Dropshipping for Beginners: The Ultimate Step-by-Step Guide

Dropshipping is a popular business model for beginners because it doesn't require you to handle product manufacturing, packaging, or shipping. This allows you to focus on other important aspects of your store, like creating high-quality product pages and providing excellent customer service.

So, how does dropshipping for beginners work? To set yourself up for success, you should understand every aspect of running a dropshipping business before moving forward.

What is dropshipping?

A dropshipping business allows items to be stored, packed, and shipping directly from the manufacturer or supplier. So, the person running the online store doesn't need to handle the products at all. All you have to do as the seller is set up product pages and market the products. Then, someone else will handle everything else.

Dropshipping is popular for beginners because it allows you to start an online business without having to worry about every aspect of it yourself. Without packing and shipping products, you'll have more time to focus on other areas of the business. Yet, the main downside is that you won't have control over the product quality and shipping procedures.

How does dropshipping work?

Dropshipping is fairly straightforward. Here's how it would usually work:

1. You find a dropshipping supplier that sells the product you'd want to sell further;
2. The supplier stores the products at their facility and you don't have to store your own inventory;
3. You set up an online store or choose a platform that provides a platform for the customer to find your products on (like Shopify, Amazon, Ebay, etc.);
4. When someone orders a product, they pay you;
5. You forward the information to the supplier (or it gets forwarded automatically);
6. The supplier packs and ships the product;
7. You pay the supplier for the cost of the product (but keep the difference);
8. The customer receives the product;
9. If there's an issue with the order, the customer contacts you.

The details may vary slightly on how you have set up this process and what kind of products you offer. Before working with a supplier, talk to them about their shipping process to ensure it aligns with your business model. As long as you have clear communication with everyone you're working with, it should go smoothly.

Is dropshipping right for you?

A dropshipping business can be a great option for some, but it's not suitable for everyone. You need to carefully consider if using a dropshipping supplier is the right choice for your online store.

On one hand, it offers an easy way for beginners to get started without having to store and ship products themselves. On the other hand, it prevents you from customizing your products and having control over product quality.

To determine if dropshipping is right for you, decide if the pros outweigh the cons. If this is your first time running an online store, this may be the easiest way to get started.

Evaluating the pros and cons

Like any business model, there are advantages and disadvantages to running a dropshipping business. Before starting your dropshipping journey, think about both the pros and cons to decide if it's right for you.

The pros

• Low startup costs: You only need to pay for products after someone buys them. There's no need to spend a lot before starting your business, making it lower risk than other business types.
• Relatively easy to get started: Since you're not making and handling the products yourself, you don't need to prepare much besides choosing a product and a storefront.
• Someone else handles the products: Even though you're the business owner, there are lots of aspects of your dropshipping store that you don't have to worry about. You don't need to have experience with making and shipping products.
• More time to focus on product listings: With someone else dealing with the product aspect, you have more time to focus on creating product pages and using marketing tools.
• Lots of product niches to choose from: Most product niches are available through dropshipping. Since you don't have to store the products in your home or office, it's easy for you to sell a bigger variety of products.
• You can work from anywhere: You're only in charge of the online portion of your site, so you can operate your dropshipping business from anywhere. Your suppliers don't need to be in the same location as you, making this business structure more flexible than others.

The cons

• Limited customization options: With a dropshipping business, someone else is making the products for you. In many cases, the supplier will be producing the same products for several businesses, which means that there's not much room for customization (if any). Private label solutions provide greater flexibility.
• Quality control is out of your hands: You won't be seeing the products before they're shipped to your customers. Finding a reliable supplier is crucial so you don't have to worry about how the products turn out.
• Profit margins may be low: When a product sells, you only earn the difference after subtracting the product and shipping costs. Plus, many suppliers charge you a little more than the wholesale price. So, since you're only earning a percentage of each sale, you'll need to sell lots of products to earn a decent profit.

Dropshipping for beginners: Step-by-step

Once you've decided that dropshipping is right for you, it's time to start planning your dropshipping business.

1. Determine your product niche

The first step in any retail business is to choose a product or service to offer. Aim for something you're knowledgeable and passionate about, while also focusing on profitable niches with low competition to maximize your success.

Before getting your heart set on a specific product, make sure your product catalog makes sense for dropshipping. Most products work for dropshipping, but some are easier than others. If your item is hard to ship or has specific regulations, it may be harder to find a supplier to work with.

According to statistics, beauty, health, and household care products are the most popular dropshipping categories. Alongside those, food and personal care niches are expected to grow in upcoming years.

To be more specific, popular dropshipping products could include different household items and stretch into even pet products, supplements, skincare, and coffee. Yet, trends are always changing.

Choosing a trending niche can be beneficial, but make sure it's also a niche you know how to market well and know there's demand for it.

2. Research trends and competitors

A successful dropshipping store is one that stands out from competitors. Make sure you're taking example and analyzing similar businesses when getting your shop started. Look at what products they offer, which products are most successful, and what their prices are.

If possible, take a look at reviews from customers. Reviews can give you a lot of insight about what people liked and disliked about the company, their products and the experience overall. If there's a feature customers commonly praised, make sure your products include something similar. If the customers wished there was an additional feature or more customization, see if you can add that into your products.

Looking at social media pages could also give you some insight, especially when it comes to marketing. Just remember to keep your posts unique and look after starting clear of copying someone else's brand.

When conducting market research, go to such tools like Google Trends or Exploding Topics to see wether or not there's demand and analyze your competitors' trends.

3. Learn about the legal aspects in your region

While this definitely isn't the fun part of starting a business, it is very important. Make sure you familiarize yourself with tax requirements, business licenses, and copyright laws for dropshipping stores.

If you're ever unsure about the business requirements in your area, talk to a local legal professional to get your questions answered. It may take longer to start a dropshipping business if you do this, but it's worth it because it'll save you from major issues in the future.

This is also a good time to think about financial considerations. It's a good idea to have a business bank account to keep business earnings and expenses separate from your personal assets.

4. Find a dropshipping supplier

Finding dropshipping suppliers is the most important aspect of starting your business. Without suppliers who you can trust, there's a big chance your store will not be as successful.

Once you know your product niche, find dropshipping suppliers that sell items in that product category. You'll want to find a trustworthy supplier that also offers exactly what you're looking for.

Consider as many options as possible before choosing, taking into consideration all the places they might have reviews and if not sure, ask around in forums (like Reddit's r/dropshipping). Make sure to understand their shipping time, minimum order quantity, and packaging policies.

You may be able to find suppliers by using search engines, but most new businesses rely on supplier directories or databases. For example, the Shopify app store has a list of popular dropshippers.

5. Consider private label suppliers

One of the biggest challenge (and why it dropshipping as a whole gets such bad rep) is that the products seem all the same. This can make it difficult to set your online store apart from the competition.

When choosing suppliers, consider private label options. These operate similarly to dropshipping, but with far more customization options. The extent to which you can make it your very own brand will differ from supplier to supplier, so it's a good idea to do some research and compare as many options as you can.

This option is preferred by many new business owners because it gives you the opportunity to make your product truly yours. Even if it's still identical to other products in terms of manufacturing, the unique label can help it stand out. Plus, people may recognize your brand, making them eager to buy more products from your store.

6. Choose products and adjust your prices

Once you find reliable suppliers to work with, you can determine exactly what products to sell. Of course, the products must be within the supplier's product catalog. So, many dropshipping stores work with multiple suppliers to ensure their business includes everything they envisioned.

Pricing can be tricky. On one hand, you'll want to earn as much as possible, on the other hand, you'll want to provide competitive prices that encourage customers to choose your products above the competition.

With a dropshipping store, you'll get paid when someone buys your product, but you'll have to pay the supplier for how much it costs them to make and ship it. After selecting a supplier and products, you will have a clear understanding of their costs. Therefore, you will need to set your product prices higher than these costs in order to generate a profit. It's important to remember that sales tax will be applied to the purchase.

You'll need to find a balance between pricing products high enough to earn higher profit margins and keeping them low enough to attract customers. Some customers are willing to spend more for higher quality products while others want the most affordable choice. Make sure you research your target audience and offer them the experience they're expecting.

7. Think about your target audience

Before moving forward with your dropshipping store, you should know who you're selling your products to. Consider the age range and gender of people who might be interested in your business niche, their interests and lifestyles may come into play as well.

Determining your target audience before selling your products will give you the advantage against your competitors. The way you design your website, write your product listings, and market your products can all vary based on who you're trying to reach.

For example, people of a certain age group might be looking for specific features in a product. By knowing this and highlighting it in your product descriptions, you can help your dropshipping store stand out from competitors.

