How to Start an Online Dropshipping Business in 2021

To say that the prospect of starting a business is daunting would be an understatement. Spending your hard-earned money on a business that could fail is enough to prevent you from...

Fiona Gurtiza
Fiona Gurtiza March 22, 2021

To say that the prospect of starting a business is daunting would be an understatement. Spending your hard-earned money on a business that could fail is enough to prevent you from taking that risk. And it goes without saying that you need to worry about other factors like conducting data analysis before you even begin.

But what if there was a way for you to start a business without breaking the bank? Enter dropshipping, an e-commerce business model gaining popularity due to its low upfront cost. 

You may be asking yourself: what is dropshipping? How does dropshipping work? And most of all, how do you succeed with dropshipping?

Let us help clear things out for you.

What is Dropshipping?

In a nutshell, the dropshipping model involves participation from three parties: the vendor (which is you) the supplier or wholesaler, and the customer. Here’s how it works: you start by fulfilling the customer’s order and getting the delivery details. Then, you send the information over to the supplier or wholesaler who will ship the product over to your customer.

On paper, it may sound pretty simple. But you may be asking yourself: how do you make profit with dropshipping? To make things work as a vendor, you’ll need to sell your products for a higher price than your initial purchase with the wholesaler. Here’s an example.

Let’s say you’re a business selling kitchenware. A customer sees one of the knives you’re selling and decides to buy from your online store. He pays $100 for the item, while you pay the manufacturer $60. Then, you send over the delivery details to the supplier so they can successfully ship the item. All in all, you’re making a profit of $40 for that one item.

The $60 discount comes from directly working with the supplier or wholesaler. You can get even bigger discounts if you buy in bulk.

A Caveat?

If dropshipping is so successful, you might be curious about what’s stopping your customers from buying directly from the supplier and wholesaler. After all, couldn’t they buy a product for much cheaper without a middleman involved?

The truth is, suppliers usually sell products in bulk and require minimum orders. Moreover, these wholesalers focus on maintaining the quality, storage, and distribution of these products — not marketing and advertising. And that makes it harder for customers to find these businesses online. 

Long story short: your business is more convenient and accessible compared to direct manufacturers.

How to Start your Dropshipping Business

As mentioned earlier, you’ll need to do a lot of research and preparation before committing to a dropshipping business. But we’ve made the process easier for you with these seven steps:

Choose your Product

Always consider evergreen products when starting a dropshipping business. These include products from the tech, beauty, fitness, and fashion industries.

After that, narrow down your product and target market. For example, if you’re looking to sell products from the fitness industry, in light of the recent pandemic, you might think of targeting stay-at-home customers who want to maintain a home workout routine. So that means it would make sense for you to offer products like exercise mats, push-up boards, and pull-up bars.

But before anything else, you’d want to test the product first before selling it to ensure customer satisfaction. 

Perform Market Research

The next step is to identify which products are sought after in your specific industry. To do that, shortlist the product you plan to sell and conduct keyword research to get a clearer picture of demand and search traffic.

You can use tools such as SEM Rush, Ubersuggest, or Google Keyword Planner. You may want to limit the search to your local area, however, so you can focus target audiences near you.

It also helps to be on the lookout for passing trends. For example, if summer is coming up, people might be looking for cute or sporty swimwear. Or some people might be looking for tech products they can use during travel. 

Analyze the Competition

Dropshipping is a highly competitive business space. And regardless of the niche you choose, there’s always going to be competition. But don’t be discouraged because it helps to perform a competitive analysis to see what everyone else is doing. And it can be as simple as heading over to the Facebook account of your competitor and checking out how they’re marketing their products.

You can get a lot of insights by performing this simple exercise. You can examine their page design and how they interact with their target audience. You can also subscribe to their email list so you can stay on the loop when it comes to their marketing campaigns.

Find a Supplier

A supplier is one of the foundations of your dropshipping business. Without one, you wouldn’t make your business work at all. So how do you find a dropshipping supplier?

First, make a list of potential suppliers that you’ll be partnering with on Oberlo or Alibaba. Partnering with a good supplier provides several advantages, including access to product inventory, on-time shipping and tracking, and more.

When finding the right supplier, ask questions relevant to your business. In particular, you’ll want to know more about product quality, delivery performance, and communication. So ask questions like:

To protect yourself, you may want to consider drafting a Dropshipping Agreement Contract. You can find a template here.

Create Your Ecommerce Store

Now that you have your product, target audience, and supplier, it’s time to create your e-commerce store. This is where you’ll be doing important steps like posting your products, directing your customers, and processing payments.

Shopify is one of the most popular dropshipping platforms you can use. And the best part is that it’s absolutely simple for you to use and set up your store. Shopify has an integrated system that will help you add products, create pages, pick a theme, configure settings, and more.

Drive Traffic to Your Ecommerce Store

Driving traffic to your store is one of the most important parts of running a successful dropshipping business. After all, who would buy from you if nobody knows you exist?

So use everything at your disposal to promote yourself. Establish your presence on social media and create accounts on Facebook, Instagram, TikTok, and Pinterest. With the right SEO gameplan, you can expand your reach and target customers with precision.

Offer Stellar Customer Service

Providing excellent customer service helps build trust and authority. Keep in mind that a negative shopping experience lowers the chance of repeat sales. 

Nothing’s perfect though, and there will be days when your supplier could be at fault. But always make it a point to set things right and prove to your customers that their needs matter. This is why your supplier should provide top-quality service.

Get Started with Dropshipping

Dropshipping is a lucrative business to get into. But to make it work, you’ll need to commit time, effort, and resources.

The infancy stages will be dedicated to devising your marketing strategy. After that, the next step is ensuring that you provide consistent products and customer service. It can be a lot of work. But if you check all the boxes, you’ll eventually reap the rewards of setting up your own dropshipping business.

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