Building a Successful Online Drop Shipping Business
[Update – Nov 5, 2023]
You are keen on eCommerce and would like to start an online store? You are not alone! Online business is attracting more and more entrepreneurs and more specifically with the drop shipping business model.
The most significant difference between drop shipping and the classic way of operating is that you don’t hold any product inventory. Instead, you only pay for the products when the customer has already given you the money for the order.
Therefore, drop shipping is a great business model for aspiring entrepreneurs to start with because it’s accessible. There is a good earning potential with arguably low barrier to entry. Since you don’t need to stock or handle the items you are selling, it’s possible to start a drop shipping business with limited funds.
It’s a business model that I’ve chosen back in 2008 when I launched Candlesbook.com and still use today. Why? For its simplicity!
Drop shipping is a supply chain management method in which the retailer does not keep goods in stock but instead transfers its customer’s orders and shipment details to either the manufacturer, another retailer, or a wholesaler, who then ships the goods directly to the customer.
As in retail business, the majority of retailers make their profit on the difference between the wholesale and retail price, but some retailers earn an agreed percentage of the sales in commission, paid by the wholesaler to the retailer. Wikipedia
How to set up your personalized drop shipping shop using this 11-step blueprint
1. Market and competition research
- Identify primary competitors
- Understand market size and potential growth
- Study customer reviews and feedback on competitors’ products
- Monitor competitors’ marketing strategies
- Identify gaps or unmet needs in the market
2. Choosing a niche
- Identify your passion or interest
- Analyze profitability potential
- Ensure sustainable demand (avoid fad products)
- Study the logistics and complexities of the products
- Check if there’s room to add value or differentiate
3. Securing drop ship suppliers
- Research credible suppliers and manufacturers
- Check and compare their product quality and reliability
- Negotiate pricing and terms
- Understand their shipping times and logistics
- Establish clear communication protocols
4. Purchasing domain name and hosting
- Choose a domain that reflects your niche and is easy to remember
- Check domain availability
- Consider security features and SSL certification
- Look for hosting providers with good uptime and support https://janiceloves.com/A2Hosting
- Ensure scalability options for future growth
5. Choosing an eCommerce platform
- Assess ease of integration with drop shipping
- Compare platform fees and transaction costs
- Check customization options
- Ensure mobile responsiveness
- Look into customer support and community reviews
6. Creating a product catalogue
- Write clear, compelling product descriptions [COUPON CODE ecomm30 saves 30%]
- Invest in high-quality product images
- Organize products into intuitive categories
- Optimize for SEO
- Ensure easy price and inventory updates
7. Creating blog posts
- Identify trending topics in your niche
- Use SEO optimization for each post
- Create value-driven content that solves readers’ problems
- Use high-quality images and multimedia
- Engage and encourage readers to share and comment
8. Creating a customer acquisition plan
- Develop SEO strategies for organic traffic
- Consider pay-per-click advertising
- Explore affiliate marketing or partnerships
- Offer promotions or discounts to attract initial customers
- Develop a referral program
9. Building a list with newsletters and follow-ups
- Offer incentives to sign up (e.g., discounts, ebooks)
- Develop engaging content for newsletters
- Segment your list for personalized campaigns
- Create automated follow-up sequences for abandoned carts
- Monitor and optimize email open and click-through rates
10. Promoting on social media
- Identify the best platforms for your target audience
- Create a content calendar
- Engage with followers and respond to comments
- Collaborate with influencers or brand ambassadors
- Run targeted social media ads
11. Analyzing metrics, ROI and optimizing.
- Track website traffic and user behavior with tools like Google Analytics
- Monitor sales and revenue metrics
- Analyze customer acquisition costs
- Gather and act on customer feedback
- Continuously refine marketing strategies based on data insights
Pros and Cons of Drop Shipping as a business model
- Good earning potential with low barriers to entry. Ideal for limited fund budgets.
- More time to dedicate to growing your business by not having to handle your own inventory and take care of shipping
- You only pay for what you sell which lowers the risk.
- More choices to offer as you do not create the products, you curate them into your online catalogue.
- Mitigate the risk in trying out and experimenting new products.
- It’s not your logo on the box, so difficult to build a brand.
- It’s vital that you work with safe and verified drop shippers. You do not want customers being displeased. It reflects on your business.
- You are subject to sudden stock shortages if you are not selling print on demand products.
- Quality. Have the product or samples delivered to your home. Doing so also allows to take better photos for your online catalogue.
- Suppliers illegally using a trademarked logo or another company’s intellectual property. ex: Nike, Adidas
- Delivery. 3 to 5 business days is ideal. Some platforms like AliExpress and Alibaba can take from 17 to 40 days. It might trigger orders cancellation.
The good news? There is a solution for each of these ‘cons’!
This business model is a powerful way to generate automatic revenues and can be set up to simply round off the end of the month or for more substantial income, depending on the time you’ll allocate to it.
Now that you’re familiar with the essentials of an online drop shipping venture, are you inspired to chase your concept? If you’re nodding in agreement, gear up to join the movement.
Not sure if this business model suits your vision and would like to discuss more about it? Book a Free discovery call !
PS: Please note, for full transparency, that some of the links I’ve included are affiliate links.
I’m co-author, online strategist and entrepreneur Janice Dugas and would love to connect with you. If you are new to the world of online entrepreneurship please check out my comprehensive article on the Essential First Steps For Entrepreneurs and learn how to gain a solid presence online when it comes to building a lucrative online business.
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