How to Start Dropshipping Business in 6 Easy Steps (2023)

How to Start Dropshipping with no Money 6 Easy Steps (2023)

Learn how to start dropshipping with the right suppliers, e-commerce platforms, and products.

Ever wondered how to start a dropshipping business? In this guide, we cover the process of building and running a dropshipping store from start to finish.

Plus, we talk about whether a print-on-demand store is right for you, along with other questions about the legality of dropshipping, how much money you need, and more.

Keep reading to learn all about how to start a dropshipping business the right way.

What is Dropshipping? And how does it work?

The term dropshipping refers to an e-commerce fulfillment method where a merchant partners with a supplier and that supplier manufactures, stores, and ships the products. Therefore, the dealers (or retailers) are not directly responsible for the total movement of inventory. Storage and shipping are all done by the supplier.

How to Start Dropshipping Business in 6 Easy Steps (2023)

The supply chain for Dropshipping

The simplest way to look at it is by listing the steps a product moves through when processed through the dropshipping business model:

1. The supplier buys or produces product A.
2. The supplier stores Product A in its warehouse.
3. The buyer (you, the business owner) works with the supplier through a drop shipping relationship.
4. The merchant sets up an online store for the sale of product A.
5. The merchant markets Product A.
6. A customer buys product A from the grocer's store.
7. Both the seller and the supplier are notified of the sale.
8. The supplier selects, packs, and sends product A directly to the customer.

As you can see, the trader (you, the store owner) cannot see or touch the product throughout the dropshipping process. This reduces your costs and allows merchants to spend more time and money on marketing, building their websites, and growing their businesses instead of focusing on items like inventory, shipping, and packaging.

Self-fulfillment: Where you buy products from wholesalers, store them in your warehouse, package them when sold, and ship them out.

Third-party logistics: You still buy products at wholesale prices and quantities, but you also work with a third-party supplier company. Therefore, you send all the purchased goods to the fulfillment company, store them in their warehouses, then pack and ship them when sold.

These two fulfillment methods above are more traditional and have been around much longer than drop shipping. However, as you may have noticed, each of them has additional costs on buying wholesale items, therefore, putting stress on your finances with an upfront cost. Dropshipping does not require wholesale purchases, as all products are sent out on request. In addition, self-fulfillment requires you to store inventory in your own home, office, or warehouse while also figuring out a picking, packing, and shipping operation. The third-party logistics option solves storage and shipping issues, but you're still stuck ordering wholesale products.

Overall, learning how to start a dropshipping business offers significant promise to those interested in removing the following:

• The need to have a warehouse.
• The need to buy wholesale goods.
• The need to run a pick and pack.
• The need to ship products from your location.
• And also the need to sometimes manufacture your product (depending on what you sell)

Sounds great, right?

Yes, dropshipping has its advantages, allowing you to run a lean business without many upfront costs. A kid from their dorm room could set up a dropshipping business as long as they could prove a decent credit history or sales data to the payment processor. However, dropshipping has its limits. So take a look below to understand the primary pros and cons of dropshipping to find out if it's right for you.

Advantages and disadvantages of Dropshipping

Benefits

What are the pros and cons of learning how to start a dropshipping business? Here's a look at the main ones:

The products are already made for you: there is no waiting for a supplier to manufacture a batch of wholesale goods for your company. And although some customization is available through dropshipping, you usually work with a supplier who already has products. That's why you wouldn't drop out if you invented a product. Remember that print-on-demand vendors are a huge exception. You can design things like shirts, mugs, and canvases with partners like Printful. The raw product is already created, but then they print on it with your design.

The upfront and overhead costs are incredibly low: Dropshipping has a low barrier to entry, even for those who aren't flush with startup capital. You can start a dropshipping business with almost no money at all. It's a bit of a stretch since you have to pay for an e-commerce platform and advertising, but a little money goes a long way with dropshipping. Also, consider the savings from eliminating warehouses, shipping materials, warehouse workers, and the various other elements that go into fulfillment logistics.

You can make money quickly when you learn how to start a dropshipping business: An e-commerce platform starts at about $29 per Month. Let's say you spend $100 on advertising in the first month. This means you only need a profit of $129 to break even. This is of course a simplistic view of it, but dropshipping costs are so low that advertising usually comes in as the highest expense.

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You are protected from unpredictable sales trends: One of the primary disadvantages of buying wholesale is that you buy a large batch of products and wait for people to buy them from you. It's a huge risk considering trends change, seasonality comes into play, and you may find yourself overbought in inventory. Dropshipping products are shipped out on demand, which means you're not left with a high upfront cost that could potentially sink your business. Instead, you gradually increase your sales and never have to worry about inventory gathering dust on the shelves.

You can spend most of your time and money on market research and sales: Resources for a dropshipping business go primarily to ads on Google, Facebook, and other social media such as Instagram and TikTok. All your hard work and investment goes into it, making it a fairly simplistic, focused business model that many individuals are well suited to handle.

It's a nimble space: Do you find that your product is no longer selling well? Simply pick another product in the same industry (or a completely different one) and start selling it. Although it takes some time and some investment to turn, you don't worry about the remaining inventory that you need to sell.

You don't need to store products or worry about inventory management: Dropshipping leaves the storage of products to the supplier. That's the main premise behind dropshipping, helping the merchant out by simplifying the logistics of the entire operation and cutting costs for inventory, inventory management software, and workers.

Packaging and shipping are left to the supplier: the products are not only stored in the supplier's warehouse, but they also pack and ship the products to the merchant. Again, you (the merchant) now do not need to pay for warehouse workers or set up a process of picking, packing, and shipping. You also save on all the materials you need for the shipments.

There are plenty of platforms to start a dropshipping operation and partner with a supplier within minutes: you have the option to directly contact suppliers and see if they ship products to you. However, several e-commerce platforms and third-party dropshipping software allow you to sign up for an account and choose from a large selection of products, all available for dropshipping. This provides access to multiple suppliers in one place and your products sync with your e-commerce platform.

You can now find drop shippers that ship to your customers in a reasonable time: Previously, shipments took weeks or even months to reach their destinations once shipped. This is because the vast majority of products come directly from China. That has changed, with many dropshipping platforms offering warehouses in multiple locations such as the US, UK, Europe, and Australia.

You can still make a profit with the right products: Dropshipping margins are lower than usual, but that just means you have to put in a decent amount of research to find products with respectable margins. You'll find that some items aren't worth messing with, but there are still plenty of options that sell at low prices, but then consumers are willing to pay premium rates.

High-maintenance products are often easier to manage with dropshipping: large, fragile, or technical products require special storage facilities and shipping materials. Because of that, it makes a lot of sense for the supplier or manufacturer to hold on to these types of products and ship them out, rather than requiring another company (you) to handle all of that when the items are shipped out.

Disadvantage

Profitability is lower than other fulfillment methods: Dropshipping interrupts production, storage, and shipping. So you save money there. But that means the supplier takes a bigger cut as they complete everything that works for you. The advantage of buying wholesale is that you can buy 10,000 units of a product for incredibly cheap, then mark it up for a huge profit. Dropshipped products are sold on demand and the supplier does most of the work, so your margins are reduced significantly. That said, you shouldn't need such high-profit margins anyway since all you're doing is running an e-commerce website and marketing.

It's harder to build a recognizable brand: Like many of the items you buy on Amazon, there's a good chance you have no idea who the seller is. Dropshipping is similar where the merchant gets less credit for the sale because they are more of a middleman, they don't have much control over the product and shipping, and dropshipped products are often generic, non-customized items to begin with. Not to mention, you often can't put your label or logo on the package or drop a note in the box to thank your customers.

You may encounter legal problems: Not all suppliers follow the rules. You can go to a dropshipping site like Spocket, which connects you with suppliers on AliExpress (or Alibaba), and see hundreds of suppliers violating regional or national laws. And we're usually not talking about them selling illegal or dangerous materials, but rather those that infringe copyrights or trademarks. I've known drop shippers get shut down for selling Apple Watch bands that looked too similar to what Apple offers. Or there was a drop shipper selling lightsaber toys and marketing them as lightsabers, prompting Disney to send them a Cease and Desist letter. (Surprisingly, you can sell them, but don't use the word "light saber."

There is limited product quality control and supply chain control: Yes, you can order samples from your suppliers. But that's usually the extent of your control over your products. If an item comes off the line and it has a defect, you cannot look at the product and decide not to ship it to your customer. Each step of the supply chain is also left to your supplier's control. Finding a reputable, reliable supplier solves most of these problems, but remember that you have limited control when it comes to shipping costs, shipping speeds, packaging materials, and the quality of the products that go out.

It's a highly competitive space: you have almost no upfront costs! And it sounds great for optimistic entrepreneurs looking for an easy buck. Yet, dropshipping requires real work, as many of the products being sold are also being marketed and sold by hundreds of other individuals and businesses. After all, the supplier just wants to move the products, so if they ship to you, they are probably drop shipping for several other companies.

Some suppliers have terrible shipping speeds: As you can see in the Pros sections, this is usually no longer an issue as long as you do your research and find the right suppliers. However, many suppliers are still located in China or India, and it takes 30-40 days to ship to a place like the US. This is unacceptable and a recipe for canceled orders in our world of expected 2-5 day shipping.

How to start Dropshipping? The necessary steps:

1. Choose a lucrative product niche for your Dropshipping Business
2. Decide if you want to create custom Print-on-demand products for Dropshipping
3. Choose an e-commerce platform and build your store
4. Choose a supplier that ships
5. Run marketing and advertising campaigns that work specifically for Dropshipping
6. Handle important things like permits and taxes
7. Continually optimize your website

The Ultimate Guide to How to Start a Dropshipping Business

Are you ready to learn how to start a dropshipping business? In that case, remember that dropshipping is simply a form of fulfillment method. It's still a full-fledged business where you have to put a significant amount of work into site customization, product sourcing, customer support, and more. We encourage you to avoid dropshipping as a "get rich quick scheme" as it is by no means far from it.

In this guide, we outline everything you need to know about how to start a dropshipping business, from choosing a lucrative product niche to figuring out the demand for products and choosing an e-commerce platform to run the right marketing campaigns to get customers.

Step 1: Choosing a lucrative product niche for your Dropshipping Business

I've seen far too many people write blog posts or ask for advice on forums about how to find "ideal" dropshipping products.

I have some news for you: there is no secret recipe hidden by all the successful drop shippers out there. They simply went through steps to find products they like, have good delivery times, solid margins, and have found success in the past.

Dropshipping puts you in the middle. This means that the vast majority of the products you can choose from have been sold in the past, are currently being sold, and will continue to be sold by others. You're not going to stumble upon some hidden invention before everyone else gets their hands on it. Vendors sell all kinds of products, from wireless earbuds to wigs and essential oils to luxury leather bags.

The key is to avoid creating a "General Store" and instead find a unique selling proposition with a few useful, everyday products. 

What does it mean? Here are some steps to help you get there:

1. Look around your own life and find out what interests you or something you can get into. For example, I play softball every Tuesday, like going to the movies, and cycling or going camping on the weekend. Those are four huge categories that I can start looking at. Everyone has wonderful products for dropshipping.
2. Limit it to a certain market or something special. Sometimes you have to test these to see if there is any interest, but the idea is to take a general category, like camping, and narrow it down to a group with certain needs. For example, maybe I could sell to female campers. Maybe I could only sell stylish hiking bags to female campers who also want functionality as a place to put their water, clothes, and maybe a toiletry bag?
3. Research keywords to see if anyone is looking for this type of thing. Go to Google Trends, Google Keyword Planner, and the various other search engine analysis tools and start testing keywords that might apply to your niche. This gives you a perspective on the competition and how much traffic is coming to those words.
4. Check places like Reddit, Facebook, and YouTube to see if people are talking about these products to those kinds of people.
5. Finally, we want to make sure that the idea is lucrative. This is when you go into apps like Spocket, Modalyst, or AliExpress to see what margins look like for new products in the category.

As an example of checking the profit potential of a product, I found this bike trainer that costs anywhere from $460 to $627. This is the price you, the merchant, would pay after making a sale.

How to Start Dropshipping Business in 6 Easy Steps (2023)

And a quick search for similar or comparable bike trainers shows price lists anywhere from $700 to $1,400. At least your profit can end up at around $70 per Sale. That's not bad, but the higher price ranges can produce close to $1,000 in profit. Remember, this is a price for a price to begin with, so a cheaper product, like a backpack, would still look like a high-quality choice if you could buy it for $20 and sell it for something like $50. 2: Decide if you want to create custom, print-on-demand products for your Dropshipping Store two means of purchasing your products:

• Standard drop shipping: With previously designed and created products, ready to be sold and shipped to your customers.
• Print-on-demand: A setup where you create certain designs and have them printed on products when a customer has ordered them. Then the print-on-demand supplier also sends the item out.

Printful is one of the most popular solutions for configuring a print-on-demand dropshipping store.

This method has its pros and cons, but overall print-on-demand dropshipping allows you to differentiate your brand from the rest, create unique products, and still eliminate the need to store or ship your items. However, there is also extra work involved as you have to make the designs.

Print, and other print-on-demand platforms, let you upload designs for different types of products, such as:

• Clothing
• Bags
• Phone case
• Jewelry
• Keyrings
• Shoe
• Pillows and blankets
• Coffee mug
• Pet products
• Stationary
• Posters and canvas prints
• Much more

Step 3: Choose an E-Commerce platform and build your store

An e-commerce platform serves as a way to build an online store and a complete website in one place. These platforms offer features to create product pages, collect payments for your sales, and even complete marketing tasks like social ads and email marketing.

That's why it's important to get an e-commerce platform set up, as it's the most important way you can sell your products as a drop shipper.

We like Shopify the best when learning how to start a dropshipping business, as it offers some essentials you can't find anywhere else.

Why Shopify is Best for Dropshipping

Why Shopify is Best for Dropshipping

• It offers pre-made templates for different industries so you can design a professional online store in minutes.
• Payment processing is free (besides credit card processing fees) and integrated directly into the platform.
• Shopify integrates with a wide range of dropshipping and print-on-demand apps like Spocket Printful.
• Shopify has superior advertising tools for launching ads on places like Microsoft Search Network, Google Search, Facebook, Snapchat, and more. Advertising is the main way you get sales for drop shipping, and no other platform has so many advertising options.
• You can start selling your dropshipped products on places like eBay and Amazon.
• They let you create a Facebook store almost instantly, which is great for dropshipping.
• Shopify has various automations to bring back dropshipping customers like email marketing workflows and cart abandonment emails.

Other e-commerce platforms that work for Dropshipping

• Wix: About as simple as Shopify forum dropshipping, but not as many advertising tools.
• BigCommerce: Offers a wonderful interface for dropshipping. The main dropshipping app is Spocket Printful, so it is solid but limited compared to Shopify.
• WooCommerce: You can integrate with almost any dropshipping app, but WooCommerce runs on WordPress and requires more technical knowledge.
• Magento: Similar to WooCommerce, where you get complete control over the site, technical knowledge is usually required.
• OpenCart: Requires some technical knowledge and it has a few decent AliExpress dropshipping apps.

Step 4: Choose a supplier that ships

As mentioned before, you no longer need to pick up the phone to start calling suppliers in your desired industry to make it as a dropshipping professional. It's probably a waste of time unless you want to get specific about the type of product you want to sell and where it's coming from.

Several reputable dropshipping apps are available that integrate with Shopify and many other e-commerce platforms.

These dropshipping apps provide:

• A full marketplace to find suppliers and products
• Filtering tools to refine specific categories
• Information such as the cost of products, potential margins, and sales
• Instant synchronization with your e-commerce platform to transfer product information, photos, and prices
• Automated notification to the supplier (and you) when an order comes in via your store
• Direct link to everything your e-commerce store offers, like statistics, marketing, and social ads

Start your journey with Spocket

Spocket is the most effective dropshipping app for all skill levels, considering that it links you to AliExpress, which has the largest collection of worldwide suppliers who dropship.

Therefore, you can install the Spocket app on your Shopify store and filter for products based on what you need.

We recommend filtering for things like shipping times, where the products are shipped from, and potential profit margins.

Some customers don't care if they have to wait a few weeks to receive a quality product. But in our experience, it's worrying when you see delivery times of around 15 to 30 days. We encourage you to skip these products and choose those with delivery times from 1-14 days to the country of your choice. It takes a little digging, but there are plenty to choose from. We also find that it is sometimes easier to find these faster shipping rates by directly browsing AliExpress instead of Sprocket.

Consider Printful for Print-on-demand Dropshipping

If you decide to go with a print-on-demand dropshipping store, the most convenient app to install is called Printful. The company has a wide range of warehouses worldwide, so your customers receive faster shipping, and Printful maintains a higher quality control (since they own their warehouses).

In short, you create both Printful Shopify accounts, connect the Printful app to Shopify, and then start uploading your designs to Printful. Then you can choose products to place designs on, set prices for those products, and sync them with your Shopify store.

Not only that but Printful offers beautiful product images where your custom designs are displayed on mockup images with human models.

Other Dropshipping Suppliers to Consider

Each of the following dropshipping apps has its advantages and disadvantages. For example, DSere Modalyst specializes in dropshipping from independent suppliers and fast delivery to places like the US, UK, and EU. Printify is an alternative to Printful, while some of the others are similar to Spocket with unique selling points.

• DSers
• Modalist
• Printify
• Dope
• Salehoo
• Wholesale Central
• Dropified
• CJDropshipping
• Tee launch
• SPEED
• CustomCat
• Application
• EPROLO
• Syncee
• Goth
• DropCommerce

Step 5: Run marketing and advertising campaigns that work specifically for Dropshipping

As any experienced dropshipping professional will tell you, you won't see any sales until you create a solid advertising plan.

Dropshipping is unique in that you're not so concerned about building your brand (although you should be too), but more about testing ads, finding the ones with the best results, and retargeting to people who have shown interest.

Therefore, the following types of marketing and advertising strategies usually work best for dropshipping:

• Facebook and social ads: Facebook and Instagram are the gold standards for dropshipping ads, but Shopify also offers options for advertising on places like Pinterest, Snapchat, and TikTok where you can also dropshipping video ads.
• Retargeting: The retargeting campaigns on Shopify and Facebook use algorithms and AI to show ads again and again after someone has shown some kind of interest in your products.
• Google Ads: Along with Microsoft Ads, these give you a chance to get your product in front of people searching around on search engines. Although they are very competitive, the right products and keywords can help you a lot.
• Content Marketing: Think about creating videos, blog posts, and other content that features your products, shows photos and videos of them in use, and explains details of how to use the products to your customers.
• Communities: While you don't want to spam communities, it's not a bad idea to get active in forums, Facebook groups, or Reddit threads that talk about your products. You may occasionally be able to mention your site if it comes up.
• Influencer Marketing: Many drop shippers swear by influencer marketing, seeing how these people have built-in platforms, tons of people listening to their every word, and it works as a way to advertise on social media without having to pay for Facebook- or Instagram ads. Simply put, people are more willing to listen to another person they admire than a random ad on Facebook.
• Selling on Marketplaces: This is more of a secondary way to sell, but places like Amazon and eBay also tend to bring exposure to products that perform well or get quality reviews.

Step 6: Handle other important things for a Dropshipping Store

Dropshipping presents one of the simpler forms of fulfillment, but that doesn't mean you can save money when it comes to properly and legally setting up your business.

Here are some other important things to consider when learning how to start a dropshipping business:

• Get your permits and licenses. Check your local laws to find out if an online store needs standard permits or special business licenses to do business in the area. In general, this is almost always a requirement, so the last thing you want is to run an illegal business.
• Establish a business structure as a sole proprietorship, C Corp, LLC, or S Corp. Take a look at the requirements in your region and talk to the Small Business Association or related organization in your area.
• Get your finances and credit in order. Most payment processors (like those provided through Shopify) require a potential credit check or at least some sort of proof that you can reach a certain number of sales to make the partnership worthwhile. Make sure you have all this squared away to make the approval process easier. Also think about how much money you need to save to pay for things like advertising, taxes, and investments elsewhere in your business.
• Save money from your sales for tax and payment of the supplier. Not all income goes straight into your pocket. A quick way to destroy your business is to take all the money and forget that you have to pay taxes and the products themselves.

