How does Dropshipping Work?
Are you looking for a profitable side hustle?
Would an extra $10,000 per month help?
It’s very possible if you choose dropshipping, but NOT your average social media dropshipping strategy people might try and sell you. Our approach is very different, but don’t worry, if you know us, you know we are going to cover it ALL in this article on how to become a dropshipper.
Let’s first cover:
What is Dropshipping?
Dropshipping is a low-risk business where a person sells items on their own website (we recommend Shopify) without keeping the products in stock.
The seller purchases the item from a 3rd party supplier and the supplier ships the product(s) directly to the customer. This cuts back on costs that a wholesaler would typically have, therefore lowering the price of the product and leaving space for increased profit.
Dropshipping is a great opportunity because you can start small and build your business at your own pace. You can also start with little upfront cost.
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Here are 7 Steps to Build a Successful Dropshipping Business
Step 1: Picking a Niche and Market that Will Profit
The first thing you need to decide is your niche. Market research is so important, you want to pick a niche that you know WILL bring in results. This is the MOST IMPORTANT part.
Using tools like Keywords Everywhere helps you identify what products people are searching for on Google, so it takes all the guesswork out. For example, if you were to search for “electric fireplace” using this tool it tells us that over 300,000 people search for this every single month on Google (these are just estimates), the average person would tell you, those won’t sell well, but that’s why we’re not asking the average person.
We let the data tell us what people are searching for. You want to try and find products that people purchase all year round, so you can create this massive empire that works on autopilot bringing you a steady income every single month.
When you are looking for products to sell you will want to focus on selling high-ticket products. The more you sell an item for, the more money in your pocket from EVERY sale. Ideally, you want to be listing products you can sell for $800 or more.
When it comes to choosing specific products you will also want to ask yourself: Is there a demand for the product? Is your audience looking for this item? Will this product fulfill a NEED for your audience?
It is also important to research how many brands are available for you to partner with. Are there many known brands that sell your product? (You want a list of at least 5, 10 is even better!)
STEP 2: Develop the Right Relationships with Domestic Suppliers to Dropship
First, you will need to think about what merchants you want to work with and if you’re in the US we recommend only working with US based suppliers. You will be selling their products on their behalf as the retailer. You will most likely be asked to sign an agreement with them.
It is important to focus on partnering with well-known brands that have a great reputation for selling high ticket items. High ticket items sell for over $800. Working with well known brands will prove they are reliable and established and will eliminate the question of how it’s priced.
You can also do a Google search for a product you are interested in selling. Go through the list of suppliers and contact them directly. You will want to stick to the retailers that come up on the first (after the sponsored) or second page of Google.
STEP 3: Set Up Your Storefront
After you know what high ticket items you will be selling, you’ll want to set up your site on Shopify (it’s what we recommend), you can use other platforms but this site has all the features you need to create a profitable high-ticket e-commerce store.
Step 4: Create Product Descriptions and Images
Ok, so now that you have your dropshipping site up and suppliers, you’ll want to start adding those products to your site. With the power of AI you can use tools like chatgpt to help you come up with descriptions for your products and make sure you include keywords that people might use if they are looking for those products on Google.
Remember to write descriptions in a language that appeals to YOUR specific audience. Be engaging and polished.
Include high-quality images. Get the pictures directly from your suppliers. You can also get pictures from customers’ reviews. You can optimize images on ShortPixel Image Optimizer for free. It is important that the images of your products portray that you are selling quality products and the buyer is purchasing from a quality site/seller.
Step 5: Getting People to Your Site that Already Want to Purchase
Now that you have your site up and products loaded, now it’s time to start driving traffic to your site. You’ll want to use Google Merchant to help you promote your products organically. This is ideal, it means that people can find your products for free using Google and you can make a sale without having to pay for any advertisements.
You will want to create ads to help drive traffic to your site because organic traffic in the beginning will just not be enough. There are many tutorials you can find on YouTube and Google on creating ads to drive traffic to your site.
Be sure to do your thorough research and measure the data. It’s important that you’ll start to get sales if you are paying for ads to drive traffic to your site. The only way this becomes profitable is if you are making more than you are spending.
Once you receive the order from the customer the first thing you need to do is contact your supplier and make sure they have it in stock. You will then want to process the payment. If you are using an e-commerce platform like Shopify, most have the option to process orders automatically for an extra cost. When you are getting many orders at once, this could be a huge advantage in assisting you to stay organized.
After you know the item is in stock, it is time to fulfill the order. Once the supplier gets the order they will charge you the wholesale price and shipping (and any other fees that might be associated with selling the item). You collect the money from your customer and you profit the difference that you owe the supplier. So, do you see how this all works?
Step 6: Supplier Ships the Order
The supplier then packages and ships the order directly to your customer. They will send you a tracking number so you can track and ensure that the item reaches your customer. You will want to make sure that your shipping times align with the supplier so that your customer is expecting the package at the correct time.
The order will arrive with your business name, address and logo. Once the package leaves the supplier, it is up to you to track it and make sure it arrives. This is another reason it is important to know your supplier’s shipping times.
You can try offering free shipping to entice the customer to purchase from you. You will want to add the price of shipping to the item price listed on your site so that you aren’t actually losing money on the sale.
Another thing you will want to keep in mind is returns. Some of your suppliers might not accept returned items or have a restocking fee. Do your research and align your return policies with your suppliers so you are not losing money on returns.
Step 7: Follow Up With Your Customer
After the customer receives the product you should follow up and ask for them to review the product. Customer reviews are a great way to give your products and brand instant credibility. It is also a way to get feedback and see ways to improve your products and services. This is FREE marketing!
Some other things to consider when setting up your dropshipping business:
1. What will you need to do to get your business set up and protect yourself?
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- LLC – This is something you’ll want to get assistance with if you don’t know what to do.
2. How will you set up payment gateways?
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- Paypal, Stripe and Google pay are some options you can look into. See what the terms are. What packages are available and what fees are charged.
3. Pricing items. You want to be competitive with your competitors so take a look at their pricing.
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- Remember, you need to price the item at least 20-30{6c4f10cab50a46b63425e915a3b32a252b20e15cfb3b21d076e7c5437b6ee37b} higher than the seller. You can always offer free shipping or a discount code to first time shoppers as an incentive to purchase from you.
4. Provide excellent customer service. This will create customer loyalty and increase the chances of future purchases.
Ok, so that covers it! What do you think? Now that you have all the information to get started do you think dropshipping is for you?
If you want to find even MORE work from home opportunities to make money, check out my article on 30 legitimate ways to make money from home.
Still looking? If you’re a mom, be sure to join our Unbound: More than just a Mom Facebook group where our goal is to help you earn a minimum of 6-figures per year! Click here to join.
