Beginner’s Guide: 3 Essential Steps To Launching a Profitable Dropshipping Business

Beginners Guide To Launching A Dropshipping Business

The eCommerce market is huge, being worth more than $220 billion dollar market in the U.S. alone and is growing by 17% a year.

There’s no denying that the industry is huge, and with all the available online, it’s now easier than ever to start an online store.

In this guide, you will be learning exactly how to start an online drop shipping business from scratch.

If you aren’t familiar with drop shipping, the concept is very simple and easy to work with.

You work with wholesale supplier that has an inventory of products for you to sell and that ships the product under your name when you get a sale.

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We will go further in depth about how to find the right supplier, and the all the different platforms on which you can sell your products.

1. Finding a Supplier

The first step when getting started with dropshipping is finding a good supplier to work with. This part can be harder than you might think…

In fact, 84% of online sellers find establishing a relationship with a drop shipper is the biggest roadblock when starting an online store.

There’s many factors that come into play when choosing a supplier, such as their selection of products, how fast they deliver products and how the quality of the products is controlled.

I personally use SaleHoo as my supplier and would recommend it to everyone, especially those who are just starting out with affiliate marketing. Signing up with them is quick and hassle-free, and I find that they have the best profit margins by far and just a great catalog of profitable products to sell.

Here is a list of more trustworthy suppliers :
– Worldwide Brands
– Doba
– Wholesale Central

Sometimes, these mainstream, big suppliers don’t have some of the niche-specific products that people want to sell on their website.

In that case, you must research to find the right supplier for your business.

There’s a significant amount of untrustworthy companies and therefore knowing how to verify the legitimacy of a wholesaler is important.

Make sure you do some research on any wholesaler you are considering working with.

2. Selecting Products to Sell

When selecting which products to sell, there’s a lot of decisions to be made.

The more expensive the product you are selling is, the greater the profit margins can be. On the other side, if you stick to selling cheaper things, the profit margins will be much smaller but generating sales is much more easier.

What I find works best is right in the middle – products that are worth somewhere around $50 leave room for decent profit margins while still being cheap enough for people to actually buy it.

The key to picking the right item to sell is making sure that people are actually buying it online.

A good, foul-proof method to to this is going through completed listings for a certain keyword on eBay by clicking ‘advanced search’ and checking the ‘completed listings’ box. A quick search for a product “Bose Soundlink Mini” pulls up some great insight about how well it’s selling.

bose soundlink sales

 

In this case, 6 of them sold and 1 of them didn’t sell. That would give us an 86% sell-through rate.

By doing this, you can see if your product is actually selling or not. If the product is selling at least 60% of the time, you can be pretty certain that you will be able to sell it with ease.

You can also utilize market research tools that give you information about the market for a certain product, such as the average selling price and the sell-through rate. There’s many tools like this available but most of them are quite costly.

I personally use the SaleHoo Market Research Lab which is free after signing-up.

statsmarket research

I found the Market Research Lab to be actually very useful when it comes to finding the best products to sell. Not only do they give you a very accurate price check on items, but they also find the hottest things to sell. Tools like this aren’t necessary, but do make product research a much easier task.

3. Choosing a Selling Platform

Once we have a supplier and have chosen the products we want to sell, now we need to decide where to sell these products.

A popular choice among dropshippers is eBay because their authority and constant traffic make it very easy to sell.

There was 162 million active buyers on eBay in 2015, and this figure is only going up.

eBay active buyers

Getting started on eBay is a great way to get comfortable with dropshipping and test what works for you.

Other similar platforms include Amazon, Bonanza and thousands of other emerging marketplaces that you can experiment on without any risk or investment.

The other, more fun way to go about this is to create your own online store and list your products for sale there.

While this option requires more work and a bit of an initial investment, it’s the next big step to making more money with drop shipping by creating niche-specific online stores that generate a steady income from natural visitors coming to your website.

A good way to understand how these e-Commerce websites work is to see for yourself. Here’s some examples of successful drop shipping stores running today :

Northern Parrots
http://www.northernparrots.com/

Cookbook Village
https://www.cookbookvillage.com/

House of Rave
http://houseofrave.com/

Besides all running with the drop shipping business model, what do all these websites have in common?

They are very niche specific. This is key when starting an online store – you need to pick a market that is very unsaturated and has little competition.

Northern Parrots sells everything one needs to take care of a parrot. Now, while you might think that this is an unprofitable business, you’d be surprised at how many people go to the web looking for parrot supplies online.

By picking something specific, you have very little competition and therefore get more buyers on your site.

We covered picking a niche for dropshipping in a separate post because it’s a very crucial step, and should not be overlooked.

Conclusion:

The eCommerce market is predicted to increase 17% next year, opening multiple new opportunities for marketers to tap into drop shipping.

It is estimated that 44% of worldwide internet users have bought products online, and this figure is only rising.

Digital buyer penetration

In this post, we’ve covered the crucial steps to launch your dropshipping business, and some tips to make it easier along the way.

With all the tools and content available, it’s far from impossible for a brand new online store to be up and running within 1 day.

Do you prefer selling on your own store or on a platform like eBay? Why?

Gabriel St-Germain

Gabriel St-Germain

Canadian student/affiliate marketer who makes money online. He discovered internet marketing at the age of 16, and has been successful since then (within just 18 months of starting, he had already made over $100,000).
Gabriel St-Germain
  • Andy

    Great article. I’m gonna try to stick to this and hopefully it works.

  • michael fiatuho

    i have now understand what dropshipping is,thanks very much for your lectures….Is there no free drop shipping supplier websites out there? it seems i dont have money now to register the sites but very much interested in this dropshipping business

    • Hi Michael,

      Thanks for your comment. As far as I know, there’s no trustworthy drop shipping supplier that doesn’t require a monthly subscription. The suppliers I talked about in this article are probably your best bet.

      Thanks,
      Gabriel