• What is Dropship Business? A Complete Guide for You

    What is Dropship Business A Complete Guide for You

    Dropshipping business is a great and popular entrepreneurial opportunity for many people to make money online.

    This article will share everything you need to know about the Dropshipping business.

    So, if you want to start a Dropshipping business, then you should read a comprehensive guide that offers all the details needed about this opportunity to make money online.

    In fact.

    Dropshipping has exploded in popularity over the past few years, and thousands of people around the world generate up to seven-digit dollars in revenue from Dropshipping.

    What is Dropshipping Business?

    What is Dropship Business? A Complete Guide for You
    pixabay.com | mohamed_hassan

    The Dropshipping business model offers you entrepreneurial opportunities where you can run an online store without the need to save any inventory.

    When sales are made, your supplier will send products from their warehouse and send them to your customers' doorstep.

    So.

    In the Dropshipping business, you don't need to care about storing, packaging, or shipping your product.

    Dropshipping business is different from traditional retail and e-Commerce businesses in the sense that retailers don't need to store items.

    Retailers transfer order details and customer shipments to other factories, traders or retailers, who then deliver goods to customers.

    Dropshipping business is very popular among traders because almost 33% of e-Commerce stores use Dropshipping as a method of fulfilling their sales targets.


    Also Read: What is Digital Marketing? A Complete Guide for You


    How does the Dropshipping Business Model Work?

    What is Dropship Business? A Complete Guide for You
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    The Dropshipping business model is easy to understand. This involves three key players:


    • Factory (supplier)
    • Retailer (you)
    • Customer
    Factories (suppliers) are responsible for creating products, managing inventory, delivering products to customers, replacing damaged products, and even repairing products.

    The factory sells products to retailers at wholesale prices and assumes the risk of inventory being sold.

    On the other hand, retailers (i.e., you) sell the manufacturer's products on the website with your own brand.

    They are responsible for choosing and marketing products.

    Plus, they handle customer questions and complaints.

    Finally, the Dropshipping business model involves customers who buy products directly from retailers (i.e. you).

    If there are questions or problems, customers contact the retailer from whom they have brought the product.

    Simply put, the Dropshipping business model works like this:

    1. The customer then buys items from your store at retail prices.
    2. Orders are then forwarded to the supplier. You must pay wholesale prices to your supplier.
    3. Suppliers send products to customers with your business name and even your address.
    So, Dropshipping requires minimal investment from the dropshipper because they don't need to buy and store bulk stocks.

    This eliminates the risk of buying large quantities that require large capital, and also avoids problems when you cannot sell all products.

    Why is Dropshipping a Good Business Idea?

    What is Dropship Business? A Complete Guide for You
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    Here, I have included a number of reasons why Dropshipping is a good business idea for new business people.

    You must start a Dropshipping business because this is a low-risk business model.

    Here, you only need to pay for the products you sell to sell to paying customers.

    In addition, you don't need to spend money on creating a product.

    You do not need to maintain inventory or ask that you pay employees for packaging and shipping products.

    Low entry fees make it a great entrepreneurial idea.

    Even though it takes time to do daily work to process orders, most of it is automatic and only requires a click of a button.


    Also Read: What is Online Business? A Simple Guide for You

    Here, I share several reasons why you should start Dropshipping:

    • This is an opportunity to "make money" that is profitable. This offers an opportunity to set your price. You have control over how much you can make. In addition, the more you actively market your business, the more likely it is to succeed.
    • Dropshipping offers you the opportunity to maximize your creativity. This can be very fun. You can take advantage of your new ideas.
    • At Dropshipping, manufacturers (suppliers) send products to your customers on your behalf. So, you don't need to pack everything yourself.
    • You don't need to carry inventory. You don't need to hold a product box either in your home or in a warehouse. So, you don't need to pay warehouse fees. You save a lot of money because there are no unsold inventory costs.
    • Dropshipping offers you the opportunity to build your own career. You can decide what work you do, and how you manage your day. Besides that, your boss is your only customer.
    Here, I give you some statistics that hopefully can give you enthusiasm for doing a Dropshipping business:

    • 33% of online retailers have used Dropshipping as their main business model.
    • There are as many as $14.2 billion of dropshipping products sold on Amazon in 2011 itself which constitutes 34% of products sold on Amazon.
    • Global e-Commerce sales reach USD 2.3 trillion.
    • In fact, Google Trends has shown a huge increase in interest in Dropshipping over the past few years.

    What Do You Need to Start a Dropshipping Business?


    There are only a few important things to start the Dropshipping business. These are as follows:

    • You will need products to sell.
    • Find the factory or supplier of that product.
    • Platform (like a website) for selling products.
    • Marketing.
    However, to make your Dropshipping business a success, you must have a positive attitude, a good work ethic, and a sincere commitment to your new business venture.


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    How to Start a Dropshipping Business

    What is Dropship Business? A Complete Guide for You
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    Here, I share with you the Dropshipping business plan. This is a step-by-step guide to starting a Dropshipping business.

    Step #1: Finalize Dropshipping Business Ideas


    First and foremost, you must complete and choose the best Dropshipping business idea.

    It's all about choosing a niche that you like.

    And, it must be profitable too.

    Some niches that might sound interesting to you include beauty, fashion, jewelry, fitness, technology, and backpacks.

    I need to emphasize here that your niche is important.

    So, spend a good time analyzing various Dropshipping and select business ideas that you like and that benefit you.

    And make sure you really understand the product.

    Here, I include some instructions that will prove useful to you when you choose your Dropshipping business idea:

    • You can use Google Trends to find out if the niche has a rising or falling trend.
    • Google Keyword Planner helps you find out your potential Dropshipping business ideas. For example, you can find out the search volume for the keyword you are about to use.
    • Social media is another viable channel for finding Dropshipping business ideas. For example, you can explore social media pages for top brands. You can find out how they market their brands.
    Here, I include some characteristics of the perfect Dropshipping product:

    • Big brands don't dominate good Dropshipping products. This means you have a greater chance of getting a portion of the market.
    • Small and light products. Usually, a good Dropshipping product must fit inside a shoe box. The weight must be less than 2 kg.
    • Good Dropshipping products must not be seasonal and sell out throughout the year.
    • Products must be sold in the range of $15 to $200. This price range is known as the "sweet spot" in the eCommerce world. Anything cheaper than $15 won't give you a lot of profit margins, and anything more than $200 will be difficult to sell. Even though there are exceptions to this rule, following it will facilitate your Dropshipping business trip.
    The guidelines above will help you to choose a good Dropshipping niche and have some product ideas that are considered feasible.

    If you have at least one product idea at this stage, you can continue reading this guide to the next level.

    Step #2: Find a Dropshipping Supplier


    In the Dropshipping business, suppliers are your most important business partners.

    So you need to find a reliable supplier who can maintain your product stock, uphold product quality, and ensure that orders are sent to your customers immediately and on time.

    Here, I include important features that you should pay attention to in dropship suppliers:

    • You need to make sure that the supplier can send the goods. In addition, you should know that not all product suppliers offer Dropshipping as a service.
    • Suppliers must have years of experience with Dropshipping. Dropshipping suppliers carry many responsibilities with Dropshipping. So, you need to make sure that dropship suppliers have experience & helpful staff so you can depend or rely on them at any time.
    • Dropship suppliers must charge a small fee for their services. Usually, the costs range from $2 to $5. If more than that, then you have to find another supplier.
    • Dropship suppliers must offer fast shipping so that your customers will get their items as soon as possible. You must check the shipping time to the countries you serve. Delivery time of one to two weeks can be received at Dropshipping. However, if they take more time out of it, then you should look for other suppliers because it can generate negative feedback from your customers.
    • You must request product samples and check the quality before committing to suppliers. Plus, suppliers must offer high-quality images that you can use in your product list.
    You can look for dropship suppliers online or use wholesale directories.

    Step #3: Select the Sales Platform


    After completing a product and lining up for suppliers, it's time for you to start selling and making money.

    However, you must choose the right sales platform to succeed in the Dropshipping business.

    Well, you can choose to sell on an established platform. You can also start your own online store.

    It's easy to start a dropship business with an established online marketplace like Amazon or eBay.

    You only need to create and manage an account and start selling.

    They already have a lot of traffic. In addition, consumers trust this platform.

    So, you can make money with this online market.

    However, this online market charges a fee for every sale you make.

    In addition, you must compete with other sellers on this platform.

    In addition, you have limited control regarding branding, customer service, product photography, etc.

