What is Dropshipping? The Ultimate Guide for 2022

Dropshipping is a type of retail that allows entrepreneurs to earn revenue without the need for much upfront capital or inventory.

Dropshipping has become popular, especially in recent years, due to its low cost and high flexibility.

Anyone can start a dropshipping business and it is most common on the Shopify platform. In this guide, we will go through what dropshipping is, how to get started, the pros & cons, and much more.

What is Dropshipping?

Dropshipping is a way for eCommerce entrepreneurs to sell items without having to maintain any inventory. When a merchant receives an order from a client, they merely contact the supplier and the products will be delivered straight to the consumer’s house. Dropshipping apps like Oberlo will enable you to pull items from a variety of suppliers into your online business to expand your product range.

Dropshipping is an excellent way for new entrepreneurs wanting to start an online business to get started. It’s easy to set up and run, and it doesn’t need a substantial investment of money. You may also start a successful dropshipping business on the side – even if you have a full-time job.

How Does Dropshipping Work?

Your first step is to do product research.

The best way to get started with dropshipping is by finding products to sell. It doesn’t matter what industry you are in or what niche you are targeting, there are bound to be popular products that aren’t being sold online yet.

One of the easiest ways to find great product ideas is by using a keyword research tool like SellTheTrend. It will provide you with keywords related to your industry or niche, in addition to suggesting popular product ideas.

Another way is to spy on stores and see what they are selling. Look for items that they have on their main page as they are likely to be top-sellers.

You can also look through your Facebook feed to see what items people are selling. These are likely targeted ads based on your own interests. So you might even find something you are interested in selling. This is manual market research but it could pay off.

You can also find products on AliExpress on their “best sellers” list. Look for what products are selling well which will indicate there is good demand for that product.

Once you’ve done some research and chosen a promising niche or product category, the next step is to find suppliers for your products.

Dropshipping works best if you can get in contact with manufacturers directly. This will eliminate the need for middlemen (or dropship distributors), which will save you money and ensure the top quality of your products. You can usually find manufacturer information on product listing pages on marketplaces like Alibaba or Aliexpress.

After selecting your preferred supplier(s) it’s time to open a store. There are many eCommerce platforms to choose from these days, but the most popular ones are Shopify and WooCommerce.

In general, dropshipping is a simple concept that can be applied in many different e-commerce niches. It’s not limited to fashion or any other specific industry – it can work for pretty much any product you can think of.

Can Anyone Start a Drop Shipping Business?

Yes, anyone can start a dropshipping business, you just need a little capital and the know-how on how to do it.

The drop shipping model is a beginner-friendly business model, and there are plenty of resources available to help you get started.

However, there are some pros and cons to consider before starting a dropshipping business. That’s up next.

What are the Benefits Dropshipping?

Dropshipping has a few benefits. For one, it’s a very low-cost business to start. You don’t need to invest in any inventory, and you can sell products from various suppliers on your online store. This means that you can find products from all over the world and offer them to your customers without having to worry about shipping or customs fees.

Dropshipping is also beginner-friendly. If you can operate a computer and navigate around a website, you can probably start a dropshipping business. There are many online resources available to help you learn about dropshipping and how to run your own online business.

Another advantage for new drop shippers is that you have the freedom to sell anywhere in the world. You don’t need a physical store or warehouse, so there are no extra costs involved with setting up your own location. This makes it easy to get started and test out different markets without having significant financial restrictions.

Dropshipping also doesn’t require much time commitment. You can usually run your online shop from anywhere, even from work on your lunch break, if you want to!

What Are the Disadvantages of Dropshipping?

On the other hand, dropshipping has its downsides as well. For one, it requires extensive product research and competitive analysis before starting a business. This can be time-consuming and difficult, especially if you don’t have any prior experience in the industry.

Another disadvantage is that customer support can be a challenge. Since you’re not dealing with the products yourself, it can be difficult to provide quality customer service. This can lead to a lot of complaints and negative reviews, which can hurt your business.

In addition, because you’re not dealing with the products yourself, you are at the mercy of your suppliers when it comes to quality control and product delivery. If your supplier ships late or send low-quality products, it will reflect badly on your business. You may also find it difficult to build trust with customers if they know that are not the ones handling the products.

Finally, profit margins for drop shipping businesses are usually around 20-30%. This means that you need to sell a lot of products to make a decent profit. If you’re not comfortable with this kind of margin, it may be worth considering another business model.

What are the Shipping Costs Associated with Dropshipping?