8. Create your brand's details

To run a successful dropshipping store, you'll need a strong brand identity. Come up with a memorable name, choose a color scheme, and design a logo. These choices will be present throughout your online storefront, so make sure the designs and colors you choose are appealing and will stand out from similar stores.

Also, determine what you want your brand to stand for. Are there certain features that you prioritize in the products you sell, such as sustainable packaging or local ingredients? Of course, you don't get a say in how the products are made, but you can choose to work with suppliers that fit your brand's image.

If you choose to go with private labeling, brand image is more important than ever because your branding will be on every product you sell even though you didn't make the products yourself.

9. Build your online storefront

Next, you'll need a way to sell products online. You could build your own website, but many beginners prefer to make a storefront through Shopify, Amazon, or a similar ecommerce platform. You will still have to market your products, but setting up the storefront is more straightforward through those methods. Here's a breakdown on how to choose the best ecommerce platform for your needs.

No matter how you set up your online store, it should be easy to find and navigate. Write product descriptions that are clear and concise. Ideally, use bullet points to easily highlight all the features of each product. If your product has features that stand out from competing products, be sure to highlight that in your description.

To help your products reach people, don't forget about SEO (search engine optimization) when writing product listings. This involves using certain keywords that customers might search to get your product pages to show up. Keep in mind the same approach if you're planning to work trough such platforms as Amazon and Ebay.

Make sure that your product pages display reviews. Visible reviews will make your store appear more trustworthy. Customers often rely on reviews when making purchasing decisions, as they can gauge whether other people's experiences with the product align with what they're looking for.

10. Market your dropshipping products

People won't magically find your products if you never advertise them. While some people might stumble across your product, it's best not to rely on that. Luckily, since a dropshipping store leaves all the product handling to someone else, that gives you more time to focus on the online aspects of your business.

Here are a few ways to market your products:

• Have active social media accounts for your brand: If your target audience is in a specific age range, consider what social media platforms they likely use most. For example, TikTok posts may reach younger audiences while Facebook may reach more mature age groups.
• Try email marketing strategies: Offer a way for people to sign up for your mailing list if they like your brand. That way, you can send them emails about new products and discounts to encourage them to buy more items.
• Work with social media influencers: Many influencers will post about your products if they receive a free item. While you may not make a profit by giving away free stuff, their posts can encourage more people to buy your products, especially if they have a large following.
• SEO: Most SEO tools require you to get a subscription to use all their features, but in many cases, it will be worth it. Having good SEO can help people stumble across your product pages more easily. Google Analytics, Ahrefs, Semrush, and AnswerThePublic are just a few of the many tools that can help you.
• Run paid advertisements: If you have some money to spare, it can't hurt to run paid advertisements. Appealing advertisements can lead to more sales, so you'll likely earn your money back. Choosing where to advertise depends on where you think your target audience will see it. Google, Amazon, Facebook, TikTok, and YouTube are just a few popular choices.

The more ways you market your online store, the better. If you're not creating enough content about your products, it'll be difficult for your potential customers to find your dropshipping store.

11. Provide good customer service

Finally, don't neglect customer service. No business operates perfectly all the time, so you are bound to have customers contact you now and then. By providing good communication and resolving issues quickly, you can create a positive brand identity.

When a customer orders a product, offer them a way to contact you if they need anything. Some dropshipping suppliers may allow you to add a personalized note in the packaging, but if not, you could offer this information through email. Encourage them to rate the product and contact you with any questions. Then, make sure you always respond in a timely manner if a customer contacts you to provide a positive experience.

Common mistakes to avoid

With any new ecommerce store, you're bound to run into some issues now and then. To help get ahead of potential mistakes, it's best to prepare for them.

Choosing a product or a niche you know nothing about

While you don't have to have prior experience with your dropshipping niche, it's a huge benefit if you do. If it's a product type you've used before, it'll be easier for you to understand what customers are looking for. You can use your experience to highlight the most important features and market it effectively.

If you don't know much about the products you're selling, you may end up focusing on the wrong aspects when advertising them. Having specialized knowledge and experience can make your dropshipping store more successful.

Not communicating with your supplier

Just because you and your supplier are handling different aspects of the business doesn't mean you can't work together. In fact, it's essential to work together. Make sure you have an easy way to contact them (email and/or text) so you can keep each other in the loop with any changes in business structure.

