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by Mike Vestil 

What Dropshipping Means: The Process, Tools, And Advantages

Dropshipping is a popular business model for entrepreneurs who are looking to get started with an online business. The good news is that anyone can get started, and they don't need any upfront investment. 

But what does dropshipping actually mean? 

This article will answer this question and more! We'll discuss the process of dropshipping, its advantages, disadvantages, and some of the best tools for dropshippers. Let's dive in!

What Is A Dropshipping Business?

Dropshipping or drop shipping is a way of retailing products online where a store doesn't keep the products it sells in stock. Instead, when a store receives an order from a customer, it purchases the item from a third-party supplier and has it shipped directly to the customer's door. This process helps stores increase their profits by eliminating the need for storing and shipping goods themselves. Sometimes, suppliers agree to provide the products at a wholesale price.

Drop shipping is the act of transferring packages between locations after receiving an order without processing transactions at both locations. The term was originally coined by internet business owners who would bring boxes of inventory to public places and ship them as they came in.

Dropshipping is typically done using an e-commerce platform that allows a business to build and customize its online store. Orders are passed on from the dropshipper either manually or through custom software, typically by providing customer information such as name, address, and payment details. The items purchased will be shipped directly to the customers' doorsteps.

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Image credit: corpnet.com

The Dropshipping Process Explained

The process of dropshipping is:

  • Find someone who sells the item you want to sell and get their contact info and product link. Check the authenticity of the seller and the product quality. Check for average shipping times promised by the seller. Enquire about the number of pieces of a product available with a particular seller.
  • Choose a name for your store. A good way to choose your dropshipping company name is by combining the product you are selling with an industry term or keyword. For example, if you sell watches, combine words related to time such as ‘chrono’, ‘watch’, and ‘hour’ to form a new store name and register a domain with it.
  • Register your business on Google My Business and open up a Gmail account specifically dedicated to your online store. This will be important later when checking analytics about where views are coming from on your website. Get your site indexed in as many search engines as possible. Search engines are designed to pick up new sites and index them automatically but because the web is too vast with web pages being put out every minute, letting the search engines know about the webpage manually can help index them. For example, you can get indexed on Google by submitting your site to Google search console and on Bing using Bing Webmaster tools. Please note that submitting webpages to search engines doesn’t guarantee their indexing.
  • Create social media pages on Facebook and Instagram to promote the product you are selling online.
  • Design a website with e-commerce software, like Shopify or BigCommerce - this will take care of hosting and payment processing as well as basic SEO (search engine optimization) functionality that Google requires if you want to rank higher in search results.
  • Create a logo and use it on your website and social media pages.
  • Take great product photos to post online. You can use software like Photoshop or Canva, or hire a photographer.
  • Start dropshipping! Promote your website using Google AdWords and other advertising platforms like Facebook so people who are looking for the products you have will be able to find them.
  • Choose branded packaging for the product you are selling, to make your store look more professional. This will also help with conversions since research shows that people are much more likely to buy something if it’s packaged nicely. You can outsource this design work too if you don’t have any graphic designers on your team.
  • Look at the analytics of where views on your site are coming from. If most of them come from social media then start focusing more efforts in that direction; if 90% of them came from organic searches (people typing in keywords related to your products in search engines) then boost your SEO efforts on all pages by writing unique copy optimized around those buyer keywords. 
  • Track all your inventory using analytics software that will tell you how many items are being purchased, which of them are the most popular, and what pages on your website result in the highest conversions
  • Make sure all products have a high level of customer service. A good way to do this is by offering free return shipping for people who order more than one product at once or if they spend over X amount with their initial purchase
  • Start looking into expanding your business overseas. Research local trends in other countries where you might sell easily without needing to invest too much money first
  • Keep growing your business by constantly improving everything you do and always communicating with customers. They’ll appreciate being informed
  • Send out a monthly newsletter telling people about new products, discounts they can use on their orders, and other interesting items related to what you are selling. This will keep them coming back again and again for more
  • And you’re done! You can now enjoy the benefits of working from home, making money doing something you love, and having exceptional flexibility in your schedule where you don’t need to clock in or out. Just do what works best for your lifestyle while making sure all orders go through smoothly without delays because you want to provide the best customer service possible
  • And you’re done! You can now enjoy the benefits of working from home, making money doing something you love, and having exceptional flexibility in your schedule where you don’t need to clock in or out. Just do what works best for your lifestyle while making sure all orders go through smoothly without delays because you want to provide the best customer service possible
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Image credit: 1digitalagency.com

Is A Dropshipping Business Profitable?

Yes, dropshipping is a very profitable business. However, you need to know how to properly start a dropshipping business. 

You need to:

  • create social media pages on Facebook and Instagram
  • design a website with e-commerce software 
  • take great photos of the products you are selling online 
  • use branded packaging for your product
  • look at analytics data like where views on your site are coming from
  • provide customer service

Once you do all this correctly, you’re on your way to making dropshipping profitable for you! You’ll find more information on some of these later in the article.

How Much Profit Can Be Made In Dropshipping?

Profits in dropshipping will depend on a variety of factors, including how successful your business is and whether you're using the correct strategy. You must do some research into what kinds of products are profitable to sell and how to go about generating a following for them. Make sure to reduce fees from payment providers that charge a lot in transaction fees by choosing an alternative like Stripe.

Some stores make millions doing dropshipping and on the other hand, some stores are struggling to break even.

Is It Really Worth Doing?

Yes! Once you start dropshipping, you will quickly see that this is a good way to make extra money. 

All you have to do is find a product that people want, purchase it for cheap from a website like Alibaba, create your own packaging and logo design (if necessary), shoot product photos and finally upload it onto Shopify, Instagram, or Facebook pages. You can run ads on Facebook, Instagram, or Google to advertise the product. After this, you just need to wait for orders! The results of dropshipping are generally worth the efforts

It will take time and hard work but you'll soon see how easy it is to make money on your own schedule, at home.

How Do I Choose The Best Dropshipping Supplier For My Online Stores?

If you're just starting out it's better to go with an international company that does not require a big initial investment but is also expanding abroad. 

There are many factors to consider when choosing the best supplier for dropshipping. You need to be careful and read everything they give you, such as their terms of service and FAQs. The following factors will help you decide what is important:

  • You want to look at the product you are selling and how it's being sold on their site. If they have a variety of products then that is good, but if they only sell one type of product or all items are for sale in bulk quantities this might not be ideal because you will need to change your costs accordingly based on what the supplier is selling the product for.
  • You also want to find suppliers that are transparent with their information and have an easy method of communication so you can always ask questions if need be. Usually, this will just come down to personal preference but it's something important to take into account when choosing a company because there might not be anyone to ask if something goes wrong.
  • When it comes to the terms of service, you want to choose a supplier that has specific details on what is allowed and not allowed in their policies so there are no surprises later down the road. Things like returns or canceling an order should be clearly stated by your supplier because these can become problems later on if you are selling a product that is hard to find or must be ordered in bulk.

These factors need to be analyzed before choosing the right supplier for your dropshipping business and can help you decide what kind of company will work best for both parties involved.

The best sites to buy products from for dropshipping are Alibaba, AliExpress, eBay, and Walmart.

Alibaba is a great place to find products from China. If you're looking for something from the U.S., AliExpress also has a lot of sellers who are based there. eBay is a decent site with a wide range of products. Walmart sells products online too and is another place to save money by buying in bulk if you plan on doing dropshipping.

Related reading: Ebay dropshipping

E-commerce Platforms For Dropshipping

The most common e-commerce platforms for dropshipping are:

  • Shopify is ideal for beginners because it makes the whole process simple by offering a ton of support if you get stuck somewhere along the way.
  • Bigcommerce works great too but might be more expensive than other options which can make things difficult if this isn't your main source of income right now.
  • WooCommerce is open source so it's free to use but also has some limitations if you want more advanced features like custom design options.
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Image credit: makingthatwebsit.com

Right Approaches To Dropshipping

  • The first thing to consider is the niche you are targeting. There should be enough people wanting to buy your products, right? So make sure it's something that fits with what you want and allows for future growth as well.
  • The second thing is choosing your suppliers wisely because if there's one major problem you'll run into right off the bat, it will be finding the right supplier that will sell you the products at a good price and deliver them to your customers.
  • Ensure quick shipping times. Delayed delivery can upset customers and result in a reduced number of customers coming back to purchase from the store.

Best Products For Dropshipping

The best products and niches for dropshipping generally have a WOW factor attached to them. Selling the exact product that's easily available on other e-commerce platforms might not be the best way forward. Even if you're selling common everyday products, ensure that they have a sense of ‘WOW’ that similar products on other e-commerce platforms don't. 

