The beginner's guide to dropshipping

If you're interested in starting a dropshipping business, you have come to the right place. This useful guide breaks down how to set up your dropshipping store from zero.

What is dropshipping?

This business model allows you to sell products without having a warehouse, without purchasing stock, and without sending orders to customers. You choose your supplier or subscribe to a supplier's dropshipping programme, and they take care of the order fulfilment for you. This leaves you more time to focus on marketing your eCommerce site and customer service enquiries.

Dropshipping is becoming a popular way to earn a passive income with revenues in the region of €100-600,000 per year.

How do I start?

So, you have decided to take the plunge with a dropshipping business, that's great! The next few steps will involve planning and creating your eCommerce store. It can be confusing to know what to do first, so we have outlined the process for you.

The 5 stages of starting a dropshipping business:

1. Research

2. Planning

3. Building

4. Marketing

5. Analysis

Keep reading for more detail and what to do at each stage.

Research Stage

First and foremost, research needs to be your priority when putting together your dropshipping business plan. This is the same principle when you start any business, online or offline. The research stage will help you find out how the competition is, which market niche to choose, and which customers to sell to. There will always be some risk involved, as no business idea is guaranteed without any bumps along the way, but putting in research will help you have more knowledge of the business landscape you want to join.

How to find a niche

Use tools such as Google Trends and Google Keyword Planner to investigate a product category you are interested in. For example, you might like watersports and decide to look into the popularity of stand-up paddle-boarding (SUP). Within the sporting goods market, your niche might be SUP and surfing. This narrows down your product offering and appeals to a smaller, more specific customer base.

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Competitive research

Once you have found a niche you want to explore, you will want to check how saturated the market is. Don't be disheartened if there is a lot of competition, as the aim is to find a gap in the market and differentiate yourself. For example, you might notice that in the niche of baby products, there aren't many eCommerce websites in your country selling a certain brand or perhaps you want to stand out with only non-plastic toys and accessories.

Online tools

There are some amazing free online tools to take advantage of. We recommend SimilarWeb, SEMRush, and Moz to find information about company websites and where they rank on Google. Data you can easily access includes how their website ranks globally, how their website ranks by country, how they rank in their product category, plus traffic and engagement rates.

Google search

A search on Google will show you who lists the highest in Google's search engine results page. Your top competitors to watch out for will rank on the first page on Google. Check the paid adverts to see which companies have an advertising campaign and which keywords they are using. To find variations of the keywords you are interested in, try the free KeywordsFX tool. This information is also useful to help you with your marketing ideas further down the line.

Search social media

An easy way to check the competition is to search on the top social media platforms. Take a look at their social media engagement, how big their following is, and the hashtags they are using. Again, take note of the paid adverts to see who has advertising campaigns on Facebook and Instagram, the keywords they have targeted, and the style of their content.

With this information, draw up a list of your competitor's strengths and weaknesses to help you spot opportunities.

Find a supplier

Deciding on a reputable dropshipping supplier is the next important step in your research. Now that you have a niche and product range in mind, you can search for the wholesalers that will provide the stock and order fulfilment.

Google search

An extensive search on Google will bring up some suppliers based on your product keywords. To make it less time consuming, you can use these tips for getting more relevant search results:

Supplier directories

These can be found by searching on Google for a supplier directory. There are many articles with updated lists of suppliers that run a dropshipping programme so it's worth checking to see which companies might interest you. Most of these articles are free but there are some directories that are part of paid services such as Shopify and Oberlo that require you to be a member.

A useful article to read:

Take a course

If after this research stage you feel as though you would like to improve your understanding of eCommerce and marketing, there are free and paid courses online. We have rounded up a selection of trustworthy course providers for you to consider. You could complete one of the courses before you set up your dropshipping business or learn as you go if you already have substantial knowledge.

Find a course:

Planning Stage

Before you create your online store, you'll need to plan a few things to help it run smoothly.

Choose a name

The name of your dropshipping business will feature on your design branding, your website domain name, and marketing. Think carefully about how your name fits with your product range, niche, the customers you want to target, and your competitors. It's beneficial to use keywords to help with Google search results but it's not paramount.

Tips for deciding on a name:

Find more ideas in this article:

Write a business plan

While a business plan is usually required for attracting investors or funding towards your new venture, it is useful to have one for several reasons. It creates a blueprint of your business services by outlining your core business activities and objectives, helping you achieve your business milestones, and providing an estimate of the costs involved. In doing so, it also helps you to identify any potential problems or overlooked details.

What should be included in a dropshipping business plan:

Resources to help you:

UK Government Business Plan GuidePlugins

Vision and mission

Writing the vision and mission of your dropshipping business helps to define your company and its future. It not only informs employees, stakeholders, and customers about your business but it allows you as the business owner, to have a clear understanding of what you offer.

How to write a mission statement

How to write a vision statement

Read this related article:

Building Stage

Now onto the main hands-on part - building your dropshipping store! This is where you will offer your products to customers online. There are two options to try at this stage, either create your own website or use a subscription-based software service.

Creating your own website

Subscription-based software to make an eCommerce site

To import products to your website from your dropshipping supplier, they will provide you with plugins. These are software add-ons that allow you to include a specific feature in a computer programme. It sounds more complicated than it is! In the backend of your website, simply add a plugin provided by your dropshipping supplier and their products will pull through onto your website.

Lightspeed, Magento, and WooCommerce are plugins supported by dropshippingXL.

What pages should I have on my webshop?

Obviously, you will need more than just the product pages. Consider including these pages as part of your eCommerce website:

Read our articles:

Marketing Stage

After you have your dropshipping website up and running, you need to decide how to attract business. Your marketing plan will include all the ways you intend to promote your store, get traffic to your website, and increase sales.

Recommended marketing channels:

If you created a business plan in the planning stage, most of this marketing strategy will already be thought of and ready to implement. It's helpful to put all your marketing intentions into a spreadsheet so you can clearly see how you will take advantage of each marketing channel.

Read our articles:

Analysis Stage

Make sure your sales and marketing efforts are tracked so you can see how effective your business is running. If you are using subscription-based software for your eCommerce store, then they will likely have a sales dashboard. Shopify for example will give you a sales report so you can see sales by month and channel. It's also worth creating your own sales report in a spreadsheet to review your profits, expenses, and sales levels. This will help you tweak your marketing and advertising to improve or increase efforts when necessary.

Tracking the success of your socials

Social media channels have an analytics tab to show the level of interest and engagement your business profile has with social media users. You can access statistics such as the number of clicks on your posts, the number of views, the number of comments on your posts, and the number of interactions. Adding this data into a key performance indicators (KPI) dashboard will give you a full overview of online interactions with your dropshipping brand.

Tracking your ads

You are paying to advertise on social media and Google so you will want to monitor the success of these campaigns. Review the analytics dashboards in your social media channels for your advert engagement data. Check your Google Adwords account to review the traffic you received as a result of your Google pay per click ads. Again, add this data to your KPI dashboard so you can see a full overview of your digital marketing success.

Track your sales

Keeping track of your dropshipping sales is important. With this information, you can see which products are your best-sellers, which products aren't popular, and how the price point may be affecting sales. To maintain lucrative profits, amend your product range, prices, and offers based on these statistics. You can use a spreadsheet and manually track this information, however, once your business starts to scale you can benefit from using software to organise this large volume of data. Oberlo and Spark Shipping are two examples.

Summary

That's everything you need to know to get your dropshipping business off the ground. The least exciting but most important step will be your research and planning stage. This will make the hands-on part of building your eCommerce store and promoting your goods a lot easier and with a better idea of who you are selling to.

For a reputable dropshipping supplier with logistics hubs in the US, Europe, and Australia, sign up to dropshippingXL. Our business team are on-hand to support you. Should you have technical or commerce queries, you can contact us for help.