DollarBreak is reader-supported, when you sign up through links on this post, we may receive compensation. Disclosure.
The content is for informational purposes only. Conduct your own research and seek advice of a licensed financial advisor. Terms.
What is a Dropshipping?
It is a fulfillment model that allows you to buy products individually from a wholesaler and ship them directly to your customers.
Here are the 4 steps in the process:
- A customer places an order on your website
- You place an order with the supplier
- The supplier ships the order
- You alert your customer to the shipment
And best of all, the process can be almost fully automated. Dropshipping works best if you build a shop around one product and add a few more products to complement it or upsell the customer.
In this guide, I will provide you with exact guidelines on how you can start a successful dropshipping business even if you are a beginner.
Let’s start with the pros and cons of dropshipping.
Why Is Starting a Dropshipping Business a Good Idea?
Dropshipping comes with a lot of advantages. Let’s have a look at the most important ones:
- No cash investment needed – dropshipping does not require you to invest in the stock, because you only pay when a customer purchases your product.
- No need to have a warehouse – you will not even see the products because the suppliers will ship the orders directly to your customers.
- No need to fulfill orders – there is no need to be involved in the fulfillment process or hire staff to oversee it because your supplier will handle the process for you.
- Forget about logistics – the supplier will take care of the partnerships with logistics companies which will distribute your products in the most cost-effective way.
- Can be run from anywhere – you can live in the Bahamas or somewhere in the Caribbean because this business model does not require you to be in a specific location.
- A wider selection of products – you can have from one to million products or have 10 different websites selling in different niches. It is easy to add new products.
- Can change the supplier at any time – if you have issues with a specific supplier, you can simply switch to another one because there are usually no commitments.
What Can Stop You from Building Dropshipping Business?
Of course, there are risks involved with dropshipping and here’s what you need to know:
- Higher fulfillment costs – when you dropship, you not only pay the real cost of stocking, picking, packing, and shipping, but you also pay a hefty mark-up to the suppliers.
- Inventory issues – you have almost no control over how your supplier will manage inventory. Sometimes your most popular product will be out of stock, and there is nothing you can do.
- Higher competition – dropshipping has a low entry barrier, which means that there is a possibility that other people will sell the same products, making it harder to stand out from other businesses.
- Suppliers mistakes – you have a low level of control; therefore, there is always the risk that suppliers will send the wrong items to customers, cause a delay or pack the products poorly, all of which will impact the customer experience.
As you can see, the model has some definite advantages but also comes with a number of built-in complexities and problems you’ll need to be able to address.
The good news is that with some careful planning and consideration, most of these problems can be resolved and need not prevent you from building a thriving, profitable dropshipping business.
Getting Started with Dropshipping
According to Google Trends, dropshipping interest has spiked in the last few years. More and more people have been getting into this business; therefore, you need to have the best strategy to succeed.
How to Find a Winning Product for Dropshipping?
One of the most important aspects of having a successful dropshipping business is finding the right product.
Unlike in conventional e-commerce stores, where you must sell certain types of products and stick to those products because you’ve already ordered plenty of stock, the dropshipping business model allows you to test the market without buying any inventory.
However, it is important to be aware of the most valuable product characteristics when entering this type of business; otherwise, you will spend tons of money on tests and waste a lot of time finding them on your own.
So What are They?
- The surprise factor –you want to grab people’s attention while extolling your product’s benefits in the video or image you will use in your advertising. You will have to market this product, so think from the beginning about how you are going to make your product appealing. For example:
- Profit margins – it’s a good rule to have at least a $10 profit margin per item in order to cover your advertising expenses. For example, if you buy a product for $2, then you should sell it for $12 + shipping.
- High demand – concentrate on products which solve people’s problems. The more severe the problem, the higher the demand. For example, there are a lot of tea drinkers out there who might want to use the same tea bag for their second cup of tea. This is where the tea inflator comes in!
- Not found in retail shops – your products should not be easily available because retail stores could easily undercut you in price.
- Not seasonal – choose a product which sells throughout the year because you do not want to start your business in February with ugly sweaters and wait for Christmas to sell the first one. Check seasonal interests with Google Trends.
- Low return rate – products that come in different sizes or are technically difficult to operate usually have higher return rates, so choose simple products such as this Pineapple Slicer.
