How To Start A Dropshipping Store — ‘The Theory ‘
This is my own experience researching this topic — hence I am calling it ‘The theory’. A warning, I have never had an eCommerce store yet. However recently this is something I had an interest in. I believe in trying out many things when we are young(and when you're old!). For this reason, I am considering hiring a person who will manage a Dropshipping store for me. As a pre-action to this, I was doing some research and decided to write a little guide. This is by no means comprehensive but it should serve as a good start and hopefully spark something for you. The main takeaway is starting your own store is not difficult and relatively inexpensive. If you live in Ireland and are a business owner you should consider applying for LEO’s(Local Enterprise Office) Trading Online Vouchers which give you up to €2,500 to get your business up online — I know, what a great initiative!
But first why eCommerce?
The simple answer is growth. As we can see from this graph and just the general sentiment of people; more and more people shop online. This trend is not going anywhere and those who ride this wave can profit greatly.
Secondly, why Dropshipping?
The simple answer is you do not need to store inventory. For those who are unfamiliar with Dropshipping; it means that you do not hold any inventory of the product you are selling. Instead, you have a mutually beneficial relationship with a supplier. They give you products to sell, store them, ship them for you and accept returns, etc. You market and sell their products. In my opinion, the best way to get started selling online as it’s a very low risk!
NOTE; I am oversimplifying the steps; there's a lot of complexity if you want to dive deep into the topic. This article is here to serve you by providing you with the place to start your eCommerce journey. You may see me following up with a second article (‘The Practice’) if I am able to hire someone.
Step 1: Discover your product — Google Trends.
There seem to be two types of products you can choose to sell; commoditized & niche products.
Commoditized products are essential, high demand, or popular goods which everybody needs. You see many of these in offline/online stores. There is high competition and therefore more difficult to be successful.
Niche products on the other hand are goods or services that serve a smaller and specific customer base/product category. They are less popular and hence less competitive and it’s easier to stand out in this market.
My recommendation from my research is that it's better to go with niche products. Less competition and you will be able to spend less money on advertising.
Consider product size and weight
The size and weight of your product will have an impact on how much you sell.
To put this simply you want to sell light and small products so your shipping costs are minimal and you don't scare your customers away with high delivery costs. If you can provide your customers with free, fast shipping, you significantly increase your chances of winning their sale. Shipping costs are the greatest reason for shopping cart abandonment.
Use google trends
Google Trends is a quick Google tool you can use to test if your product will have a chance at success.
Google Trends gives you the ability to complete a search for a product or business idea and then view the search demand for that keyword throughout the past few months, years, and in different geographical locations. You can also compare the volume of searches between a few terms and therefore help yourself choose the best product (we’re looking for growing demand so an upward graph).
Step 2: Study your competitors & nail your price — Amazon, Etsy & Google Search.
The Google Keyword Planner is a slightly different tool to the one previously mentioned it helps you visualize how much an advertising campaign might cost you, giving you an insight into how costly it will be to advertise your product.
An added bonus is that this tool will provide you with various related keywords which can help you generate ideas around which words to use on your website such as, product names, descriptions, blog posts, and website as a whole.
Compare a few different keywords to see how much of a budget you need to get a certain amount of impressions. The goal is to discover keywords that will give you the highest impressions/site visits at the lowest spend.
Nail your pricing
Your pricing strategy is going to be hugely important — and I believe as a beginner your competitive advantage.
Be sure to look at their prices for similar products across a variety of channels, like Google, Amazon, Etsy, as well as eBay, and Alibaba. This will give you a good idea of the highest, lowest, and average prices.
Try to see if you can set your price lower than your competitor's average but while still maintaining profit margins to make you want to work on your business.
Study your competitor's social media
With social media on the rise, it’s essential your business capitalizes on the opportunity to outperform your competitors on all of the leading platforms.
Analyze your competitor's engagement(how many likes/shares), comments (positive and negative), photos(what kind of content, educational/promotional), what platforms they use(see if there's a platform they are not using but could be effective), tone of voice, frequency of posts, hashtags they are using, if they are using influencers to promote their product.
Take a look at all of their social media channels you can think of like Pinterest, Facebook, Instagram, Snapchat, Reddit, and Twitter. Because your competitor may not be using one of these and you could utilize it to gain a competitive advantage.
Step 3: Choose your platform and build a website — Shopify or Woocommerce.
An eCommerce platform is a software that allows you to build and easily manage your website, sales, and operations. It has many powerful features already pre-designed for you, allowing you to focus your efforts on marketing and sales.
These SaaS (Software as a Service) eCommerce platforms remove much of the complexity from running an eCommerce site, such as product updates, security, hosting, checkout, payments. DDoS attacks, analytics, and more.
I will focus on the two main options; Shopify and WooCommerce.
Shopify
Allows you to set up an eCommerce site quickly and easily. It is a paid service and you will be paying a monthly fee / yearly fee to use it. It will do everything else for you. It’s very easy to use, you can set it up yourself or get somebody to set it up for you and show you how to use it.
WooCommerce
WooCommerce is a plugin that works on already existing websites if they are designed using a content management system (CMS), like WordPress. WooCommerce is a plugin that gives you an eCommerce shopping cart solution. This is a freemium service meaning some things are free and extras you will need to pay for.
Choose a great domain name
Once you have chosen your eCommerce store provider you will need to choose a domain name. Choosing a credible and relevant to your product domain will instil confidence in customers and can build customer loyalty, so don't overlook this step.
