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How to Start a Dropshipping Business: A Complete Playbook for 2021

April 2021

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How to Start a Dropshipping Business

Polina Kratovich

Polina Kratovich is a technical writer at Amasty, a Magento developer who helps businesses by building e-commerce tools. She is passionate about describing products in simple language. You can find all of Polina's articles about e-commerce on the Amasty blog.

“

The way to get started is to quit talking and begin doing.

- Walt Disney

114 million people lost their jobs because of the pandemicand lockdown. And this sad statistic has one bright side. Part of those people chose not to look for a new job but create one. They started their own business and helped other people who needed a job as well.

But how to start a business if you don't have money? Well, there are several strategies you can use, and one of the easiest ones is dropshipping. Let's see how it works, the pros and cons, and how to start a dropshipping business.

What is Dropshipping, and How Does it Work?

Dropshipping is a model of e-commerce business where the seller takes care of marketing and accepts orders but doesn't own stock. Seller distributes orders between several suppliers - dropshippers.

Here is what dropshipping looks like.

Retailers create a platform where suppliers can place their products. Retailers create product pages, bring paid and organic traffic through PPC, blog, social media, and communicate with customers. The retailer manages almost all the marketing processes and brand reputation. Suppliers, in their turn, store products, process orders, and deliver them to the customers. They have to manage stock and replace defective products if needed.

Pros and Cons of Dropshipping

But of course, like anything in the world, dropshipping has its advantages and disadvantages.

Pros of Dropshipping

Low entry threshold
As you don’t own any goods and don’t have any stock, you don’t need a huge budget to start your business. All you need is to build and optimize the online store and find reliable suppliers.

No need to take care of products
Without stock, you don’t need to worry about expiration dates, dead stocks, or out-of-stocks. If the manufacturer supplied defective products, your dropshipper is the one who needs to deal with this and replace it for the customer.

Easy growth and internationalization
With this model, you can easily expand your business and try new markets. Just find suppliers in a new country or with interesting products and add them to your store.

Cons of Dropshipping

Risks
As you don’t have stock and you need to manage a network of suppliers, you always have a possibility of

human mistakes
and bad faith

Unfortunately, no one is immune to these risks, even the most experienced businessmen. The only thing you can do is try to build trustworthy relationships with every team member and partner.

Start Your Dropshipping Business

Find an idea

First off, choose your niche. You need to find a starting point for your business, and an idea of what you want to sell. Even though it's important to follow your heart when you build a company, you also don't need to forget about revenue and customer needs. In the ideal world with pink unicorns, your store will combine all together: your passion, profit, and users' requests. And although we live in a real world, we would like to highlight that it is worth striving to balance these three components of any business.
If you struggle with finding what is on demand right now, you can always check Google Trends to see what people look for and what problems they have.

Analyze Competitors' Activity

When you have chosen your niche, it’s time to look at the competitors and see what they do. Find other dropshipping stores and analyze them to find best practices. But you don’t need to copy your competitors. Keep in mind that you need a unique selling proposition that will help you to stand out from other e-stores and convince customers to choose you. This is especially important for a field with high competition. Here we also recommend diving a little deeper and trying to make SWOT (strengths, weaknesses, opportunities, threats) analysis to see the strengths and weaknesses of your opponents that you can use in marketing.

Don’t forget to check social nets and marketplaces too. Many merchants start their businesses on Instagram or Amazon.

Find Dropshippers

Next, you need to find your secure partners and build a strong network of suppliers. There are 3 most important points you need to pay attention to when choosing dropshippers:

1. Products they offer
Do they have products that you are interested in? What is their quality? Where and how were they produced? Is this production ethical? Ask your potential suppliers for the test samples and check if you like these products and if they suit your idea and standards.

2. Shipping times
As your dropshipper will be responsible for shipping and delivery, you need to clarify all the available shipping opportunities. How fast do they usually deliver orders? Do they have express delivery? Do they provide gift wrapping services? Can the client choose a specific delivery time?

3. Communication abilities
Finally, you need to always stay in touch with your partner. Analyze how fast they answer your messages and ask about alarm situations. For the first time, we recommend choosing partners that are located in the same or similar time zones. Thus, it will be easier to communicate.

Build Your Dropshipping Store

After your dropshipping business plan is ready, you can start building your store. For this, you need to:

1. E-commerce platform
Choose an e-commerce platform that will be the base of everything. There are various options. So you can find the most suitable one based on your technical knowledge, budget, and previous experience.

2. Hosting
pick the hosting if it is not included in your platform already. And don't forget that your business will grow. Don't choose the smallest and cheapest server. Leave some space for your future ideas.

3. Installation
install and set up the platform you have chosen. Even though most solutions have an intuitive interface and come with guides and support, you may need help from developers here.

4. Design
Choose, install, and customize the design of your website. Pick your brand colors and fonts, create a logo or even ask a designer to establish a brand book.

5. Fill in Information
Fill up your website with products and set access for your drop shippers so they can see new orders too.

6. Plugins
Make customizations by installing 3rd-party plugins or custom development, if needed.

7. Test
Test, test, and test one more time before you go live.

Market Your Dropshipping Store

And last but not least is marketing. To make your dropshipping business successful and sell as many products as possible, you need to focus on marketing from the first day. At the beginning of your journey, we recommend you focusing on the following marketing techniques:

SEO and content marketing
PPC
SMM

Here is how you can act. Start with SEO, and until you wait for the first results, get paid ads in Google. Create pages in social media and start generating content. You can launch ad campaigns there too. Share not only marketing content but also educational and fun. To strengthen SEO, you can start a blog on your website or create a knowledge base where you answer the most important questions about your business. Once you have your first customers, you can start building your email base and launch marketing newsletters.

But never forget to analyze the results you get. Use the PDCA model to get constant improvements in your marketing and business: