A Beginners Guide to Dropshipping

How to Start an Online Business and Never Stock Inventory

Dropshipping is a way to fulfill orders without stocking inventory. Instead, you purchase inventory as needed from the manufacturer or wholesaler. It’s a way to quick-start a business without upfront investment. You don’t purchase a product until you have a customer order. 

You can literally get a dropshipping business up and running in minutes. And it’s easy to scale once the business gets established.

In this beginner’s guide to dropshipping, we examine how to:

  • Determine the right niche for dropshipping
  • Research the competition
  • Select a supplier
  • Price your products
  • Dropship on Amazon
  • Market and grow your dropship business

Determine the Right Niche

Because it is relatively easy to set up a dropshipping business, a lot of people do it. So you want to carefully assess what niche you want to be in. The definition of niche is something very specific. To find your niche, narrow a category to its smallest component. For example, within the pet food category, maybe you want to focus not only on dog food, not only on all-natural dog food without preservatives, but perhaps all-natural food for dogs with allergies. 

Here’s one of the chief advantages of dropshipping. Since you aren’t buying inventory, it doesn’t cost you anything to test a niche. If the all-natural food for dogs with allergies isn’t generating a lot of sales, find another niche. 

Determine the Right Niche

Select a Supplier

While you could search directly for manufacturers and/or wholesalers to contact about purchasing products, perhaps the easiest way to select a supplier is to use any one of a number of dropshipping platforms. The biggest of these is AliExpress. Other dropshipping platforms to consider include:

  • CJDropshopping
  • DropnShop
  • Oberlo
  • Salehoo
  • Worldwide Brands

Price Your Products

Many dropshippers compete on low-price, so typically margins are low. Determine if you can competitively match or even get below the competition’s pricing and still make a profit. Alternatively, higher pricing is justified if you offer value-adds such as premium branding, online advice, and customer service. However, time and expense to better market your value-add products also add overhead costs that put pressure on your margins. 

Dropship on Amazon

While there are a number of platforms for drop ship sellers, Amazon is probably the best choice for beginners. You can have your store up in no time, with access to features that help promote your business, and your business is associated with the leading online retail brand worldwide. 

There are insurance requirements and some fees, but this is a part of getting on almost any dropshipping platform.

Dropship on Amazon

Market and Grow Your Business

If all you had to do is open your dropship store and sit back and make money, everyone would be doing it. Just like any business, you have to market it if you expect to have any success. 

The main question to ask is: what brings visitors to my storefront and, most importantly, what causes them to buy? 

Implementing effective marketing strategies is a subject for another whole blog, but basically, you want to look at various social media sites that can possibly drive traffic to your storefront. You can buy PPC ads that you only pay for if, as the name implies, a potential customer clicks on it (though there is no guarantee the customer goes on to purchase). You can also segment the ads so they target specific locations, demographics, and/or shopping patterns. Conduct A/B testing to determine which ads are most effective in channeling traffic to your dropship store.

Develop an email list to send potential customers product news and promotions. A good way to do this is through social media. Offer a product discount to anyone who provides their email. Chances are you’ve already won a new customer who is interested enough to want the discount.

Once you’ve launched and marketed your products and your business, look at continual improvement. Delete products that aren’t selling well and test new items. Continue to test new ads. Determine which sales pages convert better. Research what tools you can use to help you identify new products, optimize listings, and market more effectively.

 Grow Your Business

Consider Amazon FBA and GETIDA 

Many dropshippers become so successful they consider other fulfillment methods to supplant or even replace the dropship model. If you are already an Amazon, consider 

Fulfillment by Amazon (FBA). 

With FBA, you still don’t have to deal with the hassles of managing inventory: Amazon does that for you, albeit with some costs to you. However, FBA sellers are advised to carefully track reimbursements Amazon owes you due to errors in mishandling your inventories and order fulfillment. The best way to do that is by using GETIDA (GET Intelligent Data Analytics), the largest provider dedicated to Amazon FBA auditing and reimbursement.

GETIDA  performs a full Amazon audit of up to 18 months of all your transactions to identify discrepancies eligible for FBA reimbursement. There’s no cost for this analysis. With your approval, a GETIDA team composed of former Amazon FBA reimbursement employees presents and follows up on your claims to the appropriate departments. You only pay a percentage of whatever claims are successful. Even better, you can get $400 in free FBA Reimbursements to try them out.