Drop shipping is an extremely popular business model for new entrepreneurs, especially Gen Xers and Millennials, due to internet marketing skills far outweighing financial capacity. Since you don’t need to stock or handle the items you are selling, it’s possible to start a drop shipping business with limited funds.
An e-commerce website that operates a drop shipping model purchases the items it sells from a third-party supplier or manufacturer, who then fulfills the order. This not only cuts operational costs, but it also frees up your time to focus all of your efforts on customer acquisition.
If you are ready to start a business that can compete with retail giants, and do so on a limited budget, then follow the six steps below. While it doesn’t take a lot of startup funds to launch a drop shipping business, it will require an immense amount of hard work.
The niche you select needs to be laser-focused and something you are genuinely interested in. A product range that isn’t focused will be difficult to market. If you aren’t passionate about the niche you select, you will be more apt to become discouraged, because it takes a lot of work to successfully scale a drop shipping business. Here are some points to consider when selecting your niche:
Remember, you will you be competing with other drop shipping operations as well as retail giants like Walmart and Amazon. This is where a lot of potential drop shippers go wrong because they look for a product that has little to no competition. That’s a sign there isn’t demand that particular product.
There are many reasons why a product might not have a lot of competition, like high shipping costs, supplier and manufacturing issues or poor profit margins. Look for products that have competition, as it’s a sign that there is a high demand and the business model is sustainable.
Partnering with the wrong supplier can ruin your business, so it’s important that you don’t rush this step. Conduct proper due diligence. Most drop shipping suppliers are located overseas, making communication extremely important, both in terms of response speed and the ability to understand each other. If you are not 100 percent confident in the communication abilities of a potential supplier, move on and continue your search.
People were using Aliexpress and eBay vendors as their drop shipping suppliers and experienced a lot of trouble on that platforms. So most of the drop shippers are changing to other platforms like CJDropshipping, here is an article that tells why people quit from Aliexpress.
Try to learn from other entrepreneurs who have walked this path in the past. There are plenty of information sources available, from business and tech blogs to this subreddit about drop shipping. It’s a popular topic that can help you avoid costly supplier mistakes.
The fastest way to launch a website that supports a drop shipping business model is to use a simple e-commerce platform like Shopify and WooCommerce also available on Amazon, Etsy, eBay etc. You don’t need a tech background to get up and running, and it has plenty of apps to help increase sales.
Even if you have a sizeable budget that would allow you to hire a web design and development company to create a custom solution, it’s a much wiser move to use one of the plug-and-play options, especially in the beginning. Once you are established and the revenue is coming in, then you can explore additional website customization.
Having a great product and a website is great, but without customers looking to buy, you don’t have a business. There are several ways to attract potential customers, but the most effective option is to start a Facebook ad campaign.
This allows you to generate sales and revenue right from the start, which can contribute to quick scaling. Facebook allows you to place your offer directly in front of a highly targeted audience. This gives you the ability to compete with the largest brands and retailers immediately.
You also have to think long-term, so search engine optimization and email marketing should also be a focus. Collect emails from the start and set up automated email sequences that offer discounts and special offers. It’s an easy way to leverage your existing customer base and generate revenue without additional advertising and marketing spend.
You need to track all of the data and metrics available to grow your business. This includes Google Analytics traffic and Facebook conversion pixel data if that is your main customer acquisition channel. When you are able to track every single conversion — to know where the customer originated from and what path they took on your website that eventually led to a sale — it enables you to scale what works and eliminate what doesn’t.
You will never have a set-and-forget advertising or marketing solution. You need to constantly test new opportunities and fine-tune current campaigns, which allows you to know when to optimize or shift campaign spend.