Shipping costs for dropshipping can vary depending on the supplier you are using. For example, Aliexpress offers free shipping on most items, while Alibaba has more variable shipping costs that depend on the item’s weight and destination.

It is important to factor in shipping costs when pricing your products, as you will want to ensure that you are making a profit on each sale. You can use a shipping cost calculator to get an estimate of how much it will cost to ship your items.

Keep in mind that you may also need to pay for packaging materials and shipping labels, so be sure to factor those costs into your calculations as well.

Overall, dropshipping can be a relatively inexpensive way to start selling online, but it is still important to do your research so you can ensure that you are being profitable.

How do Find the Right Dropshipping Supplier?

Finding the right dropshipping suppliers can be difficult for new businesses. There are a few steps that I recommend you follow in order to find the best dropshipping supplier or third party supplier.

Research: The first step is to do research on all of the dropshippers that carry your target product. If you are dealing with vendors on Aliexpress, check out how many customer orders they have and what their customer experience is by way of reviews.

Talk to multiple suppliers: The next step is to contact two or three dropshippers about your product. See how they respond, if they speak good English, and what their pricing is. If you have any questions for them just ask away. You can even see which company responds the most quickly so you know who you’ll use in the future.

See how responsive they are: After contacting two or three dropshippers, start comparing how responsive each supplier is. For example – one of my suppliers sent me an email during my research stage saying that they wanted to drop ship for my store but I never responded. Weeks later I emailed them back thinking it would be fine but then I received no response at all. Unfortunately, this company had a few bad reviews on their website so I didn’t want to get involved with them.

Find a drop shipping supplier that speaks good English: The final step is to find a supplier that you’re comfortable doing business with and who speaks great English. A lot of Chinese companies don’t speak fluent English which can make communication difficult at times.

You should also see what their minimum order quantity is. You should find one that will allow you to ship out one item at a time.

Don’t be afraid to Bargain

If you order a lot of items from your supplier, you should always try and ask for a discount. Not only will this show them that you’re a valued customer, but it’ll also help to improve your relationship with them. I’ve been able to get discounts from my suppliers by simply emailing them and asking for a better price.

In the dropshipping industry, it’s always important to remember that you have the power to negotiate with your supplier. If you order a lot of items from them or if you plan on doing business with them for a long time, don’t be afraid to ask for a discount. You may be surprised at how much they’re willing to give you.

Dropshipping is a Scalable Business

When you find a winning product, you can scale your business based on that one product or a few. Dropshipping makes it easy to test products and see what works and what doesn’t. You can then focus on the products that sell the best and continue scaling your business from there.

A lot of eCommerce entrepreneurs get stuck building a single product business. They find a winning product and establish their store around it. However, what do you do when that one product starts to decline in sales?

Dropshipping is a scalable business model that alleviates this problem by allowing you to test multiple products at once. When some of those items sell well, you can focus your time and energy on those products. And, when the products you’re selling decline in popularity, you can simply replace them with new items.

This scalability is one of the main reasons why dropshipping is so popular among eCommerce entrepreneurs. It allows you to build a business that is sustainable and profitable, no matter what happens with individual products.

Some stores can make 6 figures a month with a single product. However, this requires a lot of dedication and hard work. With dropshipping, it’s possible to make a healthy income by selling a variety of products. This gives you more flexibility and room for growth in your business.

What is the Best Platform to run your Drop Shipping business on?

There is no one-size-fits-all answer to this question, as the best platform for your business will depend on your individual needs and preferences as a drop shipper. However, some of the most popular eCommerce platforms for online stores include Shopify, WooCommerce, and Magento. Each of these platforms has its own unique advantages and disadvantages, so you’ll need to decide which one is right for you.

Shopify is a popular eCommerce platform that is easy to use and has a wide range of features. It is perfect for entrepreneurs who are just starting out, as it requires no programming knowledge and comes with everything you need to get started including inventory management, support, multiple currency options, and more. It also has a huge community of users and developers who can help you when you need it.

If you want to manage your own website, WooCommerce is another popular eCommerce platform that can be used to build a store with WordPress. However, WooCommerce stores aren’t as easy to set up and they come with fewer features than a Shopify site. In addition, WooCommerce sites have a lot of compatibility issues with third-party apps.

Magento is an open-source eCommerce platform that also has a wide range of features and customization options for entrepreneurs. It’s perfect for entrepreneurs who already have experience running online businesses and it’s relatively easy to use once you get the hang of it. However, Magento sites require coding knowledge to customize them and many third-party apps don’t work well with this platform.

Should you Still use Facebook ads for your Dropshipping Business?

