"This Is How You Can Successfully Start Dropshipping"

Selling products on the internet without storing them is impossible - or is it? The answer to your question is: Dropshipping makes it possible. Because it is an uncomplicated method with which you can build a standing in the online area, without having to invest large sums in advance. Sounds interesting and could be just the right thing for you and your business?

Then read on, because in this article we explain to you how the dropshipping business model works, how you can make money with it, what difficulties can occur in the first steps and how you can start this online business. Then we look at which products are best suited for dropshipping and you get a step-by-step guide for your start from us. Of course, we will also name some software that can support you in dropshipping.

What is dropshipping and what business model is behind it?

Maybe you are first asking yourself: What is dropshipping exactly? Dropshipping defines a fulfilment method in e-commerce where you as shop owners sell products to your customers that you do not have to keep in your inventory. So you don't have your own warehouse, because this is located at a third-party provider who sends the ordered goods to your customers for you. To start with this model, you need to open an account with your supplier. Supplier databases such as Alibaba, AliExpress or Dropship Direct can help you with your selection. If you have set up a Shopify shop, you can also map your dropshipping business via the supplier directories integrated in the backend by importing them directly into your shop with a few clicks.

When your customers' orders come in, you only have to check them for the information provided and click on the "Order" button. The order is already on its way to your supplier and can be dispatched by them. In addition to these automatic processes, there are also a few areas of activity that you need to take care of yourself. These include the marketing and digital presentation of the products, the pricing towards the customers as well as the amount of shipping costs. Due to the low capital commitment, dropshipping is suitable for young companies with a low start-up capital. In addition, you can quickly change your product range if necessary, as you don't have to sell off existing items first. This can be necessary, for example, if new trends emerge or you want to change your business orientation.

If you decide for this business model, you can choose between fulfillment via a wholesale warehouse or a consignment warehouse. With the choice of a wholesale warehouse, you can access the entire range of the wholesaler you have selected and distribute it to your final customers, as long as the products are available from the dealer. The only costs for you are for the products and for shipping the items. With the second option, a wholesaler sets up its own warehouse space for you in its central warehouse, where it stores goods for you and sends them out when your customers place orders. The increased effort and separate storage space usually results in higher costs for you than with variant number one.

The fulfillment method of dropshipping presupposes that you can rely on your suppliers, as you are fully responsible towards the customers for delivery times and product quality, even if you are actually only acting as a middleman behind the scenes. The synchronization of stock levels can also become a real challenge, as you are dependent on your wholesaler reporting these reliably and you need to transfer them quickly to your own shop system in order to avoid negative reactions from those who order. If you offer a wide portfolio of products, it can happen that you cannot source all of them from the same dealer. If your customers then order different products, different dealers get the order to send and the customers receive several packages. This can lead to incomprehension, because for the consumers it does not become clear why they receive two packages for two products that they order via the same platform, such as your Shopify online shop. Also bear in mind that it can be more difficult to build a recognizable brand that customers associate with your company due to the use of dropshipping. Often you have no handling costs with fulfillment by a third party, but you also do not have the opportunity to attach a shipping carton or a corresponding reference to your company, for example in the form of accompanying flyers or stickers.

This is how you can earn money as a dropshipper

So, and how do you now generate profits by selling products via dropshipping, when you also have to pay another party from the proceeds? The principle is the same whether you are just starting with dropshipping or have already gained experience with different sales methods. Since you have control over the final price and do not have to take any account of a retailer, you can set it in such a way that you achieve the margin that you have promised yourself from the respective product. Even though dropshipping initially sounds like increased costs, it is nevertheless a simple method for generating good revenues quickly. How does it work? Since your business partner is a wholesaler, you buy from them at wholesale conditions. These are generally well below the prices that you can achieve from end customers for your products. In the end, this leaves a profit for you as dropshipper, the amount of which you can adjust by varying the selling price.

Where can difficulties arise in setting up a dropshipping business?

At first, e-commerce may seem quite uncomplicated via dropshipping - nevertheless, difficulties can occur when you start with dropshipping. Since the start-up costs are very low, this form of sales is suitable for many companies that see an opportunity here. Therefore, a dropship store can be very competitive in the beginning and require a lot of attention in terms of marketing, so that you can assert yourself against the competition. Possibly due to the high competition capacity, you are also forced to differentiate yourself through the price of your products. This option is of course completely legitimate, but it reduces your profit margin, as the reduction in the selling price does not bring with it a reduction in the purchasing costs. Thus, the competitive pressure can initially lead to lower profits than you originally planned. Opportunities to circumvent the differentiation over the price can be extensive product training and product descriptions, first-class customer service, or a wider range.

Another difficulty can also be the dependence on a single supplier. If he no longer has the products ordered by the customers in stock, but this has not been noted in his warehouse management system or it has not been synchronized with your system, the customers have to wait for their orders, which has a negative impact on their satisfaction with your online shop. If you rely on several providers, you minimize the risk that goods are not available and customers receive the orders late or not at all.

