Imagine having an online store where you show off cool products. When a customer buys something from you, you don’t actually have to keep all those products in stock or worry about shipping them. Instead, you team up with suppliers that can handle all that. Your job is to simply select products, market them, and make sure your customers receive their orders.
This is called dropshipping. According to Truelist, eCommerce retailers who opt for dropshipping could earn 50% more than businesses that rely on onsite inventory. Retailers who use this business model also reduce expenses a lot. This could be the perfect option for you if you’re looking to earn more profit while trying to reduce your expenses at the same time.
In this article, learn more about dropshipping, the key players in dropshipping, its advantages for SMBs, whether this business model is for you, how to start dropshipping, its best practices, and answers regarding its legitimacy. By the end of this article, you’ll be able to leverage the knowledge you learned if you ever decide to go down the dropshipping path.
What is dropshipping?
With traditional online stores, you keep an inventory of all your products ready to be packed and shipped.
With dropshipping, you don’t have to manufacture and keep the products you sell. You simply receive orders from customers and relay these orders to a supplier, who will then send them directly to the buyer. This saves you from inventory headaches as the supplier handles the inventory and shipping themselves.
Key players in dropshipping: Retailer, supplier, and customer
Dropshipping involves three key players that make the entire process successful. Let’s take a closer look at each role and how they collaborate to create a seamless online shopping experience:
- You (Retailer). You showcase and sell products in your online shop, market them, talk to customers, and manage the shop.
- Supplier. They have the products. They handle shipping when you get orders.
- Customer. They’re the ones who buy the products that you sell.
Advantages of dropshipping for SMBs
What benefits can small to medium-sized businesses get from dropshipping? Take a closer look at these different advantages:
- Low Startup Costs. You don’t need a huge amount of capital to begin. Just make your shop appealing and make sure your target audience knows about it.
- Reduced Inventory Risks. You won’t have to worry about products not selling because you’ll only buy what you sell. No need to worry about unsold items collecting dust.
- Wider Product Selection. Sell various products without needing a big storage space.
- Location Independence. Work from anywhere as long as you have a computer and internet.
- Scalability Opportunities. If your shop gets bigger, the suppliers will handle more orders, but you won’t need to worry about space.
Is dropshipping for you?
When is dropshipping the perfect choice for you? Here are the different personas where dropshipping might be useful:
- eCommerce Newbies. It’s perfect for those who want to start an online business without investing a lot of money upfront. You build your online store, market and sell your products, and let the suppliers handle the rest.
- Part-Timers. If you’re looking for an extra source of income on top of your full-time job, online selling through dropshipping is a great idea.
- Global Entrepreneurs. Try dropshipping if you want to expand your business globally without worrying about international shipping. You can partner with suppliers in different countries so you can provide products to your customers without worrying about logistics.
- Flexibility Seekers. If you’re an adventure seeker who wants to travel the world but don’t want to be tied to a physical store, dropshipping is a great business opportunity. With this method, you can manage your business and keep earning from anywhere in the world.
How to start dropshipping
Choose a niche market
Identifying profitable niches
Think about what makes you excited. Maybe it’s trendy gadgets, eco-friendly products, or stylish fashion. Find a niche that not only interests you but also has potential customers who are passionate about it. Identifying a niche that’s within your line of interest will motivate you to keep going and be innovative.
Evaluating market demand
Research, research, research. Check if people are searching for products in your chosen niche. Tools like Google Trends can give you insights into the demand for specific items. The more demand, the better the chances of sales.
Find reliable suppliers
Researching reputable suppliers
Trustworthy suppliers are the backbone of dropshipping. Look for those with a solid track record, good reviews, and a reputation for delivering quality products.
Ensuring product quality and delivery times
Your customers’ happiness and satisfaction depend on the products they receive and when they get them. Communicate with potential suppliers to understand their product quality standards and shipping times. Be transparent with your customers regarding these so you can set proper expectations.
Set up an eCommerce website
Selecting the right eCommerce platform
Choosing the right platform makes all the difference. Consider Web.com’s online store builder solutions. Web.com is a reliable solutions provider that has a proven track record of helping customers succeed online with its extensive product offerings and personalized support.
Designing a user-friendly website
First impressions matter. Your website should be user-friendly and appealing so that it’s easy for visitors to navigate your website. Use Web.com’s website builder to whip up your online store within minutes. You’ll have complete control of how your website looks with its pre-made templates and convenient drag-and-drop feature. If you don’t have enough time to spare, consider website design services and let design experts create your website for you instead.
Integrating payment gateways
Security is crucial in eCommerce. Integrate secure payment gateways to protect your customers’ transactions. A secure shopping experience builds trust and encourages repeat business.
Order fulfillment process
Inform your suppliers about orders, and they’ll take care of shipping the products to your customers. A seamless order fulfillment process keeps customers happy and your business running smoothly.
6 best practices for successful dropshipping
Whether you’re new to dropshipping or a seasoned pro, these six best practices will guide you toward a thriving online store that stands out:
- Promptly respond to customer inquiries. Imagine you walked into a store, asked a question, and got ignored. Not cool, right? The same goes for your online store. Answer customer questions quickly and warmly. It shows you care, and it also builds trust.
- Provide seamless returns and refund process. Sometimes, products are not a perfect fit for the customer. If a customer wants to return something or needs a refund, make it easy for them. Craft a good return policy that’s easy to follow. If you also offer a refund, clearly state the conditions beforehand so that they’re aware before they ask for a refund. A hassle-free returns and refunds process shows that you value their satisfaction.
- Leverage social media marketing. Social media is like your megaphone. Share your products, engage with customers, and create a friendly online community. It’s a fantastic way to get the word out and connect with your audience.
- Implement search engine optimization (SEO) techniques. Imagine your store showing up first when someone searches for what you sell. That’s the magic of SEO. Use relevant keywords, create helpful content, and optimize your website so search engines notice you. For your website’s SEO, consider getting tailored, professional seo services.
- Encourage your customers to leave reviews and testimonials. Think of customer reviews as virtual high-fives or stepping stones for improvement. Encourage customers to leave online reviews. It’s like word-of-mouth advertising and shows potential buyers that the previous ones trust you. Reviews can also give you insight into which areas you need to improve. To encourage them to leave reviews, offer a discount on their next purchase.
- Display trust badges and security certificates. Online shoppers worry about security. That’s why you need to invest in website security services to give them peace of mind. Show them you’re legit by displaying trust badges and security certificates. Examples of these are SSL (Secure Sockets Layer) certificates, McAfee Secure, payment gateway badges (logos of trusted payment gateways such as VISA, Mastercard, and PayPal), and Norton Secured Seal.
Is dropshipping legal?
The short and quick answer is yes. But like any other business venture, there are guidelines to follow. By setting up your business responsibly and following the rules, you’re ensuring a smooth and legit dropshipping journey. It’s all about doing what’s right and building a successful business with integrity.
Here’s a quick overview of legal considerations when setting up your online store:
- Business setup. Just like any business, you’ll need to register your dropshipping venture. It shows your customers you are a legitimate business, and it also builds trust among your them and your suppliers.
- Supplier agreements. When you partner with suppliers, it’s a good idea to have clear agreements in place. Make sure both parties understand their roles and responsibilities.
- Taxes. Uncle Sam wants his share, even in the digital world. You’ll need to collect and remit sales tax. Check with your local tax authorities to stay on the right side of the law.
- Consumer laws. Ensure you’re familiar with consumer protection laws in your area. This includes return and refund policies.
- Intellectual property. Don’t step on anyone’s toes. Make sure the products you’re selling don’t infringe on anyone’s copyrights or trademarks.
Build your online store with dropshipping
Inventory and shipping are two of the most stressful things an entrepreneur has on their plate. You won’t know for sure whether you’ll sell all your products or ship out all your orders without hiccups. If you want to skip these hassles, dropshipping is for you. With these handful things out of your mind, you’ll be able to start selling and earning right away.