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Dropshipping has been climbing the ranks as one of the most popular online businesses to start as a side hustle and a full-time way to make money. Its popularity comes from its low risk, high reward concept that, when executed correctly, can be quite lucrative.

If you’ve ever wondered if you should start a dropshipping business and how you can get started, this is the article for you! Read on to our eight steps, best practices, the benefits of starting a dropshipping business and answers to common questions regarding starting a dropshipping business as a beginner.

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In This Article:

What is Dropshipping

How Does Dropshipping Work?

How to Start Dropshipping in 8 Steps

Why Start a Dropshipping Business?

Best Platforms for Your Dropshipping Business

Dropshipping FAQ:

What is Dropshipping

Dropshipping is a method of order fulfillment that involves selling online products from third-party suppliers to customers. The manufacturer or retailer then fulfills the order and ships it directly to the customer without you ever having to touch the product. This allows you, as the drop shipper, to avoid handling inventory and logistics. Your focus as a dropshipper is on the product branding, marketing, website experience, and customer service.

Dropshipping companies will create partnerships with selected suppliers – which can be manufacturers, wholesalers, or retailers – to select their product offering. Some suppliers can even offer customization for the dropshipping company, allowing you to personalize your brand and make it more unique. This can help with marketing and your unique value proposition to customers. However, this tends to require higher minimum order quantities so that is something that should be kept in mind.

How Does Dropshipping Work?

The dropshipping model has three key phases:

  1. The customer places an order on your website for the store’s determined retail price

  2. The order is then forwarded (preferably automatically) to the supplier, the dropshipper then keeps the profit margin.

  3. The supplier fulfills the order and ships it directly to your customer

Complaints and questions are sent to the dropshipping business, who will then need to forward the issue to the supplier and remedy the situation.

How to Start Dropshipping in 8 Steps

1. Pick a niche.

Creating a focused online store will help you decide on products and will also make it easier to develop a brand. To choose a niche, think about your interests, passions, or problems that you’ve noticed a product is a solution to. Figuring out what your target audience wants and how to fix their pain points will result in sales.

2. Do a market analysis.

Once you’ve decided on a niche or two, you’ll want to research it in the market. Analyze your competitors and determine if it’s a viable product/niche. You’ll also want to gather information on and consider:

Tools like Similarweb and SEMrush can help with this evaluation.

3. Create your online store.

Building a beautiful storefront and designing an efficient user experience is essential to a successful dropshipping business. We’ll discuss the best platforms for accomplishing this a little later in this article.

4. Choose your products.

Now that you know your market niche, you can select your products. Check out sites like Ali Express, Alibaba, Doba, SaleHoo, and Wholsale2B for products and suppliers that you can drop ship. Make sure you’re checking supplier pricing, reputation and reviews, ensuring they have good product quality (this can usually be found in the reviews or many offer a free trial or samples of their products), and verifying they have good customer service.

5. Find a dropshipping supplier.

Choosing a reliable supplier or suppliers is paramount to the success of your dropshipping business. You need a supplier that will deliver on a quality product and ship within the allotted time to the customer. Having a reliable supplier will save you from future customer service issues down the line.

6. Register your business as a legal structure.

Depending on the regulations in your country, you’ll want to register your dropshipping store as a legal structure to protect yourself personally. Many businesses opt for an LLC in the United States, but you’ll want to research what is best for your situation and location.

7. Prepare your finances.

Separate your business and personal finances with a separate business bank account. This will help you see your accurate financial health in your business, as well as help you be protected from personal liability in some situations. If liability is something you’re worried about, speak to a local professional on how to protect yourself.

Additionally, you’ll want to understand how income, use and sales taxes will affect your business.

8. Market your brand.

Optimize your online store with keywords and promote your products with social media and other marketing tools. Read how to drive traffic to your Shopify dropshipping store here!

Why Start a Dropshipping Business?

Dropshipping businesses can be an amazing side hustle or even a full-time business, with minimal effort compared to many other business models. When done correctly, it can be a lucrative business without the stress of dealing with inventory and logistics.

Other benefits include:

Best Platforms for Your Dropshipping Business

There are a few platforms you can use to start your dropshipping business, but the most popular one by far is Shopify. Shopify was designed specifically for online stores and has every feature or app you can think of to easily make a store and create the best user experience for your customers.

Other options include:

Dropshipping FAQ:

Is Dropshipping Easy to Start?

Dropshipping is one of the more simple business concepts, and it helps that you can do it from the comfort of home. All you need is a laptop! To start dropshipping, you’ll need to decide on a niche for your business, find products and suppliers, and set up your system so that it can be automated from start to finish. Read our section above about 8 easy steps to start a dropshipping business, we’ll break down how to get started step by step!

Is Dropshipping Worth It?

It can be if you choose the right products and sell it at the right price. Dropshipping can be very lucrative, but many people don’t make the money they were looking for. It can be helpful to invest in a dropshipping course to learn more about the best tactics and strategies to succeed in more detail.

Can You Start a Dropshipping Business For Free?

No, dropshipipping will require a low amount of startup costs, but it cannot be done for free. You’ll need to purchase a domain for your website, sign up for a storefront platform like Shopify, pay for company incorporation, and likely want to spend some money on marketing to get your brand and products out there for people to find.

How Much Money Should You Have to Start Dropshipping?

Dropshipping is one of the cheaper businesses to start, however you will need money for your website, business incorporation fees, web hosting, marketing, and inventory. While you won’t be housing the inventory yourself, you will likely need to purchase a minimum order quantity from your supplier. But this all depends on the products and suppliers you are going to be using to drop ship. We recommend having about $1000 to get your dropshipping business launched and operational.

Is Dropshipping Profitable?

According to Oberlo, the dropshipping market expected to grow to $301.11 billion by 2024. This leads us to believe that dropshipping is not only profitable but thriving!

What Are Some Good Niche Dropshipping Business Ideas?

Some great examples of niche dropshipping stores would be:

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