Dropshipping 101: Learn The Fundamentals Of The Business

Over the last few years, the shopping landscape has changed significantly. With the advent of eCommerce, we have more opportunities to succeed as we learn about new ways to sell online. If you want to take advantage of this or are willing to start your business from the ground, this ultimate dropshipping 101 guide can be very useful!

The eCommerce world is full of information and procedures. We know that the amount of data can be overwhelming, so in this article, we will cover step by step what dropshipping is, how it works, and what practices you can implement to use dropshipping in your favor.

Join us in learning the fundamental aspects of dropshipping to know why this business model can become a valuable strategy to make your online selling succeed. Ready to become the best dropshipper? Let’s start!

What Is Dropshipping And How Does It Work?

To get dropshipping 101 fundamentals, we must understand that this practice is a low-risk business model in which we sell and promote products without manufacturing or maintaining inventory. How? Essentially, when a product is sold, as dropshippers, we acquire it from a third-party supplier, who handles direct shipping to the customer. 

This process involves three parties: the customer, the seller, and the supplier. When a customer buys a product from our store, we forward that order to the supplier, who manages the shipping part.

As a dropshipper, you retain the profit margin between the sourcing and selling prices. Is dropshipping profitable? Absolutely. However, in order to apply dropshipping 101, you have to handle all the sales processes effectively and optimize your customer service.

Beginner’s Tip: Wondering how to retain your customers? We can help you with some retention tips to keep your customers coming back.

Now, let’s see some pros and cons of this business model.

Pros & Cons Of The Dropshipping Model 

Here you have some of the main benefits of starting a dropshipping business:

• Low initial investment:  Since we only pay for the products we dropship after customers settle their orders, startup costs are significantly lower than traditional retail models. 
• Low entry barrier: Anyone with an internet connection can begin applying the fundamentals of dropshipping 101. This accessibility is a huge advantage for aspiring entrepreneurs. 
• No inventory: One of the main benefits of this practice is that you don’t have to worry about managing stock or storage space, saving money and time. 
• Flexibility: The only thing you need to run your dropshipping business is a good internet connection; this business model allows you to work from any place you want, making better use of your time. 
• Scalability: Since you can quickly add new products or expand into new markets, avoiding the cons of traditional inventory management, dropshipping allows quick expansion due to its high scalability. 
• Low Risk: The flexibility and low initial cost of starting a dropshipping business make it a low-risk model compared to traditional retail.
• Opportunity to test products: With dropshipping, you can quickly test new products in your store without purchasing inventory upfront. This allows you to try and change products, adapting to your customer niche.
• Easy order fulfillment: In a dropshipping business model, the order fulfillment process simplifies since suppliers handle packaging and shipping directly to customers. One of the key characteristics a good supplier must have is fast shipping. Here, we gather the fastest dropshipping suppliers.

Here are a few disadvantages that you should consider if you’re starting a dropshipping business:

• High competitiveness: Of course, you’re not the only one learning dropshipping 101. In order to make a difference in a competitive market, you must build brand loyalty and recognition. 
• No control over stock and shipping times: Since we don’t manage this part of the process, delays and customer dissatisfaction can be difficult to avoid if we don’t have a reliable supplier. 
• No control over price changes: Following the previous point, suppliers may change prices without notice, impacting your profit margins and pricing strategy. Luckily, you can easily solve this problem by leaning on our price & stock monitoring feature. 
• No control over product quality: This is one of the most critical points to consider. That’s why it is essential to find reliable suppliers and always ask for samples of their products. 
• Selling channel policies: Some selling channels have strict policies or restrictions limiting your product selling options. But don’t worry; we will also cover that for you. Keep reading to learn how to find the best-selling channels! 
• Difficulty in building a brand: Differentiating your brand is challenging in this business model. You must create a trusting relationship with your customers to stand out. 
• Processing orders: We have to have enough time to deal with a high volume of orders and coordinate with multiple suppliers to make everything go smoothly. But don’t get scared! With our fulfilled feature, you can process orders automatically while you take care of other tasks. 
• Customer service is on us: As retailers, we handle customer inquiries, returns, and complaints. It is essential to provide excellent customer service, and it can be demanding, requiring significant time and effort.

Tip: Don’t let these disadvantages hold you back! Accessing our automation tool and features lets you efficiently manage these pain points. With that assistance and the proper guidance, starting your own dropshipping business is easy. Save time and money by starting AutoDS free 14-day trial.

Dropshipping 101: Quick Guide On How To Start Dropshipping

Let’s get deep on dropshipping 101. Before you read the information below, remember that we are here to help you build a successful dropshipping business. Now that you know the fundamentals of dropshipping, you can delve into each part of the process of starting your own dropshipping business.

In this part of the process, you may have many questions. What kind of taxes should I pay? Which selling channel is better for my store? How do I choose the perfect product to sell? Keep calm; we will guide you on every step you should take before you start your business. If you already started it, don’t miss the chance to optimize it with the following bits of advice! 

1. Starting Budget & Dropshipping Taxes 

Like every other business model, determining our working capital is one of the first steps we must take. This way, we can identify the best-selling platform for our budget. It’s challenging to know precisely how much it costs to dropship because it depends on the selling channel’s budget requirements. However, remember that it is a much more profitable business model in most cases than a traditional sales model. 

Also, we must remember that every business has to fulfill tax obligations. The type of taxes you would have to pay primarily depends on aspects like the location and structure of our business. Knowing how taxes work on dropshipping is not difficult at all!

Of course, as this is a beginner’s guide to dropshipping, we’re trying not to overwhelm you with information, but you can always find more details about this subject on our ‘How to learn to dropship – The Full Guide’. 

2. Select A Selling Channel

Choosing our selling channel is necessary to clear the dropshipping 101 journey. First, you have to know that there are two types of selling channels.

• Marketplaces: A platform that lists products from multiple sellers. In this type of selling channel, we can take advantage of the large audience on the platform and the recognition and trust the marketplace already has.
• Customizable eCommerce platforms: eCommerce websites allow us better customization and brand development. In this type of platform, the buyer can focus only on our listing and products without getting distracted by our competitors’ products. 

Here is a list of the best-selling channels to start your dropshipping business. Do you want to know the best part? AutoDS supports all of these channels with automation. Remember that each selling channel has budget requirements, so you can choose the one that adapts better to your starting budget.  

• Shopify: To start dropshipping on Shopify, we need a starting budget of $500-$1000. Also, we need to register for a Basic Store Subscription plan worth $29 per month. 
• WooCommerce: The WooCommerce starting budget is $500; since we can build and customize our store, it comes with a monthly subscription. 
• eBay: We need about $50 to $100 to start on eBay. We can open an account for free, but we still need to put aside around $100 for possible payout delays. 
• Amazon: We must invest a $500 starting budget to start dropshipping on Amazon. If you’re starting, we suggest you cover the $0.99/sale with the individual Plan. 
• Facebook Marketplace: Starting a dropshipping business in Facebook Marketplace needs no initial working budget. We only have to pay for the first few orders until we receive payouts from Facebook. 
• Wix: Wix’s cheapest plan comes at $17/month. The starting budget to start dropshipping here is around $500 
• Etsy: Similar to eBay, we need a starting budget of $100 to start operating since we don’t need to pay subscription fees or any costs associated with opening a store.

3. Create Your Online Store

A consolidated online store is key to attracting customers and providing them with the best experience. These are some points that we recommend you consider:

• Design and esthetic: Presenting your products on a visually appealing platform is important. Details such as the color palette or a logo that represents you are necessary. 
• Fluid and clear communication: For our online store to work, we must communicate information (prices, product types, payment methods) clearly and concisely, adapted to our customers.
• Website design and user experience (UX/UI): We must create a user-friendly website design that ensures easy navigation, fast loading times, and a streamlined payment process to enhance the user experience. 
• Efficiency in payment method: Set up secure and convenient payment options for your customers. 
• Marketing strategies: To grow our online store, we must develop a comprehensive marketing strategy to attract customers. We can use various digital marketing strategies and channels, such as social media, email marketing, and paid advertising, to reach our target. 
• Use AI to your advantage! Platforms like ChatGPT or similar ones can assist you in setting up your online store. This AI platform can give you valuable insights on creating a name for your store or better understanding what type of public you want to target with your ads. Do you need an extra hand with a title or a description? Don’t miss our AI product title & description generator; use it to boost conversions!

Beginner’s Tip: Get a free AI pre-built Shopify store with winning products already added. Click here and let the magic happen!

4. Conduct Product Research

The next essential aspect of dropshipping 101 is taking the time to research and evaluate potential products to sell in our online store. This involves identifying popular products, assessing the competition, analyzing the market, and selecting those items that have the potential to generate sales and profits. The ultimate goal is to find profitable products that meet the needs of your audience. Of course, you can lean on our dropshipping product research tools article to achieve this.

This is one of the most critical and challenging parts of the process. If you’re seeking inspiration, make sure to check out our article on success stories. Seeing other people’s examples of successful dropshipping stores is always helpful in finding your way. 

These are some of the reasons why it is so essential to conduct correct product research before diving into the dropshipping world:

• We can identify profitable products.
• It allows us to assess the competition. 
• We understand better the market trends.
• We can minimize the risk of investing in products that may not perform well.

Products To Avoid

To achieve success with your dropshipping business, it’s necessary to consider which products are not recommended to sell. This way, we avoid legal issues, generating low profitability or a poor image for our online store. These are some of the products you should be aware of:

• Copyrighted items
• Age-restricted products 
• Dangerous goods
• Medicine or supplements

Don’t worry too much! By avoiding these products, you shouldn’t have any problems setting up your online store. If you have further questions about the legal aspects of dropshipping, check out this article, which has all the details you need to know.

Pro Tip: Connect To An Automation Tool

We know there are a lot of steps, and the amount of information can be overwhelming. But since you are here, we are gonna share with you one really valuable piece of advice: by automating some processes like inventory management, price monitoring, product imports, order tracking, analytics, and reporting, you can save time to focus on the most important aspects of dropshipping 101.

Tip: Here at AutoDS, we offer a wide range of tools that can definitely streamline your tasks, saving you time and money.

5. Choose A Dropshipping Supplier

As we saw before, choosing the right supplier is one of the aspects that makes a difference in your store. Many factors that directly influence your relationship with your customers and the success of your business depend exclusively on working with the right suppliers. But How do you choose the best one for your business? These are some of the things that we recommend you keep in mind:

• Pricing: Although it may sound obvious, we cannot stress enough the importance of this aspect. It is essential to invest your budget wisely by choosing a supplier that offers affordable prices for your business.
• Reliable shipping: Working with major shipping carriers and fast shipping times is necessary to ensure that our customers receive our products within the agreed-upon time frame and without any inconvenience.
• Return policy: We want to make things easier for our customers. That’s why looking for suppliers offering quick and easy returns is helpful. 
• Location: If you choose a supplier close to your target audience, getting your deliveries done faster will be easier. 
• Payment Flexibility: It doesn’t hurt to have a selection of payment methods to work with our suppliers. 
• Customer reviews: Paying attention to public opinion about the supplier can help you determine the quality of their products.
  

6. Import Products To Your Store

The next step in dropshipping 101 basics is importing trending items and offering them in our sales channels. Essentially, there are two ways to achieve this step: 

• Manually listing our products: This option may require time that we can leverage to do the most essential tasks. 
• Import items automatically: Using the AutoDS Product Importer feature, you can save time and effort to focus on other aspects of your business or personal life. 

It is a very intuitive process, but here you have a little help in case you wonder how to use it: 

1. Log in to AutoDS free trial account.
   
   
2. Select the product you want to add to your store and copy the product’s URL or ID of the item you want to add.
   
   
3. Next, click on the “Add Products” on the left sidebar of the AutoDS platform.
   
   
4. Choose the “Single product” option, and paste the product’s URL.
   
   
5. Click the “edit now (quick)” button.
   
   
6. Once the import process is complete, you will see your product in the drafts section. Click the save button to update the product details. 
7. The last step is to click the “Save and import” button. 

Now, your product is available in your dropshipping online store!

7. Market Your Dropshipping Products

There is not only one magic trick for success. We strongly recommend you try different strategies in order to get which is better to reach your target audience. Keep in mind that sometimes you need to combine strategies, but your personal path will depend a lot on your specific audience and products. 

If you don’t understand what we mean by “strategies,” don’t worry! We’re not talking about master plans –we are referring to a series of initiatives, such as the following, that you should definitely count on:

• Offer free shipping: One of the best ways to build customer loyalty is offering free shipping. This causes a positive perception of our brand in the eyes of our customers, making them feel that we are willing to invest in their satisfaction.
• Paid advertising campaigns: Paid advertising platforms, such as Facebook ads, Google ads, or similar ones, allow us to reach specific demographics, interests, behaviors, and geographic locations. Also, this kind of advertising allows us to measure our campaigns’ performances in real time. 
• Add email marketing to your business: If we want to create a sense of connection and exclusivity with our customers, email marketing can help us build closeness to our target audience.

Remember that these strategies only work if they go hand in hand with genuine organic content and excellent customer service. To delve into the vast world of strategies, we suggest starting by reading tips & tricks on how to market your store, where you will find more information on the subject.

8. Fulfill Your Orders

The current times move quickly, so generally, customers expect to receive their order almost immediately after purchasing it. This can be achieved easily if we have an automated system for order fulfilment.

As you can imagine, it’s easier to automatize this process to save valuable time. With our Fulfilled by AutoDS, you can automatically process the orders on your behalf. You can make your clients happy even while you are sleeping or traveling! 

Gain access to all of our features and make your business grow by:

• Reducing errors: our system deals automatically with the shipping info and details. 
• Tracking information: You can stay on top of your orders and their status throughout every step of the delivery process.
• Scale your business: process your orders automatically to allow your business to scale.

Dropshipping 101: Best Practices & Tips For Success 

We’ve already covered almost everything you need to know about dropshipping 101. As you see, with the correct guidance and features, starting your dropshipping store can be very easy. Of course, we can provide you with much more information, but knowing the fundamentals is the first step on this journey. 

Join us for some additional tips to ensure the success of your business!

Scale Your Business With An Automation Tool

As we saw before, automation tools can significantly help our dropshipping business scale in several ways. In the first place, by automating processes like inventory management, customer communication, or order processing, we can save time and resources and focus on the strategic aspects of our business.

Manual processes can become overwhelming and prone to errors. With automation, we can handle increased order volumes and manage larger inventories without increasing our workload. That’s why, in AutoDS, we offer you a wide range of automation features that can be useful for your dropshipping business. To name some of those:

• Price And Stock Monitoring: We automatically scan your products, in case of updates, we edit this information in your store!
• Fulfilled by AutoDS: Automate orders, tracking updates, and returns without needing a buyer account. 
• Product research system: Easily browse through 8M+ trending products from suppliers worldwide and effortlessly add them to your store with just one click. 
• Product imports: Effortlessly import over 500M products from global suppliers with a single click.”
• Product sourcing: Send us any product link or images, and our team will locate it for you, stock it in our warehouses at discounted rates, and ship it directly to your customers with personalized packaging and branding. 

And many more!

Work With Multiple Suppliers

Through diversifying our supplier network, we can establish a safety buffer against unexpected events like a delay in your deliveries, a bad customer experience about a devolution, or running out of stock. Working with various suppliers is a helpful strategy to avoid those mistakes.

Of course, working with high-quality suppliers is a must to reduce potential risks and make our business grow. This way, we ensure the quality of our products, and delivery & shipping times will always be good. Always make sure you choose the best dropshipping suppliers for your growing business. 

Provide Excellent Customer Service

Have you heard the phrase “the customer is always right? Then you know how important it is for your store to provide an excellent customer experience. Remember that dropshipping is a highly competitive market, and establishing a good relationship with your clients will help you make a difference. 

Learn More About Dropshipping 

With this in mind, you can start thinking about starting your own dropshipping business. Remember that in this kind of practice, it is essential always to continue learning and searching for better ways to reach your goals. Of course, we are here to help you! In both our YouTube Channel and our Dropshipping Blog, you can find tailored advice and tools to grow your dropshipping business in less time than you imagine.

Frequently Asked Questions

How Can I Start Dropshipping As A Beginner?

You can start in a few simple steps: Conduct product research, select the right selling channel and supplier, create your online store, and leverage automation tools to save time and resources on prior aspects of your business. 

Is Dropshipping Still Worth It In 2024?

Yes! Dropshipping will still be worth it in 2024. According to Statista, by 2027, the dropshipping business will be worth $500 billion. So, you’re right on time to jump into this business model.  

What Is The Secret Of Dropshipping?

The secret of dropshipping is to conduct proper product research to find winning products, market your store correctly, and use a dropshipping automation tool that helps you with the entire selling process.

Conclusion

Dropshipping may seem like an intricate or exclusive business model if you see it from the outside. Now, having incorporated this quick guide on how to start your own dropshipping business and the best practices and tips for success, we can conclude that you are ready to get started! Take advantage of our automation features and guidance to get your business up and running without wasting any extra time or money.

If you’re tired of investing your time and not reaching your goals, this practice can help you grow in less time than you imagine. If you ever feel lost or overwhelmed, we are always here to lend a helping hand!

Ready to keep on learning? Delve more into dropshipping 101, read the following articles:

• How To Get Products For Your Online Store Like A Pro
• Dropship Inventory Management: Your Key To Success
• Print On Demand 101: A Full Guide To A Successful Start