How to Start a Dropshipping Business: A Step-by-Step Guide

In this guide, I am going to explain how to start a dropshipping business.

Dropshipping is an online business model that has become super popular over the last few years - I first discovered it back in 2018 and have ran many dropshipping stores since, but dropshipping itself has been around for a long time.

I have had many stores that didn't take off, but had success with a few. The ones that were successful more than made up for the money I spent on the other stores, so it does work. 

I made around £60,000 in total - my best selling product was.... well, keep reading, I'll tell you later ;) 

That being said, it is not a get rich quick scheme as many of the YouTube 'gurus' like to make it out to be - it takes time, like any thing worth doing, to learn all the skills necessary.

It sometimes gets a bad rap because, since it is fairly low barrier to entry, there are a lot of people that try it and a lot just want to make profit without any regard for the customer - don't be like that, otherwise you won't last 5 minutes.

This is a business - treat it like one.

I am not currently running any dropshipping stores because I decided to explore other avenues and couldn't do everything at once - but that doesn't mean I might not go back to it at some point, and it certainly doesn't mean you shouldn't check it out.

I'll run over some of my top tips later, as well as the pros and cons of dropshipping, but for now, you must be thinking - what the hell is dropshipping??

What is Dropshipping and How Does it Work?

Starting an online business can be a great way to make money and achieve financial freedom - even as a teenager, but it can also be challenging, especially for those who are new to the e-commerce world. 

One of the most popular ways to build an online store is through dropshipping. 

We will go through the different steps involved in setting up a successful dropshipping business, from choosing a niche and identifying the right products to sell, to setting up your online store and finding reliable suppliers. 

We will also cover important topics such as marketing and advertising your products, fulfilling orders and managing inventory, handling customer service and returns, scaling and growing your business, and much more. 

By the end of this guide, you will have a clear understanding of what it takes to launch and run a successful dropshipping business.

Dropshipping is a business model where an online store doesn't keep the products it sells in stock. Instead, when a store sells a product, it purchases the item from a third-party supplier and has it shipped directly to the customer. 

This allows the store owner to sell a wide range of products without having to invest in inventory or handle the logistics of shipping and handling.

This is not the same as affiliate marketing where you aren't selling your products, but rather earning a commission selling other peoples products.

The process of dropshipping typically works as follows:

• ⏩ You advertise a suppliers products on your website.

• ⏩ A customer places an order on your online store.

• ⏩ You, as the store owner, forward the order and customer's shipping information to your supplier.

• ⏩ The supplier ships the product directly to your customer.

• ⏩ You keep the difference between the wholesale price and retail price as profit.

One of the main advantages of dropshipping is that it allows you to start an online store with minimal upfront investment. You don't need to purchase inventory or spend money on storage and shipping. 

Instead, you can focus on building your brand, marketing your products, and growing your customer base.

It's important to note that when you're dropshipping, you're essentially acting as a middleman between the supplier and the customer. This means that you're responsible for providing excellent customer service and handling any issues that may arise with orders. 

You'll also need to be careful when choosing suppliers, as the quality of their products and shipping times can have a significant impact on your reputation and customer satisfaction - and subsequently your bottom line!

Overall, dropshipping can be a great way to start an online store, but it does come with its own set of challenges and responsibilities. With the right approach and a bit of hard work, however, it can be a highly profitable and fulfilling business venture.

Choosing the Right Niche for Your Business

Before you start your dropshipping business, it's important to choose a niche that has a proven track record of success. It helps if it is something you are interested in too, certainly when you start off.

A niche is a specific area or market segment that you'll be focusing on with your business, and it is best to stick to products in a particular niche rather than having a general store that sells all sorts of unrelated products.

The reason for this is that you want to build up an audience that has a common interest as it is then easier to market and re-market new products to them. 

If you sell random items, you will constantly have to attract new customers rather than re-marketing to previous ones (and similar audiences - more on that later) as your audiences will be mixed and so your marketing won't be as effective, which means your costs to acquire a customer will be higher. 

Actually, what you really want is a sub-niche. So, if you're interested in fashion, instead of just clothes your niche could be trendy plus-size women's clothing, or if you're interested in health and wellness, your niche could be natural supplements. 

