A Beginner’s Guide To Dropshipping
If you are reading this right now, there’s a high chance that you are doing so because you are interested in making extra money. In this time and age, the internet has given a lot of opportunities to those who are ready to seize it.
One of such is dropshipping – the ability to make lots of money, build relationships with customers across the globe and create a business without manufacturing a single product!
This is the huge opportunity a business model like dropshipping has created. It is estimated that the dropshipping industry is worth $196.78 Billion.
By now, the hair at the back of your neck is probably standing and you want to go all in right? Well, the best part is that anyone including you can become a dropshipper.
The goal of this article/guide is to teach you how.
What you will find in this article:
- What is dropshipping?
- Dropshipping statistics
- How does dropshipping work?
- Factors to consider before choosing a product
- Where to find products to dropship
- How to find suppliers/manufacturers/vendors
- Qualities of reliable dropshippers
- How to process orders in 5 simple steps
- Conclusion.
So if you have not backed out yet, let’s dive in!
What is dropshipping?
Dropshipping is a retail model where the selling store/seller doesn’t stock or own inventory. In simple terms, the store owner purchases the items from the original manufacturer. When a product is sold, the store owner purchases the item from a third party which is shipped directly to the customer. The seller rarely handles the product directly.
Dropshipping is a business model where a store owner processes orders through a third-party supplier/vendor. The third-party dropshipping supplier/manufacturer is then tasked with the responsibility of shipping the order directly to the consumer – without an intermediary step like having to store the goods.
With this business model, the retailer (seller/store owner whom the customer contacted) does not produce nor store the goods, but instead, passes customer’s information to the supplier to ship on their behalf. The store owner is then relieved from the burden of having to maintain stock or own a warehouse.
One amazing thing about dropshipping is that you really do not need extreme knowledge of how to code or design or anything, with just basic internet skills, you can build a business empire right from your bedroom.
In fact, dropshipping is a low-risk, low-investment business that doesn’t require a physical location, because it maximizes the Internet’s opportunities.
But first, let’s get some statistics about dropshipping
Image source: Statista
- According to the latest data, the global dropshipping market is forecast to reach $196.78 billion in 2022, a whopping 23.7 percent year-over-year increase from 2021.
- Experts predict that by 2026, the dropshipping market size will be worth as much as $476.1 billion. To put things in perspective, this is more than 3.5 times its value in 2020 and an impressive $347.5 billion of growth in just a matter of six years.
Source: Oberlo
How does dropshipping work?
If you are wondering how dropshipping works, here’s a simple process:
Step 1: A customer places an order on the retailer’s online store owned by the dropshipper.
Step 2: The dropshipper forwards the order and customer details to the supplier/vendor/manufacturer they have partnered with to process the customer’s order.
Step 3: The manufacturer/supplier/vendor packages and ships the item to the customer on the dropshipper’s behalf, after charging the dropshipper shipping fee, plus the cost of the product.
Once the order is delivered to the customer, the dropshipper is responsible for handling any customer queries, returns, or any other issues.
Note: Ensure you have struck a discount deal with the supplier and discuss terms of return for damaged goods and licensing issues before you go ahead to sell a supplier’s product online.
Factors to consider when choosing a product
There’s no manual to the kinds of products you can sell as a dropshipper. However, considering that some products have really done well based on the demand and supply theory, you should consider products that has the potential of moving fast which would help you get fast and multiple income.
You want to pick a product that has the potential of growing, because any decision made at this point will have long-lasting implications for the success or failure of your dropshipping business.
Most importantly, the product you decide to sell should be a good fit for your niche audience and your brand and you must be able to sell it.
Here are some factors to consider before choosing a product to sell.
- Follow demand – You must ensure that there is a market for your product and go in the direction of what the market wants. It’s always easier to fill the demand of a thirsty market than to create a demand. The latter is stressful and requires more money than you could possibly imagine.
- Research – Conduct extensive research on your product – its supplier, distribution, and manufacturing costs and other incentives the supplier provides.
- Understand the product – You should at least know what the product is and what it does. Having a genuine interest in your product will give you an upper hand especially in marketing the product.
- Choose an undersaturated market – Although, seeing a demand for your product is cool but also consider the competition within the market. When you enter an oversaturated market, you will have plenty of competition, and this would decrease your chances of selling to customers because of the oversaturated market.
- Low shipping costs – If the cost of shipping is too high, customers will be unhappy, and they will look for alternatives. This is probably why it’s not a good idea to handle produce or perishable goods when you are starting. They are expensive to dropship because they will require specialized equipment and shipping methods which will all contribute to shipping costs.
Note: Regardless of the item you pick, start small. You can expand your product offering as you grow and gather experience in the business.
Where to search for dropshipping products
Now that you have the basic knowledge of dropshipping, the next thing to know is where to source for your products right?
Well, Google is a great place to start. With the use of Google Trend, you can see the best selling products within a particular period of time. With this information, you know what products to start looking for suppliers for.
You can also get product ideas from eCommerce sites like:
How to find suppliers/manufacturers/vendors
Once you have settled on your product, it’s time to look for dropshipping suppliers. As a matter of fact, finding a great supplier is the most critical part of a successful dropshipping business.
There are several strategies you can use to find dropshipping suppliers, and you must keep in mind that this can be one of the most challenging steps when setting up your dropshipping business.
