How to start a dropshipping business is one of the most popular topics on the digital table. It’s something many people are interested in but have no idea what it is or where to start.
Dropshipping is taking the world by storm and changing the way eCommerce is done. Sellers from around the globe learned to earn high profits on products without ever needing to hold inventory.
Instead of selling the old-fashioned way, dropshippers outsource most aspects of their businesses to a robust network of suppliers and marketplaces. Now, with a laptop and internet connection, the possibility of unlocking profits awaits us at our fingertips.
As a result, anyone can become an eCommerce entrepreneur with little effort and high returns. This is by far one of the easiest online businesses one can start and is well worth the time investment.
In this article, we’ll discuss all things dropshipping. What it is, how to make money doing it, and what you should do to start on the right track.
If you’re looking for a complete guide on how to start your own dropshipping business, we recommend reading How To Start A Dropshipping Business In 2022: A Complete Guide.
The Dropshipping Business Model
Let’s get right to it.
So what is dropshipping, and what makes this business model so unique?
Until dropshipping became possible, operating an online store required you to purchase physical products, hold inventory in a warehouse, pack orders, and ship them out. This resulted in high costs and made it difficult to break even.
In contrast, dropshipping businesses hold no physical inventory. Instead, they have access to products offered by various dropshipping suppliers. As dropshippers, we can sell these items on selling channels like Facebook Marketplace, eBay, Shopify, and others.
When a customer purchases an item from our store, we place an order with one of the suppliers and instruct them to send it straight to the customer.
As you can see, the dropshipping business model is as simple as it gets, and the sky’s the limit on what you can accomplish.
It requires no office, warehouses, or team of employees. All it takes to set up a dropshipping store is a computer, an internet connection, and the motivation to learn and succeed.
Running A Dropshipping Business: Is It Really Worth It?
Opening a dropshipping business is one of the most lucrative earning opportunities in the world today. It has many benefits and few requirements to begin compared to other business models.
Since the dropshipping business model does not require us to purchase stock, no initial investment is required. Customers buy products from your store and pay you first. After that, you pay suppliers for the order.
Therefore, almost anyone can start this kind of business without worrying about startup costs.
Contrast that with standard online stores where you need an initial investment to purchase products with the hope that inventory sells. Dropshippers don’t have to worry about that.
Additionally, dropshipping is a low-risk/high-reward business. The worst that can happen is a lack of sales, but there’s no harm since you didn’t purchase inventory beforehand. Your initial investment here is the time and work you put into product research and testing.
Furthermore, dropshipping allows you to sell almost any kind of product. You can have multiple stores, each with its own niche. As a bonus, AutoDS gives you access to over twenty-five suppliers expanding your options to millions of different products.
It is not surprising then that the dropshipping market keeps growing every year. According to Grand View Research, dropshipping is forecasted to bring in almost $558 billion in revenue by 2025. As demand for products online grows, so does dropshipping. So this is an excellent time to jump in.
Remember, dropshipping comes with lower startup costs than any kind of business and gives you the flexibility to work from anywhere in the world on your own schedule.
How To Make Money Dropshipping
Now that we see the value of dropshipping as a business, how do we translate the time investment into profits?
The truth is that, if you want to make money dropshipping, product research, and customer service are your highest payoff activities.
Finding products that people are interested in accounts for the majority of your initial success. Then, customer service makes the difference between a store that survives and grows and a store that fails.
Product research breaks down into three key activities:
First, find products and ideas that work. For example, AutoDS’s Sell These Now video lists some of the most proven products on the market.
Second, testing products you find in your store. The key is to keep on testing multiple products. Don’t settle for a few. Add multiple products, keep the ones that work, and delete low-performing ones.
Third, spying on and learning from the competition. Existing profitable stores can give you crucial information. Learn from their successes by finding out what marketing methods or product types are working for them.
Additionally, learn from your competitors’ mistakes and by avoiding them in your store.
Once the sales start coming in, keep this ironclad rule: your customers are the number one priority. They are the lifeblood of your business and what keeps your dropshipping operation functioning.