How to Find Dropshipping Suppliers?
There are few good places where you can find suppliers for your dropshipping business.
Memorize the characteristics of profitable dropshipping products and head to these websites to conduct your research:
- Ecomhunt – is a winning product tool for dropshippers. Every day they research the market and upload top-trending products that you can sell.
- Niche Scrapper – is similar to Ecomhunt, but they use technology to scrape top-performing products off the internet.
Once you have a product idea, sign up with any of these dropshipping companies which synchronize inventory and order fulfillment by automatically connecting you with approved suppliers.
And the best part is that the companies listed below have FREE plans, so you can try them out without the need to invest any money (AliExpress Dropshipping has a 7-day FREE Trial).
- Spocket – is a dropshipping app that can be used to find fast shipping and hot selling products from the best suppliers in the US, Europe, Canada, and Asia.
- AliExpress Dropshipping – allows you to import any product from the biggest online international retailer in China – Aliexpress.
The imported items are ready to sell right away!
How to Set up Dropshipping?
Next, you need to set up your e-commerce store so you have a platform from which to sell.
I recommend opening your store with Shopify, which currently has a free 14-day trial.
There is a 6-step process involved in setting up your online store.
Start your Free Trial with Shopify
Enter the required details and click the ‘Create your store’ button.
You will be asked to enter some details about yourself. Once you are done, click the ‘Enter my store’
Choose a Theme
Instead of hiring a graphic designer to design your website, you can install one of the pre-made templates and customize it to your needs.
You will find over 70 store themes to choose from in the Shopify theme store.
It is possible to filter themes by Free or Paid, then choose the layout style, industry and catalog variations that suit your product best.
Set up Your Domain
In order to make your website visible, you need to add a domain name for your new store.
If you have one already, simply connect the existing domain name.
Otherwise you can buy one directly from Shopify. Prices vary from $9-$14 per year.
Enter your desired domain name, check to see if it is available and click the ‘Buy’ button.
Set up Payments Processor
Next, in order to receive payments from your future customers, you need to add a payment processor to your store.
Shopify has many main payment providers, including Paypal, Amazon Pay, and Stripe, which accept credit cards and other payment methods during checkout.
Connect Dropshipping Apps
As mentioned previously, Spocket and AliExpress Dropshipping have either Free plans or trials.
As a result, you can add them all to your store to test their functionalities.
Add the Spocket app
Add the AliExpress Dropshipping app
It’s time to add products to your store.
The process for all apps is similar.
- First, locate the product.
- Next, import the selected products by clicking the ‘Add to Import list’ button.
- Afterward, check the products on the “Import list” on the left-hand side, and, if everything is there, click on the ‘Import to the store’ button.
A similar 3-step process applies to all the apps.
It’s likely that you will use the app that lists your target products.
Once you add your products, your store is ready for launch!!
Add More Features to Your Store
Here is something you can do before your launch.
Shopify has some very useful apps for dropshipping which you can add to your store to make more sales.
- Ultimate Sales Boost – it helps to boost your sales by providing a sense of urgency and scarcity with features such as a countdown timer, product upsell, a low stock warning and many more.
- Facebook Live Chat – live chat is a convenience for customers. If buyers are not ready to make a purchase, you have an opportunity to handle their questions and provide quick answers.
- Consistent Cart – over 3/4 of shoppers choose to leave the site without completing a purchase. This app helps you to recover those lost sales.
How to Market Your Dropshipping Business?
Establishing an amazing business is merely the first step. Attracting customers requires marketing.
This is where Facebook comes in. There are over 2.23 billion active monthly Facebook users, and advertising on Facebook is cheap compared with using other channels!
On just a $5 daily budget, you can start an advertising campaign and gather your first data or maybe make your first sales.
Things you need to do:
Login to your Facebook account and create your “Business or brand” page.
You will be asked to enter your “Page name,” then choose the “Category” from the drop-down options and enter the address details.
It is important to add some posts, describe your page in settings as well as upload a profile and page images.
This will make your page look alive in case someone would like to check to see if you are a real business.
Install Facebook Pixel
Facebook Pixel is a code which collects data on your websites and tracks conversions generated by your Facebook ads.
Follow the detailed guide to set up Facebook Pixel up for your Shopify store.