Another challenge may be that you never see the products you sell yourself. Of course, you can inform yourself about the functions, advantages and handling and pack these in product descriptions and advertising messages. However, detailed questions from your customers can lead to you having to make additional effort by contacting the manufacturers or your suppliers.

If the case should arise that your products do not please your customers, they can make use of their right of revocation and return the item. They then get their money back. For this you should make a clear agreement with your suppliers in advance. In these, you should specify where the package should be sent back to and how the return communication process works when the package has, for example, arrived or the refund has been initiated. In addition, it can happen that the dropshipping products, for example due to inadequate packaging, arrive damaged at the purchasers, and they demand an undamaged replacement product. Secure yourself for these occurrences in advance, as otherwise you as shop owners are liable and have to bear the costs for the replacement product compared to the providers.

This is how you can start your dropshipping business

If the potential difficulties have not deterred you, you are surely asking yourself the question "How do I actually start a dropshipping business"? We would like to answer this for you in the following section. So, now it's time to roll up your sleeves and create the conditions for your successful dropshipping business.

First, you should decide on a niche. Which customers do you want to address? What are the current trends? What products do you like? How profitable can these be for you? Are you and your company perhaps already known in a particular industry and can get off to a good start there? Once you have answered these questions for yourself and found the niche that suits you, you should carry out product research with your competitors. Look at how they present and describe the products, what prices they demand and what conditions they set for shipping. In addition, you can gather ideas for your own shop on the corresponding dropshipping e-commerce pages. Perhaps you would like to display reviews from satisfied customers or link additional product variations. There are no limits to your creativity - simply let yourself be inspired.

If you have an idea of which products you want to sell, you next need to look for a reputable dropshipping provider, because this lays the foundation for your business. When choosing, make sure the providers make a serious and reliable impression and the product shipping is high-quality in your eyes. Look critically here, because your customers will also do this. But how do you find the right trading partner for you? E-commerce platforms such as Shopify offer you a plug-and-play option that can support you in your search. For this, you only need to connect the Oberlo marketplace to your online shop and the search can begin. On Oberlo you will find dropship suppliers from many different areas, such as electronics, fashion or toys. With just a few clicks you can import them into your shop and sell them. The marketplace is completely free of charge.

Once this is done, it's time for you to choose an online shop, like Shopify, for your business and set it up accordingly, if you don't have one yet. It is the heart of your e-commerce business, because from it you sell your products, generate traffic and handle various payments. The common dropshipping tools offer you a complete marketplace for searching for suitable products and suppliers, information on product costs, potential margins and potential sales as well as the possibility to filter various categories. In addition, they contain automated messages that you can send to your suppliers when an order from your customers enters your system as well as a direct link to all functions of your e-commerce shop to be able to evaluate the behavior of your customers. An immediate synchronization with your shop platform is also included in order to always keep product details, prices and photos up to date. With the correctly set up online shop and suitable suppliers, you can expand your dropshipping internationally and find customers all over the world.

Now it's time for the next step for your dropshop. Decide on a business structure. The two most common forms of business start-up are the sole proprietorship and the limited liability company (GmbH). The company structure that is easiest to implement is the sole proprietorship, but with this you also do not have personal liability protection in case of a lawsuit. On the other hand, it is practical with this form of business that you can submit the tax return as part of your personal tax return. A GmbH provides better protection for your personal assets, as a separate legal entity is created with the company formation.

With the selection of your company structure, the structuring of your finances should also go hand in hand. This means that you should strictly separate your business and private assets in order to avoid unnecessary complexities with your bookkeeping. A confusion of payments to suppliers, incoming payments from customers and debits of private purchases can otherwise quickly become opaque. In the worst case, the tax office objects to this in the context of your tax declaration - and you really don't need that. So open a separate account for your dropshipping activities in the name of your company. In addition, it doesn't hurt if you set up a small starting cushion with which you can pay the first dropshipping and software fees.

Now it's time for the marketing of your dropshipping business and the associated products. In order to decide which platforms are best suited for this, you need to look at your target group. Where is it active? What preferences does it have? How often does it buy products and why? Which social networks does it use? We generally recommend that you make a target group analysis before selling your products in order to tailor your advertising measures and avoid scatter losses. Therefore, it makes sense to create a buyer persona, which represents a personification of your target group. When you consider this, you will find out how you should approach the marketing of your dropshipping products. You can, for example, place advertising on Instagram, Facebook, TikTok, or Pinterest. In addition, you can use influencer marketing for your company. At the same time, you should operate content marketing in order to regularly provide your target group with current information about your company, your products and perhaps also your team over a longer period of time. This will allow your customers, and those who could become ones, to identify themselves with you and you will gradually build up a strong brand with a good image that will have a positive impact on future advertising measures. Another marketing option is the development of a community, for example in the form of a Facebook group or online forums. In these, you can discuss your customers' wishes and ideas, respond to questions and concerns and thus strengthen your good reputation. However, make sure to appear not too promotional, but rather advisory, otherwise your target group can quickly question the sincerity of your efforts. In addition, you can reach your buyers via mobile marketing. For this, you could set up a Deluxe Club, for example, where members are immediately informed by SMS as soon as there is news about certain dropshipping products from your e-commerce. The users pay for this information in the form of additional data, which enables you to get to know your target group even better.

