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7 Steps to Building a Successful Online Drop Shipping Business

7 Steps to Building a Successful Online Drop Shipping Business
CJFeb. 14, 2019 05:20:521012

Dropshipping is an extremely popular business model for new entrepreneurs, especially Gen Zers 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 dropshipping 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.



  Find out Step-by-step Dropshipping Guide here!

1. Select a niche


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 becoming discouraged, because it takes a lot of work to successfully scale a dropshipping business. Here are some points to consider when selecting your niche:


  • Seek attractive profits. When you are running a drop shipping business model, your focus is on marketing and customer acquisition, so the amount of work required to sell a $20 item is essentially the same as it would be to sell a $1,500 item. Select a niche with higher-priced products.


  • Low shipping costs are very important. Even though your supplier or manufacturer will handle the shipping, if the cost is too high, it will act as a customer repellant. Find something that is inexpensive to ship, as this also gives you the option of offering free shipping to your customers and absorbing that cost as a business expense in order to attract more sales.


  • Make sure your product appeals to impulse buyers with disposable income. When you are focused on driving traffic to your website, you want to experience the highest conversion rate possible because most visitors will never return. The products you are selling should trigger impulse buys and appeal to those with the financial ability to make a purchase on the spot.
2. Perform competition research


Remember, you will 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. 



3. Secure a Supplier


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 dropshipping 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.


Alibaba has become one of the largest online resources to identify and communicate with potential manufacturers and suppliers. Make sure to ask a lot of questions and learn what their production capabilities are in the event that your business grows exponentially. You want to be certain they have the ability to scale with you.


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 dropshipping. It's a popular topic that can help you avoid costly supplier mistakes.


4. Place Test Orders


Although dropshipping lets you have minimal involvement with handling your overall product catalog, it is better to set aside money, as well as a little bit of time, to test out the products you plan to sell. If you don't, you risk listing a product with too many shortcomings or defects, which will result in unhappy customers and a lot of time spent dealing with returns. 

Another merit to place a test order is that you can have a complete evaluation of the fulfillment service and delivery time



5. Build your e-commerce website


The fastest way to launch a website that supports a drop shipping business model is to use a simple e-commerce platform like Shopify. 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.


6. Choose an Ads Campaign


Every e-commerce business should look for ways to reduce their average cost to acquire a customer through organic channels like content marketing, SEO, and word of mouth. But to get started, advertising is usually an essential channel for most product-based businesses. The most common channels include search engine marketing (SEM), display ads, social media ads, and mobile ads.


For an online dropshipping business, the most effective option is to start a Facebook ad campaign. By running Facebook Ads, you can place your offer directly in front of a highly targeted audience, which allows you to generate sales and revenue right from the start. It is an easy way to quickly scaling.


It is better to think long term, so search engine optimization and email marketing should also be taken into consideration. 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. 


7. Build your brand


No one will doubt that branding is one of the most important aspects of any business, large or small, retail or B2B, dropshipping be no exception. An effective brand strategy gives you a major edge in increasingly competitive markets. Your brand differentiates your products and services from other competitors, makes people know you, and wins your trust and revenue.


Having a domain is the very first step to build your brand, then it's about looking for a product or line you can white label and sell as your own brand with custom packaging. Even if you are not planning to set up a brand at the beginning of your business, it is better to take it into long-term consideration. Because by running ads, you can draw traffic and convert into orders in the short term, but to have a sustainable business and grow up steadily, it needs to be driven by wide publicity and word of mouth, and the premise of these is a brand of your own.   



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