Quick FAQ on How to Start a Dropshipping Business

Is Dropshipping Legal?

Yes, as long as you buy and sell products that do not violate any laws or infringe patents, copyrights, or trademarks. It's no different than any other business. Dropshipping is not even an e-commerce business type, but rather a method of fulfillment in your business. So as long as your business follows the rules, you shouldn't have any problems.

How much does it cost to start a Dropshipping Business?

The short answer to this is less than a regular online business where you buy wholesale products, but also more than what many "experts" online say about dropshipping. There is an upfront time and monetary investment to set up your store, along with ongoing expenses to keep it running, run ads, and potentially hire people to help.

The most common dropshipping expenses include:

• A monthly subscription to an e-commerce platform like Shopify
• A domain name
• Advertise
• Marketing apps

Potential employees as virtual assistants or web designers

Below are some expenses from real, successful dropshipping sites listed for sale through Shopify's exchange.

• Costs from a new toy store:
• Shopify: $29 per Month
• Domain: $14 per year
• Apps for marketing, currency conversions, reviews, and dropshipping: $49 per Month
• Employees (a virtual assistant for customer support): $250 per Month
• Instagram and Facebook ads: $4,000 per Month.

As you can see, the ads end up being the most expensive part, as is the case with the majority of dropshipping businesses. That's how you get more customers. However, keep in mind that this company has an average revenue of almost $40 per Month. The expenses amount to about 4,329 dollars per month. That's a $35 margin without taking into account the cost of goods sold. After that, this company reports an average profit of $8,400 per month.

Here's another real-world example from a yoga pants store on the Shopify Exchange Marketplace:

• Shopify: $29 per Month
• Domain: $16 per year
• Apps for email marketing and more: $278 per Month
• Ads on TikTok : $5,350 per Month
• Cost of goods sold: $5,000

That's a total of about $10,658 a month in expenses. Again, most of these expenses are ongoing ones that you don't necessarily need to worry about right from the start. This business has been growing for a while and is increasing its marketing spend every month. If you're curious, this dropshipping business brings in an average of just over $15k in monthly profit. So the revenue will be close to $26k per month.

Can I Make Money Dropshipping?

Yes. See examples of the previous question.

Most of the money made from dropshipping comes from savvy business people who find useful, trendy products (you don't reinvent the wheel), know how to create wonderful ads on social sites, and work full-time to grow their business.

Can I drop products on marketplaces like eBay and Amazon?

Yes. Both platforms allow for dropshipping. You've probably bought some drop-shipped products from these sites in the past. Some platforms like Shopify Wix even help you sync your dropshipped products with eBay and Amazon.

Do I have to pay for shipping and taxes while Dropshipping?

For taxes, probably. Look up the local laws for your state, county, city, country, or wherever you live. In most cases, you must pay tax to the municipality where your home or office is located.

Shipping depends on your supplier. In my experience, most dropshipped products have some sort of shipping fee involved. Try to get the cheapest, fastest shipping for an advantage. If your supplier charges for shipping, you just need to figure out whether to pay the cost yourself or pass it on to your customers.

Optimize your website like Crazy

As time goes on, it is wise to refine your website and further optimize it for keywords, improved media elements, and more creative product descriptions.

This is what we would call an ongoing task that you could outsource to someone else or just work on it when you have free time.

And with that, you should be well on your way to learning how to start a dropshipping business and get your first sale! But don't be discouraged if your first or fifth or tenth dropshipping product doesn't get the response you expected. That's the whole game behind dropshipping. Careful testing separates the amateurs from the true professional drop shippers. So get out there and start testing.

If you have any questions about how to start a dropshipping business, let us know in the comments section below.