Dropshipping has taken the world by storm and continues to grow every year. However, many still struggle to understand what it is. Wouldn’t it be nice if there was a dropshipping information source for dummies?
One thing’s for sure; no one mastered dropshipping overnight. Everyone has to start somewhere.
Think of dropshipping as an online business that doesn’t require an office or employees. Similarly, it requires little to no initial investment. All that is necessary is you (the business owner), a laptop, and an internet connection.
Once you grasp dropshipping, you’ll understand why it’s an easy, fun, and flexible way for people of almost any age or background to earn a living or add a stream of income.
That’s why we’re presenting to you with the ultimate dropshipping crash course for dummies. When you’re done reading it, you’ll understand what dropshipping is, how it works, and most importantly, how to start your own profitable dropshipping business.
What Is Dropshipping?
Because this is a dummies guide for dropshipping, we should first define what it is. Dropshipping is an online eCommerce business model that does not require you to own, hold or ship inventory.
Your web store offers products for sale. A customer visits your store and makes a purchase. After receiving payment, you order the item from a supplier at a lower price and have it shipped directly to the customer. The price difference is your pure profit.
Dropshippers are in some ways similar to real estate agents. You don’t own the products. Instead, you show them to customers. If they buy, you make money. If not, no harm done.
For example, a customer buys a pair of sunglasses in your store for $40. In turn, you order it from the supplier for $25 and instruct it to send the item directly to the customer. The customer receives a brand new pair of sunglasses, and you just made $15 without leaving your couch.
In contrast, standard online retail stores must purchase their products in advance and manually fulfill orders. Additionally, they must sell inventory. Otherwise, they lose money.
Is Dropshipping Legal?
Does all of this sound a bit sketchy? It’s ok to be suspicious at first and wonder if dropshipping is legal. However, you can rest assured that dropshipping is a fully legal and legitimate business model.
Dropshipping is all around us. In fact, chances are you’ve purchased products from a dropshipper without prior knowledge. It is a very mainstream type of business.
However, just like any business, there are regulations that we all need to follow. As long as you keep to them, you’re in the clear.
The most important rules to pay attention to have to do with your product offerings. Steer clear of selling copyrighted or trademarked products. eBay VeRO is a great resource to help avoid these issues, containing a list of companies that uphold their copyrights.
The eBay VeRO list is helpful regardless of where you sell (Shopify, Facebook, etc.) because it contains all major copyrighted or trademarked brands. That’s why the VeRO list is the basis for the AutoDS copyright warning system that protects dropshippers from reselling copyrighted products.
Additionally, you want to avoid selling age-restricted products like alcohol or tobacco and dangerous products, including weapons and ammunition.
As a final note on products, try not to sell medical devices and any type of product that requires a special license to sell.
Other than product regulations, always keep in mind country-specific rules. For example, the UK has strict consumer protection and anti-competition laws. Additionally, some countries may have special tax rules.
To conclude, dropshipping is legal. However, you must follow the rules to keep it that way.
Is Dropshipping Profitable?
Dropshipping is one of the most profitable businesses to run for two main reasons. First, there is an ever-growing demand for online products. Second, the super low investment and expenses of the businesses keep the margins high.
Demand for online products is exploding year by year. To get a perspective, according to Statista, global annual retail eCommerce sales have grown from ~1.5 billion in 2015 to ~4.3 billion in 2020.
Usually, running an online store requires a sizable initial investment, creating a barrier to entry. You’ll need to purchase products, hire employees and pay for storage and shipping costs.
However, dropshipping is the best way to capitalize on the growing demand for online products. Anyone can enter the market so long as they have a computer with internet access.
Furthermore, in many cases, dropshipping requires little to no marketing investment. For example, you can run a store on a platform that does the marketing for you.
What Are The Benefits Of Dropshipping?
As you can see, dropshipping is a profitable and easy business to run. Not only that, it comes with a host of benefits and perks that almost no other job or business can offer.
You can work from anywhere in the world and set your own work schedule. Additionally, as the only employee and owner, you don’t answer to anyone. The people you need to satisfy are your customers.
Dropshipping is a low-risk, high-reward business. There is no initial investment, and you only pay for products after getting paid. Therefore, you and not worry too much about losses.
Furthermore, because you don’t hold or own products, you can quickly scale your business to levels of sales and profits that regular sellers take years to build. Similarly, dropshipping makes it easy to sell products from multiple categories.
Dropshipping For Dummies – How To Begin
Now that we know how ideal this business model is, it’s time to begin the dropshipping journey with a practical step-by-step tutorial for dummies.
First, you should pick a selling channel, which is where you sell your products.
Then, you’ll need suppliers to source the products. And last but not least, an automation software to process orders. Manual processing of orders is a nonstarter if you want to earn high profits dropshipping.
Choose Your Selling Channel
When you start advancing in dropshipping, you’ll be able to sell on multiple channels simultaneously.
Facebook Marketplace has been around for a while but is relatively new in the dropshipping world. As a result, there is hardly any competition, and you can sell almost any product with fast results.