Yes, you should still use Facebook ads for your drop-shipping business. Facebook has a much larger user base than Google, so you’re more likely to reach your target audience on Facebook. Additionally, Facebook ads are more customizable than Google ads, so you can create ads that appeal specifically to your target audience.

For example, you can target your ads based on a user’s interests or demographic information. You can also target users by location to make sure that only a relevant audience sees your ad.

While Google is a decent source for advertising as well, Facebook ads might be a better fit for most dropshipping entrepreneurs.

In general, experts recommend that you spend about 25% of your time and money on marketing efforts such as PPC campaigns and spending money to advertise on platforms like Facebook.

Also keep in mind that the more targeted the ad is for its audience, the more relevant it will be to them – meaning they are more likely to click on it. As long as you stay positive about trying out this combination of tactics, you should get great results.

How to Find Influencers to Get More Sales

Influencers can really skyrocket your sales if you can get them to promote your product. However, finding and contacting influencers can be difficult. Here are a few tips to help you find and contact the right influencers for your product.

One way to find influencers is by using Instagram. You can search for specific hashtags related to your product or industry and find people who have used those hashtags in their posts. These people are more likely to be interested in promoting your product.

Another way to find potential influencers is by looking at who is already promoting your competitors’ products. Chances are these people would be interested in promoting your product as well, since they are already familiar with it.

Once you’ve found some potential influencers, the next step is to contact them. You can contact influencers by DMing them on Instagram. Once you’ve contacted an influencer, make sure to be as clear as possible about what you want from them and the benefits they will get for promoting your product.

Also, make sure to use social media monitoring tools like Sprout Social, Mention or Keyhole to keep track of every mention of your brand/product/competitors’ brands/products so that you know the right time to strike and reach out to influencers.

Low-Ticket VS High-Ticket Dropshipping

When it comes to dropshipping, there are two main types: low-ticket and high-ticket. Low-ticket dropshipping is when you sell products that are inexpensive, such as t-shirts and phone cases. High-ticket dropshipping is when you sell more expensive products, such as furniture and appliances.

Which type of dropshipping is better? That depends on your goals and what you’re comfortable selling. If you’re looking to make a lot of money quickly, then high-ticket dropshipping is the way to go. However, if you’re just starting out and don’t have a lot of money to invest, then low-ticket dropshipping is a better option.

Another thing to consider is your target market. If your target market is wealthy people, then high-ticket dropshipping would work well. However, if your target market is people with limited budgets, then low-ticket dropshipping is a better option.

Ultimately, the type of dropshipping that you choose comes down to personal preference and what you’re comfortable with. There’s no wrong or right answer; it’s simply a matter of choosing the option that best suits your needs.

You can check out my separate article on High-Ticket dropshipping which goes into much more detail and the pros and cons of this business model.

How Long Does It Take Before You Start Making Money?

That depends on a lot of factors. Among the most important is the kind of products that you’re selling, where your target market is located, and what your marketing channels are.

However, in general, if you’ve followed my advice up to this point, for some people they can start making money with their first product, while others don’t make money until they’ve promoted their 10th product. The idea is to find a winner and scale from there.

Rome wasn’t built in a day, and your business won’t be either. Perseverence is key!

Test, Test, Test.

In order to be successful in this business, you need to test many products. This is the only way to find products that sell. And, once you’ve found a winner, you need to scale it up by tweaking your ads and improving your website.

So, you should expect to spend a lot of time testing and tweaking before you make any serious money.

Is Dropshipping illegal?

Dropshipping is not illegal, but there are a few things to keep in mind before you start dropshipping. First, make sure that you’re not violating any laws or regulations in the country where you’re doing business. Second, make sure that you’re not infringing on any trademarks or copyrights. Finally, make sure that you’re not selling any illegal products.

If you’re doing all of these things, then you’re in the clear and can start dropshipping with peace of mind.


Conclusion

Dropshipping can be a very profitable business but it can also end up costing you a lot of money too. The main reason for this is picking the wrong products to sell. So, in order to be successful, you need to test many different products over time.

However, if done correctly, dropshipping can be a fantastic business model that allows you to make money online or supplement your income while still holding down another job. Just know that it’s not easy and takes dedication but with the right guidance it can be one of the best ways to get started making money online today.

To eliminate risk and give you the best chance for success, you’ll want to check out my best dropshipping course post which lays out the best training you can get.

I’ve bought a lot of dropshipping courses over the years and reviewed them all. Some are just terrible, while others are fantastic!

Drew Mann

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