So you want to start your own dropshipping business, a business model everyone is talking about online. By now you may already have heard quite a lot of success stories from dropshippers, how they were able to quit their 9-5 jobs and chill somewhere in Asia running a completely automated and outsourced Dropshipping business.
However, if you’re new to ecommerce, Dropshipping is still a fairly new concept with many questions that needed to be answered before you have a clear view. In this post we’re going to answer some of the most asked questions about dropshipping like what is drop shipping, how much money do I need to start a dropshipping business, do I need to register a company to start, etc… etc…
By the end of this post, you will have a solid understanding of what, where and how to go about starting your dropshipping store.
1. What is Dropshipping?
Dropshipping is a retail fulfillment method where a store doesn’t keep the products that sells in stock. Instead, when a store sells a product, it purchases it from a third party supplier and has it directly shipped to the customer. As a result, the merchant never sees or handles the product. This means that the seller never invests or hold the inventory upfront. They simply pay a small portion to the supplier from the payment they received from their customers.
Supplier product cost = $10
You sell it for = $30
You pay the supplier $10 to ship the product to your customer
Your profit = $20
If you’re new, let me tell you. Dropshipping is a business model that can be done with 100% automation and outsourcing. You can read a more detailed Guide on Dropshipping Here.
2. Won’t My Customers Purchase Directly From the Supplier and Cut the Middle Man Price?
First of all, it’s a very big internet and your customers may not know about the supplier to buy from them directly.
Secondly, when people buy things, they’re not just buying products. They’re buying into the marketing, positioning, trust, brand, and lifestyle those products present. So as a Dropshipper you can focus only on marketing and saying the right things to the right people.
3. How Much Time Do I Need to Spend Every Day to Build a Profitable Dropshipping Business?
It depends! We can divide the most time-consuming works by store development, optimization, product research, ad creative creation, ad creation/marketing, order fulfillment, and customer support.
When you’re starting out, especially if you have a limited budget then we don’t recommend outsourcing any of these tasks. In such an instance, you might expect to spend around 4 – 6 hours a day on your store if you’re using Shopify for dropshipping.
Shopify has a wide set of features and tools/apps to automate most of these tasks to a certain level making your life much more easier running a dropshipping business. Like the App Dropified which automates the product sourcing and order fulfillment process to a great extent.
If you’re not using Shopify as your platform for dropshipping then you might expect to spend around 6 – 10 hours with your store.
If you have a good budget to spend or if you already have found a winning product and in the process of scaling that product. We recommend outsourcing a few time-consuming works such as store development, optimization, product research, ad creative creation, order fulfillment, and customer support. You can only focus on the most important thing which is marketing. In this case, you can expect to spend around 1-2 hours a day on your store measuring and managing your ads.
4. What are the Requirements for Starting?
Nothing! I mean you just need a store (which can be developed) and access to a payment gateway to start accepting payments from your customer which we believe you have (at least a PayPal account to receive payments is enough). Everything else can be found or learned online.
5. How Much Money Do I Need to Start a Dropshipping Business?
You can start your dropshipping business even with as little as $100. But you should have some money to play with ads and fulfill orders in case if there is a hold on your payment account.
You should also expect to fail sometimes and lose some money in the process. The last thing you don’t want to happen is when you have just found a winning product which is going to be really big and you sitting there without any money to spend on ads.
So if you ask me, a secure budget to start is $1,500. But it’s not mandatory that you need to have this amount of money to spend and succeed. Just start with what you have now and spend more time on learning than executing. Who knows you might be the next 7 Figure Dropshipping success story.
6. Do I Need to Register a Company to Start?
NO! You don’t have to register your business to start, as long as you have access to a Payment Gateway.
Registering your business is always a good idea, but it is not something you should definitely do when you’re starting. Maybe once you hit 1 million in sales or find your first few winning products (we people at eCom Record hope you do), then you may consider registering your business. For newbies, No! you don’t have to register your business to start.
7. Should I Start With a General Store or a Niche Store?
Start a General Store if you don’t have a passionate niche or know a product or niche which you think will definitely bring in sales.
What we and almost all 6-7 figure dropshippers recommend is to start a general store and test a wide variety of products without being restricted to a niche. Once you have found a few winners, then you can start a niche store or a one-product store around those products and build your brand.
8. What Are Some Best Niches to Start Your Store In?
The Best Niche to start is the niche you have experience in. If you’re a gamer? Start a gaming store, Do you love fishing? Start a Fishing equipment store. Likewise, Almost all niche has potential. But the thing that makes the difference is how much you know about your customers and how well you can serve them.
Don’t have a passionate niche? Go for a niche that is vastly growing in recent times. To give you an idea, here is our list of 5 Best niches to start your dropshipping store in 2020.
9. How Do I Find Suppliers?
If you have decided what you’re going to sell, then finding a supplier shouldn’t be that difficult. You can find Suppliers from China via sites like Aliexpress and Alibaba and use a tool like Dropified to import the products to your store.
Or if you’re someone thinking long term and want to build your own brand. You should find your own private suppliers from USA/Europe. You can use eCom Record to Find Highly Vetted Suppliers from Countries all around the World.
10. How Many Products Should I Add to My Store to Start?
Quality Over Quantity! You don’t need hundreds or thousands of products to succeed in dropshipping. Instead, You Just need a handful of well-researched products in your store to start making sales. You can definitely research and add more and more products as you go. But you can start small. You can even start with one product in your store, but a good number of products to start with is 12 (a Dozen).
11. What is the Minimum Profit Margin Should I Set for My Products?
There is no universal rule for setting up your product prices. But there are a few things you need to consider when doing so.
First of all, you need to be aware of your expenses. Most people only think about the product price when deciding a profit margin. They have more to worry like maintenance costs, shipping costs, payment gateway fees and any other fees associated with running your online store.
Considering all the costs mentioned. Come up with a profit margin rule for yourself. Here is our profit margin rule for Dropshipping
12. How to Find Winning Products?
Product research is more of an Art than a Science. You get better at it as you do more of it. Look for a product that has a passionate audience, has a viral factor or solves a problem making people’s life easier. Find products that have any of these characteristics. If you found a product that has all. Congratulations!
Also, consider product saturation when choosing a product. You don’t want to spend money on an over-saturated product.
13. Which Marketing Platforms/Strategies Should I Start With?
There is no single platform we can specifically mention. But Facebook and Instagram ads are a good place for a newbie to start. Also, Don’t limit yourself when deciding where to promote. Google ads, YouTube ads, Instagram Influencer Marketing and other forms of marketings are no behind to Facebook/Instagram advertising. You can also make use of Instagram and YouTube influencers to get some quick sales.
14. How to Create a Video or Image Ads for Dropshipping?
You don’t have to order the product yourself and shoot a professional video or image ad. Just start with what suppliers provide you. Create a quick slideshow, edit your image with a call to action or use the image as it is.
Once the product is proven to sell, you can order the product yourself and shoot some cool ads. But to start just make use of what you have.
15. How to Handle Returns and Refunds When Dropshipping?
If you get a return or refund. Don’t take it personally and handle it like a professional. You either order the product from the supplier or offer a complete refund. Be the middleman, let your supplier know the problem about the product they shipped to your customer, forward their solution to your customer as it is yours.
I hope we have answered some of your questions and cleared some misconceptions about starting a dropshipping business.
While these are the most asked questions, this post will be updated every now and then as we get more and more dropshipping related questions from budding entrepreneurs.
If you have any other questions not been covered in the above list. Please leave it in the comments section below. We promise to answer all of your questions and add them to the above list.
Happy Sales Everyone 🙂