According to Statista study, global e-retail sales reached $3,53 trillion in 2019. This figure is predicted to nearly double to $6,54 trillion in 2022.
Definitely, 2020 is going to be an incredible year for the eCommerce business. And it would be a great idea to thrive in the market with dropshipping.
To avoid any mistakes which can make you die in the very first steps, you should follow this ultimate checklist to launch a dropshipping store.
An overview of dropshipping
If, by some chance, you are not much familiar with dropshipping, let’s take a quick overview first.
What is dropshipping?
Dropshipping is basically a retail fulfillment method in which merchants do not hold inventory or handle products themselves. Instead, when a customer places the order, the retailer forwards the order details to a third party, such as a manufacturer, wholesaler, distributor. The product is now shipped directly from your partner’s warehouse to the end customer.
Dropshipping allows you to sell physical items without establishing a warehouse to store products or involving in packaging, shipping, handling returns.
How does dropshipping work?
From the diagram below, we can recognize three primary parties involved in dropshipping: the suppliers, the retailers, and the customers.
In this process, dropshipping store owners work as intermediaries between the initial suppliers and the end consumers.
- The retailers list the merchandise of the manufacturers on their website.
- When the customers place orders at retail price, the merchants will purchase the identical items at the wholesale price, and transfer order information to suppliers for fulfillment.
- The suppliers are now responsible for packaging and shipping products to the customers under the business name of the retailers.
- The dropshipping store owners keep the markup amount (the difference in prices) as profit for themselves.
Why should you start your business with dropshipping?
Dropshipping is a lucrative medium for conducting business. Retailers who adopt the dropshipping can gain 50% more profit than those who keep their own stock inventory. Here are some main benefits that make dropshipping become such a popular approach.
Not much capital required: The initial investment of starting a dropshipping business is just related to build and run your website. You only have to pay for the domain, hosting, theme, app, etc.
Easy to get started: Dropshipping is relatively easy to learn and adopt. It typically involves three primary tasks: defining your niche, finding suppliers, and setting up your online store.
Low overhead costs: A dropshipping business has a simple structure that allows you to reduce almost all overhead costs. Because you do not own an inventory or deliver products, you do not have to deal with the related expenses.
Easy to scale: When it comes to dropshipping, you can expand your business with less effort and resources than other business models. As the workload and expenses do not add up quickly, you can grow faster.
Lower risk: Dropshipping can effectively reduce most risks of a retail business. You do not hold an inventory means that you do not bear the risk of unsaleable products, broken items, or damage to physical properties.
6 Important checklists to launch a dropshipping store
Dropshipping is undoubtedly an excellent business idea to start with. However, many people close their dropshipping stores within one month since they cannot generate enough profit.
The reason behind these failures is because they do not know what to do in order and miss some crucial steps.
Below is an eCommerce checklist for you to build a sustainable dropshipping business.
It is a common misconception that the first step of starting an online business is to build an online store. Actually, successful entrepreneurs take a few earlier steps to gain long-term growth. Instead of jumping in so quickly, you should build some foundation first.
Selecting a niche
It is critical to spend time finding the best dropshipping business ideas. Choosing a niche that you are passionate about is good. But you have to make sure the niche is profitable.
You can make use of some tools like Google Trends, Google Keyword Planner, Ubersuggest’s Keyword Tool, or do some research on Amazon to look for the niches in demand.
The perfect dropshipping products are typically not dominated by giant brands, non-seasonal, small, and lightweight. The price range should be between $15 and $200.
Perform competition research
After selecting a niche, you should conduct a proper competitor analysis. As dropshipping has a low entry barrier, it has relatively intensive competition. When you can adopt this business model, anyone can do it. Valuable insights from research can help you develop strategies and tactics to stay ahead of others.
Find a supplier
An unreliable and unprofessional partner can ruin your business. You should carefully investigate the following factors when evaluating a supplier.
- The experience in dropshipping as a service
- The activeness of customer service
- The shipping times
- The pricing terms, quantity discounts, dropshipping fee
- The automated data interchange option
Finding a good supplier is probably the hardest task of starting a dropshipping business. You can follow some tactics to look for your potential partners.
- The quickest way is to connect the wholesalers directly and ask them whether they offer a dropshipping service.
- Another way is to order from your competitors. The return address labeled in the package is the address of the supplier. Then you can Google this address to find the name of the supplier.
- You should also attend trade shows to find your desired suppliers or make use of online directories.
Create your dropshipping website
Dropshipping allows you to run your business either on an online marketplace like Amazon, eBay, or on your own website.
Although it takes you more time and effort to build a website, we highly recommend you to invest in this part. When you create your own dropshipping website, you will have complete control over branding, design, layout of your online store.
These days, there is no need to build a website from scratch. There are many eCommerce platforms that help you to build an online store with ease. Shopify is well-known as the best platform for dropshipping.
The first thing you need to do is to choose a domain name for your store. The domain name is your store’s unique address, for instance, www.pipsnacks.com. The domain name should be short, simple, and relevant to your niche.
Then you need to care about the hosting. Simply put, web hosting is a server that stores your data and makes your site available on the internet. If you use a hosted solution like Shopify, you do not have to worry about hosting, installing, or maintenance.
When operating an online store, especially a dropshipping-based store, the way you display your product matters a lot. If you have good products, but you cannot show them in an appealing way, then your potential customers will not make purchasing decisions.
If you have a store powered by Shopify, you already have a free theme. With this theme, you can also do some customization. However, to make your store more appealing and differentiate your offerings from other competitors, you had better invest in a paid theme with special features for dropshipping.
Setup your dropshipping store
After building your website and designing it with a beautiful theme, it’s time to finish all settings to make sure that your store looks professional.
It is important to note that dropshipping is legal, and of course, you have to fulfill taxing regulation. Typically, you are obligated to pay sales tax and income tax.
If you have a Shopify store, then you can easily set up taxes for dropshipping. After you fill in the required information, Shopify will automatically collect and calculate sales tax on each order you make.
Create a marketing plan for your dropshipping store
When almost everything has been prepared carefully, it is crucial to implement a strategic plan to gain customer acquisition.
First and foremost, you should apply various SEO tactics to increase the visibility of your online store on search engines.
Then you can promote your products effectively by optimizing various channels such as:
Content marketing: Building a blog that provides useful and up-to-date information and educates your customers.
Email marketing: Creating opt-in email lists and sending them emails on a regular basis.
Social media: Having some social accounts to connect your potential customers, and run paid ads on these channels.
All in all, the final step is to analyze and optimize your strategies and activities to ensure sustainable growth.
You should recheck the responsiveness of your website on different devices like desktop, mobile phone, tablet, etc.
You should evaluate marketing channels to see which ones are effective. You can make use of some tools like Google Analytics, Google Search Console or Facebook Pixel to track the data and metrics.
With in-depth analyses, you can modify your offerings to maintain your competitive edge.
The dropshipping business model is absolutely an incredible medium to enter the eCommerce world. Of course, nothing is easy at the very first steps. We hope that with the above checklist, you will be more confident and be ready to launch your dropshipping store.
Author bio: Jasmine is a content creator at Avada Commerce. She loves reading books, traveling and shopping online. As an ordinary customer, she has special interest in discovering online distribution channels as well as E-commerce platforms.
Check out my guide on how to start your business right with tons of useful tips I learned by successfully starting, building, and selling multiple companies.