Drop shipping: What It Is, How It Works, and How to Start a Business
Updated: Sep 3, 2022
If you've been thinking about starting an online business, Drop shipping is a great way, to begin with, a bit of up-front investment. You may have heard the term thrown around, but what is Drop shipping exactly? How does Drop shipping work? And how can you start a Drop shipping business? In this post, I'll answer all those questions and more!
Drop shipping is a business model in which eCommerce entrepreneurs sell products without carrying any inventory. When a store owner receives an order from a customer, they simply contact the supplier, then ship the products directly to the customer's door. Drop shipping apps like Oberlo let you add products from various suppliers into your shop to fuel your product offering.
Drop shipping is the perfect business model for new eCommerce entrepreneurs. It's simple to set up and manage, and it doesn't require a significant up-front investment. You can also run your Drop shipping business in your spare time – you don't need to quit your job to start a successful store. Plus, you can apply several Drop shipping tips to drive traffic to your store.
How Does Drop shipping Work?
As I mentioned earlier, Drop shipping is a business model in which eCommerce entrepreneurs sell products without carrying any inventory. When a store owner receives an order from a customer, they simply contact the supplier, then ship the products directly to the customer's door. Drop shipping apps like Oberlo let you add products from various suppliers into your shop to fuel your product offering.
Because you're not responsible for any inventory, Drop shipping reduces the amount of time you need to spend on managing and ordering products. This system is perfect for new eCommerce entrepreneurs who don't have the financial resources or space to invest in inventory. When you Dropship, you'll never need to worry about excess inventory, as you'll only ever order the necessary amount of products to meet the demand from your customers.
The Pros and Cons of Drop shipping
Drop shipping is a cost-effective way to start your own business, and it's been growing in popularity over the past few years. However, there are some disadvantages to consider before starting a Drop shipping business.
One of the most significant drawbacks of Drop shipping is that it's challenging to scale up your business. When you're starting, you'll likely be dealing with fewer orders than if you were shipping products yourself. This means that you'll need to find a way to attract more customers if you want to grow your business.
Another disadvantage of Drop shipping is the lack of control over your inventory. Because you're not storing any products yourself, you're at the mercy of your supplier when it comes to stock levels and product availability. If your supplier runs out of stock, you may be forced to wait for new products to arrive or miss out on sales opportunities. You also won't build a relationship with your customers, as they'll be buying from your supplier instead.
How to Start a Drop shipping Business
So, now that you know what Drop shipping is and how it works let's look at how you can start a Drop shipping business!
The first step is to find a Drop shipping supplier. You can search for suppliers on Oberlo or use a platform like AliExpress to source products. When you find a supplier, you'll need to contact them and ask if they're willing to Dropship products for you.
If the supplier agrees, they'll give you a list of available products for Drop shipping. You'll need to create an account with either Shopify or Woo Commerce to set up your store. Both platforms are free to use, and they both have built-in Drop shipping features that make it easy to get started.
Next, add products from your supplier's catalog into your store. Because you don't need to worry about inventory, you can add as many products as you like. However, it's essential to make sure that you don't add too many products, as this could overwhelm your customers and make it difficult for them to find what they're looking for.
When you've added all of the products from your supplier's catalog, it's time to create a payment processor account. You can use PayPal or Stripe to process payments from your customers.
Tips for Making Your Drop shipping Business Successful
Now that you know how to start a Drop shipping business, it's time to learn how to make it successful. Here are a few tips to help you get started:
- Start by choosing a niche market that you're interested in and knowledgeable about. This will help you attract customers interested in what you have to offer.
- Create attractive product listings with high-quality images and detailed descriptions. This will help your products stand out from the competition.
- Drive traffic to your store by using effective marketing strategies like SEO, social media, and paid advertising.
FAQs About Drop shipping
Q: What is Drop shipping?
A: Drop shipping is a business model where eCommerce entrepreneurs sell products without carrying inventory. When a store owner receives an order from a customer, they simply contact their supplier, then ship the products directly to the customer's door.
Q: How does Drop shipping work?
A: Drop shipping is a supply chain management technique in which eCommerce entrepreneurs sell products without carrying any inventory themselves. When a store owner receives an order from a customer, they simply contact their supplier, then ship the products directly to the customer's door.
Q: What are the benefits of Drop shipping?
A: Drop shipping has several benefits, including low startup costs, the ability to test new products before investing in inventory, and minimal risk if things go wrong. It also allows entrepreneurs to run their businesses from anywhere in the world.
Q: What are the drawbacks of Drop shipping?
A: Drop shipping does have some drawbacks, including the fact that it's challenging to scale a business up and that there's a higher risk of product shortages. It also can be challenging to build a brand around your products.
Q: How do I start a Drop shipping business?
A: The first step is to find a Drop shipping supplier. You can search for suppliers on Oberlo or use a platform like AliExpress to source products. When you find a supplier, you'll need to contact them and ask if they're willing to Dropship products for you. If the supplier agrees, they'll give you a list of available products for Drop shipping. You'll need to create an account with either Shopify or WooCommerce to set up your store. Both platforms have built-in Drop shipping features that make it easy to get started.
Next, add products from your supplier's catalog into your store. Because you don't need to worry about inventory, you can add as many products as you like. However, it's essential to make sure that you don't add too many products, as this could overwhelm your customers and make it difficult for them to find what they're looking for.
When you've added all of the products from your supplier's catalog, it's time to create a payment processor account. You can use PayPal or Stripe to process payments from your customers.
The final step is to set up shipping. You can either ship the products yourself or use a Drop shipping service like Oberlo Supply.
Q: What are the best marketing strategies for Drop shipping?
A: There are several effective marketing strategies that you can use for Drop shipping, including SEO, social media, and paid advertising. However, the most important thing is to find out what works best for your business and stick with it. Try different tactics and see which ones generate the most results, then focus on those methods moving forward.
Q: What are the biggest challenges I'll face when Drop shipping?
A: The most significant challenges you'll face when Drop shipping is finding quality products and dealing with product shortages. It's important to find high-quality products from reputable suppliers, and it's also essential to plan for potential product shortages. You can use inventory management tools to help you track stock levels and prevent deficiencies.
Q: How can I make my Drop shipping business successful?
A: To make your Drop shipping business successful, you'll need to focus on providing excellent customer service and maintaining a positive relationship with your customers. You should also make sure that you're constantly optimizing your store so that it's easier for customers to find what they're looking for. And finally, you'll need to make sure that you're reinvesting some of your profits back into your business so that you can continue to grow and scale. Drop shipping is a great way to start an online business with little up-front investment, and it's a business model that can be successful for entrepreneurs of all levels of experience.