How to Start a Dropshipping Business in 2022
Dropshipping is a great way for someone that doesn’t have a large amount of money to stock a warehouse to sell products for other companies that will send products with your shipping from label, whether that’s a custom label you provide or a generic one they have available.
While we can’t guarantee success, that takes some work on your part. We can provide you with the steps required to start a dropshipping business, how to avoid some of the pitfalls along the way, and give you the best possible chance at a successful online dropshipping business.
If done correctly, you can make thousands of dollars each month just like so many other companies out there doing this already. If you’re worried about the work required to scale your dropshipping business, don’t worry, we will show you how to automate most of the dropshipping business as you grow.
Become A Member
People who join now will have free access to our premium members area. We don’t SPAM you, we send a newsletter once or twice a month only.
Table of Contents
What is Dropshipping
Skip the Read
Watch the Dropshipping Video
Dropshipping is the process of selling someone else’s physical products, but with you acting as the original seller.
In some cases, you can even rebrand the product as your own. Have you ever bought something generic at the grocery store and noticed it shipped from the exact same place and matches the name brand exactly beside the packaging? You can rebrand a product with your company logo or custom designs.
But, mainly dropshipping is the simple process of selling someone else’s products with your company information as the original seller instead of the dropshipper company information.
Pros and Cons
There are many pros to running your own dropshipping business as well as some cons. Some of the pros are:
- Low Cost to Start – You’re selling someone else’s products as your own. They ship them for you and print the shipping label with your information on the product. This means you aren’t paying for upfront inventory, so no storage requirements. You don’t order the product until the customer buys from you, and on top of that, you’re making a profit from the sale. Now, there are costs associated with dropshipping to do it right. You may need to consider paying for advertising to get customers to your store. This can be done on a budget through Google Ads, Facebook Ads, Bing, and other online marketing sources. There are also costs for WordPress plugins that can make your dropshipping experience more automated, such as plugins that automatically add products to your store with the click of your mouse, or plugins that allow you to automatically fulfill orders. You may also be interested in hiring a virtual assistant as your store grows.
Everything I mentioned above is not a requirement but can be associated with costs. As stated, you can start with little money at all.
- Easy to Start – Thanks to WordPress, Shopify, BigCommerce, and other eCommerce platforms, it has never been easier to create an online eCommerce store for your business. Web Design World will show you how to create an eCommerce store yourself with no outside help, you just have to decide which option works for you. WordPress is free and easier to customize, but Shopify and BigCommerce are larger paid systems with many 3rd party applications to build a successful dropshipping store as well.
- Tons of Products to Sell Online – China is not your only dropshipping source, but it is the biggest one obviously. There are thousands and thousands of products to choose from. The hardest part will be deciding what kind of store you will create and the types of products you will sell. We find it’s best to just sell a few products, an example is picking a niche selling a focused product, then possibly selling some related products that a customer may buy during the checkout process.
- Scaling is Easy – There are many people out there that understand dropshipping. You can easly hire a virtual assistant for a small monthly fee that will make sure your orders are fulfilled quickly. There are even people overseas that can go and source the products you sell and get the fastest shipping for you. After your first store experience, you can run multiple stores with various niches and grow your online business exponentially.
- Sell Products Everywhere – You can sell your products all over the world (excuse me, someone else’s products 🙂 ). Please keep in mind, that every country has its own set of rules about eCommerce and you should be aware of those rules before you sell in other countries.
- Automation is Key – With an eCommerce website, your customers just place the orders while you sleep and all you have to do is process the order from your backend dashboard and your dropshipping supplier will do the rest. An hour or two of your day and you’re done.
Ok, there can’t be all pros to dropshipping, sorry. There are some cons as well:
- Stock Shortages – It happens, especially with what has been happening with Covid starting back in 2019. We are finally starting to get back to normal. Stock shortages are a thing and they can happen quickly. A great example of stock shortages affecting the rest of the supply are semi-conductors, which affect the supply of PlayStations, some vehicle parts, and more. You don’t want to create a repetition of being out of stock of your products too often, so make sure you have a source for more than one supplier for your product and be aware of any of the product shortage timeframes, such as seasonal products.
- Competition Selling Cheaper – Companies with funds to buy products in bulk can beat most dropshipping prices. Many companies on Amazon that offer fulfillment by Amazon (FBA) are buying in bulk and usually can beat any prices you may offer. You will have to be creative with how you bring shoppers to your website and convert them.
- Higher Costs of Goods – Unless you are buying a large number of products at once, your cost of products will be high. After you’ve established your company and purchase products from a dropshipping company, you can negotiate a lower price, but this will take some time to establish your company.
