There are over 1 billion websites on the internet right now. That’s a staggering number, if ever there was one. However, it isn’t just personal blogs and wedding websites that make up this mammoth number. A large chunk – specifically, 26 million websites – belong to the eCommerce sector alone. And this was last year. The numbers are on the rise every day.
So, if you’re considering opening your online store, you certainly won’t be alone. But before you head right into creating your product and start thinking about where you will store all that inventory, you might want to read this blog post. Because here, we talk about all things dropshipping. And how a dropshipping business can be one of the most profitable ways to run an online store in 2023.
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What is dropshipping?
At its core, dropshipping is an e-commerce model allowing retailers to offer their customers a vast range of products. But with dropshipping, business owners such as yourself do not have to worry about the costs and logistics of holding and storing large amounts of inventory. You simply create a website, set the prices for the products, and earn profits from each sale. Production, supply, and fulfillment are all handled by the supplier.
But, surely, that’s not enough to understand just how the dropshipping model of eCommerce works. So let’s look at that in a little more detail.
How exactly does a dropshipping business work?
While every business differs slightly from the next one, a typical series of events usually occurs in the dropshipping model for an eCommerce store. The five main steps involved in dropshipping are:
Step 1: Dropshipping business meets supplier.
The business (i.e. you, the dropshipper) finds, settles on, and creates a contract with a dropshipping supplier that promises to offer high-quality products, manage the stock, and take care of last-mile logistics such as packaging and delivery.
Step 2: Customer places order on dropshipping website.
A potential customer reaches your website, browses through products, picks one, and places an order – just like on any eCommerce website.
Step 3: The supplier receives the customer’s order. And the customer receives an order confirmation.
Once the customer has paid, the seller is notified of the new order. They then send this information to the dropshipper. The information typically also includes shipping details so that the dropshipper can use these details for better customer service later in the process. The seller also sends the customer a notification that their order has been confirmed.
Step 4: The dropshipping business ships the product to the customer.
The dropshipper finally ships out the product to the customer. This product is usually branded and packaged by the seller. The dropshipper can also use the supplier’s shipment services to deliver the order to the customer.
Step 5: The customer receives the product.
If the four steps above are executed correctly, the customer receives the product they had ordered in time, and in good condition. Once this is complete, the seller receives their payment after the deduction of any fees charged by the dropshipper.
Getting an overview of a business model is one thing. And getting to know its functioning inside out is another. This is why we think it is essential that you also know the possible benefits and disadvantages of dropshipping as a model for your eCommerce store. Here they are.
The three biggest advantages of a dropshipping business
1: Dropshipping needs low upfront costs.
Starting any business – online or otherwise – can be an expensive endeavor. But, as we’ve discussed briefly above, dropshipping offers a solution to this problem. One of the biggest advantages of dropshipping is that it requires very little initial investment. And if you compare this to a traditional brick-and-mortar store, the costs are virtually negligible!
That’s primarily because conventional offline stores, and even self-run eCommerce businesses, carry a substantial inventory cost. The seller must purchase inventory before opening the store to the public. These products must then be stored somewhere, adding significantly to the upfront investment.
With dropshipping, instead of purchasing and storing a large inventory of products, you only need to pay for the products you actually sell. This means you don't have to invest a large sum of money into your business immediately. A sum of money that includes the costs of warehouse space, insurance, and staffing required to manage the inventory. By eliminating these costs, dropshipping allows entrepreneurs to start a business with a much lower initial investment than a traditional brick-and-mortar business. Or even other kinds of eCommerce businesses.
2: A dropshipping business has more flexibility.
Another huge benefit that dropshipping offers is flexibility. This results in you being able to offer your customers a much wider range of products than you would have otherwise been able to.
Let’s take the example of an online store that follows an inventory management model instead of dropshipping. This business would have to produce or purchase large amounts of inventory. But if they find that the inventory is not selling as well as expected, they are simply stuck with the product. They may even have to resort to heavily discounting expensive inventory just to make room for better-selling products. And there would still be no guarantee of success in sales. This can be a huge financial burden, and may even force smaller stores to shut down.
With dropshipping, however, you can test and try different products without incurring significant costs. If you find that certain products are not selling well, you can simply remove them from your store and replace them with new products. What’s more, you are not required to pick products from the same supplier, so you have products coming in from multiple sources. This means you can keep bringing new suppliers on board, or dropping the ones whose products aren’t working for your business. All are based on your customers’ needs and preferences. The result is likely greater brand loyalty and increased sales: both critical to the long-term success of any business.
