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Baby Steps

Understanding Drop Shipping and Starting Your Own Online Business Today

Isha Mandloi

Get the lowdown on drop shipping and learn how to start your own business today!

Have you ever wanted to run your very own online retail store? It seems like the perfect job to many. You get to work from anywhere, on your own time, and also make a decent living doing so.

What if you could start doing that today?

With drop shipping, it’s possible and now as easy as ever. You can have a real business up and running within the next 24 hours - complete with everything you need to start making money.

That’s because with drop shipping, you won’t have to purchase or manufacture any inventory upfront, so most of the costs (and work) involved are removed from the equation. Essentially, all you’ll need to start your own store is to find viable products, and display them all in one place.

But first, let’s rewind a bit.

How does dropshipping work?

Drop shipping is a business model that differs from traditional retailers in how they fulfill orders. Basically, the typical drop shipping process would look like:

  1. Your customer orders an item from your store. You earn the retail price.
  2. You order the item from your supplier, using your customer’s delivery information. You pay at wholesale price.
  3. Your supplier ships the item directly to your customer.
The dropshipping model of ecommerce

You only need to purchase inventory as needed, which means only to fulfill orders as they come in. When a customer buys a product from you, you sell it to them at retail price, while paying your supplier the wholesale price. You pocket the difference and end up making money - or at least that’s the idea.

When it comes down to it, drop shipping is just reselling for a profit, except the products never actually go into your possession. Products ship directly from your suppliers to your customers - eliminating a lot of the work for you.

This is what makes drop shipping so easy to get into. It’s an ideal setup for people who might not have the resources required for more traditional business models.

Is dropshipping legal?

Yes. Drop shipping is completely legal. It might sound too good to be true, but rest assured, drop shipping is a legitimate way of running a business.

In fact, plenty of retailers, big and small, currently use drop shipping as their secondary, or even primary method of serving customers.

One thing though: It might be a good idea to register your business with your local government, especially if you plan grow it for the future. Some suppliers and marketplaces will require valid business documents and tax information before working with you, anyway, so it’s good to have those ready.

How do I start drop shipping?

So you’ve decided to start a drop shipping business. Now what?

You’ll need two things to get the ball rolling: Products and a storefront.

Finding Products

Before anything else, pick a niche. It helps to be specific. You want your customers to be able to find your store, and having a focused brand is the key to doing so. It also makes promoting your business a lot more cost-efficient, as you can more accurately target your desired market.

Once you’ve settled on a particular niche, start looking for products. You’ve got a lot of potential routes to take here. You can try to visit trade shows, search wholesale directories, and even scout what your competition has on hand. Ultimately, what you want to find are reputable suppliers your business can count on.

Sounds like an impossible task? Not at all, to be honest. These days, there’s plenty of great services you can sign up for that make it as easy as shopping online. With Spocket, it’s simply a matter of opening their catalog, picking products you like, then pushing them to your store with a click of a button.

Creating Your Store

With all your products ready, you’ll obviously need a place to display them all. You can try any of the big marketplaces out there, but we highly recommend launching your own website so that you can drop ship to your own business.

This gives you a ton of freedom on how you can run things. And it grants you the opportunity to build a real brand that people can relate to. You can effectively tell your brand’s story, highlight any worthy causes you support, and deliver more value to your customers this way.

And remember: It helps to put some real thought behind your store’s design and appearance. You’re asking for people’s money, so be credible and look the part.

Here’s a quick checklist of what you need to have for your store:

  • Reliable web hosting
  • Secure shopping cart and payment gateway
  • Navigable store catalog with all your products
  • Business identity and branding
  • Contact information and store policies

Promoting Your Business

Once everything’s set up and you’re ready to receive orders, you’ll want to start promoting your business. You need traffic to make sales, after all. Social media marketing and writing optimized content help a great deal, but to really drive up those numbers, you’ll want to invest in paid ads.

Ads provide excellent returns in terms of gaining exposure and building a loyal following, which ultimately stimulate more sales. There’s no one-size-fits-all solution, though. Try out different strategies, see which ones work, and adjust accordingly for your business.

Always continue to test things out. The great thing about drop shipping is that since you’re not buying any inventory upfront, you can switch products for practically zero cost. With any luck, you’ll eventually learn what works and start making consistent profits.

Final Thoughts

Drop shipping is a low-risk, low-entry business that anyone can get into. That means competition can get tough, so you’ll need the right set of skills and the discipline to push yourself if you want to succeed.

It’s not a surefire way to making money, either. It’s still a real business with correspondingly real demands and problems - and there will be quite a few, so be prepared.

The good news is that all of these issues can be addressed. Do your due diligence and brush up on your business and customer service skills. At Spocket, we love entrepreneurs! We are here to help you scale your store to the maximum and get the best out of your dropshipping experience.

The best part? Spocket works with platforms beyond Shopify--including WooCommerce. Checkout how Spocket fares as a WooCommerce plugin here: An In-Depth Spocket Review: Dropshipping Made Easy.

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Isha Mandloi

Isha is a content creator at Spocket. She is passionate about helping entrepreneurs build and scale their businesses. She creates insightful content focussed on ecommerce, marketing and growth.

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