- Customer Service Demand – In order to establish a successful business, you’re going to need to keep customer service in mind. You have no control over shipping, and there will be questions if a product is not shipped in a reasonable amount of time. In addition to shipping, you will have to deal with refunds, customer complaints, reviews, and much more. It is extremely important that you partner with a reputable dropshipper to help reduce some of these inevitable things that will happen.
- Quality Control Issues – If you sell a niche item or at least plan on selling a niche item, you may want to consider purchasing the product yourself first. If it is sold by more than one supplier, try a couple of different suppliers to test their shipping time as well as the quality of the product they manufacture. This will help you understand what you’re selling much better and answer any questions that come up as mentioned about customer service issues.
- Too Many Dropshippers – There are many dropshippers out there like you trying to make money online. You will need to set yourself apart from your competition and do it better than they are. We won’t give you some false sense of getting rich online, it takes some work to be successful in dropshipping. You are dealing with a saturated space in terms of dropshipping, but you can still be successful. It is helpful that you don’t try to be a jack of all trades and sell anything and everything under the sun but focus on a niche that is in demand.
- Multiple Supply Sources – It’s great having a large supply list, but keep in mind, you will have to keep up with that supply list and order products from multiple sources when in fulfillment mode. It is important that you try not to grow your business too quickly and scale proportionately to what you can handle, otherwise, you will burn out quickly.
- Low Profit – Just because you’re not carrying a physical product, you can only sell products online at a competitive fair price compared to your competitors. You might only make a couple of dollars on a product and many might not even sell. Keep this in mind, you might not be profitable right away. Consider tracking all of your monthly expenditures, including fees you pay for hosting, domain name, 3rd party plugins that help automate your store, or any other fees associated with your online dropshipping business.
- Supplier Errors – Your supplier is going to make a mistake, no company is perfect. It is imperative that you have a good line of communication between yourself and your supplier. You want to work with a responsive supplier, not one that takes days or weeks to answer your questions. If a product is sent to the wrong customer or the wrong product was sent, you will need to have a process in place to correct this issue.
How to Get Started with Dropshipping
In the following sections, we will go over some basic requirements to start a dropshipping business. The keyword is business, so we will also briefly discuss business licenses, but you will need to do your own due diligence based on what part of the world you are located in.
Remember, you are selling products to customers and they are paying their own hard-earned dollars for those products. It is important that you put serious effort into your online business and build trust.
Before we start building our dropshipping website, we need to figure some things out first, so read on below and eventually you will be ready to build your first eCommerce store in WordPress.
Find my Niche
You don’t have to run a dropshipping store based on a certain niche, but it can help you be more successful. You can run a store with lots of products or within a certain category such as clothing, toys, radio-controlled cars, watches, jewelry, or whatever you want.
Keep in mind, that you are looking for products with high demand and lower competition rates to be successful. There are many free tools out there to help you determine the statistics around your niche, make sure you use them. We’ve provided some below.
- Facebook Insights – You can use this free tool to search niche or at least market interest. What we are searching for in this course is wedding rings for our dropshipping example website. When I do a search for wedding rings with Facebook business insights, I come up with a 22.6 million audience size broken down by the top cities, in my case New York, Houston, and Chicago are the top three cities I could target. Facebook has over 2.3 billion members targeted on a daily basis for various ads. A great place to start and find your best niche area to target.
- Google Keyword Planner – This is a valuable free tool to track all kinds of keywords that Google is tracking. This will tell you the daily volume of searches for your keyword, and various phrases used for the keyword and lead you to all kinds of great possible niche areas to dropship products for. I wouldn’t normally use wedding rings as a dropship niche, but since I own buyweddingrings.com it only makes sense for me to make use of it. By searching the Google keyword planner, I found some niche areas I could focus on because wedding rings by itself is highly competitive. Some of the niche areas I found are “wedding day diamond”, “men’s wood band ring”, “men’s Saphire band rings”, and the list goes on. Focusing on the lower competitive keyphrases will allow me to have a chance at organic “free” website traffic.
- Google Trends – This free tool will let you know what is trending via the search engine, breaks down different searches based on different countries, and shows you over a set amount of time. On Google trends I noticed the key phrase “fashion wedding rings” is a hot item during the month of December, so I could make sure I’m running ads on those during December. Also, “lesbian wedding rings” is a high search topic throughout all of the months.
