Welcome to Dropshipping 101. In this post, you will learn the basics of the dropshipping fulfillment model as well as an overview of how to start a dropshipping business with Shopify.
Dropshipping 101: What is Dropshipping?
Dropshipping is a product sourcing and fulfillment model, meaning it is a method used to deliver a product to a customer after they have made a purchase. Notice what it is not: Dropshipping is not a means for choosing a product to sell, a manufacturing plan, or a marketing tactic. It solely refers to that process that occurs after a customer places an order.
So, how does the dropshipping model work?
With the dropshipping fulfillment model, the seller doesn’t store any inventory. Instead, when a customer places an order through the seller’s online store, the seller communicates that order to a supplier, who then ships the product directly to the customer.
Whereas other fulfillment models involve buying and storing inventory at a warehouse, a dropshipping seller doesn’t hold any inventory at all. Instead, they establish an agreement with a supplier, usually through AliExpress, CJ Dropshipping, or a “Print on Demand” company, like Printful. Once a customer places an order through the online store, the supplier ships the product directly to the customer. The seller doesn’t pay a dime to the supplier until an order is placed by the customer!
Benefits of Dropshipping
It may be obvious to you why the dropshipping model is so appealing to e-commerce entrepreneurs. But let’s spell it out. This is Dropshipping 101, after all.
- Dropshipping allows you to avoid the major expense of purchasing inventory.
- Dropshipping only requires a minimal upfront investment. In fact, keep reading and learn how you can, FOR FREE, build a functional store with real products available for purchase. Yep that minimal investment I mentioned…is actually $0. Your budget does not hold you back from dropshipping!
- Setting up a dropshipping store is extremely quick and easy (meaning, you can have your store ready today if you want to). No coding or prior experience required.
- Dropshipping has extremely low risk and downside. This is a natural follow-on from the first few bullets. Low investment required + fast and easy to test products = low risk.
Hmm, so I can start a business with a $0 investment, today? Sign me up. Next, let’s get practical and learn how it all works.
How to Start a Dropshipping Business with Shopify
The primary steps to starting a dropshipping business with Shopify are as follows:
- Choose your product or niche.
- Create and optimize your online store.
- Deploy a marketing strategy.
- Test, Evaluate, Revise, Repeat.
Choose a Product or Niche
Many aspiring entrepreneurs never start their journey because they are unsure about which products to sell. There are so many options!
Luckily, (and, sorry for beating the dead horse here,) the Dropshipping Model affords you the ability to choose a product with virtually no risk.
Let’s say you decide on a product. You launch your store but get little to no sales. Are you screwed? Nope! You can simply pivot to a new product. The only cost is your time.
To get started, try choosing a niche or market segment that you are familiar with. Brainstorm product markets that you understand, are passionate about, or are aligned with your hobbies and interests.
Let’s go over some of the most common resources for finding dropshipping products.
Using Print on Demand
One option for finding great dropshipping products is to use a print-on-demand service, such as Printful. These services allow you to dropship custom designed items, such as t-shirts, hats, flip flops, coffee mugs, canvas prints, sweat pants, backpacks and more. Simply choose a product from Printful’s library, upload your design (you can make the designs in a free tool like Canva) and watch as the tool creates a 3D rendering of your new product. Push the product to your store (automatically if you use Shopify), and start selling it!
As you can imagine, this model is very popular for creative entrepreneurs who have skills in graphic design.
If that’s not you, have no fear. Many non-creative-types also use the Print-On-Demand model by simply outsourcing the design. Head over to Fiverr or Upwork to find a freelance designer.
However, many dropshippers prefer to avoid the creative side and sell products with a proven track record. For that, let’s talk about AliExpress.
AliExpress is an extensive B2C marketplace where you can find very cheap but high quality products from Chinese suppliers. Most of these suppliers offer dropshipping services. You can find items for sale in almost any niche: AliExpress contains over 100 Million Products! For comparison, Amazon “only” sells about 12 million products.
A simple way to choose a dropshipping product is to browse AliExpress and look for popular products within your chosen niche. In the screenshot below, you can see the Men’s Clothing product category is pulled open.
Using the filters under the search bar, you can isolate products based on your preferred criteria:
- Display products that fall within a specific price range
- Show only those items that ship from the US, as opposed to China. (This is a good hack, as the items will generally be shipped to your end customer that much faster – assuming you are a US based business.)
