What is Dropshipping? | The Ultimate Guide

The Ultimate Guide To Drop Shipping

Introduction

After 5 years, the most common question I get in the comments of my blog, videos, and webinars is still “What is drop shipping?”

On top of that huge question, there are a lot of smaller questions that I’m asked. Questions like:

“How do I find a good niche?” Or “How do I get suppliers?”

So to answer those questions and to show that you can reach your goals through drop shipping, I’ve put together this comprehensive guide. It’s a written version of my very popular mini-course video series but with some enhancements.

My goal is to give you a complete guide of drop shipping. That way, if you or someone you know is curious, you have the perfect resource.

WARNING: This guide won’t give you everything you need to start your own eCommerce business, but you will know the general process I use to succeed with drop shipping.

Section 1: What is Drop Shipping?

Before we go too deep into the details, we need to answer the question, “What is drop shipping?”

I know a lot of people find out about my full eCommerce coaching program, Drop Ship Lifestyle, by searching for the term ‘drop shipping’. And that they aren’t really sure what it is or how it works.

Also, I know people wonder how you could actually drop ship profitably because there are many ways to drop ship. And the truth is, some ways work and others don’t.

To start, let’s go over this diagram:

So as simple as possible, this is drop shipping in 4 steps.

Step 1

You list the supplier’s product on your store for customers to buy.

Step 2

The customer purchases something from your eCommerce store.

Step 3

You order that same exact item that the customer paid for from your supplier.

Step 4

Your drop shipping supplier ships this item directly to your customer. So your customer receives the item that they’ve ordered from you.

You receive the money you sold it for and then your supplier charges you the wholesale price. So your profit is the difference between that retail price you sold it for and the wholesale price that you pay to your supplier.

That’s drop shipping in 4 steps. What I’m going to do now is further explain what drop shipping is. I’m also going to show how it works and the different ways you can use drop shipping. Lastly, I’ll show you which way is the most profitable.

eCommerce Business Models

Before we go any further into how drop shipping works, what I really want to do is walk you through the different ways to make money online. That way, we can eventually get to how drop shipping is different and why I believe it’s the best way to make money with online.

With dropshipping, you can profit without putting up money for inventory. You can start for not much…CLICK TO TWEET

HINT: With dropshipping, you can profit without putting up money for inventory. It’s a business model that lets you get started for not much money upfront.

As far as online business models go, the most popular are eBay, Amazon, and build your own eCommerce stores (Shopify).

eBay:

Ebay is an online auction site that allows for you to sell as an individual or to set up a store, within their platform.

When I first started in this business over I think almost 10 years ago now, I was using eBay and that got saturated very fast and became a pricing war. It just wasn’t worth it, so I cut that out.

Shopify

There are lots of different options for building your own store and we’ll get into them a little later. But basically, Shopify is a plug and play online software that you can use to build your own eCommerce store.

Shopify has tons of templates that you can choose from. For eCommerce, they have some highly converting ones.

With Shopify the build process is very simple.

1. You sign up
2. Upload a logo
3. Upload your own text

And within an hour or so you can have an eCommerce store.

One of the biggest benefits of having your own store is that you control the whole sales process. And it might not make sense now why that’s beneficial, but I’ll show you exactly why you want to own that customer info in later sections.

Also, I’ll show you why owning the whole process can make or break your business. How it gives you much more control over your fate and over the fate of your drop shipping business.

Amazon

If you’re not aware of this, you can actually go on Amazon and list your own items for sale. You could build what’s called an Amazon store.

Amazon, It’s a great business model. I’m not going to put it down at all, but I do prefer to have my own eCommerce stores. Again, I use Shopify to host them and the reason is that you have much more control.

When you’re selling through someone else’s platform, whether that be eBay or Amazon or any other platform, they control the whole sales process, they own the customer and their database. They could sell other products to them and get them into their own sales model.

Those are the 3 main eCommerce business models that I think most people are aware of and the way most people get started out. So out of all of these, which do I like the best?

I like having your own eCommerce store. I like using Shopify.

How To Find Products To Sell Online

Let’s say you know how to sell online. It could be eBay. It could be Amazon. Or if you follow my advice, it could be your own eCommerce store.

Your next step is finding products to sell. There are three main options and I want to break them down for you right now.

Importing

The first option is to import your products. You can go to websites like Alibaba and you could find products to imports from, let’s just say, China.

This is actually how I started in business. Before I ever drop shipped, I was importing products.

Arbitrage

The next option, which some people recommend and I have no idea why is what’s called arbitrage. This is going to local estate sales, flea markets, or garage sales to find products that you could sell online for profit. I think this is just a waste of time and something that’s not scalable at all.

Drop Shipping

In my opinion, the best option would be drop shipping. Remember that image we reviewed in the beginning of this section? Basically, you’re finding companies that have products to sell and they’re looking for people to sell their products for them (retailers like you).

Becoming A Retailer

When you go into a store, let’s say in a shopping mall like Bloomingdale’s, they sell tons of products, right? And they’re not selling, self-branded Bloomingdale T-shirts or jeans.

