dropshipping

Dropshipping, what is it? Complete guide to start your business

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It is true, we have all dreamed of becoming millionaires with an Internet business that is fun and does not involve much effort. Today this dream can become a reality with Dropshipping.

Dropshipping is a new form of online sales that minimizes operational risks and investment in inventory, and relieves the seller of the stress of managing their orders and shipments, outsourcing these activities to their suppliers. All you have to worry about is creating your website , choosing the right products and marketing.

Sounds good? Read on to find out what Dropshipping is, what its advantages and disadvantages are, how to start your business and more.

Learn about Dropshipping and how to start a business:

  1. What is Dropshipping
  2. How Dropshipping works
  3. Advantages and Disadvantages of Dropshipping
  4. How to start a dropshipping business
  5. Frequent questions
  6. Making your first sale with Dropshipping

  1. What is Dropshipping

Dropshipping (or triangulation of shipments in Spanish) is a type of retail business that allows you to sell products without the need to manage inventory, shortening the supply chain where your supplier sends the products directly to your customers.

Unlike the traditional retail model, Dropshipping removes the need for the seller to fill orders and invest in inventory. This allows you to start a business without the stress of producing, storing, and shipping products. But then, what do you do as a seller? Only the fun remains! It’s up to you to choose the products, create marketing campaigns and provide excellent customer service.

  1. How dropshipping works

In a nutshell, Dropshipping works like this:

  1. Choose the products. Whether you choose products from independent suppliers, or integrate a Dropshipping marketplace on your website. At Wix we work with apps like Modalyst (Dropshipping) and Printful (Print on Demand) that make it easy to integrate with your store.
  2. Import the products to your online store and set your prices. Remember that you have control over your profit margins.
  3. Accept your customers’ orders. Buyers make their purchases (and payments) in your online store.
  4. Forward purchase orders to your supplier. Add your customer’s shipping information, and pay the order to your provider on their behalf.
  5. Send and fulfill the order through your supplier. Your supplier ships the products directly to your customer’s address. You will receive a tracking number so you can update your client. If your supplier offers this option, you can even design the packaging of the products with your brand identity.

We already understood how the technical part of Dropshipping works, now we have to understand how the business model works. Like any other retail model, the business is to sell more expensive than what you buy. The difference with Dropshipping is that by outsourcing inventory and shipping, your profit margin is lower than the traditional model.

  1. Advantages and Disadvantages of Dropshipping

Now that you understand what Dropshipping is, it’s time to ask yourself, is Dropshipping the ideal model for you? Like everything, this model has its advantages and disadvantages, here we leave you the most important ones to consider:

Dropshipping Advantages

  • Create an online store ready to sell without inventory. With Dropshipping, filling your product catalog is easy. Choose the products, add payment options and set up your online store.
  • Expand your product catalogue. You don’t have to limit yourself to what fits in your stock or what you can make, the possibilities are endless.
  • Avoid initial investment in inventory. Production and storage costs are covered by the supplier. In this way, you can allocate your funds to create your website and promote it with marketing campaigns.
  • Manage your business from anywhere. By not having a warehouse, you can run your Dropshipping business from anywhere (as long as you have Internet access).
  • Test which products work and always stay up to date with new trends. By working with third-party products, you have the flexibility to change your inventory whenever necessary.

Disadvantages of Dropshipping

  • You cannot fully control the quality of your products. If you’re working with independent vendors, it’s a bit more difficult to minimize this risk. You can ensure that your vendors are trustworthy by working with Marketplaces like Modalyst or Printful .
  • Customer service can be more complex. Unless you really know the products you’re selling, you may get questions you don’t know how to answer. To avoid this problem, make sure you have a direct communication channel with your provider.
  • In case there are changes or returns, you will have to manage them. Depending on which providers you choose, you may have to handle refunds yourself.
  • Shipping costs will depend on where your provider is located. If your customers live far from where your products are manufactured or stored, shipping will be more expensive. This disadvantage can be used in your favor, think that if you are based in Spain, but your products are stored in the United States, you will have better shipping rates to offer customers who are in the United States or its surroundings.

  1. How to start a Dropshipping business

Convinced that Dropshipping is for you? These are the steps to follow to set up your eCommerce business:

  1. Create your online store

The first step to start your Dropshipping business is to create an online store. How do you create an online store? It’s very simple, start by choosing an ecommerce template and customize it with your colors and information.

Then register a unique domain where your customers can easily find you. The domain is the web address where your site will be published. Choose a name that is easy to remember and represents your business.