- View products that have a review rating of 4 stars or above
- Sort results by Total # of Orders (a good gauge for popularity), Price (important since this is your main cost), or Date Added (so you can try to identify trends)
A strong dropshipping product has strong and growing sales, solid reviews, and a was uploaded relatively recently.
Product Research Tools
If browsing 100 million products on AliExpress sounds like a mind numbing exercise, consider using these product research tools. Each of these will enable you to identify trends, evaluate products, and have advanced searching and filtering capabilities. These databases could just help you find the diamond in the rough:
Still not sure how to decide what product you should sell? Check out our post that goes over a proven method for answering this very question.
Create and Fill Your Shopify Store
Shopify is what is known as a “turnkey” e-commerce solution.
In practice, that means you can sign up for Shopify and create an impressively professional online store in under an hour. No coding required. And the basic plan costs just $30 per month. (They have a 14-day free trial, meaning you can create a fully functional store for free!)
Shopify offers many free courses and tutorials on how to set up your store. Here is a quick video where I set up a store in just a few short minutes!
Tactically speaking, once you’ve gone through the logistics of setting up your store, you can easily add products to it from AliExpress using a free service called Oberlo.
Oberlo is actually an application that Shopify owns, so it plugs into your store seamlessly. It includes a free chrome extension that allows you to import products from AliExpress into Oberlo in 1 click. From there, you can modify the product details and publish it to your Shopify store. The entire process takes minutes! Watch the YouTube video for a 5 minute overview of this process. It’s super simple.
In a separate post, I will discuss how to best write your product descriptions to convert prospects into buyers. I will also go over some of the tools and third party apps that you can use to optimize your store and maximize sales.
Market Your Shopify Store
To recap, dropshipping requires no upfront investment in inventory and the setup of your store is incredibly easy due to tools like Shopify and Oberlo. Therefore, the vast majority of your efforts will go into digital marketing.
Common marketing tasks and expenses include:
- The development of a brand story, mission, and vision.
- The creation enticing product pages with good pictures and compelling product descriptions.
- Outbound Marketing tactics like Paid Advertising and Influencer Marketing, used to drive potential customers to your storefront.
- Inbound Marketing Tactics like blogging for Search Engine Optimization (SEO) to drive organic traffic to your store.
Most dropshippers rely heavily on Facebook Ads and Google Shopping Ads. That’s because they provides cheap cost per click (CPC) ads that can be highly targeted. With Facebook, you can isolate an advertising audience based on interests, demographic information, geography, purchasing behavior, and much more. But there are a huge number of options when advertising. Moreover, we recommend you deploy a holistic marketing approach for your Shopify business.
Test, Validate, and Revise Your Strategy
As mentioned, one of the primary benefits of dropshipping is the freedom to inexpensively test different products and marketing strategies. A good dropshipper is frequently conducting A/B tests on the following variables:
- The products they sell in their store.
- Product pricing.
- Promotions, discounts, and deals.
- Ad platforms.
- The audiences they target through advertisements.
- Their advertisement copy (headlines, descriptions, bullets that sell your products) and creatives (images, videos, slideshows, etc).
- Post purchase tactics like referral programs, sales funnels, loyalty programs, email marketing.
You get the idea. The marketing side of things may seem a bit complex. But dropshipping is an ideal business model for anyone who is persistent and diligent enough to test the variables at their disposal. Find out what works, and you just might build a successful eCommerce brand.
Disadvantages of Dropshipping
Dropshipping, like any fulfillment model, has its downsides. Here are a few of them:
- Navigating the competitive world of online advertising can be difficult, and this often stops entrepreneurs in their tracks.
- Since you aren’t storing inventory, you have very little control over the consistency of the product quality. This MAY drive up returns and refunds you have to issue.
- Furthermore, you don’t have great control over the timeliness of the delivery. As compared with Amazon FBA 2-Day shipping, dropshippers are at a disadvantage. Most dropshipping products take 2 weeks or more to be delivered. As a result, go for NOVELTY products as opposed to COMMODITY products.
- You often don’t have the option to customize your product packaging, which can be very important in brand development.
Dropshipping 101: Wrap It Up, Chuck
Well, there you have it: Dropshipping 101. This is definitely a business model worth considering for new entrepreneurs that are on a tight budget! Sign up below to stay in the loop and get in touch with me about any questions you might have.