What they’re selling are products from dozens (if not hundreds) of suppliers and brands. So in the world of retail, there are the companies that manufacture and build brand names, and then there are the companies that sell for them. They’re the retailers. So in order to do drop shipping in a way that’s effective and scalable, we’re becoming retailers.

But we’re not doing what Bloomingdale’s does in the sense that we’re holding the inventory. What we’re doing is providing a retail outlet to sell these products for brands that create great products, without keeping inventory on hand.

Drop Shipping Success Checklist

Now we’ll go through what I’m going to call the successful drop shipping checklist. It’s a 7-step process that I use every time I create a store. And I highly recommend you use it when starting a new eCommerce store.

But remember, this is only the first section. So don’t plan on mastering any of this until you read all the sections.

If you eventually decide to join my online coaching program and community, Drop Ship Lifestyle, there are tons of videos on each of these topics. In the program, I give you the exact steps for building a successful eCommerce business.

With that being said, I still want to break this down so you get a good understanding of what drop shipping is, how drop shipping works, and what you should do when you’re ready to start.

That way you’re not left on your own, guessing what works. I have 10 years of experience with drop shipping, so let me give you the process that I use.

Step 1 Choose A Niche

You need to figure out what you’re going to sell.

In later sections I discuss what meets good niche selection criteria. I also cover how to choose a niche that you could actually make profit with.

Step 2 Research Competitors

The next thing you want to do is find your future competitors. So yes, you will have drop shipping competitors because there’s no niche out there that has zero competition. If you find one, it’s probably because it’s a bad niche and people don’t buy those products.

In this step, you’ll look for drop shipping sites that you’ll be competing with. Basically, you’ll try to find them before launching your drop shipping store so that you know who your competition is before you even get started.

Step 3 Create Your Store

You read that right, the third step is to actually build an online store. Yes, prior to ever even contacting the supplier. That’s because the good suppliers won’t approve you unless they see that you already have an eCommerce store. So this is something that you’ll want to do even before making that first phone call or sending that first email to a potential drop ship supplier.

Step 4 Get Approved With Suppliers

Once you have your store up, then you can start making phone calls and sending emails to potential drop shipping suppliers to get approved with them.

With Drop Ship Lifestyle 6.0 we have certifications that can help with that. As well as, resources and guidelines that will make getting approved with suppliers as painless as possible.

Step 5 Optimize Your Drop Shipping Website For Conversions

After that, you will want to optimize your website for conversions. This is where you can make all the difference. There are so many different things you could do once you have your drop ship store up that can improve your conversion rate. Your conversion rate is how many people buy versus how many people visit your site.

Here’s the thing, you could have all the traffic in the world but if they don’t buy from you it doesn’t matter. You don’t need tons of traffic but you do need a buying audience. You need your website to turn those visitors into buyers. Or else, all the traffic in the world won’t solve your problem.

Step 6 Get Paid Traffic

The next thing to do is to get traffic. It’s one of the biggest questions I get asked in addition to niche selection, “how do I get the traffic to my store?”

There are a ton of different ways to get traffic to your drop shipping site and you shouldn’t rely on just one. You want to have diversified sources of traffic. That way your business doesn’t turn off overnight if one of your traffic sources stops working.

Step 7 Outsource & Automate

After that, you want to outsource and automate. So the beauty of drop shipping stores is that it’s very easy to automate them and outsource different tasks. You don’t want to do this at first. You want to build your business, you want to run it for a while.

That way you know how every step of the process works. After you do that, it’s very easy to start delegating tasks, outsourcing, and using apps that automate how your business works on a day-to-day basis.

Examples

The last thing I wanted to do in this section is to give you some example of good ideal stores.

That way you can see what it looks like when you properly execute the steps. Also, so you can see what an actual Shopify eCommerce store looks like.

Example 1: Enlighten Chandeliers

The first example is our demo drop ship site store enlightenchandeliers.com.

If you want to jump over to the site and check it out, feel free to. Again, this is just one of our demo stores.

This would be an example of a site that went through all 7 steps. It also uses a Shopify theme that is known to convert.

Definitely check it out, click on some of the product pages, and see what your drop shipping store could look like.

It only cost $29 per month to build and maintain this site at Shopify, that’s it. No customization, nothing special. It’s very simple and doesn’t require help from a web designer.

Example 2: Happy Paws

Let me show you another one of our demo drop shipping stores, if you want to check it out here’s the URL: happypawsdsl.com. It’s a store that sells pet supplies like kennels and crates.

Again, check it out, go to the product pages. In my opinion, this site looks amazing. This is the theme that we use for most of our stores and it’s built on Shopify.

Shopify is a plug and play eCommerce system. This theme costs less than $100. So for less than $100, you could have a gorgeous store that looks like this. That has all this functionality built in like:

• Social sharing
• Review system built in
• Floating menu bar
• Live chat

These examples should give you an idea of what an actual drop ship business looks like. I wanted to show you what a real quality drop ship store looks like, and what a store that has potential to make a lot of money looks like.