Create a Compelling Video for Your Product
Before you launch your Facebook Ad, you need to make sure your creative material is ready.
A Facebook Ad should preferably have a video instead of images because it lets user interact with your post for a longer time.
However, you must have heard that the human attention span is now shorter than a goldfish.
Sooooo…. the goal is to intrigue people in the first 5 seconds.
How to hook someone that fast
As you know, Facebook plays videos while you scroll through your feed, meaning that you have to make sure there is something interesting in the beginning of your video which draws people into watching the whole ad and eventually clicking on it.
Here is a good example for engaging people who may experience back pain:
The commercial goes straight to the point and asks you – “Does your back hurt?” and shows a familiar work environment. If your answer is no, that’s okay and off you go.
However, if your back really hurts then you likely will be interested enough to watch the video to see what might alleviate your back pain.
I appreciate the fact that you may not necessarily have the budget to create a similar commercial.
However, with some creativity, you can easily achieve your desired results.
If your budget is tight and you have no intention of producing videos, then I suggest downloading a FREE eBook with 500 Facebook Ad images and copy examples from AdEspresso for inspiration.
*PS – Just in case you do suffer from back pain, I’m adding the link to Plexus Wheel, so you aren’t left dangling 🙂
Define Your Target Audience
“Everyone” is not your target audience!
Each product has an audience who buys it. For example, if you try to sell a walking stick to 30-year-old men, do you think they will be interested in buying it?
You know the answer! So how do you define your target audience?
The easiest way is to use the Interests feature on Facebook Audience Insights
Let’s say I want to advertise a “Backbone Stretcher” which I chose during my Spocket app set-up.
I should then think about the people who own similar products and the reasons why they bought them in the first place.
To be clear, the reason can be that the product solves a problem or that it provides a benefit.
Now suppose that I think people would buy this product if they have back pain and want to stretch their backs without going to the doctor.
As a result, I would use “Stretching” as my target interest and enter it in the Interests box. Also, I want to target the United States, so I’d enter the US in the Location box.
What can you tell from this data?
First, 75% of female Facebook users and only 28% of male Facebook users are interested in stretching.
Second, 22% of those interested in stretching are 45 to 54 years old, and 22% are between 55 and 64 years old, which provides an approximate age range.
This information allows me to examine segments of the audience in order to obtain more information. To do so, I simply apply the filters in the left-hand columns.
Once this step is complete, additional information comes up on items such as relationship status, educational level, and job title.
Now, I would save the audience and create my ad by clicking the green button in the right corner.
Launch Your First Facebook Ad
Once you have clicked on the green ‘Create ad’ button for your own product, you will be taken to the page below. Click on ‘Use Ad Create Tool.’
First, switch to Quick Creation using the bottom button on the lower right-hand side.
In the beginning, your objective is to collect data with as small a budget as possible.
As a result, you should choose a marketing objective with a low cost per click such as “Traffic,” as I have in the “Backbone Stretcher” example I will use for illustration throughout this section.
Next, name your “Campaign”, “Ad Set” and “Ad.”
In addition, enable the “Campaign budget optimization,” then enter your daily budget and “Save to Draft.”
Next, select the ad set for your product from the left-hand side and choose the saved audience.
Finally, upload your images or video according to Facebook instructions, create your description, add your website URL, and publish your first ad.
Target Website Visitors from Facebook
As soon as you have set up your first ad, it is important to track all the people who visit your website.
Visiting shows that they are interested in what you are offering and that there is a possibility that you will make a sale.
Let me walk you through tracking visitors:
First, go to the Facebook Ads Manager. Under Assets, click on Audiences.
Then create a Custom audience using Website traffic as the target source.
Create your Pixel name and enter your Website URL (make you sure that you have installed Pixel on your website; otherwise, Facebook will not know who visited your website).
Next, name your custom audience and click on “Create Audience.”
On top of that, you have to create one more ad, but this time choose “Conversions” as your marketing objective.
This way, Facebook will optimize your ad to convert the most people.
Learn the RIGHT Way to Start a Dropshipping Business
Keep in mind that the number of visitors will depend on your budget.
However, start small and test ads with a few different titles.
Once you see that visitors are converting to sales, you can increase the budget and scale up the campaign.
Continue learning and don’t give up too early!