3: The dropshipping model is scalable without growth pains:
Expanding a business is no small feat. And it doesn’t matter if the business is online or physical. That’s because business growth can be a double-edged sword – especially if it’s a small business to begin with. On the one hand, increased sales are a sign of success because they bring in more revenue, further fueling growth. But on the other hand, this same growth can often increase the workload to a point where business owners can no longer stay true to the brand’s promise, niche, or quality.
But a dropshipping business can avoid this catch-22 situation. Because a large chunk of the work – such as purchasing and storing additional inventory – involved in the processing and fulfilling of orders is taken up by the suppliers. This allows the dropshipping business owners to concentrate on expanding the business without having to worry about these factors. This means more time for the business owner to focus on adding newer offerings to their store, marketing their product, offering better customer support, and so on. This makes dropshipping a truly scalable business model that can grow with your customers' needs and desires.
Having said all of this, we must also remember that, just like any other business, dropshipping too has its downsides. So, let’s take a quick look at those. This way, you’ll be armed with all the knowledge you need before you set up your own dropshipping business.
The three disadvantages of dropshipping
1: Dropshipping businesses can face quality control issues.
When running a dropshipping business, it is important to know that you are not always in control of the products you sell. This lack of control can result in difficulties ensuring the quality of said products.
Suppliers are expected to bring in high-quality products. But their failure to do so can have huge negative impacts on the business. Because customers don’t know that you’re using a dropshipping business model for your ecommerce store. They just remember that your brand sold them a sub par product. This could lead to customer complaints, negative reviews, and a slump in sales.
This situation can be avoided if you take the crucial – and sometimes painstaking – step of thoroughly researching your suppliers to make sure that they have a good industry reputation for offering top quality products.
2: Lower profit margins can be the bane of dropshipping.
Dropshipping businesses can potentially have lower profit margins compared to traditional retail businesses. This is due mainly to the popularity of the dropshipping model itself. Because the model brings such ease and low startup costs, competitors with deeper pockets can try and undercut you on pricing.
What’s more, suppliers can also add their own markups on the products they provide. This means you’re likely to pay slightly higher prices on purchasing the products, and sell them at lower costs to match the competition.
The workaround to this problem would be to focus strongly on building a reliable trustworthy brand that customers don’t mind paying a little extra for. Doing this would involve you creating a better website than the competition (more on this later in the post), and offering excellent customer service. Finally, you’ll want to keep a close eye on expenses involving marketing and advertising. These steps will help you stand out from the competition, and mitigate the low profit margins that are often associated with dropshipping.
Shipping times can be longer than expected, leading to customer dissatisfaction. Since the supplier is responsible for shipping the products directly to the customer, shipping times can vary based on the supplier's location, shipping method, and shipping speed. This unpredictability can result in longer shipping times than customers are used to, leading to frustration and negative reviews. To combat this, it's important to clearly communicate shipping times to customers and to keep them updated throughout the shipping process.
3: Dropshipping can face fulfillment issues.
Because you’re relying on suppliers to fulfill orders made with your business, mistakes can – and do – happen. We’ve already discussed product quality issues in a point above. But suppliers can also make errors such as items missing in delivered orders, subpar quality packaging, and more. This is another issue that can cause your business reputation to suffer, and possibly lose potential customers along with profits. Once again, the solution is to vet your suppliers before signing the dotted line with them. And be prepared that problems will arise, and that you might have to ultimately handle them at your end with increasingly better customer service, as discussed above.
Now that you understand what dropshipping is, how it works, and what its ups and downs may be, let’s get into how you can actually start your very own (successful) dropshipping business in 2023.
How do I start a dropshipping business in 2023?
Starting a dropshipping business can be a truly lucrative venture. But it can also be a daunting task for beginners to get started in the first place. And that’s the reason we’ve created this guide that should help both experienced entrepreneurs and freshers start and succeed in their dropshipping business.
Pick your niche
When starting a dropshipping business, it's important to choose a niche or specialty area you want to focus on. This means selecting a specific product category or industry to concentrate on rather than offering a wide range of unrelated products. By focusing on a niche, you can differentiate yourself from competitors and establish a unique brand identity in the market.
Let’s take an example to understand niche selection better. Instead of selling a general selection of products like electronics, home goods, and fashion, you could choose to specialize in eco-friendly products such as jute or hemp shopping bags, reusable home cleaning supplies, etc.