So, sell them high-quality products, deliver on time, and take care of any issues that come up.
As you gain more visitors and buyers, build an email list. In time, you can tap into your loyal customer base for sales repeatedly.
Finally, don’t forget that as a business, you are here to make money. Every profitable business makes its money buying low and selling high, and dropshipping is no different. So set high-profit margins on your products. Low margins of 4-5 percent profit won’t cut it.
If you still have doubts, be aware that high margins are normal in the eCommerce world. In fact, you’ve probably purchased a high-margin product from a dropshipping store without realizing it.
How To Start A Dropshipping Business
We’ve covered the principles of succeeding in dropshipping. Now let’s go through the foolproof step-by-step guide on how to start a profitable dropshipping business.
Find Trending Products To Sell
In order to start a successful dropshipping business, you’ll first need to learn how to find good and trendy products to list in your store. There are two general approaches to this task:
Begin by looking at what other dropshippers have in their stores. There are many sellers online, so in order to identify dropshippers search for products from your suppliers on the selling channel that you want to sell on.
For example, take a product title from Walmart and search for it on eBay. You might find other dropshippers who are selling the same item for a profit. This is a good indication that there is interest.
Once you identify popular dropshipping products, extract their details from supplier websites and list them in your store.
Additionally, supplier websites themselves are a goldmine for product finding. For example, you can find amazing products for your store on Amazon’s Hot New Releases or Best Sellers pages. Pick the ones with positive reviews and seller feedback.
Other than the two major product-finding methods, there are many ways to gain inspiration for product ideas. For example, get inspiration from AutoDS’s article on the +99 Best Dropshipping Products to Sell In 2021. Similarly, you can check out our YouTube Playlist on the Hottest Dropshipping Products of 2021.
Finally, to save time, automate product research with the AutoDS Finder. This feature scans eBay for the hottest selling product and uploads them from your chosen supplier directly to your store.
Select Your Target Audience
While on your product search mission, always keep your audience in mind. Who is interested in this product? Is there a specific region or age group that is more likely to buy it?
However, audience research isn’t black and white. Perhaps a product sells better in the UK market, but that could be because it isn’t marketed correctly for an American audience.
See it as an opportunity. Once you find products selling well in one market, try to sell them to another audience, and you’ll see some great results. You can always change the marketing and create a niche for your product in another region.
Finally, remember that there are upsides and downsides to different regional audiences.
Overlooked places like New Zealand, Australia, Canada, and Europe offer us opportunities for profit with relatively low competition. On the other hand, while the American market has the highest demand for online products, competition is also higher.
For Shopify Dropshipping, we recommend using the Audience Research Spreadsheet to help narrow down and nail your target audience.
Identify Your Competition
Dropshipping competitors should never be an obstacle to worry about. Use them as a compass to help find your way to more profits.
For starters, check what products your competitors are selling and how they market them to audiences. Then, see which gaps you can fill in.
Perhaps there is a similar product with better features you can sell. Or, maybe the product is marketed to one region, but other regions would love it as well.
For eBay dropshipping, Zik Analytics is a great way to keep an eye on your competitors if you don’t want to search eBay manually.
Similarly, for those dropshipping on Shopify, we recommend reading How To Spy On Shopify Stores: The Top 6 Spy Apps For Dropshippers to learn about and master your competition.
Additionally, you can sell the same items to a different market than your competition. For example, if the competitor sells a product on eBay, you can try selling it on Shopify.
Create Your Online Store
Now that you’ve found your products and audience, it’s time to open an online store. Also called a selling channel, this is a virtual space where you make products available for purchase.
Three major platforms are most popular and effective for dropshipping: Facebook Marketplace, eBay, and Shopify.
Facebook Marketplace has been around for years, but its potential as a dropshipping platform is now being realized. Opening a Facebook store is as simple as logging in to your Facebook account, heading over to Marketplace, and listing products.
Who hasn’t heard of eBay? It is one of the most popular eCommerce platforms in the world that brings organic traffic to your store, without having to spend a penny on advertising. Since many of us don’t have an account, we need to create one first.
