How Do I Start a Drop Shipping Business? 6 Steps to Building a Successful Online Drop Shipping Business
Do you dream of owning your own online store, as around 105,000 Americans do? Before recently, the process was laborious and costly.
Prior to the advent of drop shipping, e-commerce retailers had to purchase their inventory, find somewhere to store all the goods and then handle the logistics of packaging and shipping to their customers.
With drop shipping, virtual retailers don't have to keep any actual inventory in stock. Rather, they team up with a supplier who takes care of all of the order fulfillment and shipment details. When an order comes in, the retailer submits that data and the supplier takes care of the rest.
Sounds simple, right? It can be, but if you're wondering, "How do I start a drop shipping business?" it's best to start from the beginning. Today, we're sharing six steps that can turn you into the e-commerce leader you want to be.
Ready to learn more? Let's get started.
1. Decide on Your Niche
The most successful drop shipping companies are masters of one.
Rather than offering a little bit of everything, laser focus your efforts. Will you sell only toddler clothing? What about sports equipment, women's footwear or cosmetics?
There isn't a right or wrong answer. The only guideline? Make sure you're interested in it your niche! You'll need to be able to speak in an authoritative voice about your products and if you're not passionate about them, it will show.
Not sure where to start your search? Here are a few considerations to keep in mind about every prospective niche you're considering.
As the owner of a drop shipping store, you don't have to worry as much about physical product details. Rather, your focus is on customer acquisition and digital marketing.
That means you're putting in the same amount of legwork for each item, regardless of how much it sells for. A $15 t-shirt or a $1,000 watch both require online advertising. Keeping that in mind, look for products with a price point that makes them worth the effort.
True, the shipping falls on your manufacturer or supplier. Still, if you're forced to tack on a sky-high shipping charge to each item, it will deter prospective buyers in a heartbeat.
One recent study by the National Retail Federation revealed that 75% of online shoppers expect free shipping on all items, even those over $50. To keep up with demands and expectations, find products that are lightweight and easy to ship. This way, you can absorb the cost as a business expense while still offering the benefit of free shipping to your customers.
Want to attract a wider audience of buyers? Sell them something they can't buy in their own city. One of the appeals of online shopping is the wide array of products available, so get creative and look for one-of-a-kind specialty products that will help your brand stand out.
Most people who browse drop shipping sites and make a purchase have the disposable income to do so. These types of stores advertise flash sales, bundle deals, and last-minute discount codes to encourage impulse buyers to convert.
Does your product speak to buyers looking to spend a little extra cash? Or does it require a thoughtful decision and a major investment? Make sure it's the former.
It goes without saying that you want to offer products that your target audience is searching for. When fine-tuning your niche, leverage online resources including Google Keyword Planner and Google Trends to find popular search terms related to your industry.
Type in the name of the objects you plan to sell. How's the traffic volume? If it's low, that means it's time to think about offering something else or restrategizing your position.
2. Check Out the Competition
Not only are you competing against other drop shippers, but keep in mind that you're also up against other online retail giants like Amazon.
When you start out, you may not be able to compete with the top-tier drop shipping services, and that's OK. You'll spin your wheels, deplete your resources and drive yourself crazy looking for a super-exclusive niche that's still untapped. If no one's buying it on Amazon, chances are low they'll head to your store to seek it out.
Instead, embrace competition.
Look for similar products that are in high demand and research what sellers are doing to inch ahead of their peers. If a product on one of these mega-sites isn't performing well, that's a sign it's uncompetitive. From high shipping costs to too-tight profit margins, there are myriad factors that can attribute to this outcome.
3. Find the Right Supplier
Especially in the beginning, you might feel tempted to settle for the first supplier that comes along. After all, you're ready to set up your store and start selling!
However, it's important to take your time with this next step. Linking your brand to the wrong supplier can create a domino effect that brings your whole business down.
As many drop shipping suppliers are headquartered overseas, make communication a top priority.
Ensure communication is clear, consistent and quick. You'll need to have these lines open so you can relay order details and ensure a timely response. Otherwise, misunderstandings can lead to delays, which lead to irate customers, negative feedback, and a stain on your business.
During the initial interview process, also inquire about each supplier's scalability. Can they support your brand as it grows and demand increases? Or, is their storage capability limited, along with their support resources?
For other questions to ask potential partners, read online blogs and forums from others who have walked this road and found success.
4. Make a Website
You can't sell anything online without some form of internet presence! That means you'll need to have a website to get started.
Stick to a simple website builder that takes care of the backend development work for you, such as Shopify. You don't need an extensive tech background to get your site up and running on this platform and it also includes plenty of apps to help you sell smarter.
Of course, if your budget allows, you can get a slicker website when you team with a professional web designer and let him or her take the reins. Yet, it makes more sense to stick with these simple plug-and-play versions until your store takes off. Then, you can revisit the idea of expert design.
5. Attract Your Target Audience
Once your site is set up and your store is live, it's time to reach out to those prospective buyers!
Start by creating a cost-effective Traffic Roots Ad campaign. This way, you can market your goods straight to potential buyers without hoping they'll navigate their way to your website first. This is a great way to ramp up initial sales and set the foundation for profitable scaling.
At the same time, launch a campaign to request the contact information of anyone who visits your site or makes a purchase. With that valuable data, you have the basis of an email marketing list! Use this platform to connect with your followers and encourage repeat purchases by emailing discount codes, fun giveaways, and other promotions.
6. Analyze Your Performance
Growth requires understanding. Unless you know how your drop shipping business is performing, how will you know how to tweak and improve it?
To that end, make it your goal to track every conversion.
Where did it originate? How long did it take to come to fruition? What did the path to purchase look like?
Google Analytics is a great resource when you're looking to measure these metrics, as well as Advertiser analytics in Traffic Roots if you decide to run a few campaigns. Once you have the data you need, use it to scale your shop more effectively. Prioritize top performers while decreasing efforts spent on those lagging in sales.
How Do I Start a Drop Shipping Business? One Step at a Time
There's no surefire way to guarantee that your next business venture will be a red-hot one. Even the best ideas can fizzle out after a few months, while ideas no one expected to succeed can become industry disrupters and game-changers.
As such, the answer to the pivotal question of "How do I start a drop shipping business?" is simple. Take it one step a time, resisting the urge to rush ahead of yourself.
Do your due diligence and find a stellar supplier. Research your product niche to make sure it's popular, and then learn how to make it competitive. Create a dynamic website and commit to a digital marketing campaign.
These are steps you can't afford to skip, so take your time!
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Visit our drop shipping page to learn more and let's take this next step together!