Dropshippers are companies that most often sell products wholesale to various stores and provide shipping. All of the inventory is maintained by the dropshipping company. Many dropshippers will provide white-label shipping so the products are represented as your own.
Every year dropshipping is gaining more and more popularity with e-commerce stores. Why? You do not have to physically have the products that appear in the online store, because they come to the customer directly from the wholesaler with which you have concluded the contract, and you only need a minimal own contribution and a website with an online store in this model – these are indeed good reasons for opening such a business. Check how to start running a shop in the dropshipping model step by step.
Time needed: 7 days
How dropshipping works
- Dropshipper maintains inventory and distribution
The dropshipping company usually through a warehouse will have the actual supply of products ready to ship.
- Dropshipper offers wholesale accounts
In most cases, the dropshipping company will have a set of rules in place and require a reseller to complete an application process. The dropshipping company will provide the tools and information a reseller will need to know about the products.
- Approved reseller sets up a channel for selling
This is usually done through an e-commerce website.
- Reseller sells at retail
The reseller sells the product to one of their customers at retail price.
- Reseller places an order
The reseller pays the dropshipping company wholesale price plus shipping cost and provides the ship-to address of the customer that made the purchase.
- Dropshipper ships
Once paid the dropshipping company takes care of all shipping to the seller’s customer. In most cases, the dropshipper will have a returns policy in place that the seller has to follow.
- Shipping time
From the time to the order being placed to delivery generally takes 1 week.
- Profits and accounting
Both the dropshipper and the reseller maintain their own profit margins, and bookkeeping and act independently of each other as companies.
First steps in the dropshipping model
The dropshipping model is primarily an easy way to open your own online business. You save time, in addition, you do not need a lot of money, and the possibility of integration with wholesalers allows you to increase the range to a significant extent.
What is dropshipping?
The dropshipping store operates mainly on the basis of the so-called long tail, i.e. you sell goods that you do not have in stock. You send the goods directly from the warehouse with which you have signed a contract, so you do not have to have a warehouse or waste the time needed to prepare, send, and ship orders. The only thing you need to focus on in this situation is advertising, which will get you a large number of orders.
First steps, or how to start dropshipping?
To get started, you first need to define what you want to sell, but it’s worth emphasizing that dropshipping allows you to sell virtually any type of product. However, it is better to choose products that are not very competitive on the market, are easy to sell, and will not generate returns. Smaller products, even in the case of a complaint, will not generate such problems as large products, which take up much more space in a dropshipping warehouse.
For example:
If you choose dropshipping of large household appliances then perhaps the profit will be significant, but you will also need large warehouse space and possible space in your private area if there are any complaints that come to you, not to the wholesalers. Also, check which goods are returned most often. For example, shoes are a product with relatively frequent complaints, just like clothes.
An additional advantage of dropshipping is that you don’t need a business to start your business at first. Therefore, you do not have to pay registration fees. Without registering your business, you can accumulate earnings up to half the minimum wage/year. Company registration is required above this amount. You need to check with your local and state governments to confirm the exact requirements.
However, you have to pay tax on earnings to the IRS. The settlement with the IRS is subject to the margin you impose on the sale of the selected product in your online store, e.g. you pay a wholesaler for an order of $500, while a customer in your store buys this product for $650, i.e. you imposed a margin of $150. The $150 is the taxable amount. Remember that in the case of unregistered activities, not every wholesaler will agree to cooperate with you. Many require you have a registered business license while others are happy to set up your soul owner account with only a SSN.
If you are interested in running an online store based on the dropshipping model, we invite you to take a look at our eCommerce offerings.
Building an online store is the next step to success in dropshipping
To create a business in this model, it is necessary to have your own online store. The easiest solution is to let Glenn Website Design build your e-commerce shop. Then you do not have to worry about the process of creating an online store or the issue of integration with a wholesaler. Such services come complete with a ready online store that allows you to modify and input new products through CMS, (Content Management System).
Cooperation with the selected wholesaler is the next step
When starting cooperation with a given wholesaler, you will probably not be able to count on large discounts. Wholesalers adjust prices individually to each company. The more customers you get, the more you can count on higher discounts over time. So how do you start dropshipping? Startup companies usually significantly lower the imposed margin to attract customers. Also, remember to always carefully read the terms and conditions offered by a given wholesaler before signing a cooperation agreement.
Integration with a selected wholesaler
By connecting your online store with a selected wholesaler, you can immediately sell the entire assortment of a given wholesaler. The import includes all selected data prepared for export, such as titles, descriptions, prices (you add your markup to them), and photos. Products are imported to the store automatically, you do not need to create descriptions or manually photograph each product. The dropshipping model saves a lot of time as well as money.
By creating a store from scratch (without importing products) you need a graphic designer, photographer, copywriter, and a person who will add all these products and information to your store, which initially generates huge costs. Integration with a selected wholesaler allows you to avoid these fees, you earn on the same margin, but thanks to this you avoid the initial investment in the store. Product data (prices, descriptions, stock status) are updated automatically, so you don’t waste time manually updating many thousands of products. With our eCommerce website, you can integrate with a selected wholesaler that we support or with a selected wholesaler for which we will then create an individual integration system, however, the wholesaler must provide a file with products ready for import.
Positioning and promotion in the media
With such a comprehensive system as e-commerce software with warehouse integration, your main task is to acquire customers, and in order to acquire them, it is necessary to promote your store. Promotional activities on the Internet can be divided into:
Paid search – sponsored links, you can see them at the very top of the search results. These are paid activities. Their result depends on the CPC quotient (declared amount per click) and the quality of your ad (determined by Google). A higher product places the page in a higher position. They can appear on the first page of Google search results in a variety of places: in addition to organic (organic) search results, for Shopping ads; over organic search results (limited to 4 text ads); under organic search results (limited to 3 text ads)
SEO (positioning) – is used to improve the visibility of the website in Google search results. These are free activities, the so-called organic. Positioning activities include: adjusting the content contained in the title tag, selecting the appropriate headers, assigning alternative text to graphics and other objects, correctly arranging elements on the page, such as menu content, shortening the page loading time, preparing internal texts on the page for SEO and matching existing ones, sharing from social media, photos, videos and more.
Promotion of the website in social media – paid activities on Facebook, Instagram, Linkedin, and other social media channels
Using the help of famous influencers – promoting your products and brand with famous people is a very effective way to attract new customers. People follow their “idols” and believe in their opinion about the chosen product. The choice of an influencer depends on your budget. If you do not have large funds allocated for advertising, then you can choose an influencer who is less known, but his audience is a group that coincides with your target group.
After reading the article ” Dropshipping – how to get started, or dropshipping step by step!” “You’ve probably already convinced yourself to run an online store in this model. It is one of the simpler forms of online sales if you want to have your own online store. You will not only use it to sell proprietary products but you are left with a wide range of products that already exist on the market and whose sales you can mediate. You do not need a large investment to start, you also do not need time to build a store from scratch or programming knowledge. The only thing you need is willingness, your own brand of the store and good advertising is a simple way to succeed at a minimal cost.