Keep in mind that this is the hottest channel right now that offers significant advantages like super low selling fees and major exposure to millions of US users.
To start dropshipping on Facebook, make sure you have a US IP address so that you can turn on the shipping option and gain access to buyers in all fifty states.
Then there is eBay. As a marketplace that’s been around for years, it has a proven track record of enabling sellers of all levels to succeed early.
The unique design and features of eBay make it a perfect place for dropshippers. You’ll have access to hundreds of millions of visitors organically, without having to pay traffic sources to bring customers to your store.
What’s more, with relatively low investment, you can make your way to the top of the search results.
However, keep in mind that eBay initially limits you to selling ten products and gradually increases the limit over time. That can be an obstacle for some, but as a new dropshipper, it’s an excellent opportunity to learn the ropes before working your way up.
Shopify offers a solution to sellers who prefer running their store outside the confines of a marketplace. The platform was designed for online sellers in mind, being both user-friendly and highly customizable.
As a bonus, there are no product selling limits, so you get to decide how fast you want to grow. Additionally, the selling fees are much lower than eBay.
The biggest challenge when using Shopify is the lack of an existing audience. To succeed, you’ll need to do the marketing work on your own and set aside a budget for it.
If this selling channel seems like the right fit, let our Shopify wizard guide you to a winning store in the Shopify Dropshipping 101 A-Z course.
Once you pick a selling channel, it’s time to choose suppliers where you’ll find products to sell.
The most successful dropshippers run versatile stores by working with multiple suppliers. Doing so allows them to diversify product offerings and increase sales.
Keep in mind that there are at least twenty-five different dropshipping suppliers on the market, so regardless of niche or target audience, there is something out there for you.
Dropshipping Product Research For Dummies
Picking suppliers is good progress, but it’s not enough. Since there are millions of products on the market, you’ll need a way to sort through the pile. The goal is to locate the products that customers are most likely to buy.
Uninteresting or low-demand products hardly get sales. On the other hand, selling hot products leads to high sales and repeat buyers.
The action of finding the best products is also called product research. It is one of the most, if not the most, important task when running a dropshipping store and can make the difference between success and failure.
To find winning products, you can take one of two approaches. Find out what product categories are trending on the market or learn from your competitors by selling similar or identical products.
However, the key to succeeding is testing. After the initial research, you need to test multiple products in your store and see what customers buy.
For example, Amazon’s Best Sellers contains categories such as Most Wished For or New Releases which give you a good idea of the most popular or in-demand products. Once you find a hot category, test multiple products and see which ones are selling the most.
Alternatively, you can replicate the success of your competitors by testing out their product offerings in your store.
Dropshipping Automation Software
The last step before you begin selling is finding automation software to help run your store. Manually running your store takes time, energy, and careful attention to detail.
If you want to turn a dropshipping business into a primary source of income, you’ll need a way to speed up the operation, streamline the steps and minimize mistakes.
Think about it. Dropshipping requires price/stock monitoring, easy and fast fulfillment, order automation, customer service, VA’s, and more.
Therefore, the most successful dropshipping stores use automation software to help run their businesses. Platforms like AutoDS can automate every step of the dropshipping process, from listing products to processing orders. Instead of hours, you get tasks done in seconds.
Once you’ve mastered the basics, your store will start seeing sales, and you’ll need to fulfill orders.
Fulfilling orders simply means going to your supplier’s website and placing orders for customers. There are two methods of order fulfillment. Manual and automatic.
Manual fulfillment requires that you go to the supplier website for each order, fill in customer details, review information carefully, and place the order.
Conversely, automatic fulfillment saves you the time and headache of placing individual orders by allowing you to do so in bulk or automating the process altogether.
For example, the Fulfilled by AutoDS service takes care of order fulfillment from A-Z without human intervention.
When orders come in, the AI software places the order with the supplier. Then, when the order ships, it sends tracking info to the customer. Finally, once the item arrives at the customer’s address, AutoDS marks it delivered.
The golden rule for any flourishing business is customer satisfaction. Your profits and growth directly correlate to the level of customer service you provide.
Dropshipping is no different, so you’ll need to keep tabs on orders, ensuring they are placed accurately and delivered on time.
Additionally, customer service entails answering customer questions and processing returns when they are requested.
Does this sound a bit overwhelming? It doesn’t have to be if you can manage all customer interactions and multiple stores in one place.
Luckily, AutoDS offers this exact feature. On your selling platform, there is a dedicated page where all customer interactions take place. From there, you can stay on top of any customer service issue from multiple stores with the confidence that you won’t miss essential issues or messages.
There is a famous saying: money is constantly falling, you just need to find out where. Dropshipping is one of those places.
And as you now know, dropshipping isn’t that complicated, even for dummies. Anyone can start and see results quickly. So if you like the idea of quitting the 9-5 grind or just looking for an additional income source, dropshipping is for you.
As long as you have the will to succeed and put in the effort, you too can build a dropshipping empire.
Take the next steps and jumpstart your dropshipping career with our full A-Z dropshipping courses: