What Is Dropshipping: A New Way to Get a Business Started

Have you ever heard of dropshipping? It's a way to set up your e-commerce store without needing to stock or ship any products. You can start selling things today without spending a dime on inventory and without needing to deal with shipping. Sounds impossible, doesn't it? 

The concept of dropshipping is not new. There's been a lot of evolution over the years and it's been around for more than a decade. In this article, we’ll be talking about dropshipping. We’ll tell you how it works and how to set up your own dropshipping store.

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What Is Dropshipping?

Dropshipping

Dropshipping refers to a model of e-commerce in which the store owner does not keep products in stock. Instead, the owner buys the goods directly from a third party and ships them directly to the customer. This makes it easier for entrepreneurs who want to start their own business but don't have any experience with inventory management and distribution systems. Nowadays, however, dropshipping has become a more mainstream option for businesses of all shapes and sizes, offering a number of benefits over the traditional model of retailing.

To get more clarity let’s understand dropshipping with an example.

Example of Dropshipping

DropshippingExampl

Notebook Therapy

The Notebook Therapy Shopify store sells journals and writing accessories. When it comes to creating a successful eCommerce store, Notebook Therapy has done everything right. They even have a blog that's constantly updated.They offer free shipping on all orders and the best part is there is no minimum purchase.

Additionally, they offer regular discounts and promotions. The company has a strong social media presence, having 1.6 million followers on Instagram. There is a very clean design and straightforward product pages, which is appropriate for this niche.

As we now understand what dropshipping is, let's look at some common myths surrounding it

Myths About Dropshipping

The dropshipping business model has become extremely popular in recent years. It simply means that you never handle a product yourself. Instead, you place orders for items that your customers want and have them shipped directly to the customer. In order to make a profit, you mark up the item's price beyond what you paid. It is still common for dropshippers to be misunderstood, however. Below are some of the most common myths about dropshipping.

  1. Dropshipping Will Make You Rich Quickly - One of the most popular myths in dropshipping is getting rich quickly. But the reality is you need to do a lot of experiments with your product, and there is no guarantee that they will all work. At the end of the day, it's Business, and not everything works in Business.
  2. You Can Only Dropship from the US or to the US - Dropshipping allows you to ship anywhere in the world from anywhere. If you live in India, you can sell products to any country. You just need to ensure that your customers are finding your products through organic marketing or advertising.
  3. Dropshipping is Easy - Many people think that dropshipping is easy, but initially, you need to learn about the platform that you gonna use to set up your website. Later on, also, there are a lot of automation tools you need to master to scale your Business.
  4. Dropshipping Is Illegal - Dropshipping is legal, but as with any other online business, you have to follow the policies of the platforms you choose to use. One of the popular platforms is Shopify.
  5. Only Popular Stores Can Sell Well - Everybody starts from zero at some point. The thing that matters in dropshipping is how you build your brand and gain people's trust. If you sell great products that add value to the customer, then they will purchase from you and will recommend them to others.
  6. Dropshipping is Dead - New entrepreneurs cannot afford the cost of bulk inventory. As a result, dropshipping is a safer and more cost-effective method of running a business. Dropshipping is not dead, and it won't die anytime soon. There is some competition, but there are still a lot of possibilities in the world of dropshipping.

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Benefits of Dropshipping

The primary advantage of dropshipping is that it enables entrepreneurs to start an online store without the massive capital investment of buying inventory. Let's discuss some of the best benefits of dropshipping.

  • Lower Startup Costs 

Dropshipping is the favorite choice for new entrepreneurs as it does not require a lot of investment. You don't need to worry about the inventory once you get the order from the customer. After that, you just need to reach out to the supplier, and they will deliver the product directly to the customer.

  • Flexibility 

Many aspects of a retail business can benefit from dropshipping. There are no limitations to where a brand can operate, how many products it can offer, or how easily it can change its offerings as the market changes.

  • Lower Inventory Management 

Dropshipping reduces retailers' management overhead by eliminating the need to maintain physical inventory. Because everything is outsourced to suppliers, they do not have to manage inventory, infrastructure, or shipping.

  • Testing New Products Without Risk 

You can always test new products in your store as you don't need to invest and maintain the stock. This is one of the best advantages of having a dropshipping business.

  • Scalability 

Retailers that use dropshipping can scale quickly since there are no restrictions on the size of their physical shops or how many workers they need to fulfill orders. Because of this, dropshipping can greatly benefit retailers experiencing fluctuations in sales due to seasonal factors.

  • You Can Offer a Wider Range of Products 

Dropshipping gives you the leverage to list a lot of products in your store as everything is online. You can connect with multiple suppliers and sell n number of products in your store.

Challenges in Dropshipping

  1. Building Your Own Brand While Selling Third-Party Products - It's always tough to build your own brand as you are selling products from a third party. To overcome this, many people are trying to list unique products so that they can stand out in the market and build their brand.
  2. Finding a Reliable Supplier - As it's very important for every dropshipping Business to have a really good relationship with a supplier, they should be trustworthy because if they are not able to provide products to customers on time, it will affect your brand value.
  3. Coping with a ban on Facebook, Shopify, and PayPal - It's essential to follow the guidelines of these platforms. You need to study a lot about these platforms. For example, you should be aware of what types of ads are a ban on Facebook, and if your product is not met with the guidelines of these platforms, you cannot run ads.
  4. Handling Shipping and Processing Time - Sometimes, it takes a lot of time to deliver the product to the customer. To solve this problem, you have to be honest with your customers, never lie about your shipping times, and write the actual times your parcels will arrive in the shipping section of your website. As a result, your clients will appreciate your honesty, and your complaint rate will be low. 
  5. Dealing With Customer Returns - Things can get complicated when a third party is involved. Dropshipping returns policies depend greatly on the suppliers, and the majority of them do not offer return services.
  6. Running Out of Stock - Dropshipping can be challenging during particularly busy periods, such as during Christmas. There are often times when you sell the most, which is why you should prepare ahead of time and get a supply of your best-selling items. There is no need to purchase thousands of them, but you still want to have enough to be able to fulfill your orders. 

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Best Ecommerce Platform for Dropshipping in 2022

1. Magento

One of the best-known eCommerce platforms is Magento, which is renowned for its powerful features and easy customization. In addition to its strong scalability, this is also one of the best eCommerce platforms for dropshipping. In order to set up and configure Magento, you need to know some coding.

There are two Magento options : 

  • Magento Open Source: This version is 100% free to download and install. 
  • Magento Commerce (now Adobe Commerce): A premium edition of Magento Open Source. 

2. Shopify 

Shopify is a SaaS (Software-as-a-Service) platform that is very popular nowadays. There is no doubt that this platform is a comprehensive solution that provides non-tech-savvy users with all the tools they need to build an online store. 

Despite the fact that Shopify is a relatively simple and straightforward platform to use, the company offers a powerful set of marketing tools, including email marketing, abandoned cart recovery, gift card promotion, etc. The result will be a seamless shopping experience at your store without requiring you to install many apps.

3. WooCommerce 

Open-source products like WooCommerce allow you to scale with ease, as well as provide you with endless flexibility and customization options. It also inherits many SEO features from WordPress, which you can use to enhance the marketing strategies for your dropship store.

WooCommerce is built on the WordPress platform, so the dashboard is familiar to store owners compared to other open-source platforms such as Magento. Additionally, WooCommerce is easy to integrate with a WordPress site, making it a reliable eCommerce platform for dropshipping for newcomers.   

4. Bigcommerce

Along with Shopify, BigCommerce is another prominent SaaS eCommerce platform. In addition to providing top-of-the-line commerce features, BigCommerce provides mid-market and enterprise-level commerce solutions. 

BigCommerce offers advanced SEO tools, abandoned cart recovery systems, and email marketing integration that will help you run your Business more efficiently. Dropshipping businesses that want to grow fast can use BigCommerce as it is suitable for stores selling hundreds to thousands of products. 

5. Wix 

Wix is a drag-and-drop website builder that is user-friendly and allows you to build an eye-catching website. In order to stay ahead of the eCommerce trend, Wix has released Wix eCommerce, a platform that allows anyone to build their own eCommerce store without requiring any coding or design knowledge. 

It provides a hosted solution with every eCommerce feature necessary for a successful online store. You can choose from more than 80 pre-made templates on Wix, along with an intuitive drag-and-drop interface and many marketing tools to boost your dropship business. For small businesses, Wix is a good option.

6. OpenCart

It is an easy-to-use e-commerce platform that is free to use. Hosting will be the only cost. OpenCart can be easily set up by anyone who is tech-savvy. It offers both free and paid plugins and themes.

Investment Required for Dropshipping

Now that we have understood what dropshipping is, its benefits and challenges. Let's have a look at how much investment is required to get started with Dropshipping

The Basic investment that is required to start dropshipping is 250 USD. When you scale up, you will have to invest more. The following four things are essential for any dropshipping business.

  • Dropshipping Platform Fees - There are a lot of e-commerce platforms available to choose from, and the cost varies from platform to platform. For now, we are taking an example of one of the most popular e-commerce platforms, Shopify, just to give you an idea.

Shopify Basic Plan will cost 29 USD per Month.

  • Apart from that, there is a domain cost. On average .com domain will cost $10-20, and again, it depends on which domain extension you are purchasing.
  • You need to have Product Samples as well, and that will cost you around $100
  • and then comes the marketing part, which is the most necessary thing for every dropshipping Business. To test out the products, you will need at least $100.

These figures will only give you an idea of what the investment would be if someone wanted to start dropshipping. The actual number may vary from Business to Business. For example, someone might invest more than $200 in marketing as a starting point.

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How to Do Marketing in Dropshipping?

Now let's have a look at different ways to do marketing of a dropshipping business.

1. Email Marketing

It's always better to have the email address of your customers. Suppose somebody purchases your product and becomes the customer, and if any other offer or a new product you launch, you can target your old customers by sending them emails. It's just one use. You can do a lot of things with email marketing.

2. Start a Blog 

Whatever products you have, you need to do research about the relevant    article topics that you can write, and under that, you can mention your products. The blog will help you to get the organic traffic to your website

3. Master Facebook Ads 

One of the popular marketing ways used by many dropshipping business owners. Because we want instant results, blogs will take time, but with the help of Facebook ads, we can reach our target audience within a day. Testing various AD campaigns and finding the winning campaign can boost your sales, and one of the great features of Facebook ads is retargeting. Visitors to your website can be retargeted, which will improve conversions.

4. Promotional and Discount Codes

People love discounts and promo codes. It's always better to come up with new discount coupons regularly.

5. Run Contest or Giveaway 

Sometimes, you can launch a contest that will help you to get traffic to your store and give away some of your products. There might be a chance the person who didn't win the giveaway will end up purchasing your product.

6. Influencer Marketing 

This marketing method can be costly if you target big influencers, but it will give good results. If you don't have much budget, then you can reach out to a micro-influencer.

Steps to Get Started With Dropshipping

1. Pick a Dropshipping Business Idea - As a first step, you need to do market research and then finalize the one business idea that you are going to work on.

2. Competitor Analysis - After deciding what you are going to sell, educate yourself on who your competitors are, what they offer, and how they market their products.

3. Find a Supplier - Finding a good supplier on AliExpress is easy. You can find products on the platform and choose suppliers from the list of results. For each supplier, you can see reviews, ratings, and how long they've been on the platform, which should help you decide which one to choose.

4. Building a Dropshipping Business Store - Now, you need to finalize one e-commerce platform. In this video, we discussed the best e-commerce platform for dropshipping, and then you need a domain name.

5. Marketing - Once the store is set up and all the products are listed. Now, you can focus on marketing your products that we also discussed in this video. 

6. Automation Tools - You need a few automation tools to reduce manual tasks. For example, Mailchimp for email marketing.

7. Analyze and optimize - Your website, brand, and marketing efforts can be analyzed once you have spent time building them. In some cases, marketing activities are incredibly successful, while in others, they aren't. In addition, you can look at your prices against your competitors in order to see if you can come up with a few changes to make them more competitive.

8. Now Focus on Scaling - Now everything is done now. You just need to focus on scaling your Business once you get enough results. Most dropshipping businesses fail because the store owners are not good at scaling, so you need to come up with some strategy to scale your Business once you have seen decent growth in your Business.

Tips to Grow Your Dropshipping Business

1. Create an attractive store - One of the biggest reasons businesses fail is because they don't create an attractive store. This is where the challenge lies for most entrepreneurs. The initial excitement from not having to build or design a store can wear off very quickly. In fact, it's quite common for store owners to realize that their store isn't what it needs to be—and that is the first step to failure. So it's essential to create an attractive store.

2. Focus on Marketing - You need to focus on Organic as well as paid marketing to grow fast. Also, timely update your marketing strategy with the current trends and based on the data that you got from previous marketing campaigns.

3. Customer support - It's essential for every Business to focus on the retention of its existing customers by providing them with the best support.

4. List Unique Products in your store - The market is becoming competitive day by day. In order to compete, the best way is to come up with unique products and stand out in the market.

5. Add Customer Reviews - To build credibility and trust in your store, it's essential to ask for feedback and ratings from your customers. Getting a video testimonial is also a great thing to do.

6. Test your products - A helpful tip is to ask your suppliers for samples if you're considering expanding your dropshipping Business. In this way, you are able to use and test the products you intend to sell. Your product descriptions will be considerably more accurate if you have firsthand experience with the item. These sample products can also be used to create video product reviews, advertisements, and other marketing materials.

So, this brings us to the end of this dropshipping article. 

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Conclusion

In this 'What Is Dropshipping' blog, we discovered the field of dropshipping. We understood the myths, benefits, challenges, and step by step guide to get started with Dropshipping. This blog covers almost everything you need to know about dropshipping. As you can see, digital marketing plays a vital role in dropshipping. If someone is proficient in digital marketing, he/she can master dropshipping business. 

If you are looking to build a career in digital marketing, then Simplilearn's Digital Marketing Certification Course will prepare you to become a full digital marketer. With this Digital Marketing certification, you can handle marketing campaigns from beginning to end for 2022 and beyond. 

If you have any questions or require clarification on any part of this 'What is Dropshipping' Remember to leave your thoughts and questions in the comment section below, and our team of practitioners will be more than happy to resolve all your queries at the earliest.

About the Author

Tushar BansalTushar Bansal

Tushar heads product innovation at Simplilearn. He has over 10 years experience in envisioning and building products and is passionate about education and how technology can aid continuous learning for individuals.

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