Dropshipping 101: How to start a eCommerce webshop
Welcome to Dropshipping 101! In this series i will explain everything you ever want to know about dropshipping and how can make money with it.
What is dropshipping
The main idea behind dropshipping is that you can sell products that you don’t own. Dropshipping works by quite a simple model that anyone can implement. The process is based on a product acquisition model and product fulfillment.
How does dropshipping work
Dropshipping works by taking orders from your webshop (Step 1, in the figure) and forwarding the orders to your supplier (Step 2, in the figure). Your supplier in return will ship the product to your customer. Once the product is accepted by the customer the order process is completed and you completed your order.
Now you might wonder how you can make money out of selling other people’s products. Well, you do this by creating a margin. Like in the figure is shown, you might sell a product for $20, and buy it for $15. This will give you are $5 margin, which is 25%, which is alot. This is still quite a simple example and margins can even be much higer.
Now it is possible for you to do it all on your own, but there are a lot of services who can help you automate sales funnels and select suppliers.
Pros en cons
- Low startup costs – One of the biggest benefits out of dropshipping is that anyone can start it at any time for almost no cost. All you need is a domain name and you can already start with free software like WordPress and WooCommerce.
- Low Risk – You almost have no risk when using this model. You have no stock, so no upfront investment. So the main reason why shops go bankrupt is no issue for you.
- Easy sales – Thanks to the way the model works you can have a broad selection of products without ever owning a product. The fun thing is that it doesn’t even stop there. You don’t have to worry about the packing and shipment as your supplier will take care of it!
- Competition – There is quite a lot of competition. This is ofcourse to be expected as anyone wants to have a low risk business that can make money.
- Dependencies – Personally this is in my opinion one of the biggest cons. You are extremely dependent on your suppliers. You are for instance relying on someone else’s stock. Therefore if they run out, you need to make sure you are updating your webshop.
How to start with Dropshipping
As this is the Dropshipping 101, the steps mentioned will be more general as it is meant to give a good idea of how to start. Every step will have a link to its own guide for more detailed information.
Step 1: Invest time
Realise you need to invest time. When you first start a new business you need to realise it will cost time, especially if it is your first time starting a business. This does not mean you have to quit your job and dedicate the next 6-months to setting up your dropshipping business. You can start with dropshipping even when you are still working your regular job.
All businesses and entrepreneurs are unique, but it’s possible to generate a $1,000 – $2,000 monthly income stream within 12 months working approximately 10 to 15 hours per week building your business.
Now that being said, if you are able to work on your own business full-time, this of course will generate the best results and chance of success.
Once your dropshipping webshop is up and running it will start to cost less time. Most of the time investment is upfront and will become much less once you are up and running. You can even make it a complete passive income if you automate your business.
Step 2: Get finance in order
Once you realised you are going to invest your time into setting up a dropshipping webshop, it is time to make sure you have your finace option in place. You will need a business checking account, paypal or/and a creditcard to make sure can order products from suppliers.
Step 3: Find the supplier
This is very important to spend alot of time in. The better your supplier, the better your webshop is. There are a few option when selecting a supplier.
- You can take a local supplier, find a niche market and find a supplier in the area that you can make a deal with.
- Find suppliers on Aliexpress. Most dropshipping businesses use wholesalers such as Aliexpress to find there suppliers. (link)
- Take subscription with business who automate your business. This takes out alot of work, but it will cut into your margin.
Now that we have discussed the possible ways to find a supplier, we need to see what to take into account when looking for a supplier.
- Shipment time – How long does it take for the supplier to deliver.
- Shipment methods – What do they provide as options for the shipment type.
- Positive feedback – Really important to look at how many positive feedback the supplier has. I don’t take any suppliers on AliExpress that does not have 10k+ positive reviews of an average 4.8/5.
Step 4: Find best selling products
This is always fun to do. What you can do is go to AliExpress, eBay or Amazon and take a look at the top selling products at these sites. Once you have looked around you can create a big and wide product selection or go for a niche market that sells well.
Step 6: Build your eCommerce webshop
Once you have found the products you want to sell, found a supplier who can deliver it, you have your finance in order there remains only one thing to do. Create your dropshipping webshop!
Before you can actually have your own eCommerce webshop you need to have a domain name and host it somewhere.
If you want to learn more on how to select a hosting service and get your own domain name, follow our hosting 101 guide (link).
Once you have sorted out the domain name and hosting service it is time to set up an eCommerce webshop. The easiest way to do this without any programming skills or subscriptions is by installing WordPress and wooCommerce. Both are free to use and have a big community supporting the software.
If you want to learn more on how to build you eCommerce webshop and to start dropshipping, follow our dropshipping 101 guide (link).
I hope you enjoyed the article, share it if you did! Let me know in the comment section what you think about it, and where improvements are. We are all here to become better and feedback is important for that.
Links to other Dropshipping 101 guides: