Here is a review you may need: Cj Dropshipping Vs AliExpress
To cut it short, time is invaluable, especially doing business. An automated dropshipping business can save a lot of time for you, with which you can have a rest and expand your business at a speedy rate.
2. Save Money
At the very beginning of your business, you will face a bunch of tasks and works. For example, setting up your website, finding winning products, uploading your orders and tracking numbers, etc. Employees are needed but hiring them can be expensive. So automated dropshipping software or platforms can be very helpful. By automatizing your business, you can save more money. Less cost is definitely going to help your business grow, especially at the beginning.
How can CJ help to automate your dropshipping business?
1. Product-Listing
Listing products one by one can be torture for you have to check product category, description, shipping methods, and other necessary information every single time. A merit of using CJdropshipping is that you can list products with a few clicks. All you need to do is browse and click, then you can just list them at your online store. Just within a short time, these products you want to list will be shown in your store with detailed information, including title, category, images, description, variants, etc.
Furthermore, CJ is equipped with a bulk listing function, helping customers to save more time by adding products to the queue and list them at the same time in one click. It helps users to make the listing easier and faster.
2. Product-Sourcing
Finding the right product you want to sell is the first stepping-stone in your dropshipping career. But researching products is one of the most time-consuming tasks, and the problem is that it’s really hard to find the exact product you want with a reasonable price that can still give you profit. And CJdropshipping can help you with that.
Noticeably, CJ is offering a sourcing service for specific products you want. For example, if you find a specific product you want, you can post a sourcing request to CJ, and we will get back to you within 2-3 days. Or if you don’t find your existing products on CJ but want to change the supplier, you can post a sourcing request as well. All you need to do is upload pictures, titles, tags, and URLs, and our CJ team will help you with the rest.
3. Automated Order-Processing
Processing orders can be a real headache given that a lot of information is waiting to be collected and replied to. For instance, when a customer orders from your website, you need to send the customer details to your supplier. So they can ship packages directly to customers. But with CJ, you can skip the process of delivering messages by clicking buttons.
When orders come in, CJ can help you with the process of delivering customer details to suppliers and informing them to prepare for the shipment. This automated service makes lengthy and jumbled tasks much easier. Even if you begin to sell products in a large quantity, the delivery can also be made smoothly.
Additionally, your customers will ask you for the tracking numbers of their delivered products. Once delivery is made, you can check and copy the tracking numbers, and then send them to your customers. It helps you to build a reliable and trustworthy image.
4. Order-Syncing
On CJ, order-syncing is a prerequisite for automated order processing. So you need to sync your orders to CJ before using its automated order-processing feature. Luckily, CJ has made the process easy for users. You can import orders by syncing orders from your stores or uploading Excels. In doing this, CJ can help to process your orders automatically as soon as orders are placed, helping you to contact suppliers, filling the delivery details, providing tracking numbers, etc.
How to Start a Dropshipping Business in 7 Steps
Here are seven steps to creating a successful dropshipping business:
- Pick a niche. Create a business concept focusing on what products you want to sell.
- Do a market analysis. Check your market niche. Then, analyze your target audience and competitors to make informed business decisions.
- Find a dropshipping supplier. Choose reliable suppliers who will provide products that represent your own brand well.
- Create your online store. Build a dropshipping store to sell products and build branding.
- Prepare the finances. Separate your business and personal finances to accurately record how much you make from dropshipping. In addition, check if your dropshipping business needs to collect sales tax from customers.
- Register your business as a legal structure. Research the regulations in your country before registering your dropshipping business store. Note that different locations have their own laws.
- Optimize and market your brand. Optimize your online store and promote the products using different eCommerce platforms and marketing tools.
With proper research and preparation, starting a dropshipping business will not take much time and financial investment.
1. Pick a Dropshipping Niche
To start, compile your dropshipping business ideas and find a niche for your brand. This will help you find suitable suppliers and stand out among competitors.
A dropshipping niche is a group of products that cater to a specific market with similar interests. Depending on your business, a niche can be broad or narrow.
For example, Meowingtons is a dropshipping store that sells products specifically to cat owners.
First, establish a dropshipping business plan by determining the products, target audiences, and goals. This will help guide your decisions in the following steps.