Others might include vegan bodybuilding, puppy care, working from home, or fishing for beginners to name a few.

When choosing a niche, there are a few things to keep in mind:

• ⏩ Look for a niche that has a large and passionate audience. The more people that are interested in the niche, the more potential customers you'll have.

• ⏩ Check the competition. While competition can be a good sign that there's a market for your products, too much competition can make it difficult to stand out and attract customers.

• ⏩ Consider the profit potential. Some niches have higher profit margins than others, so be sure to research the typical profit margins for the products in your niche.

• ⏩ Look for a niche that you're knowledgeable about and passionate about. This will make it easier for you to find products that you can stand behind and communicate effectively with your customers.

• ⏩ Check the long-term potential of the niche, think if it's a trend or something that will last in time.

By choosing the right niche, you'll be able to create a strong brand and attract the right customers. Additionally, you'll be able to identify the right products to sell and create a unique value proposition that sets your business apart from the competition.

Identifying the Right Products to Sell

Once you've chosen your niche, the next step is to identify the right products to sell. 

This is a crucial step in setting up your dropshipping business, as the products you choose will determine your target market, your marketing strategy, and ultimately your success.

The normal go-to place to find dropshipping products is Aliexpress.com  - if you aren't familiar with it, it's sort of like a Chinese version of Amazon, but there are a lot of other options, including products direct from the manufacturer.

Here are a few things to consider when identifying the right products to sell:

• ⏩ Look for products that are in high demand and have a proven track record of selling well. You can usually see how many have sold and what the product ratings are. Check if the products are selling on Amazon, Ebay or other dropshipping stores.

• ⏩ Choose products that have high profit margins. This will allow you to make a profit while still offering competitive prices to your customers.

• ⏩ Try to find products that have faster shipping times. This is the downside of Aliexpress, but unlike when I was running stores, a lot of suppliers offer 3, 7 and 10 day shipping now, which isn't too bad.

• ⏩ Make sure the products you choose are of high quality, this is important to ensure customer satisfaction and to decrease the amount of returns. It is always a good idea to order a tester first - unhappy customers will kill your business.

• ⏩ Try to find products that are unique and not easily found in other stores, this will make it easier for you to compete in the market. At the same time, this doesn't mean sell something nobody is selling - you don't want to be the first with a product, you want to see that it is selling for other people first.

• ⏩ Choose products that have a reliable supplier that you can trust. This will ensure that your products are delivered on time and that you have a good relationship with the supplier. Again, purchase a test order, and it's also a good idea to reach out to the supplier to build a relationship.

Pick several products in your niche that seem to be selling well to try. This will allow you to see which products are most popular and which ones aren't selling as well. 

Once you've identified the right products to sell, you can focus on building your brand around them, creating a marketing strategy, and growing your customer base.

Finding Reliable Suppliers

I already mentioned this, but it deserves it's own section.

One of the most important aspects of running a successful dropshipping business is finding reliable suppliers. 

Your suppliers will be responsible for providing the products that you'll be selling on your online store, and their reliability will have a direct impact on your business.

If they provide bad quality products, have long shipping times, or run out of stock regularly when you have orders to fulfill, you will get chargebacks from customers thing they have been scammed.

This hurts in multiple ways.

You get a bad reputation and customers will take to social media and put negative comments all over your posts and page. If the order is in transit still, then they will get refunded but you have already paid for the item which is on its way to them so you lose money.

The other thing is, if you get too many chargebacks, your payment gateway provider, such as Stripe or Paypal will close your account, which will cause you a world of pain.

You also need to make sure the supplier is responsive to ensure they will resolve any issues that arise, which is another reason to reach out to them.

Just avoid bad suppliers at all costs and keep customers happy!

You can find suppliers through directories like SaleHoo, Aliexpress or Alibaba, by attending trade shows, or by contacting manufacturers directly. 

It's a good idea to reach out to multiple suppliers to compare prices and terms, and to test their reliability before committing to a long-term partnership.

Setting Up Your Online Store

Once you've identified the right products to sell, it's time to set up your online store. This is where you'll be showcasing your products and where your customers will be making their purchases.