- Amazon – Yep, Amazon has such a large customer base, they have established themselves as a reliable source for finding niche products to offer on your website. When you visit their website, go to Best Sellers and also the Movers and Shakers category. On each of those pages, you will find a breakdown of product categories to further dig for a niche you can succeed with. So, for our wedding ring website, I selected the jewelry category under Movers and Shakers and see silicon rings are hot items.
- As Seen on TV – I couldn’t really find a suitable item on this website for the wedding rings category, but you may be able to find a niche item for the area you are selling in.
- Inspire Uplift – This website has a large amount of traffic and some pretty cool products to find a niche item. I found some smart sensor body temperature rings that I believe could be a great wedding ring for a man who wants to wear a little low tech on their ring finger. I mean, I own a diamond wedding ring, but I primarily wear a black titanium ring. I would totally wear a ring that told me my body temperature.
- Spy.com – This website does some thorough research on numerous products and has some pretty cool ideas that could easily be niche areas. I found 23 rings to give your lady when you’re definitely not proposing. This could be a possibility to consider for those thinking about it but decides to wait a bit and buy one of these rings instead.
- The big dropshipping companies are also great for looking for niche products, you can see reviews, total orders, etc to help you make an informed decision. These big companies include Aliexpress, Alibaba, and CjDropshipping. We will talk about all of these in more detail below.
Lastly, look for a niche that allows you to add accessories. For wedding rings, some accessories can be fancy ring boxes, something romantic geared towards popping the question, and many other items we will search for.
How to Find Your Suppliers
Once you’ve decided on the niche you plan to sell products for, now you need to find suppliers for that product or niche category. There are many dropshipping suppliers, even some based in the United States for faster shipping. Not everyone pays for Amazon prime and is used to receiving what they order within 2 to 3 weeks, just be upfront about the shipping time and your customers will not have a problem waiting for a product you sell to take a little time to arrive.
Listed below are some resources to find a supplier for your business. Make sure you review the total orders received for the product you are selling and look at the overall reviews for both the product and the supplier before you place an order.
- World Wide Brands – This company has been around for a really long time. They currently have a lifetime access plan available. Note, you can use the other resources mentioned below which are free. We mention World Wide Brands because they screen all of their dropshippers and have a market research tool that lets you know how competitive your desired product is. It’s like a niche tool, pretty nice. I like lifetime access plans, so I couldn’t resist. The suppliers for World Wide Brands are located in the United States and Canada.
- AliExpress – This is the most popular resource for finding dropshipping suppliers on the entire planet. Most of the suppliers are based in China, and some of them have warehouses in the United States and possibly other countries. If you place an order on this website, make sure you inform the supplier you are a dropshipper and the shipping from the label should have your company information on it.
- Alibaba – This is another great company for dropshipping suppliers, however, a vast majority of the products on this website have a minimum order requirement. I will say a lot of the suppliers on this website are more reliable than Aliexpress, but might not suit your needs.
- CJDropShipping – CJ has warehouses all over the world to make order fulfillment of your products much smoother. Think of Fulfillment by Amazon (FBA), but not. You can also order products through their website, but unless you are using them for order fulfillment, I think you might as well use one of the supplier resources listed above.
- Dropified – I like dropified, but it does have a high monthly subscription price. You will notice this company on Shopify, they also have integrations for BigCommerce, WooCommerce, and others. Basically, they make it easy to search for products and with a click of a button add directly to your website. We will show some other cheaper options, but this service is well worth it if you are making decent profits, otherwise, wait.
- Oberlo – Similar to dropified, but not as polished in our opinion. They do have a free starter plan, so well worth checking out.
Keeping up with Inventory and Supplier Lists
Managing Inventory – You may ask why do I have to manage inventory and a suppliers list. For the inventory, it’s important to know how much inventory your supplier has available for a product you are selling before they run out. It’s best if you do not sell low inventory products as the supplier can run out pretty quickly when dealing with other dropshippers around the world. To maintain a good reputation, it’s best to not sell the product when inventory is low to prevent the headache of dealing with a backlog and unhappy customers.
Supplier List – If you are selling products from multiple vendors, it’s a good idea to create a spreadsheet of your suppliers, and the products you are selling from them with links to the product and order form. Maintain any important notes about the supplier such as direct contact information, and any other important information to help you ensure smooth delivery of the product to the customer.
Some Dropshipping Product Inventory Tips –
- Sell products that are easy to ship, such as clothes, jewelry, toys, and try to stay away from glass or large items that can be damaged easily during shipping. Avoiding the need to return items is the best method to being profitable, so start out on the right foot.
- Have backup suppliers available when a supplier stock is running low.