To create a successful online business, here are some tips on choosing a niche:
- Determine your interest or passion. Being passionate about what you sell makes managing a dropshipping store more enjoyable. In addition, it will be easier to convince customers to buy your products.
- Create a solution. Customers gravitate toward dropshipping businesses that offer solutions to their problems. Find out what your target audience wants and get the right products for them.
- Focus on longevity. Use a free tool like Google Trends to find products that people will always need for the long term. For instance, household appliances are commodities that will not go out of style.
When you start a business in dropshipping, don’t be afraid to be creative to stand out from competitors.
2. Do a Market Analysis
Once you have a dropshipping business plan with a niche, conduct market research to assess the industry you are entering. The market analysis should mainly focus on the main competitors and target audiences.
It is essential to research your market before creating the dropshipping store, as you can easily choose a different niche if the results don’t look promising.
Look into the following elements to kick-start your market research:
- Industry value and market size. Gather information on your market niche’s size, trends, and growth rate. This data shows if there are enough customers interested in the products. Tools like Semrush can help with this process.
- Target audience. Consider your niche demographics, such as the age range, gender, income level, hobbies, and occupation. This information will determine whether your dropshipping business idea is profitable.
- Customer buying behavior. Observe consumer behavior to see what drives product demand. Understanding how often they purchase similar products will also help determine selling prices.
- Main competitors. Find competitor sites and examine their performances. There are many online tools like Similarweb that can help identify market gaps. Limit your research to around five competitors and analyze their strengths and weaknesses.
This analysis can help you make informed decisions and projections for your dropshipping business. Estimating revenues and building marketing strategies will be easier.
3. Find a Dropshipping Supplier
If the market analysis yields positive results, proceed to choose dropshipping suppliers.
Finding reliable suppliers can determine the success of your dropshipping business. Besides providing the products, suppliers are also responsible for delivering them to the customers.
Popular wholesale suppliers like Doba, SaleHoo, and Wholesale2B offer an extensive range of products. Some dropshipping suppliers like Printful can also create custom products for your customers.
When searching for a supplier, consider the following elements:
- Legality and reputation. Find a supplier with a solid reputation. Always check the supplier’s client list and ask for their business license to avoid scammers.
- Online reputation. Look for third-party reviews to check the supplier’s service quality.
- Pricing. Consider the affiliate fee when choosing suppliers. Most dropshippers aim for 15-20% in profit margins.
- Customer service. Check if the supplier provides responsive and professional customer service by calling them directly.
- Product quality. Order the products first and review them. Most suppliers offer a free trial to test their products. Remember that the supplier should create products that are representative of your branding.
- Packaging and shipping. See what the product looks like when you receive it, and check if the supplier is consistent with packaging and shipping.
- Order fulfillment process. Note the time the supplier takes to process and deliver the order. In addition, choose a supplier that can handle returns well.
- Minimum order. Check if the supplier has a minimum order you need to pay upfront. Knowing this information will help determine your pricing.
- Integration. Most suppliers offer integrations with popular eCommerce platforms like Shopify, eBay, and Amazon. Simplify your dropshipping process by choosing suppliers that integrate with these platforms.
- Compare similar products. Order similar products from different suppliers to compare their quality and service. Choose the one that represents your dropshipping business the most.
For a small business, we recommend using one supplier only to avoid inconsistencies. After your dropshipping business grows, consider having multiple suppliers to expand your product options.
4. Create Your Online Store
Now that you have products to sell, it is time to create your own online store.
First, choose a business name for your store. It should be unique and easy to remember, preferably related to your niche market.
Then, select a platform for your dropshipping business. We will compare the two popular options for starting an online store: making a website or using an eCommerce platform.
Finally, implement consistent branding for your online store. Even though the products come from third-party suppliers, the store should have consistent branding to stand out from competitors.
Warmly is an excellent example of how a dropshipping business can have a luxurious design and strong branding.
Focus on the following factors to create a successful dropshipping store:
- User experience. Customers should be able to browse your online business to find the products they want quickly. When designing your website, make sure to consider the overall customer experience.
- Payment Gateways. Provide multiple payment options with clear instructions. Be transparent with additional tax and shipping costs that customers need to consider.