There are several ways to set up an online store for your dropshipping business, such as:

• ⏩ Building your own website: This option will give you the most control over the design and functionality of your site, but it will also require the most time and technical know-how.

• ⏩ Using an e-commerce platform: Platforms like Shopify, BigCommerce, and WooCommerce allow you to set up an online store quickly and easily, without the need for technical skills. They offer a wide range of templates and plugins that you can use to customize your store.

• ⏩ Using a marketplace: Selling through a marketplace like Amazon or Etsy can be a great way to get started with dropshipping, as it allows you to reach a large audience quickly. Plus with Amazon FBA, you can send stock to them and let them organise the fulfilment and benefit from their customer base.

My recommendation would be to use Shopify since this is what I always used. I always found it to be easy to use and intuitive, easy to set up and reasonable priced too - plus it has the ecommerce functionality all built in, but check them out and see what works for you.

No matter which option you choose, it's important to make sure that your store is well-designed, easy to navigate, and mobile-friendly. This will help to ensure that your customers have a positive shopping experience and are more likely to make a purchase.

Focus your main attention of your product page since this is where you will be sending customers to.

Don't listen to people telling you to include all the countdown timers and other spammy things on your page - it looks crap, trust me. 

Keep it clean and professional with good quality photos, and a good product description which sells the benefits (benefits  - not features!) of the product.

It's also important to make sure your store complies with all the legal requirements, such as privacy policy, terms of service, and in some cases, having a SSL certificate. This will help you avoid any legal issues in the future.

Once your store is set up and you have added your products, you can start creating your marketing strategy to attract customers and drive sales.

Marketing and Advertising Your Products

Now that your online store is set up, and you have a solid selection of products from reliable suppliers, it's time to start marketing and advertising your products. 

The key to success in dropshipping is to drive traffic to your store and convert that traffic into sales, and for that you need an audience to advertise to.

Over the long term, you can build up your organic traffic through SEO by optimising your store and product pages for search engines by using relevant keywords. This will help your store show up in search results when people are looking for products in your niche.

However, SEO takes a long time and you need results quick, so you will more than likely need to spend some money to start getting traffic.

Some ways to do this are:

• ⏩ Use social media platforms like Instagram, Facebook, TikTok and Pinterest to promote your products and connect with your target audience. You can do this using just organic reach, but likely you will need to set up an ad account and run some ads to your target audience.

• ⏩ Partner with influencers in your niche to promote your products to their followers.

• ⏩ Build an email list of customers and potential customers, and use email campaigns to promote new products and sales - again this takes time, unless you already have an audience.

• ⏩ Pay-per click (PPC) Advertising on platforms like Google AdWords to drive targeted traffic to your store.

It's important to note that marketing is a continuous process, and it's essential to measure and track your results, so you can adjust your strategy and optimize your campaigns. 

Understanding the marketing metrics (CPM, CPC, CTR, CPA, etc.) can help you to figure out how effective your ads are, or if you need to tweak a certain part of your funnel.

By using a combination of these marketing strategies, you'll be able to drive traffic to your store and hopefully convert that traffic into sales. 

It is a case of matching the product you are selling with a pre-defined audience - trying multiple audiences until you get a hit. 

Once you find one that works, you can then build things called lookalike audiences which allows to to hone in on other similar people who might be interested in your product (this is why we don't want a general store!).

Have a strategy though, don't throw money down the drain. Test a set amount of audiences with a limited budget first before going all in. 

Often you won't make enough sales to justify using that audience (or interest, as it's called). Then, if you use all your audiences up, then it's time to test something else until you get a winner.

Fulfilling Orders and Managing Inventory

Once you start receiving orders, it's important to have a process in place for fulfilling them quickly and accurately. This includes communicating with your supplier, processing payments, and shipping the products to your customers.

To ensure smooth order fulfillment, it's important to have a system in place for tracking and updating inventory. This will help you avoid overselling and ensure that your supplier always have the products in stock to fulfill orders.