Before you even start reaching out to the dropshippers, dot all your Is and cross your Ts. This includes all legal paperwork, plus your business mission and vision. Most good dropshipping suppliers will request legitimate proof that you are a legal business before they engage you.
Often, wholesalers/suppliers and manufacturers get bombarded by questions from young entrepreneurs who don’t actualize their purchases. Thus, they may be cautious when you cannot prove your legitimacy and cut off the communication when they feel you are unserious.
Process of finding and verifying suppliers
After you have decided on what to sell, then you need to build relationships with suppliers by verifying them first and tendering your proposal. Some suppliers have dropshipping program embedded on their website, for some, you have to contact them. Here’s how to find suppliers for your products:
- Contact the Manufacturer via the websites above- Most manufacturers know legitimate wholesale suppliers because they do business together. Ask for a list of wholesale distributors and make phone calls or schedule meetings to find out if they dropship. Some manufacturers have dropshipping programs for resellers.
- Consult Google- Use Google to track reliable and high-quality suppliers. You should know how to perform extensive searches on Google if you want to be successful. There are tons of websites dedicated to eCommerce that can provide helpful information about reputable dropshippers.
- Purchase Our Verified Suppliers List- This is probably saving the best for the last. The truth is, searching and verifying suppliers is a daunting task that will engage you mentally and physically. You will also part with money and time. With a verified suppliers list, you can be sure to save yourself the stress of doing the search and verification alone because you will have access to lots of verified suppliers within the industry you want to sell your products in. Get more information here
Note: It is important to perform due diligence at this stage and move on with your search whenever you feel something is off. Ask all the relevant questions and investigate the capabilities and legitimacy of your dropshipping supplier.
Bonus: You will get Alibaba Verification Guide eBook as bonus if you purchase our Verified suppliers list
Top qualities/skills of reliable dropshippers?
- Have basic technical knowledge- To be a successful dropshipper, you should be able to create and manage online catalog, inventory, order details, customer communication skills etc. This will empower you in your journey as an entrepreneur and you will be able to keep up when you scale.
- Create content around your products or business – The best way to win organically as a dropshipper is to create exciting content on social media to attract new prospects. Using reels, stories and videos, you can get more prospects to engage your contents and become customers. should assign a dedicated representative to handle any issues.
- Effective communication skills- The ability to communicate with customers from the first point of contact till when they receive their goods is very important. This would help you learn about your customers and get feedback from them.
- Be punctual, organized, and efficient – Marketplace competition has made fast shipping a priority for getting sales. Dropshipping suppliers who can ship within 24-48 hours, without failure, are preferred. Although if you are shipping from as far as China, the 24-48 hours may not work. However, the key is to communicate with your customer and let them know. You also want a supplier who is mostly error-free. You can test punctuality by placing a sample order.
- Provide high-quality products – Top-notch products will lead to a higher level of customer satisfaction. Later, you will find that happiness is key to positive testimonials and product reviews, which are major determinants of future success.The entire drop shipping business model is dependent on a reliable supplier who sends the right items out quickly and efficiently.
Further readings:
https://naiyuanmart.com/5-qualities-the-best-people-in-the-sourcing-industry-have/
How to start dropshipping in 5 steps
- Launch your online store/website- The first step is to set up your online store, and one of the fastest ways to launch a website is by using a simple plug-and-play eCommerce option, like Shopify. It doesn’t require you to be tech-savvy, and it comes with useful apps. You may consider a web designer later when the revenue has started coming in, and you want more customizations but really, you can figure the basics out on your own. You can use a free app like canva to design a logo for your store. You can start with a simple name fore you store
- Manage your inventory- You may also want to consider one of many inventory management softwares available online. You will still be required to manage stock, even though you don’t have to have the stock at hand. The process is usually tedious and time-consuming. Shopify has all this inbuilt and you can view your inventory at a glance.
- Support your business with Ads and keep track of your customers- You need customers, and one of the strategies you may want to consider is using targeted ads. Running ads on social media like Facebook or instagram will give more visibility to your store which may end up with you having more customers. This will make it easier to generate sales in the beginning as targeted ads will get you on the customer radar. If you are thinking long-term, email marketing and search engine optimization are also viable paths to explore, as they will reduce your marketing spending in the future. Also, keep track of all your conversion metrics. Knowing where your customers come from so you can focus on important platforms and intensify marketing efforts there.
- Ensure smooth order fulfillment-You want to stay on top of things, because several issues can arise with dropshipping suppliers. You won’t have the ability to shift blame, since your customers placed orders with you, not your suppliers.
To ensure a smooth fulfillment process, stick to these rules:
- Provide tracking numbers to customers to let them know their product has been processed and shipped.
- Have a formula for addressing returns or an exchange policy that you can refer to in case of damaged goods.
- When an item is discontinued or out of stock, be ready to go out of your way to find it on the customer’s behalf. Your customers will always be counting on you to make things right.
- Be very clear about your return policy, shipping communication, and customer service.
- The goal is to be the buffer between your suppliers and your customers, especially when something goes wrong.
Conclusion:
Now that we have simplified and explained dropshipping, we hope that you are inspired to get started already and make some cool cash.
Take action:
If you are ready to jumpstart your dropshipping business, you should talk to us right away!
Naiyuan Mart is the best China Procurement and Shipping Company that can connect you to hundreds of verified suppliers and manufacturers in China. We also offer procurement, Payments to Suppliers, Air & Sea Cargo and many other value added services.
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