- Categories. Help customers find your products easier by creating separate categories. Make sure to include the categories in your main menu for faster access.
- Product pages. Include clear and complete descriptions with high-quality product photos.
- Contact form. Give potential customers a user-friendly avenue to ask about your business and products.
- Mobile optimization. Make sure your store is mobile-friendly. Customers should be able to buy products from different screen sizes.
5. Prepare the Dropshipping Business Finances
Getting your finances in order is essential before you start selling products.
Separating your personal and business finances makes it easier to note revenues and expenses. Doing so is also better for your legal processes.
Consider the following factors when setting up finances for your dropshipping business:
- Business bank account. Open a new business bank account under your dropshipping name. Remember to only use this account for business transactions, such as receiving payments from customers and paying suppliers.
- Resale certificate. Many areas require businesses to get resale certificates to sell products from somewhere else. Check with your city or state to see if you need to register and pay for this certificate.
- Sales tax. Some countries require customers to pay sales tax. Check the sales tax nexus regulations with your business’ and suppliers’ local government. Then, make sure to take this cost into account when pricing your products.
- Maintenance fee. Include platform fees and marketing costs in your budgeting and pricing to help maintain and grow your business.
6. Register Your Dropshipping Business as a Legal Structure
Important! Hostinger does not offer legal advice. This section only provides a general overview of the legal factors to consider. We recommend consulting with proper legal entities before choosing your business structure.
Another essential step is to sort out the legalities of your online business. This includes checking whether you need a license to dropship in your location. Remember to research specifically for your country, as different locations have their own regulations.
For businesses in the United States, you will need a sales tax ID and an employer identification number to file taxes and apply to wholesale dropshipping accounts.
Once you have researched the regulations, consider setting up a legitimate business entity to protect yourself from legal liabilities. Doing so can also allow you to work with better suppliers and business partners.
Here are the three most common business structures:
- Sole proprietorship. With this structure, your dropshipping business finances will be taxed on your personal income. This option is risky as your business is legally attached to your personal assets.
- Limited liability company (LLC). This structure establishes your business as a separate legal entity, which means you will have personal liability protection. However, you will fulfill different legal requirements when paying taxes as a business owner.
- Corporation. Similar to an LLC, this option registers the dropshipping business as a separate legal entity. However, corporations are owned by shareholders and overseen by directors instead of just a few business owners.
After registering the business structure, we recommend creating the following documents to increase customers’ trust:
- Refund policy. A clear refund policy builds customer trust because it indicates your dropshipping business is a secure place to shop.
- Return or exchange policy. Most customers are hesitant to buy from an online business because they can’t see the product immediately. Having a return or exchange policy builds confidence in your product.
- Terms and conditions. Manage expectations and protect your business by having a legal document outlining your company’s and customers’ rights and responsibilities.
- Privacy policy. Explain how your business collects, uses, and discloses customer information. This document shows that your business takes its responsibilities seriously.
For example, the home decor store Rosamiss is transparent about the policies and terms that the business implements.
7. Optimize and Market Your Dropshipping Business
After establishing a legal dropshipping business, it is time to promote and sell your products. Good marketing and customer acquisition strategies are essential for a successful dropshipping business.
If you have a small business, start with the following low-investment marketing strategies:
- Search engine optimization (SEO). Every online business wants to rank higher on search engine results pages (SERPs) to drive more traffic. Improving your store’s SEO will help attract more potential customers.
- Blog. Create valuable and consistent content to inform audiences about your dropshipping products. Writing blog posts can also help your business connect with audiences.
- Email marketing. Build an email list by adding a subscription form to your store and offer an introductory discount every time a user signs up. Email marketing can also help keep existing buyers excited about your products.
- Social media. Share your products and content on different social media platforms to reach more audiences. This marketing method also helps your business stay connected with customers.
For example, Notebook Therapy shows how to utilize social media to boost their credibility and connect with their buyers.
Once your dropshipping business grows and you have a bigger budget, consider the following marketing strategies:
- Ads. Paid advertising is an excellent option to target a specific demographic. Most businesses utilize Google Ads and Facebook Ads as part of their marketing strategy.