Additionally, it's important to keep track of the shipping and handling costs, as well as any taxes or duties that may apply. This will help you set accurate prices for your products and avoid any surprises when it comes to fulfilling orders.

If you use Aliexpress and Shopify, you can use Oberlo for fulfilment. Oberlo is a shopify add-on that automatically exports your orders from Shopify, then with 1 click, places to order with the supplier

Handling Customer Service and Returns

Providing excellent customer service is an essential aspect of running a successful dropshipping business. Your customers will have questions and concerns, and it's important to have a process in place for addressing them quickly and efficiently.

Here are a few things to keep in mind when handling customer service and returns:

• ⏩ Make sure to respond to customer inquiries in a timely manner. This will help to build trust and establish a positive relationship with your customers.

• ⏩ Provide clear and detailed answers to customer questions. This will help to resolve any issues and prevent negative reviews.

• ⏩ Anticipate customer needs and concerns, and offer solutions before they become issues.

• ⏩ Have a clear and fair (and legal!) returns policy in place, and make sure to follow it. This will help to ensure customer satisfaction and avoid negative reviews.

It's also important to keep track of any customer complaints and use them as an opportunity to improve your service. This can help you to identify patterns and make changes to your business to prevent future issues.

By providing excellent customer service and handling returns effectively, you'll be able to build a reputation for reliability, increase customer loyalty, and ultimately drive more sales.

Scaling and Growing Your Business

After successfully setting up your dropshipping business and making your first sales, the next step is to scale and grow your business. 

The key to scaling a successful dropshipping business is to focus on increasing your customer base, expanding your product line, and improving your processes.

Some of the ways you can scale and grow your business are:

• ⏩ By adding new products to your store, you'll be able to attract new customers and increase sales. This can be done by expanding within your niche and adding complementary products.

• ⏩ By testing different marketing strategies and focusing on the ones that work, you'll be able to drive more traffic to your store and increase sales.

• ⏩ By targeting new market segments or countries, you can expand your customer base and increase sales.

• ⏩ By investing in customer retention you'll be able to keep your current customers happy and coming back, which will help you to increase your sales and keep marketing costs down.

• ⏩ By automating repetitive tasks and streamlining your operations, or even outsourcing low value, time consuming tasks, you'll be able to work more efficiently and scale your business by focusing on the high value tasks. You can hire help through sites like Fiverr or Upwork, such as a PA to deal with customers, video editors and actors to create your ad creatives, and anyone else you fell you need to support your business.

Scaling and growing your business takes time, effort, and resources, but by focusing on the above steps and continuously improving, you'll be able to take your business to the next level.

Pros and Cons of Dropshipping

Dropshipping is a popular business model that allows entrepreneurs to start an online store with minimal upfront investment. However, like any business model, it also has its own set of pros and cons.

Pros:

• ✅ Low startup costs: With dropshipping, you don't need to invest in inventory or storage space, making it a relatively low-cost way to start an online store.

• ✅ Flexibility: Dropshipping allows you to run your business from anywhere, giving you the freedom to work from home or while traveling.

• ✅ Minimal risk: Since you don't have to invest in inventory upfront, you're taking less risk than with traditional retail models.

• ✅ Wide range of products: With dropshipping, you can sell a wide range of products without having to hold any inventory.

• ✅ Scalability: As your business grows, you can easily expand your product line and increase your sales without having to invest in additional inventory or storage space.

Cons:

• ❌ Low profit margins: With dropshipping, you're essentially acting as a middleman between the supplier and the customer, which means that you'll have to charge a markup to make a profit. This can make it difficult to compete on price with larger retailers or suppliers selling direct to consumer.

• ❌ Lack of control over the product: Since you don't hold any inventory, you're at the mercy of your supplier. This can be an issue if they run out of stock, have shipping delays, or offer poor quality products.

• ❌ More competition: Due to the low startup costs, the market can be quite saturated with dropshippers, making it hard to stand out.

• ❌ Dependence on your supplier: You are dependent on your supplier for products, shipping times, and quality, which can affect your customer satisfaction and sales.

• ❌ Customer service and returns: As a middleman, you are responsible for handling customer service and returns, which can be time-consuming and difficult to manage.