There are a lot of products that will work for dropshipping and we have listed a few for you:

  • Tech accessories like phone cases or chargers can be easily sold because people always need them so you won't have any trouble finding customers when selling such accessories.
  • Small appliances are another good option since you can sell to people who need something like a blender, rice cooker, or food steamer because again - these things always break down and need replacing sooner rather than later! Kitchen appliances like toasters or microwaves can be sold too since everyone needs one in their homes!
  • Music instruments have been selling well lately but there is the added advantage of being able to find cheap options that are of decent quality to resell - this increases the profit margin for the reseller.
  • Health and beauty products are popular because you don't need a doctor's note to buy them so people will always have some kind of use for these things which is why they're super popular.

General Store Or Niche Store For Dropshipping: What Works Best?

There are both pros and cons to having a general or niche store for dropshipping.

The pros of having a general store are that it's easy to stock many different products. It's also easier to market because you can focus on broad niches instead of one niche at a time.

There are more options when it comes to products that could work. It's easier to find suppliers who will sell you a wide range of products at a reasonable price.

A downside to having a general store is that your profits per sale might be lower as you haven’t established a brand for your business and hence cannot charge high. It is also harder to stand out from the crowd.

The benefits to a niche store include high profits per sale and lower competition.

A downside is that it can be hard to find enough products in your chosen niche, especially if you're just starting. It can be more difficult to find people that are interested in buying your specific brand or product.

Having a general store might be better for some people but having more specific products that are harder to find will work best for others. It's really up to you and what kind of customers you're aiming for with your niche or target group.

Both can work if done correctly!

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Image credit: waytohunt.org

Tools To Get Started With Dropshipping

Best Tool To Find Dropshipping Products 

There are a lot of tools you can use to find the products for your store. Apart from the obvious ones like Google and Amazon, there are a few other tools that you can use to find products.

One tool is called Jungle Scout which helps you look for profitable niches as well as specific products within those niches. This way, you won't have to go through every single product on Amazon or Google. You can use Google Trends to find out what people are searching for. 

You can also join Facebook groups where suppliers will post their inventory so when they upload a new batch of products, it's something worth checking out

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Image credit: JungleScout

Best Tool To Find Dropshipping Suppliers

There are many ways that you can get in touch with potential suppliers for your store.

You could try using Alibaba which is a good place to start since they have lots of dropshippers there. You might be able to find suppliers on social media too so remember to try that as well.

If you just want something simple then check out Oberlo or AliDropship which are free and easy to use!
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Image credit: AliDropship.com

Best Tool To Automate Your Store

Many things can be automated in your store and the best options for automation depend on what kind of products you're selling.

For example, if you sell beauty or health & wellness related products then automation tools like Oberlo could come in handy since it's designed to help automate things like product images and descriptions for certain items.

If you don't want to go with something like this though, Shopify has some good automation tools too.

Using this automation, you can automatically create new products when you upload a CSV file of all your inventory with their Inventory Management app. Another automation feature allows you to use the abandoned cart feature to send out emails to people who abandon their carts after adding items.

Best Tool For Customer Support

No one tool will be the best since it depends on what kind of store you're running.

For example, if you're selling clothes then Facebook Messenger is a good way to go since it's fairly simple and easy for customers.

You can also integrate other live chat apps into your store. For example, you can integrate Intercom to Shopify.

Best Tool For Analytics

Google Analytics is great and free to use. It is by far the best analytics tool. You can set up goals, and event tracking. So it's worth checking out! Shopify has a lot of good features too and is great if you don't want to use a third-party tool. You can also choose to setup Google Analytics for your shopify store

Best Tool For Creating A Blog

Looking to create a blog to write about the products you’re selling? There are lots of tools that you can use to create and manage your own blog. WordPress is the most popular option but it's not really built for e-commerce - unless you use WooCommerce with it. 

On Shopify, you can create your own pages and put them under the blog section. Though Shopify might not be the best place to host eCommerce blogs, if a site is not heavy on SEO for generating sales, Shopify can work well.

Best Tool To Automate Emails

There's a lot of good options out there and Shopify has some automation features which are great if you're just getting started with dropshipping. If you want something more advanced though, we suggest using Mailchimp as it's fairly easy to use and has good features for email automation.

There are lots of options out there but you could try Fiverr to get something created quickly and easily. If you want more control over your design though, Shopify has some free templates available or if you already have an idea for what kind of logo you'd like, Canva is great too!

Best Tool For SEO

We suggest using Shopify or Optimize Press - both are great for SEO since they have built-in features like on-page optimization and meta tags so they'll help rank your store.

Best Tool For Abandoned Cart Recovery

Shoplo has a good feature that lets you send out emails to people who abandon their carts and it's worth checking out! A store created on Shopify will also come with features for recovering abandoned carts.

Best Tools To Use For Giveaways

You can create your own giveaway on sites like Rafflecopter but if you want something more automated then there's also a bunch of tools like KingSumo or Woobox that'll let you do this too.

Best Tools To Track Stock

There are lots of good options out there but we'd recommend using Shopify or Oberlo since these are both really good for managing stock. If you want something more advanced though then there's also Storehippo, Skubana, and Shipstation that'll let you track your stock.

Best Tool To Help With Pricing

Shopify has some great features which will help if you want to set up pricing rules for your store.  For more advanced features like product sourcing or bulk discounts, Oberlo is a great option.

Dropshipping As A Side Hustle

Working as a dropshipper is a good side hustle because you can make good money and not have to work that much once you have systems in place.

Dropshipping is also accessible as you do not need any experience at all, just access to the internet and products! Not only this but it’s good because there aren’t many risks involved in dropshipping, allowing anyone who has some extra cash to invest in the process to be able to do it.

Most people look at drop shipping as a get-rich-quick scheme which is not the case.

Advantages And Disadvantages Of Dropshipping

Here's a list of the most basic advantages of dropshipping:

  • No need to stock anything or worry about warehouse space. Purchasing inventory is a step that is eliminated in a dropshipping business. There's not a lot of overhead expenses.
  • No need to worry about getting goods from overseas suppliers.
  • Easy setup - Just sign up with a dropshipping service provider!
  • No need to hire warehouse staff or product pickers.
  • Products can be launched in days instead of weeks (or months). The risk involved is close to negligible.
  • A full range of products is only a few clicks away!

Here's a list of disadvantages:

  • You don't have control over product quality.
  • Shipping times can be long and you'll not have much control over it. Shipping costs also get unpredictable at times. You can take a look at Alibaba shipping costs to get a rough idea of how much shipping could cost you.
  • Low-profit margins because of the middlemen involved.
  • Ensuring that the supply chain never gets broken can be tiring.

These are just a few of the disadvantages, but there are ways around them.

Dropshipping businesses work well when done correctly, but it can be very risky if you are not careful with your choices. You should do some research before starting so that you know what the best dropshipping companies are and how they work.

What Dropshipping Means - FAQs

Is dropshipping illegal?

Dropshipping is generally legal in almost all countries. However, its legality varies from country to country, as well as state to state. In the United States, most states do not require businesses that solely use drop shipping models to register with them under specific regulations for remote sellers. However, some states require registration if a company sells tangible goods within the state's borders.

Is it hard to dropship?

Dropshipping is neither too easy nor difficult. All it takes to get started is having an internet connection and a supplier that you can work with! It's easy to get started because you don't need any inventory, and there are no overhead costs. On the other hand, it can be hard to find multiple suppliers who offer high-quality products.

How long does it take to make money dropshipping?

There are a lot of factors that will determine how long it takes to make money with dropshipping. The first factor is the amount of time and effort you invest into your business, and the second is the type of product you're selling. If you put in a lot of work and sell high-ticket items, then it could take as little as three months to turn an initial investment into profit. But if you don't want to put in much work or sell low-ticket items, it could take a long time to make it a successful business!

Wrap up

Dropshipping is a popular e-commerce business model, but it can be tricky to succeed in this industry. The key to success with dropshipping is understanding the advantages and disadvantages of this method of online retailing so that you can have a successful venture. If you feel dropshipping is your game to try, it’s time to put the above guide into practice and get started now!

If the lack of control over product quality, supplier reliability, and ship times is something that bothers you, consider other ecommerce business models like reverse dropshipping. Knowing what is reverse dropshipping and how it works might give you the insights you need to find a business model that is a better fit for your ecommerce goals.

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About the author 

Mike Vestil

Mike Vestil is an author, investor, and speaker known for building a business from zero to $1.5 million in 12 months while traveling the world.

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