- Influencer marketing. Collaborate with well-known people in the industry that have a lot of influence. With influencers promoting your products on their channels, you can increase the business’s credibility and reach more audiences.
- Affiliate marketing. Pay a commission to an affiliate each time a customer buys your product using their affiliate link. This marketing strategy is a low-risk and cost-effective way to promote your business.
Why Start a Dropshipping Business?
The dropshipping business model is a great way to start your own store, as you do not need to manage inventory and logistics. Although dropshipping is often suitable for small business owners, larger companies that want to branch out can also take advantage of this model.
If you are still unsure about starting your own dropshipping business, here are some of its main benefits:
- Low startup costs. With the dropshipping business model, you don’t need to stock products. Without upfront inventory investments, you can start selling products without spending much.
- Low-risk business model. Dropshippers can easily switch poorly performing products with different ones from the suppliers.
- Minimal supply chain management. Sell your products without having to stock on inventory and deal with shipping logistics.
- Flexible location. You can run and manage your business from anywhere with an internet connection because you do not need to manage the products in person. However, dropshippers need to maintain communication with suppliers and customers.
- Many product options. Since you don’t have to stock on inventory to make a sale, you can offer more products in your store. If a product is not doing well, you can switch to a different one.
- Great scalability. You can expand to a new market easily. Since suppliers are the ones who deal with the shipping, you don’t have to worry about receiving more orders.
However, there are some drawbacks to having your own dropshipping business:
- Sudden stock shortages. Sometimes, suppliers do not warn you if products go out of stock. It’s important to regularly check in with your suppliers to prevent listing unavailable products in your store.
- Less control. Dropshippers rely heavily on suppliers to create, package, and deliver high-quality products. If there are issues like product mishandling, lousy packaging, or delayed delivery, you will not be able to address them directly.
With that said, the dropshipping model’s pros still outweigh the cons.
Best Platforms for Your Dropshipping Business
As dropshippers do not have to worry about managing product supplies, most of the work goes to creating a high-quality store. The success of your dropshipping business significantly depends on where you sell.
Your platform can affect your sales performance and customers’ perception of your online store. The two most popular platform options for a dropshipping business are starting your own eCommerce site and selling on an established eCommerce marketplace.
The two options have pros and cons that we will cover in the following sections. Note that you can also choose to use multiple platforms for your store.
Create Your Own Website
Having your own eCommerce business site means more control over your store’s appearance, content, and user experience.
Website builders often offer high-quality templates with a drag-and-drop editor to customize your store. For example, Hostinger Website Builder has necessary built-in features for a store, like shipping integrations, payment systems, and contact forms.
Another option is to use a content management system (CMS) to create a website. Some popular CMSs for eCommerce include WordPress, PrestaShop, and Shopify.
With WordPress, install WooCommerce to add eCommerce features to your website. Meanwhile, PrestaShop and Shopify already have built-in eCommerce features. Alternatively, you can use Hostinger’s WordPress hosting service, which comes with a convenient 1-click scripts installer.
Here are the main benefits of making a website for your dropshipping business:
- Stronger branding. With a website, you will have full creative agency over your branding, from customizing the theme to adding useful features.
- Outstanding control and flexibility. Choose how to present your products and what information to include. In addition, you can select the payment and shipping methods that suit your business strategy best.
- Higher profit margins. Since you are not paying any platform fee to a marketplace, expect to earn all revenues from your sales.
- No direct competition. All traffic to your online business site is from potential customers. When browsing your site, they will not be able to see products from your competitors.
However, building your own site also has its downsides:
- Higher initial costs. You will need to pay for web hosting and a domain name to create your own site. Meanwhile, many marketplaces let you start selling for free.
- No guaranteed traffic and established market. With eCommerce marketplaces, there is a large existing customer base to attract to your store. However, with an individual site, you will need to drive the traffic yourself.
What Does It Cost to Get Started?
Nothing! AdSense costs nothing to get started. If you choose to use AdSense and support Google advertising on your site, you’ll be able to check the reports in your account immediately to see how well the program is panning out for you. You also might choose to jigger your ad styles and formats to see which ones give you the biggest returns. To sign up, all you need to do is submit an application.
If Google Ads is more your speed, check out our blog to learn some effective strategies to make the most of your paid search budget.
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