My 5 Top Dropshipping Tips

1 - Have an advertising strategy

Learning how to run advertisements is crucial to succeeding with dropshipping, but don't just throw money at it blindly - have a strategy and learn to read what the metrics are telling you.

For example, one testing strategy I used was running Facebook ads with a campaign of 10x single creative ad sets to different interest audiences on a purchase optimised campaign at £3/day/ad set - so £30 a day.

Run it for 24 hours and check your metrics - turn off ad sets with a CPM (cost per thousand impressions) more than £12.

Continue running for another 24 hours - kill ad sets with no sales or high CPC (cost per click), and duplicate ad sets with 2+ sales.

Another 24 hours later, kill any ad sets with ROAS (Return on Ad Spend = (revenue-costs)/ad-spend ) less than your break even ROAS (=1/ROAS) and start to scale the ad sets with 3 or more sales in a new campaign with a higher budget.

Now, this is just an example - not THE way to do it. The gurus on YouTube will have you believe that ther way is the only way and you aren't making sales because you haven't bought their course... rubbish.

Just pick a strategy that works for you and stick with it. By all means tweak it as you go, but don't jump from strategy to strategy looking for the golden technique.

2 - Learn your trade

If you are going to be successful dropshipping, you need to take the time to learn about all the different aspects.

Learn about sales, marketing, psychology, learn how to create sales copy and creatives, how to run ads, write product descriptions, set up websites.... you get the point.

A lot of this stuff can be outsourced down the line when you are making money but you need to understand how every nut and bolt of your business works first - it will help you massively when it comes to troubleshooting issues.

3 - Systemise it

Try and standardise everything you do, from finding products, creating product descriptions and running ads. The faster you can find and test products the quicker you will find a winner.

Ideally, try and create templates or use automation so that you only have to do a task once manually to leverage your time as much as possible.

4 - Don't spend money you don't have to

People are obsessed with website themes, ad-ons, pop-ups and widgets, but the truth is - you don't need 90% of them, certainly not when you are first testing a product.

Maybe once you have a winner and you want to optimise your conversion rate as much as possible, but until then, just stick to the basics. A nice basic, clean theme with only essential ad-ons.

5 - Find a winner and brand it

Dropshipping is an entry level business model and as such there is a lot of competition - the aim should not be to just keep on churning different products. Instead, you want to find a good product that sells that you can brand as your own to create a business.

Dropshipping generic products, anyone can copy - but if you create a brand and build a reputation then you will dominate, think snow white teeth whitening, Gym Shark clothing, The Oodie and many more - these all started off as dropshippers but managed to successfully create brands worth millions.

There you have it, that's my top 5 tips for you if you want to start dropshipping, that should be enough to get you started with your first online business!

Ohh yeah.... I said I would tell you my best winning product!

Winning Product

I tried a lot of product when I started dropshipping, I had a lot of flops, and others with limited success.

I only really found a few real winners, but one was by far my best seller - and I never would have thought it!

My best selling dropshipping product was..... *drum roll*

Dog jackets!

Yup, that's right - coats for dogs. 

I made around £36,000 over the space of a month, if that, on dog jackets. In fact, it would have been higher but I got screwed over by a Facebook algorithm change which killed my ad campaign... that really pissed me off!

Just a case of hitting the right audience at the right time with the right product.

Conclusion

Dropshipping is a popular business model that allows entrepreneurs to start an online store with minimal upfront investment. It's a great way to test the waters of e-commerce and see if it's something you're interested in pursuing as a full-time career.

However, it's important to remember that dropshipping is not a get-rich-quick scheme. It requires hard work, dedication, and a solid business plan to be successful. 

It's crucial to choose the right niche, identify the right products to sell, and find reliable suppliers. Additionally, you must have a plan for marketing and advertising, customer service, inventory management, and scaling and growing the business.

By following these steps and being prepared for the challenges that dropshipping presents, you can set up a profitable and sustainable dropshipping business. With the right approach and a bit of hard work, you can turn your passion into a successful business venture.

I hope you found this helpful and that it inspires you to start your own online business - if so, let me know in the comments, and feel free to ask if you have any other questions - good luck!