Dropshipping has fewer barriers to entry than conventional retail models. Yet many e-commerce businesses fail within the first year or two. Overcome dropshipping challenges with a comprehensive business strategy.
Select a profitable niche, compelling website theme, and reputable suppliers. Then use your marketing skills to build your brand and drive traffic to your online storefront. Take these steps and learn how to start a dropshipping business with increased odds of success.
Explore niche products
The bottom line is that you can't compete with big box stores and online retailers for common household products. You can still sell similar goods, but most experts suggest choosing a niche instead of being a one-stop shop for everything. Before going all-in, consider what you want to earn and which products will help you achieve those goals.
Shopify said, "it's possible to generate a $1,000 to $2,000 monthly income stream within 12 months working approximately 10 to 15 hours per week building your [dropshipping] business." A full-time workload focused heavily on marketing can produce $50,000 a year.
However, entrepreneurs Joe and Mike Brusca warn against low-ticket dropshipping. On the podcast Entrepreneurs On Fire, they recommend high-ticket dropshipping using brands people search for, such as Acme Furniture.
Competitor and market research should inform your decisions. Use Google Trends to gauge consumer interest and Keywords Everywhere to view search volumes for products and brands. Check out trending items on Amazon and social media. Keep your research close, as you'll need it to create your business strategy.
[Read more: 5 Things You Need to Know About Dropshipping]
Outline your dropshipping business strategy
HubSpot said, "Your business strategy is a roadmap for achieving your business' goals." Moreover, your strategy is a living document, meaning you will add to and alter it continually. The more details you include now, the less time you'll spend later putting out fires or coming up with policies or processes on the fly.
Think about how you will approach customer service. Will you set up an 800 number or offer live chat? Also, think about your ongoing and startup costs. How much can you invest in marketing and advertising? For each point, include research to support your decision and select key performance indicators (KPIs) to monitor your progress.
Success in dropshipping relies heavily on your marketing and advertising efforts.
Include the following topics in your strategy document:
- Branding and business differentiators.
- Product types and niche.
- Pricing strategies.
- Competitive and market research.
- Business structure and formation.
- Communication objectives.
- Return, refund, and replacement policies.
- Multi-channel marketing strategy.
- E-commerce payment methods.
- Technology requirements.
- Customer experience and retention goals.
- Supplier strategy (single or multiple suppliers).
- Startup budget.
- Financial forecasts for operating expenses.
- E-commerce and dropshipping KPIs.
Find dropshipping suppliers
When starting a dropshipping business, you'll need to register with one or more suppliers. A service like Alibaba or Importify gives you access to hundreds of suppliers on one platform. Alternatively, e-commerce software like Shopify or Wix may include an integrated supplier directory. Another option is to use a print-on-demand service, such as Printify or Printful.
Shipping times, customer support, and policies differ among suppliers. Review agreements to understand:
- Vendor and supplier roles.
- Rights and responsibilities.
- Shipping and restocking costs.
- Shipping time frames.
- Return and replacement policies.
Create an e-commerce site
A mobile-friendly e-commerce site is fast, attractive, and easy to use. Online platforms like WooCommerce, Wix, and Shopify offer dropshipping options without requiring technical knowledge. You can choose free and paid themes, so choose one that best fits your brand and objectives.
Depending on the platform, you can add question-and-answer sections, customer reviews or testimonials, and automated or live chat tools. Each product needs a description and photos. Optimize your product descriptions for search engines and humans by using frequently searched terms with the intent to purchase.
[Read more: E-Commerce Business: How to Write a Great Product Description]
Build your dropshipping brand
Success in dropshipping relies heavily on your marketing and advertising efforts. Implement an effective brand strategy to differentiate your business. Also, develop website, social media, and influencer marketing plans. Typically, these will involve paid advertising and a good understanding of search engine optimization (SEO).
Use your multi-channel marketing strategy to increase website traffic and work with micro-influencers familiar to your target market. In each case, use KPIs to measure and improve your reach.
CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.
CO—is committed to helping you start, run and grow your small business. Learn more about the benefits of small business membership in the U.S. Chamber of Commerce, here.
