Welcome to Dropshipping 101. In this post, you will learn the basics of the Drop Shipping fulfillment model as well as an overview of how to start a Dropshipping business with Shopify.
Dropshipping 101: What is Dropshipping?
Dropshipping is a fulfillment model, meaning it is a method used to deliver a product to a customer after they have made a purchase. Notice what it is not. Dropshipping is not a means for choosing a product to sell, a manufacturing plan, or a marketing tactic. It solely refers to that process that occurs after a customer places an order.
With the dropshipping fulfillment model, the seller doesn’t store any inventory. Instead, when a customer places an order through their online store, they communicate that to a supplier, who then ships the product directly to the customer.
Whereas other fulfillment models involve buying and storing inventory at a warehouse, a dropshipping seller doesn’t hold any inventory at all. Instead, they establish an agreement with a supplier, usually through AliExpress or a “Print on Demand” company, like Printful. Once a customer places an order through the online store, the supplier ships the product directly to the customer. The seller doesn’t pay a dime to the supplier until an order is placed by the customer!
Benefits of Dropshipping
The first major expense of many eCommerce businesses is to purchase inventory. On the other hand, with dropshipping, sellers avoid this expense.
The minimal upfront investment makes this model massively appealing to aspiring entrepreneurs. Low budget? No problem. A lower initial investment means lower overall downside and risk. It also means the entrepreneur is free to experiment more: a dropshipper can test out products and pivot easily if they are unable to sell them. More on this, later.
How to Start a Dropshipping Business with Shopify
The primary steps to starting a dropshipping business are as follows:
- Choose your product or niche.
- Create and optimize your online store.
- Deploy a marketing strategy.
- Test, Evaluate, Revise, Repeat.
Choosing a Product or Niche
Many aspiring entrepreneurs never start their journey because they are unsure about what products to sell. Luckily, the Dropshipping Model affords you the ability to choose a product with virtually no risk. Let’s say you decide on a product. You launch your store but get little to no sales. Are you screwed? Nope! You can simply pivot to a new product. The only cost is your time.
To get started, try choosing a niche or market segment that you are familiar with. Brainstorm product markets that you understand, are passionate about, or are aligned with your hobbies and interests.
One option is to use a print-on-demand service, such as Printful. These services allow you to dropship custom designed items, such as T-Shirts, Hats, Flip Flops, and more. This model is very popular for creative entrepreneurs!
However, most dropshippers use AliExpress to research and find dropshipping products and suppliers. AliExpress is an extensive B2C marketplace where you can find very cheap but high quality products from Chinese suppliers. Most of these suppliers offer dropshipping services. You can find items for sale in almost any niche: AliExpress contains over 100 Million Products! For comparison, Amazon sells about 12 million products.
A simple way to choose a product is to browse AliExpress and look for popular products within your chosen niche. In the screenshot below, you can see the Education and Office Supplies product category is pulled open.
Using the filters under the search bar, you can isolate products based on your preferred criteria:
- Display products only of a certain price point
- Show only those items that ship from the US (as opposed to China)
- View products that have a review rating of 4 stars or above
- Sort results by Total # of Orders, Price, or Date Added
A strong dropshipping product has strong sales, good reviews, and a was uploaded relatively recently.
Product Research Tools
If browsing products on AliExpress sounds like a mind numbing exercise, consider using these product research tools. These searchable databases could just help you find the diamond in the rough:
Still not sure how to decide what product you should sell? Check out our post that goes over a proven method for answering this very question.
Create and Fill Your Shopify Store
Shopify is what is known as a “turnkey” eCommerce solution. In practice, that means you can sign up for Shopify and create an impressively professional eCommerce store in under an hour. No coding required. And the basic plan costs just $30 per month.
Shopify offers many free courses and tutorials on how to set up your store, so I won’t go into the specifics here. If enough people request it, I will write a separate article going over the best practices for Shopify store design.
Tactically speaking, once you’ve gone through the logistics of setting up your store, you can easily add products to it from AliExpress using a free service called Oberlo.
Oberlo is actually an application that Shopify owns, so it plugs into your store seamlessly. It includes a free chrome extension that allows you to import products from AliExpress into Oberlo in 1 click. From there, you can modify the product details and publish it to your Shopify store. The entire process takes minutes!
In a separate post, I will discuss how to best write your product descriptions to convert prospects into buyers. I will also go over some of the tools and third party apps that you can use to optimize your store and maximize sales.
Marketing Your Shopify Store
To recap, dropshipping requires no upfront investment in inventory and the setup of your store is incredibly easy due to tools like Shopify and Oberlo. Therefore, the vast majority of your efforts will go into Marketing.
Common marketing tasks and expenses include:
- The development of a brand story, mission, and vision.
- The creation enticing product pages with good pictures and compelling product descriptions.
- Outbound Marketing tactics like Paid Advertising and Influencer Marketing, used to drive potential customers to your storefront.
- Inbound Marketing Tactics like blogging for Search Engine Optimization (SEO) to drive organic traffic to your store.
Most drop-shippers rely heavily on Facebook Advertising. That’s because it provides cheap cost per click (CPC) ads that can be highly targeted. With Facebook, you can isolate an advertising audience based on interests, demographic information, geography, purchasing behavior, and much more. But there are a huge number of options when advertising. Moreover, we recommend you deploy a holistic marketing approach for your Shopify business.
Test, Validate, and Revise Your Strategy
As mentioned, one of the primary benefits of dropshipping is the freedom to inexpensively test different products and marketing strategies. A good dropshipper is frequently conducting A/B tests on the following variables:
- The products they sell in their store.
- Product pricing.
- Promotions, discounts, and deals.
- Their ad platforms.
- The audiences they target through advertisements.
- Their advertisement “creatives.”
- Post purchase tactics like referral programs.
You get the idea. Dropshipping is an ideal business model for anyone who is persistent and diligent enough to test the variables at their disposal. Find out what works, and you just might build a successful eCommerce brand.
Disadvantages to Dropshipping
Dropshipping, like any fulfillment model, has its downsides. Here are a few of them:
- Navigating the competitive world of online advertising can be difficult, and this often stops entrepreneurs in their tracks.
- Since you aren’t storing inventory, you have very little control over the consistency of the product quality
- Furthermore, you don’t have great control over the timeliness of the delivery. As compared with Amazon FBA 2-Day shipping, dropshippers are at a disadvantage. Most dropshipping products take 2 weeks or more to be delivered.
- You don’t have the option to customize your product packaging, which can be very important in brand development.
Wrap It Up, Chuck
These are fairly major disadvantages. However, the dropshipping model has a lot going for it. This is definitely a business model worth considering for new entrepreneurs that are on a tight budget! Sign up below to stay in the loop and get in touch with us about any questions you might have.