Are you new to creating web pages? Check out this detailed guide on How to Create an Online Store .

  1. Choose the products you want to sell

With hundreds of categories and millions of products to choose from, it can be difficult to define a catalog. Start by defining your market niche , by selling niche products it is easier to direct marketing efforts to a specific market. Remember: specific does not mean small; your niche can be anything from baby products to collectible figures.

Use tools like Google Trends and explore the best-selling products on marketplaces to learn about the interests of your potential customers. Understand what they want to buy, find a supplier and start selling.

Trending products can be especially profitable, do your homework and find hot products. As long as you sell through Dropshipping, you don’t have to worry about buying extra inventory, and if the trend happens, just change the products in your catalog and that’s it.

  1. Find a provider

Finding good Dropshipping providers is a painstaking task. If you want to work with independent producers, you can Google them. Remember to approach producers who seem trustworthy and look for reviews of other sellers to help you decide whether to work with them.

An alternative is to sell products with your design through a Print on Demand model (or print on demand). This model is a form of Dropshipping where the supplier prints your logo or your designs on different products, and in the same way, he is in charge of supplying and sending the orders to your clients. Learn more about this model with our How to Start a Print on Demand Business guide .

  1. Add the products to your online store

Add and edit the details of the products in your catalog. Create pages for each one with a detailed description and high-quality photos or videos (if you can find photos that match your corporate identity, even better!).

Add prices and shipping details. Think about your profit margin: when setting the price for each product, do not forget to take into account the cost of this and shipping. Find the balance where your prices are accessible, and generate a profit.

Help visitors find exactly what they’re looking for by thinking like them. Take a look at your online store from the eyes of your customers and think about their user experience. Create filters and product categories to make it easier for them to navigate.

  1. Promote your business

Once your website is ready, it’s time to find your customers! Reach thousands of people by implementing a marketing plan that is specific to your niche market. Do not forget these five elements to increase traffic in your online store :

  • Branding : Use a consistent design on your page that conveys your brand identity. Create a logo that is easy to remember. Always write with the same tone of voice and style.
  • SEO (Search Engine Optimization) : Using the right keywords in product descriptions and on your site in general helps make it easier for customers to find you.
  • Email Marketing Campaigns : Stay in the mind of your customers through email campaigns, give them incentives to buy such as discounts and promotions.
  • Social networks : Help yourself with campaigns on social networks to reach new customers. Share posts with photos of your products, videos, and even testimonials from other users.
  • Paid advertising : Reach new users with paid advertising campaigns on Google, Facebook or Instagram.

  1. Frequently Asked Questions about Dropshipping

We are sure that you have many questions related to Dropshipping, here we answer the most frequent ones:

Is Dropshipping legal?

Dropshipping is completely legal, in short you are selling products on behalf of a third party with their approval. As with any business, it is important that you are up to date with the tax policies of your country.

How do you generate profits with Dropshipping?

As a Dropshipping seller, your profit is the difference between your costs and your income. Consider all expenses when making this calculation (and not just the cost of the product itself). For example, consider the investment in marketing that you are going to have to make.

The key to success in doing a Dropshipping business? Make sure you are competitive, both in price and quality. Choose products and prices that make a profit, but that your customers prefer to buy from you and not from your competitors.

How much does Dropshipping cost?

There are three main costs to consider in answering this question:

  • The price of your online store platform : Between $17 and $35 USD per month with Wix.
  • Your domain website : Between $5 and $20 per year, depending on the domain you choose. With Wix your domain is free for the first year when hiring a Business and eCommerce plan.
  • Your marketing campaigns : This depends a lot on your strategy, on Facebook and Instagram you can run campaigns with just a few US dollars a month, or you can invest thousands of dollars in campaigns. All Wix Business and eCommerce plans include professional marketing tools.

Is it worth opening a Dropshipping business today?

This will depend 100% on you. By starting a Dropshipping business you minimize risk and do not commit to starting inventory. This gives you a huge advantage when trying new markets, at best you start a successful business, at worst it was a lesson learned.

Be sure to do some market research when choosing your products, do your best marketing effort, and review the pros and cons we talked about earlier.

  1. Making your first Dropshipping sale

Congratulations! You have received your first purchase order. Whats Next?

Once you have received your first order, you must send the information to the supplier and pay for the item(s) in the order. Once you do, the supplier should ship the product directly to your customer.

Many suppliers ship the products without labels, which is ideal so that your customers do not confuse you with your supplier. Others give you the option to customize the packaging design, which is even better since they give you the opportunity to create branding on the packaging, which will help you build your brand and look even more professional.

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