E-Commerce Seller Financing   •   December 9, 2019

If you are completely new to the e-commerce scene, starting a completely new e-commerce store may seem intimidating and incredibly risky, especially if you have a limited budget to fund your inventory. Therefore, you’re thinking about whether you should start a dropshipping business instead.

Dropshipping is one of the least challenging ways of getting started in the e-commerce industry, and after some online research you know that dropshipping isn’t dead. It’s as alive as ever, just a lot more competitive.

What Is Dropshipping?

Dropshipping is a form of e-commerce business model in which the retailer does not keep any products in their inventory. Instead, they operate an online store while a manufacturer or another third party handles the products. This third party handles the orders, packs, and ships them to the customers, alleviating the retailer from any worry about the products in their inventory, warehouse storage costs, shipping, importing, and more.

The third party retains a fraction of the product price while the retailer keeps the remaining amount.

With online selling platforms and marketplaces such as Amazon, eBay, Shopify, and similar, it is possible to start an e-commerce business with minimal investment.

Yet, that does not mean that you can sit back and relax while orders and revenue keep piling up. You need to be prepared to roll up your sleeves and work, even though you won’t be handling any physical products.

If that sounds like something you can commit to, let’s take a look at how you can start your own dropshipping business in 2020.

How to Start a Dropshipping Business

1. Find a Niche

First and foremost, decide what products you will be selling and what your e-commerce business’ niche will be. This will require you to do some online research.

Make sure to choose a niche that you personally are interested in or have some knowledge in. You’ll need to spend a decent amount of time working on starting and maintaining your dropshipping business, so it would benefit you if you had personal interest and knowledge in it.

For instance, if you are a male passionate about tools and cars, selling female beauty products may be completely foreign and uninteresting to you. However, if you are a mother, baby products or clothing are not only in demand but will also be something that you will be an expert in.

Choose a niche that is not too saturated as it will make it hard for you to break into it and attract buyers. Moreover, make sure that there is a demand for your products. Choosing products that need to be replaced, such as makeup or diapers, can be great to ensure that you get returning customers, too.

Another important aspect to consider is product price and shipping costs. Selling expensive products may result in a quick one-time income boost, but they can be in low demand, resulting in infrequent purchases. In addition to that, choose products that will be inexpensive to ship. Expensive shipping costs may deter people from ordering from you.

2. Find a Supplier

The quality of your products must be great and correspond to your price. Moreover, you should also take customer experience into consideration. Aspects such as speedy shipping can determine the reputation of your business.

Therefore, choosing a reliable supplier is paramount. Make sure to do thorough research and look through reviews. It may also be a good idea to order an example product to ensure that their quality is adequate and parameters correspond to the descriptions provided.

Having experienced the products yourself can also help you craft compelling descriptions that sell.

3. Choose a Selling Platform

Next, you should select a platform from which you will be selling your products. You can opt for your own website or marketplaces such as Amazon or eBay. It may be optimal for you to consider both as they can be beneficial for a variety of reasons.

While a website will require a higher initial investment and more time to set it up, the profits and branding will be fully in your control. You won’t have to pay a commission for each sale and won’t have to share a platform with your competition, which may at the start look more impressive than you. You will, however, need to work extra on getting people to notice your brand through marketing much as social media management, paid advertising, influencer marketing, and other means.

On the other hand, selling through marketplaces has its advantages too. Marketplaces such as Amazon, get plenty of traffic daily, meaning that you can potentially get many people looking at your products if you position yourself properly. You do need to be ready to pay fees for selling each item as well as have limited options when it comes to branding and advertising. You will also be selling right next to established competitors which can make it harder for you to get customer attention.

4. Market Your Business and Products

Buyers won’t come to your store if they don’t know about it. Therefore, you should actively market it to attract new and retain past customers. There are various options that you can consider. If you sell on marketplaces, you can look into the advertising options that these platforms offer. Yet, do not allow yourself to limit yourself with them only.

Consider building and maintaining your brand’s social media channels and invest in Facebook and Instagram ad campaigns. You can also attract influencers and take advantage of the platforms they have built to promote your products.

If you have built your own website, then Google Ads can be a great way to gain exposure and attract new customers.

Paid advertising can be challenging and tricky if you are just starting out. Therefore, to save yourself tons of trouble and wasted resources, you can consider hiring a reliable advertiser and ad manager.  It may cost you more upfront, but help you avoid a painful learning curve.

5. Manage Customer Service

Once your marketing strategy is in place and orders are coming in, you still need to keep actively working on your business. This includes answering your customer queries, e-mails, social media comments, and messages, as well as handle complaints, shipping issues, and order return requests.

Customer experience can make or break your business. Therefore, make sure to carefully handle customer requests, complaints, and issues.

Final Words before You Start a Dropshipping Business

The beginning state of your e-commerce can determine its course. Therefore, make sure that you carefully establish its foundations and take care of your customers in the best way possible.

Would you like to start a dropshipping business? What are the greatest challenges or problems that you foresee?