You may have dreamed of having a drop shipping business. But you don’t know exactly where to start. Don’t worry anymore, in this article we explain all the details. Let’s start!
What is a drop shipping business?
First, we will talk about the definition of drop shipping.
In summary, it is a type of business model in which you can sell products without having them physically. Therefore, the product provider will ship it directly to the customer after the transaction occurs.
So how will you make a profit? You can do this by setting a markup on your prices. Which means you must put a higher price than the one provided by the provider.
So, the drop shipping mechanism is as follows:
1.The customer buys the product from the retailer (drop shipper)
2.The retailer orders the product from the supplier.
3.The supplier sends the product to the customer.
Despite its popularity, the drop shipping business has some advantages and disadvantages to consider. These are the things you should know before diving into the world of drop shipping.
In this list, we will show you some of the factors that make the drop shipping business so attractive:
- Getting started is easy: unlike other companies that force you to follow some complex procedures and have some particular resources. Building an online drop shipping business only requires you to have a laptop and a stable internet connection.
- Low risk: the only cost that you should take into account is that of the products that you will offer to the client.
- Low indirect cost – since you don’t have to think about inventory costs or hire employees to take care of it. Your overall cost will be much lower than you think.
- You can sell multiple products: As a direct sender, you can choose to sell products from more than one supplier. This means that you can be creative about the types of products you want to offer your customers.
- Convenience: Since you do business through a laptop, you can work from anywhere.
Although this business sounds incredibly promising, there are a few things to keep in mind before entering the drop shipping business:
- Fierce competition: There are many people involved in the dropshipping business, so you will have to work hard to stand out.
- Low-profit margins: Because you face so many sellers, there may be a price war. Which means that you should set your price as low as possible to make your offers much more attractive. But this can be avoided if you can find a niche of low competition products to sell.
- Supplier Problems: If you choose a supplier of dubious reputation, your business may end in failure. Because a bad provider can ruin your online presence with shipping errors, poor packaging, and delayed responses. However, the failure will be beyond your control.
- Inventory difficult to manage: You need to keep track of your supplier’s inventory to align it with the amount of stock available in your store.
- Customer service: You are the one who is directly connected to the customer. So, if there is any problem, you should patiently listen to the complaints.
How to start a drop shipping business?
So, you already know the basics of the drop shipping business. Now we will tell you what you must do to create one.
We’ll guide you from finding product ideas to marketing your drop shipping store. These are the steps:
Generate drop shipping business ideas
You need to know what you want to sell before entering the market. It would be a bad idea to choose products only for what you believe or like.
When you start, identify who you are trying to offer your product to. Find out what the problems are and choose a product that can solve them. In this way, your products will be considered valuable by your customers.
Above all, the product must be valuable to both the buyer and the seller. That is why you should also check if the product you want to offer is profitable and if that industry has good prospects in the future.
With Google trends, you can check if your chosen products are trending or not.
If you are sure of the specific niche you chose, the next step is to find the right provider.
You should compare supplier candidates in terms of credibility, trade policy, and the quality of the products they offer.
Make sure that the supplier does not harm your business in the long term. Also, you must convince the provider that you will be a great partner to him. In other words, the relationship has to be mutually profitable.
Now that you know all this, here are some questions to consider before choosing your product:
1.How popular is the product niche?
2.What type of providers do you want to work with?
3.What region will you sell to?
Answering those questions will help you find the right product for your business.
2. Get a domain name
Knowing which products to sell is one thing, but getting your customers to know about your products is another.
That’s why you need to make sure that customers know where to go when they want to buy the products.
After all, every store needs an address. Similarly, an online business also needs an address in the form of a domain name.
The point is, you need to make your domain as memorable as possible and relevant to your target customers. Because that is what your customers will write when they need your products.
You may already have some ideas about the domain name. But is it available?
Don’t worry, because you can check availability and buy a domain with any domain registration tool.
You only have to write your domain name to see if it is available or not. In addition to providing you with availability information, it will also suggest other related domain names.
3. Build an online store
So, you already have your own address, but what about the store?
Building an online store can be accomplished using WordPress. For this reason, the first step is to install it.
Once you have successfully created and run your WordPress site, you can start installing the Woocommerce plugin. It will allow you to create an online store within your website.
Finally, after finishing the installation of WordPress and Woocommerce, you can move on to completing your website by adding the products and designing your online store.
4. Make decisions about the details
Adding products to your online store can be tricky. Because there are some things you should keep in mind, such as:
You should consider what type of shipping fee you will charge your customers. Sometimes customers examine shipping costs before making a purchase. For your information, there are three types of shipping rates that you can choose:
- Rates by type: this rate will classify the cost according to the size of the products. This means that a smaller product may have a lower shipping cost than a larger product.
- Real-time rates: this option is more flexible. Because the cost will be based on the weight and destination of the product. Therefore, the shipping cost between products may differ.
- Flat shipping rate: A flat rate is one of the easiest rates to apply. Because you only charge a fixed price for all types of shipping.
If you live in a state where you are required to pay sales tax, you should find out how much the tax will be. Then, you must adjust the cost with the total cost that customers must pay per product.
For this task, it is always best to consult with a tax expert.
The payment method will affect the shopping experience of your customers. The more convenient the method, the happier your clients will be.
You can also take advantage of the popularity of a particular payment method to attract customer attention. In addition, you will also need to confirm if the payment method offers a low transaction tax.
5. Advertise your store
At this stage, you should think about promoting your drop shipping business. You could use some digital marketing practices to expose your business to the world.
Here are some digital marketing methods that you can use at your online drop shipping store:
People are constantly searching the Internet, and if you are using search advertising, you will surely have an advantage.
One of the most popular search advertising methods is search engine optimization (SEO). It is a way to make your website rank higher on the search engine results page.
To manage the SEO performance of your website, you need to do a little research on how the search engine works.
If you implement SEO well, you can gain more exposure by gradually increasing the rank of your website.
Paid Ads (PPC)
There is another way to put your website at the top of the search engine results page, this way is called search engine marketing (SEM). You can use it as one of your digital marketing strategies.
Basically, you buy an ad space in the search engine, then you must bid for a keyword in your campaign. The success of your offer will depend on the relevance of your keyword in the ads and the value of your offer.
To manage all this, you can use Google Adwords.
If you are not like SEO, this process will cost you some money. Because as the name implies, the ads must be paid based on how much you click on them. The more they click, the more you have to pay.
But in return, your online drop shipping store will be able to get a broader reach with a secure ad space.
Another PPC option lies on social media. You can request paid ads on Facebook or Instagram, target them to a specific demographic, and have them direct people to your drop shipping business.
You can avoid losing customers by keeping them in touch with you through Email Marketing. At this point, you are probably wondering how this method might work.
The first step in email marketing is an email list. You can send emails offering free products, discounts and other attractive offers.
Once you have the mailing list, create a marketing campaign. Send newsletters, special offers, etc. This strategy will help you maintain a close relationship with your clients.
You should take into account the advantages and disadvantages before starting the adventure of having a drop shipping business. However, if you are willing to work, you will surely be successful.
In this article, you have learned some basic steps to build your own drop shipping business, if you like this I will share you advance tutorial.
Good luck building your own successful drop shipping business!