Last but not least, for your e-commerce business, the motto applies 'trust is good, control is better'. What we mean by this is that you should constantly observe the sales of your products, the buying behavior of your customers as well as your competitors and their activities and adjust them from time to time, if necessary, in order to be successful in the long run.

Is dropshipping really profitable?

Whether dropshipping is profitable for your company depends entirely on your pricing. In general, it can be a very profitable business model that is easy to implement and does not require a large number of employees or shipping and storage expenses. The risk is low, as you deliver the products just in time to your customers. While a little tact is required in the selection of suppliers and the corresponding price negotiations, as well as in setting the selling price and its adaptations if competitors should be cheaper. However, the chances are very good that you can easily achieve an attractive profit margin for your company and can be successful with your dropshipping business.

What are the best dropshipping products?

You have already read in the penultimate section that you should decide on a niche with corresponding products before you get into the implementation and make the first steps in dropshipping. But how do you recognize that you have selected the best products for your online shop?

Various research paths can show you which products are currently trending and are purchased frequently. You can find this out, for example, on the Amazon bestseller lists, Pinterest or Google Trend. There are no limits to the preferences here - but there are also objects that you should not include in your business. These include products that are very large and unwieldy or fragile, as well as those that are not allowed to be advertised for legal reasons. Also you should not bet on products that meet the taste of the masses and therefore are already available in every shop, after all, your company and its products need a unique selling point.

Particularly good for your dropshop are products that have a special use, are rare or very cheap. They should be legal and popular, but not have too much competition so that you don't have to stand out over the price. The most successful products in dropshipping are currently objects for interior design, jewelry as well as various health and beauty articles. All also have the advantage that you can convince your customers with emotional product descriptions of the use and advantages of the objects. Suitable products for dropshipping do not have long shipping times and are already in stock at your suppliers, so they should not be produced progressively. The faster your products arrive at your customers, the happier they will be.

Your step-by-step guide to starting your dropshipping business

In the following section we have put together a step-by-step dropshipping guide that you can use for the start of your business.

• Step 1:Choose a lucrative product niche for your dropshipping business. Make sure not to open a "general store" on the World Wide Web, but useful objects that are thematically related.
• Step 2:Carry out a market and competitor observation. Allow yourself to be inspired for your own business.
• Step 3:Choose a reliable dropshipping supplier who offers his products for dropshipping.
• Step 4: Choose an e-commerce platform and build your own online shop on it. Known e-commerce platforms are e.g. Shopify, WooCommerce or Magento.
• Step 5:Import the products of your suppliers that you also want to sell into your online shop.
• Step 6:Add product descriptions, shipping notes and product photos as necessary to provide the best possible experience for your customers.
• Step 7:Calculate the sales price and set it in your shop system.
• Step 8: Choose a company form and have it registered before you start selling products.
• Step 9:Always keep your private and business finances strictly separated.
• Step 10:Carry out marketing and advertising campaigns to strengthen your image, build your awareness and bring customer awareness to your company.
• Step 11:Continuously optimize your online shop and product selection by keeping an eye on trends, markets, competitors and your target group.

These software help you build your dropshipping business

Your company can achieve good profit margins with the sale of products via dropshipping. However, you don't have to do the import, customer management and the billing of orders by hand. As always on OMR Reviews, we have compiled suitable dropshipping software and enriched it with ratings and experience reports from our users, so that you can select the best software for your company on the basis of these. On OMR Reviews you can find out more about the following dropshipping tools:

• Shopify
• Logicbroker
• Sellvia
• AliDropship
• Shiprocket
• AutoDS
• Spocket
• SaleHoo
• Dropified
• Easyship
• Oberlo
• Droppery
• Commercehub

Long-term success with dropshipping

If you keep your customers, their desires, and their behavior in mind with the activities you take up around your dropshipping business, you can be successful with this distribution model in the long term. Also keep an eye on trends in your industry and don't close yourself off to new ways. The fact that you have only low, if any, retooling costs when you take new products into your shop or remove others means that you can react quickly to current events and position yourself in the market as is best for your company. However, you shouldn't do this too often or too noticeably, so that your customers remember what your company stands for and they get the impression that they can rely on you. Because every good dropshipping business needs one thing in the end - customers who buy your products. If these behave loyally to you, you will be able to hold your own in the long term.