- Try not to oversell products, it can be a good practice to ensure you manage your inventory within a certain percentage of what the supplier maintains. Lets say your supplier has 100 products available in inventory, you could say your inventory will be 60% of supplier inventory to ensure products are available. You may adjust this inventory over time as you get used to selling the niche product you selected.
- There are some tools available that can automate the inventory available and other great automation resources. Consider using these resources, but know they may be paid applications. Just starting out, try and learn how to do things the hard way until you start turning a profit.
The most important thing is to communicate with your suppliers often and only select suppliers with excellent reviews online, such as through AliExpress.
Be Careful of eCommerce Store Fruad
eCommerce Fraud is just the nature of the beast when you run an online store, especially as you grow your traffic and popularity.
eCommerce fraud is basically when you receive an unauthorized order from a credit card owner. You also have to look out for people who make a purchase and claim to not receive the purchase and create a chargeback. Identifying fraudulent orders can be difficult, and is usually never 100%.
Here are some quick tips to help reduce fraud:
- Anti-Fraud Program – Search your eCommerce applications such as WooCommerce, Shopify, and BigCommerce for an anti-fraud tool.
- Check IP Address – Use a free IP Address checker to make sure the location matches the credit card or at least doesn’t make you suspicious. You have the right to cancel any suspected fraudulent transactions as the store owner.
- Call the Customer – Don’t be afraid to call the phone number provided by the purchaser, especially if it is for a large transaction amount.
- Review Email Address – If the email address looks a bit funky, you may want to do some more research on that email address.
- Billing and Shipping Address – If the addresses don’t match, you should definitely check the order to make sure it is not fraudulent.
- Multiple Shipping Addresses – This happened to me on my Amazon account. Somehow someone got access to my Amazon account. They sent products to multiple addresses. I had to convince Amazon this was a fraudulent order, it was like they did it from my computer. So, you need to be suspicious of anyone sending products to multiple addresses or the same customer using different cards or billing addresses.
One last point to make is that you should make sure to keep customer credit card numbers secured. It’s best if you use PayPal, Stripe, or some other form of payment processing and not store credit card numbers yourself. If you do store credit card numbers, make sure you are following Payment Card Industry (PCI) compliance standards and use a website host that meets the PCS standards.
Product Returns and Shipping Issues
Products returns are really painful for dropshippers. This is why we stress earlier in this article about doing your due diligence on the products you sell and the supplier. A quality product has fewer chances of returns, they will still happen, but you can reduce the odds by properly vetting your products.
- Well Written Return Policy – It is important that you write a really good return policy that covers everything surrounding a return. This includes damaged products on arrival, timeframe authorized to return after receipt of the product, opened products, replacement products, wrong product received, and more. Also, make sure you take into account the supplier’s return policy, they may require a Return Merchandise Authorization (RMA) before the customer can ship the product back to them.
- The Basic Return Process – Most of your return processes will be very similar each time. The customer contacts you and requests to return a product for whatever reason. You as a good customer service person inform them you’ve received the request and will respond within 1 business day. You immediately contact the supplier and ask for an RMA as mentioned above. You provide the customer on how to ship the product back to the supplier with the RMA number. After the supplier receives the product, they will refund your money and you refund your customer.
- Customer Friendly – There may be other fees associated with returning a product to a supplier, please keep in mind your customer. You want them to be happy and you should consider NOT passing additional fees on to the customer, this includes shipping fees for damaged products. Hopefully, you’re profitable, vetted your products and returns are a very small percentage of your business.
When you have a bunch of different suppliers for your products, it can be difficult to come up with shipping calculations.
- Integrated Shipping Rates – These are real-time rates integrated into your eCommerce store by USPS, FedEx, etc. Many eCommerce platforms have major shipping providers available for integration into your store. In my opinion, this is the best option for shipping rates. This mainly works if the supplier is in the same country as you and allows the customer to choose multiple shipping options if your supplier allows. This might not be an option for you using suppliers overseas.
- Flat Rate Shipping – As a dropshipper, you must rely on the supplier’s shipping costs and may need to establish a per-product shipping cost.
If you’re shipping internationally, you will need to research those costs. If your dropshipper is based in the same country as you, they most likely charge will charge additional fees for shipping overseas and you will need to include this in your shipping costs.
How to Get Traffic to Your Store
It’s important as an eCommerce dropshipping store that you come up with a great marketing plan to get your products in front of potential customers.
How to Scale Your Online Business
How to get started
Create Your Dropshipping Website with WordPress
How to get started