Step 4: Choose a European or American product supplier — Spocket.
Product sourcing is basically finding a product to sell. In current times it is best to work with European or American suppliers. As because of Covid-19 deliveries from other popular dropshipping sites like Aliexpress can take a really long time.
The best method by which you can source your products is through dropshipping partners. Reminding you dropshipping is a method of product sourcing that lets you partner with a vendor and list their products on your online store. There are other methods but this one is the least risky and most simple. You essentially won’t need to deal with inventory, packaging, or fulfilment. The partner I recommend from my research is; Spoket. It is very handy as it integrates with the eCommerce partners previously mentioned. Do keep in mind this is a paid service and you will need to pay on a monthly basis.
The vendor charges you for the products as they are sold, and ships orders on your behalf. Be mindful that because you are using a popular plugin you may experience more competition, as many of the products offered by dropshippers are easily available to other people wanting to sell products online. Be also mindful that dropshipping usually gives you a lower profit margin, so you’ll need to sell a lot before making a good profit. Having said all of this, I still think it is worthwhile as the convenience that dropshipping provides is super.
Find some vendors on Spoket and make sure you check the references of the suppliers, evaluate all of your options, ask for samples, and finally pick one and get started.
Set up shipping integrations
From my research, to begin you should stick with domestic shipping and master that before you dive into international shipping.
Make your shipping policies are very straightforward. This will prevent confusion or unpleasant surprises. Easy to understand policies will be making it more likely your potential customer will follow through with their purchase.
Also, consider tactics to increase your average order value with free shipping or by offering free shipping at a minimum order amount. Getting something for free has a huge impact on the psychology of making a purchase.
Step 5: Set up payment options — PayPal & Stripe.
In order to get paid, you’ll have to be ready to accept payments. Might be obvious, but it’s quite essential to running an eCommerce store.
Payment gateways are how you collect money from your customers. Typically, your eCommerce platform of choice will recommend which gateways work best with their system.
Choose the options that have, low or no setup fees, have low transaction fees, have least transfer delays, have best reviews and customer support and most importantly once that most people use like PayPal or Stripe.
Step 6: Market your products — my choice is Instagram/Facebook ads.
This includes two main steps; describing what your ideal customers look like and then optimize your ads.
Create customer profiles and market segments
Consumers who find your product appealing often share similar characteristics, which will help you fine-tune you're messaging throughout.
Start with demographic criteria:
- Age
- Location
- Gender
- Income level
- Education level
- Marital or family status
- Occupation
- Ethnic background
Then add psychographic criteria to go a little deeper and paint a more complete picture of your audience:
- Interests,
- Hobbies, Lifestyle preferences
- Values, Attitudes, Beliefs
- Behaviours
- Pain points.
Every industry, business, and product is different, so these lists are by no means comprehensive — think of them as more of a starting point to evaluate market segment size and opportunity.
By starting with a detailed customer profile, you’ll be able to make educated decisions when it comes to building custom audiences and crafting compelling advertising and marketing campaigns.
Look at your competition — again
See what they are doing and do it better.
If you are selling on Instagram create high-quality product content (including product descriptions and imagery). Create a strategy to market to your potential customers (so you can drive traffic to store). Best way is to purchase traffic at the beginning, just make sure what you are spending is bringing in more sales, if this is the case it’s safe to spend more money on this.
Focus your marketing efforts on the platform where your target audience is most active. Instagram is a popular choice for brands targeting the Gen Z and millennial population. This is my generation so it makes it easier to relate to these people. Choose the demographic you relate to the most, same with the products choose once you would actually use.
Social media marketing is a powerful component to driving online traffic because it allows you to directly engage with your customers. Create high-quality content that will create a desire in your end consumer to purchase your product.
Step 7: Set up analytics to measure your success — Google Analytics.
You need data and benchmarks to grow your business and make sure you are improving on a weekly / monthly basis.
Your eCommerce platform will be able to help you with basic metrics like unique visitors, conversion rate, most popular products, and average revenue per customer. You should also be using Google Analytics for your eCommerce Store.
Google Analytics can give you more insights to help you expand and improve your business. It can help you to get to know your target audience, track where shoppers come from, where they go, track how your visitors engage with your store, and much more.
You can tag the important actions or events on your timeline, like adding new products or a sale, so you can see the impact they have on your store.
Analytics in general is a key element in helping you act on facts rather than assumptions about your customers and business.
Step 8: Repeat the process.
This is probably a factor that is often overlooked. Luck is an important factor in your product performing really well and making you nice profits. In reality, you may need to test 2,3 even 10+ products before you stumble across the winning product that will bring you lots of revenue. Know that even this time will be limited so capitalize on it, while it lasts.
A practical way of repeating the process is setting a small budget of €300 and testing how your product advertisement will perform for the next week on social channels. If it didn't work out try a new product again with a minimal budget. The beauty of eCommerce is if your product works it can scale very quickly. There’s no point spending money on ads if your product is not selling, tweak things whether it’s a whole new product or new creative, or new strategy just be wise with your money to get the most from this experience.
Conclusion
If you are in Ireland and want help with your eCommerce store, the business myself and two friends started might be able to help you.
Also, see if you are eligible for the LEO (Local Enterprise Office) Trading Online Vouchers for up to €2,500. If you are you can use this to help you get started and build your e-commerce store essentially for free.
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