Then, once logged in, follow the link to creating your first listing. There are a few more steps to complete, but all in all, it’s a straightforward process.
Those who prefer having their own website should consider going with Shopify. This service allows you to build your own store and customize it to your liking.
However, it requires a higher initial investment to bring traffic to your store and some technical know-how. Luckily, if you face any challenges in the process, you can always check out our free A-Z Shopify Dropshipping Course to guide you through every step of the way.
List Your First Product
With your store all set up, you’re ready to start listing products.
On Facebook Marketplace, the process is quite simple. Head to the Marketplace and click ‘Create New Listing.’ Then pick ‘New Item For Sale,’ and you’re ready to go. For a faster, more efficient way to upload products, use the AutoDS Helper Extension for Facebook Marketplace.
For a complete overview of dropshipping on Facebook Marketplace, check out our step-by-step guide.
Listing on eBay can be done manually or automatically with AutoDS. We recommend you list your first eBay product manually to get a sense of how it works and what is required. Make sure to opt-in for business policies first. Then, fill in the product details, price, and so on.
After creating your first listing manually, save loads of time with AutoDS’s platform. There, you can quickly import products in one click to your drafts page, optimize, and publish to your store in no time.
Adding products manually to Shopify is easier than on eBay as you don’t have to create business policies. Shopify’s legal pages take care of that. To upload a product, go to your Shopify dashboard, click on the ‘products’ tab and then ‘Add Product’ at the top right.
Additionally, you can access the same AutoDS one-click upload and import features available to eBay sellers.
Market Your Store
After you list products, you’ll want to get steady traffic of customers to your store. Each selling channel requires a different marketing approach.
Thankfully, getting traffic on Facebook Marketplace is easy and free. With existing traffic of users already on the site, you have access to millions of customers spanning fifty US states. Additionally, you can boost your listings by posting them to buy/sell groups. How to start a dropshipping business couldn’t be easier than on the Facebook Marketplace, as all you need to do is start importing products to your Facebook Marketplace account.
eBay also gives you access to free organic traffic with hundreds of millions of monthly visitors to the site. While most traffic to your listings is free by default, there is an option to increase exposure with promoted listings.
The great thing about this service is that you come up higher on eBay searches and only pay if a sale is made.
Finally, you can launch traditional Facebook or Google paid ads with links to an eBay listing.
Conversely, Shopify lacks the steady organic traffic of a marketplace. Therefore, You’ll need to do the bulk of the marketing on your own.
Thankfully, there are several options at your disposal. You can use email marketing which comes at no cost to you. However, you’ll need an initial flow of customers to build your list.
With a good financial investment, you can promote your products or store using paid Facebook or Google ads. Alternatively, you can utilize influencers to boost your product for a fee. On a lower budget, try these five marketing tricks.
Keep in mind that in the age of social media, marketing opportunities are endless. Here are twelve ways you can market without Facebook or Instagram.
In any case, no need to feel overwhelmed. Our Shopify A-Z course can guide you through every step, including marketing.
Assuming you’ve listed and marketed your products correctly, all that is left is to watch your sales come in. This is the best part of dropshipping: reaping the rewards of your hard work.
As the sales come in, make sure to fulfill your orders by going to your suppliers and ordering items for your customers.
This process can take up a lot of time, especially once the volume of orders grows. However, with Fulfilled by AutoDS, customer orders are placed automatically. Yes, you heard right! And this can help you scale your business to the next level.
You just got a crash course in dropshipping. At this point, you know how it works, why it’s worth it, and how to start a dropshipping business.
We all have the things we’re passionate about in life, but finding time and money to attend to them is not easy. Starting a dropshipping business can help alleviate the money concern. But with AutoDS’s automation, you can free up most of your time for the things you love.
We took dropshipping and turned it into a passive income stream, just like investing or real estate. So all you have to do is open your store, sign up for AutoDS and let us take care of the rest as you watch the profits come pouring in.