By doing this, not only would you have identified what you want to sell, but also who you want to sell it to. And by finding the right target audience, you can focus your marketing efforts to reach more of these customers. In this case, you would have created a brand that appeals to customers who are environmentally conscious and interested in sustainable living.
The ultimate result is a brand that stands out from the competition, has a strong understanding of its customers, and can cater its offerings to them!
Research your competition
Once you’ve decided the niche you want your dropshipping business to operate in, you must research the market and the competition you will face. This will help you better understand what products are in demand, what the competition is doing to meet that demand, what works, and what doesn’t.
And instead of doing this all manually, you could simply use a product like MorningScore. It’s an SEO tool that helps you with competitor analysis through keyword management, rated organic keyword difficulty, and even website audits. What’s more, you now get a stunning 30% off MorningScore when you visit Elevate.store. So go ahead and give it a try, and understand your competition better, so you can be better than them!
Find the best dropshipping supplier you can
One of the most crucial aspects of running a successful dropshipping business is finding a reliable, trustworthy supplier. That’s because these are the people who will ensure that your customers receive great products every single time. With that in mind, do consider these pointers when you start looking for the perfect supplier:
1: Product quality:
This is arguably the most important factor to consider when choosing a dropshipping supplier. High-quality products will not only attract more customers but also help retain them in the long run. Do your research and read reviews from previous customers to get a sense of the product quality offered by the supplier. And if you’ve worked in the industry and have some experience with the products, you can always request samples to assess the quality yourself.
2: Shipping times:
Today’s customers expect their orders to arrive quickly and efficiently. Sure, not every supplier can offer same day shipping for every product every time. But be sure that you choose a supplier who can offer fast shipping times to meet your customers’ needs.
Choose a supplier who offers competitive prices, so you can offer the same to your customers. That way, it’s a win-win situation for everyone. Do remember that the lowest price does not always mean the best quality. Find a balance between affordability and quality to meet both the needs of your customers and your own business.
A reliable supplier will ensure that you have a steady supply of products and minimize the risk of stockouts. So, choose a reliable supplier who has a good reputation in the market. Look for a supplier who is experienced and has a track record of delivering quality products and services. Speaking to other businesses in the industry can usually get you a pretty good idea of a supplier’s track record.
5: Fulfillment processes:
Look into the supplier's fulfillment processes and ensure that they have efficient and streamlined processes in place. This will help to minimize errors and ensure that orders are fulfilled and delivered on time, which in turn will have your customers returning for more.
Build your dropshipping website
A website is the cornerstone of your dropshipping business. It is where customers will learn about your offerings, see your products, make purchases, and (hopefully) come back for more. This is why you must spend a good amount of time and energy on creating as good an ecommerce website as you possibly can. Let’s have a play by play of how you can create a dropshipping website that is at once aesthetically pleasing and smooth functioning.
Choose the right domain name and domain extension.
Your domain name is your website's address, and it is one of the most important components of your website. It should be easy to remember and relevant to your niche. Avoid using hyphens or numbers, and keep it short and simple.
Another important thing to consider is the domain extension itself. While you might be tempted to look for a .com domain extension, it is very likely that the one you choose will either be unavailable or be prohibitively priced. Which is why we suggest going for a modern domain extension such as .Store. For starters, .Store – as the name suggests – is perfect for online stores. It tells your customers exactly what kind of website they are interacting with. .Store also brings in the hugely popular keyword ‘store’ right into your domain name. This is a big win for your SEO efforts. Finally, by virtue of being a fairly new player in the market,.Store has a higher availability of first-choice domain names. Especially if you consider the whopping discount you can get yourself on the .Store domain extension from Elevate.store.
Find the best website platform for your needs.
There are many website platforms available on the market today. Each has its own pricing options, features, pros, and cons. The trick is to consider the size of your dropshipping business, the budget you have available, the features and customization you need, and only then finalize the platform.
We recommend going ahead with Wix. That’s because it comes with:
- The ability to list over 50K products
- 24x7x365 customer support
- 500+ free online templates
- $700 in ad vouchers on sign up
And if that’s not enough reason, you can also get yourself 10% off on Wix right now.
Design and Layout.
Because your website works in a fast-moving industry, its design and layout should be clean and professional, with a sharp focus on user experience.
In other words, your website should load fast and be optimized for all kinds of screens – laptops, desktops, mobiles, and tablets. This way, users from across the world will have the exact same experience visiting your dropshipping website.
It should also be extremely easy for your customers to navigate through your website; from learning about a product, to seeing its details, to making the payment, and finally to receiving an acknowledgement. Features such as filters and search bars make this process even smoother for customers.
When it comes to product descriptions, make sure that they are informative – without being dull. Try to use as many keywords in these descriptions as this will help with SEO rankings. Be transparent and give the customer every bit of information they need. But don’t go overboard and turn it into a huge wall of text.
Finally, use only the best-quality optimized images and videos on your website. This will help you showcase your products better and still keep the loading times superfast.
If you’re looking for a way to create great-looking photos and videos, try Glorify. Their easy-to-use graphic design software is perfect for absolute beginners. Get the subscription through Elevate.store for a 50% off discount.
One of the most important factors surrounding your dropshipping website is a payment gateway. After all, a good payment gateway is a secure and efficient platform for processing payments from customers. Some of the widely used payment gateways are PayPal, Stripe, and Authorize.net.
Before you freeze on a payment gateway, ensure you have gone through all the key factors such as security features, fees, and compatibility with your website platform. Because the last thing you want is a customer who has reached the final milestone, but cannot make the payment for a product they love.
Offer the best customer service you can
Making a sale is only a part of the business. But true success comes from keeping your customers happy and coming back for more. Which is why it is absolutely essential that you offer excellent customer service through your website, and possibly other channels.
Following these four pillars of customer service will help your customers truly appreciate your dropshipping business. It will also help you stand out from competitors who might be offering mediocre or non-existent customer service.
Get to marketing your dropshipping website
Good marketing can be the difference between a successful, thriving dropshipping business, and one that never takes off. This is why it’s crucial that you cast a wide net and use as many marketing strategies as time and budgets allow. Fortunately, you don’t have to go looking for such strategies. Here are a few that you can implement to reach and engage with potential customers.
Social media is a highly effective tool for building a brand and reaching out to potential customers. Platforms such as Facebook, Instagram, and Twitter offer vast audiences, and your dropshipping business can take advantage of this opportunity.
Remember to use the right social media platform for the right kind of communication. For instance, choose Instagram and Pinterest to promote high quality product shots. Use Facebook to run contests. Twitter can be helpful in customer query resolution. And LinkedIn can be a great place for networking.
All of this will ultimately create a strong online presence and increase visibility for your dropshipping business.
Search engine optimization:
SEO is also critical for success in the dropshipping industry. By optimizing your website for search engines, you increase the chances of your products appearing in search results, thereby attracting more traffic to your site. You can achieve this by using keywords, meta tags, and other techniques to improve your search engine ranking. If you need help with SEO, use MorningScore. It’s an SEO management tool for online sellers who are looking to boost their discoverability on search engines.
Influencer marketing is, today, one of the most powerful marketing tools in the arsenal of any business. Through influencers, your dropshipping website can reach a larger and more deeply engaged audience. That’s because influencers have a loyal following, and their recommendations can be incredibly valuable in terms of attracting new customers and generating sales.
Just be sure to work with influencers who are already part of your niche and have a well established following. Remember to also track the success of influencer campaigns. This will give you a better idea of the returns on your investment, and will help you fine tune your influencer marketing strategy as you go along.
Email marketing is another strategy that you can use to stay top of mind with customers and increase sales. And a targeted email list is one of the most valuable assets in this strategy.
Encourage customers to sign up for your email list by offering exclusive promotions, sneak peeks at new products, and valuable and relevant content. Divide your email list based on customer behavior and interests to ensure that you are sending the right message to the right people at the right time.
The quality of your email marketing campaigns will also have a huge impact on success rates.
So you must make sure that your emails are visually appealing, well-written, and provide value to your customers. Personalizing these emails will only be an added bonus. Finally, remember to keep using A/B testing to determine what works best for your audience.
If you’re looking for the perfect tool to help you with your email marketing campaigns, there is probably nothing better than MailChimp. It brings you outstanding features such as:
- Full-service marketing CRM
- 300+ apps and integrations
- Social ads and posting scheduling
- Creative assistant and automation
- 500 contacts and 5000 email sends
And you can get all of this for a huge 30% discount from elevate.store right away.
Paid advertising campaigns:
In a world where everyone’s competing for your customers’ attention, it might be a good idea for your dropshipping business to invest in paid advertising campaigns. Consider your target audience, your budget, and the type of products you are selling to determine which platforms are the best fit for your campaign. Some of the most popular platforms for ecommerce businesses include Facebook, Instagram, and Google Ads.
Create ads that grab the attention of your target audience and communicate the unique value proposition of your products. Make sure your ad copy is clear, concise, and speaks directly to the needs of your target audience. Use high-quality visuals and eye-catching images to make your ads stand out.
And once again, keep a close watch on the performance of these campaigns, so you can keep testing, refining, and improving upon the ROI you receive from them.
Very often skipped by many businesses, content marketing is really an excellent way to establish yourself as an authority in your niche and drive traffic to your dropshipping website. Create valuable and informative content that is related to your products, such as blog posts, videos, and podcasts. This can help you connect with your audience, build brand awareness, and ultimately increase sales. By implementing these marketing strategies, you can successfully promote your dropshipping business and reach new customers.
And if you’re wondering how you might generate high quality content consistently, you can look at #paid. It’s a tool that lets you match with the right creators, license content offered by creators, create unlimited campaigns, and even automate contracting and payments. And right now, it’s available for you with $250 slashed off the price on #paid, when you get it from Elevate.store.
Remember to keep a close eye on analytics
In the earlier step, we learned the value of marketing a dropshipping website well. But it’s important to take it a step further and use analytics to see just how well the marketing campaigns are performing.
That’s because analytics play a crucial role in the success of any online business, especially dropshipping. Analytics provide insights into customer behavior, demographics, sales performance, traffic sources, and market trends that can help dropshippers make informed decisions and optimize their business and marketing strategies. The result? Improved customer experiences that lead to more sales and higher profits.
There are several analytics tools that dropshippers can use to gather different kinds of data and insights. While there are dozens of analytics tools available on the market today, we’ll take a close look at the two you can start working with right away.
1: Google Analytics.
This is arguably the most popular analytics tool that provides a comprehensive view of website traffic and customer behavior: primarily because it’s a free tool. Google Analytics helps dropshippers track the number of visitors to the website, the source of traffic, and the pages that visitors view. It also provides insights into the customer journey, allowing business owners to understand how customers interact with their dropshipping website and what actions they take.
Kissmetrics is another comprehensive analytics tool that provides actionable insights into customer behavior and marketing performance. With Kissmetrics, dropshippers can track the entire customer journey, from initial visit to purchase, and beyond. The tool offers features such as individual user tracking, conversion funnels, and customer segments. This helps dropshipping business owners to gain a keen understanding of their customers and identify opportunities for optimization. Additionally, Kissmetrics provides real-time data and reporting, allowing dropshippers to quickly respond to changes in customer behavior and market trends. Its user-friendly interface and integration with a number of popular e-commerce platforms make it a popular choice for dropshippers looking to improve their marketing and sales performance. And you can get all these features for a cool 25% off from elevate.store today!
A summarized view of how to succeed in dropshipping in 2023:
We understand that there’s been a lot of information to digest in the words above. Which is why we’ve created this quick summary you can come back to anytime you like – by simply bookmarking the page.
Dropshipping is at once a flexible and scalable model for running an eCommerce store. This makes it one of the most efficient business models you can choose from. By following the steps outlined in this blog post, you can increase your chances of success and build a thriving dropshipping business.
Understand that with its benefits, dropshipping may also have certain drawbacks depending upon your risk appetite, and where you are in your entrepreneurial journey. So it’s important to look at both sides of the coin before jumping into the dropshipping game.
To succeed in the dropshipping business, you absolutely must focus on building a strong brand and creating a unique value proposition by finding the niche that works best for you. This will help you stand out in a crowded market and attract the right customers to your business. In addition, it is also essential to conduct thorough market research to understand the needs and preferences of your target audience, and to continuously test and refine your products and marketing strategies to ensure that you are meeting their needs. This will also give you insights into the competition – and perhaps ideas of how to beat them.
Another key to success in the dropshipping business is to implement effective marketing strategies that reach your target audience and drive sales. This can include a combination of social media marketing, influencer marketing, paid advertising campaigns, email marketing, and engaging with your customers to build customer loyalty. Utilizing a variety of marketing strategies will help you reach a wider audience and increase your chances of success.
Finally, it is important to stay up-to-date with the latest trends and developments in the dropshipping industry, and to continuously strive for improvement by using analytics tools. Because by staying informed and continuously improving, you can stay ahead of the competition and build a successful and sustainable dropshipping business.
So, if you are ready to take the leap and build your own dropshipping business, now is the time to get started! And we wish you all the luck in the world for your venture!