If you don't have good communication with your supplier, issues are more likely to arise. If you're not notifying them about purchases quickly enough, it could delay shipping. On the other hand, if they make changes to the products without telling you, you could end up using incorrect information when advertising the products. Make sure to communicate with your supplier regularly to ensure you're on the same page.

Ignoring trends and sales data

Any changes you make with your dropshipping business should be educated and have some kind of reason behind it. If you're not paying attention to your sales data, you could be missing out on profit.

Knowing what works and what doesn't in your dropshipping store can help you improve your business in the future.

Here are a few aspects to pay attention to:

• Which products are selling the most and the least;
• Which products have the biggest profit margins;
• How most customers are finding your store (social media, Google searches, etc.);
• How many sales are coming from paid ads;
• Are any products trending during certain times of the year;
• What devices your customers usually use (mobile, tablet, desktop).

The more you pay attention to sales data, the more you can adjust your dropshipping store to cater to it. For example, if you know that most customers are coming from Facebook, you may want to spend more time advertising on there instead of other social media platforms.

Not all information requires business changes, but all sales data is good to keep in mind.

Not using SEO

As mentioned earlier, SEO is important for getting your shop to show up in Google. You don't have to be an SEO expert to incorporate some keywords. Even using a few SEO tips could help your products reach more people.

Some store owners ignore SEO because they don't understand it. While that might seem easier for now, it could hurt your dropshipping store in the long run. You don't have to be an expert in the field to introduce the basics into your ecommerce platform.

What are the keywords people are looking when they're searching for your product? How would you look for the same product if you didn't know where to buy it?

In addition to SEO keywords, make sure your content is helpful and easy to read. Make sure you're checking the page's preview for both desktop and mobile devices so everyone can view your pages correctly.

Avoiding unhappy customers

It might seem easier to focus on the good and ignore the bad. But, with a business, it's crucial to pay attention to all. Interacting with unhappy customers can help turn their bad experience into a good one, which can improve your reputation.

To reduce the risk of disappointed customers overall, make sure your product descriptions are 100% honest. Don't bend the truth to make your products sound better. Highlight the important features in an honest way to ensure customers know what to expect.

Make sure your contact information is clearly visible on your website (and on product labels if your supplier allows it). It should be easy for customers to reach you. If the customer needs a return or refund, complete it as quickly as you can.

Not everyone will love every business, and that's okay. Yet, with honest advertising and good customer service, you can create a positive experience and grow your brand quicker.

Refusing to change and grow your business

Sometimes a consistent business plan works fine, but most businesses need to grow and change over time to succeed. You may need to change your product offerings to fit with trends. You may also want to add new products to expand your store. By making these changes, you can keep your store appealing to new customers.

You also need to plan for potential concerns. For example, the supplier you're working with now might not be the best supplier for you years from now. Keep other suppliers in mind in case you need to switch who you work with in the future. Having multiple suppliers is a great way to ensure you always have products available.

Don't be afraid to change your business as trends change. Change can be good and can keep dropshipping stores profitable.

Alternatives to dropshipping

Dropshipping is one of the easiest and most versatile ways to sell products without inventory. Yet, the process might not be ideal for every new business owner. Some might not want to rely so heavily on a supplier while others might feel overwhelmed by all the considerations they need to make.

Some similar methods include print-on-demand and selling digital products. Print-on-demand refers to products that can be printed when they're purchased, such as t-shirts, mugs, and books. A supplier will print the product with each purchase, so there's no need to have your customized items sitting around. Selling digital products could include digital artwork, online courses, and ebooks.

Both options are like dropshipping because they don't require you to have inventory. You can sell products without needing storage space or upfront costs. If one of these options sounds better for you than dropshipping, that might be the way to go.

Make your "one day" into "day one"

While all of this might seem like a lot of work at first, but in terms of starting your own online business, it's easier than most business models. It has low upfront costs and someone else is in charge of making, handling, and shipping the products. No doubt, it's a great way for new online store owners to start an ecommerce store without having to tackle every aspect on their own.

Start by figuring out what you want to sell. With a product type in mind, you can more easily find suppliers and create product pages for your dropshipping store. Take your time when figuring out the details of your business so you can ensure everything is sorted out before you start reaching customers.

If you're looking to run an online business, it may be time to start a dropshipping business. If you have a trending yet unique business niche and strong marketing strategies, you'll be on the road to success with your new ecommerce store.