    Amazon is considered the most popular online market for Dropshipping businesses.

    It has more than 300 million active users, more than 100,000 sellers generate more than $100,000 on Amazon.

    Sellers must pay around 15% of their selling price to Amazon.

    However, you can even start your own online store (How to make an online store).

    You can use online tools (like WooCommerce, Shopify and many more) to get started. You get complete control over branding, design, and layout.

    There are no fees to pay and higher profit margins for you.

    However, this method certainly requires time and a little money, but it also takes time to get a ranking on Google. Plus, you need to invest in SEO and marketing (digital marketing).

    Step #4: Implement a Customer Acquisition Strategy


    After you choose the sales platform for your Dropshipping business, it's time to attract customers to your store. This can be achieved by building and following a customer acquisition strategy.

    Customer acquisition is nothing but advertising and marketing to get new customers.

    Well, there are two approaches to customer acquisition:

    • Fast lane (paid)
    • Slow lane (free)
    Here, I show both methods of customer acquisition.

    Fast Lane (Paid, Paid Advertising)

    • You can advertise your product with Facebook ads to capture a large audience.
    • Use Google ads to advertise your product.
    • You can market social media influencers
    Slow Lane (Free Promotion)

    • Actively participate in blogs and forums related to your blog/niche.
    • You can do content marketing in the form of a blog on your store's website. You can even create YouTube Channels, Twitter posts, or Instagram posts. Content marketing serves your audience who can then be converted into customers.
    • You can capture followers by sharing amazing content on your social media channels.
    • Create an email list and reach out to a large group of people
    I have shared several strategies with you to attract customers. You can use a mixture of these strategies to develop your new dropship business.

    So, that is the step to start a Dropshipping business from the start to get success.


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    What are the Costs for Starting a Dropshipping Business?

    What is Dropship Business? A Complete Guide for You
    https://pixabay.com/images/id-1726618/
    The Dropshipping business model is one of the cheapest ways to sell goods online with very little capital.

    The minimum investment that you need to do to start a dropshipped online store is as follows (This is a fee you have to pay to start a Dropshipping business on a free open-source online store platform like WordPress):

    • Register for hosting - $3.92 / month (A2Hosting).
    • Install an online store (WooCommerce) - Free.
    • Register for an SSL Certificate - $1.50 / month.
    • Register for Credit Card Processors - costs 2 to 3% per transaction.
    • Buy a template for your website (Optional) - $25.
    If we add everything above, the cost of starting a Dropshipping business is between $5.45 and $30.45.

    If I consider the minimum cost, then $5.45 is not a big amount, isn't it?

    You can even use a fully hosted platform like Shopify where you don't need to handle settings, payment processing, security, etc.

    The cost of running a Dropshipping business on the Shopify platform:

    • Shopify: $29 / month.
    • The cost of purchasing templates for your website: $50 to $200.
    The best part of the Dropshipping business is that you can run it from anywhere. You only need to be connected to an Internet connection.

    Is Dropshipping Legal?

    Yes, Dropshipping is legal. This is a form of fulfillment of orders where suppliers handle shipments. So, there is nothing illegal about the dropship business.

    Is Dropshipping Beneficial?

    Yes, Dropshipping is profitable. Here, you only need to pay for the product you sell. You don't need to maintain inventory. The supplier handles the fulfillment of orders received. All you need to do is market and serve customers.

    How much can you get from Dropshipping?

    Here, I offer you a calculation that will make it easier for you to understand how much you can get from Dropshipping.

    For example, you get a product of $15 and sell it for $30. After deducting shipping costs and advertising costs, your actual profit for the product is $10.

    So, to make $10,000 per month, you have to sell 1000 products per month.

    • $10 x 1000 profit orders = $10,000 per month.
    • $10,000 per month x 12 = $120,000 per year.
    So you have to sell at least 34 orders/day.

    And Finally


    That's a glimpse of the way you can do in starting a dropshipping business.

    In the example above I gave a view of a dropshipping business using online stores such as Amazon and eBay.

    But basically the same in all online stores both international online stores and national online stores like Amazon, Alibaba, eBay, and others.

    All the steps above you can apply to all online stores that issue dropship features.

    And, that's all I can share in this article about the Dropshipping business.

    I hope you now have a clear understanding of the Dropshipping business.

    Good luck.
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