AN INTRODUCTORY GUIDE
Starting a Dropshipping Business
How Shopify works
Ecommerce accounts for over 57% of oversea purchases worldwide — evidence of Internet penetration and the use of mobile devices soaring, even in developing countries.
eCommerce exists in a variety of forms, depending on the business revenue model:
- Dropshipping
- Wholesaling and warehousing
- Private labeling and manufacturing
- White labeling
- Subscription commerce
Among these models, dropshipping is the most common and easiest ways to start an eCommerce business, today. As we proceed, we will discuss how to start a dropshipping business using Shopify — an eCommerce platform. But first, let us understand what dropshipping is.
What is Dropshipping?
Dropshipping is a supply chain management method where a store does not keep the goods it sells in stock. When a customer makes an order, it is sent together with the shipment details to a fulfiller. The fulfiller then delivers the goods directly to the consumer.
Dropshipping, in a lot of ways, resembles the standard retail model. However, there are some aspects of this business model that makes it different. The main difference being the use of a third-party in fulfilling customers’ orders.
The Key Elements of the Dropshipping Business Model
The three main elements that define a typical dropshipping business are the retailer, the fulfiller, and the customer.
The retailer is the face of the business, responsible for marketing products and ensuring that customers have wonderful shopping experiences. When a customer places an order, the retailer sends it together with its shipment details to a third-party who then fulfills the request.
In the dropshipping model, the fulfiller is the entity responsible for managing inventory — manufacturing or keeping stock. Also, the fulfiller is responsible for processing customer orders and replacing defective products. The fulfiller could either be a manufacturer, a wholesaler, or another retailer. In summary, the fulfiller ensures that customer orders sent by the retailer are prepared and delivered to the customer as dictated by the order and shipment details.
Another element of the dropshipping model is the customer — the reason why the retailer and fulfiller are in business. In simple terms, the customer purchases products from the retailer, and the fulfiller ensures that the customer receives them.
Most noteworthy, a retailer can work with more than one fulfiller. Depending on the nature of order and product preferences, a retailer may choose to send customer orders to different fulfillers.
Prerequisites to Start a Dropshipping Business
In attempting to start a dropshipping business, one should consider the market and the existing competition before endeavoring.
Picking a Niche
Consistency attracts consumers.
Therefore, choosing a product range that focuses on a particular industry or closely related industries is very important for the overall success of the business.
Selecting a niche demonstrates an understanding of consumers’ interests in a specific market, and helps build trust with them. Besides, narrowing the product range also ensures effective marketing.
Tips
Here are some tips to guide you when choosing a niche:
* The Product Selection Should Appeal to Impulse Buyers: Making sure you garner the highest possible conversion rates is key to propelling your dropshipping business onto more success.
* Sell Products in High Demand: Using tools like Keyword Planner and Google Trends, retailers can perform keyword research and analyze the traffic generated by specific keywords. Through insights provided by these tools, retailers can learn more about customers’ preferences.
* Sell Unique Products: Retailing products that are high in demand, but yet not easy to find, can help in establishing a solid customer base in a short time.
* Create a brand: A brand is a promise which a business makes to its customers. For example, in the apparel industry, consumers often go for products from popular brands like Gucci, Chanel, Nike. The reason being that they can attest to the quality of the products from these brands. So, whenever they encounter a new product from a particular brand, they rely on the already established trust between them and the brand to make confident purchases. A dropshipping business will have more value if it can brand or rebrand whatever it is selling and pass it off to consumers as its own.
Performing Competition Research
In business, identifying your competitors, in terms of what they offer, and how they offer it, can give you a chance of staying in the competition.
Without knowledge of your competitors and the market size they control, you may experience difficulties in marketing your products and growing your brand.
Using tools like Alexa, SimilarWeb, SEMrush, Ahrefs, businesses can gain powerful insights into their competitors’ online traffic.
Running a Dropshipping Business with Shopify
We now have a fair understanding of the dropshipping business model.
Without arming oneself with the right knowledge and tools, taking the plunge to set up a dropshipping business could be a daunting endeavor. For this reason, we will discuss running a dropshipping business using an eCommerce platform like Shopify.
Shopify is an eCommerce platform for online stores and retail point-of-sale systems. It offers online retailers a suite of services including payments, marketing, shipping, and customer engagement tools, to simplify the process of running an online store.
Follow these simple steps to move from ambition to action. Let’s explore!
Brand your Business
Firstly, you will have to find a name that fits your personality and business idea. Also, you will need to create a logo that would help your business stand out from the competition and make it unforgettable.
Using Shopify’s business name generator, you can search for business names and check domain availability instantly.
It is easy to come up with business names, but others have been on this journey before you. So, before you decide to stick to a particular name for your business, ensure the domain is available and try to claim it early. Otherwise, someone else may do.
Using Hatchful — a free online logo creator service tool powered by Shopify, businesses can create stunning logos with ease.
Establish an Online Presence
It is now time to put your brand into action.
Shopify makes this process a breeze, allowing businesses to choose from a wide range of free and paid eCommerce themes to customize the look of their store.
You can also personalize your store’s website with free, high-resolution images from Burst.
To build trust with customers, retailers should ensure that their store’s websites have these pages:
- Home page
- About page
- Shipping and Returns page
- FAQs page
- Contact page
Source Products
With dropshipping, the retailer does not have to worry about shipping, packaging, or holding inventory. Even more, Shopify makes it simpler by helping businesses to find products to sell using Oberlo.
Oberlo handles the products, so retailers never have to worry about warehousing or keeping inventory. When a retailer makes a sale, they request the product on Oberlo so that it can be packaged and shipped to the customer.
Sell Globally
Shopify is an excellent choice for businesses that want to sell globally. It incorporates a comprehensive dashboard that provides a holistic and detailed view of business activities. For that reason, retailers can gain insights into their sales, orders, and customers. As a result, they can better customize their products and marketing. Similarly, all inventory is connected to one place, by syncing across sales channels at all times.
Also, Shopify Payments allow businesses to accept credit cards instantly and without third-party accounts. Shopify also supports over 100+ external payment gateways like Visa, Mastercard, American Express, Apple Pay, Shopify Pay.
Furthermore, eCommerce stores that operate point of sale systems can benefit from Shopify’s Chip and Swipe Reader, which is free for businesses new to the Shopify POS. The reader accepts Visa, Mastercard, American Express & Discover cards.
What’s Next?
Are you ready to start your dropshipping business with Shopify?
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