Drop shipping is an popular business model for new entrepreneurs, especially gen Zers and millennials, due to internet marketing skills far outweighing financial capacity. Since you don’t need to inventory or handle the items you are selling, it’s possible to start a drop shipping business with limited funds.
An ecommerce website that operates on a drop shipping model purchases the items it sells from a third-party supplier or manufacturer, who then fulfills the order. This not only cuts operational costs, but it also saves your time to focus all of your efforts on customer acquisition.
If you are ready to start on a limited budget, then follow the six steps below. While it doesn’t take huge startup funds to launch a drop shipping business, it will require an huge amount of hard work.
1. Select a niche.
The niche you select needs to be something you are genuinely interested in and lesser-focused. If you are not passionate about the niche you select than you will be more apt to becoming discouraged, because it takes a lot of work to successfully running a drop shipping business.Please refer following poinnts before selecting niche:
- Seek for higher profits. When you are running a drop shipping business model, you focus only on marketing and customer acquisition, so the amount of work required to sell a $20 item is the as same as it would be to sell a $1,500 item.So Select a niche with higher-priced products to get attractive profits.
- Low shipping costs are very important. Even your supplier or manufacturer will handle the shipping, if the cost is too high, it will not attract customers. Find something that is inexpensive to ship than you also gives you the option of offering free shipping to your customers and absorbing that cost as a business expense in order to attract more sales.
- Make sure your product appeals to buyers with disposable income. When you are focused on driving traffic to your website, you have to experience the highest conversion rate possible because most visitors will never return. The products you are selling should trigger immedieate buys and appeal to those with the financial ability to make a purchase on the spot.
- Make sure people are actively searching for product that you plan to sell. Use Google’s Keyword Planner and Trends to look some common search terms related to your potential category. If nobody is searching for what you are planning on selling than you are dead in the water before you even begin.
- Create your own brand. Your drop shipping business will get more value if you can rebrand whatever it is you are selling and pass it off as your own brand. Look for a product or line you can white label and sell as your own brand with custom branding and packaging .
- Sell something that isn’t readily available locally. Pick something your customer can not find down the street. That will attract more customers towards you.
2. Perform competition research.
Remember you are competing with other drop shipping operations as well as retail giants such as Walmart,Amazon,ebay,etc. This is where a lot of drop shippers go wrong, because they look for a product that has no competition. That is a sign there is not much demand for that particular product.
There are many reason for why a product might not have a lot of competition may be there is high shipping costs for that product or supplier and manufacturing issues or poor profit margins.So look for products that have competition as it is a sign that there is a high demand and the business model is sustainable.
3. Secure a supplier.
Partnering with the wrong supplier can ruin your business.So it is important that you don’t skip this step. Conduct proper research on this. Most drop shipping suppliers are located overseas most likely in Chaina. Making proper communication extremely important, both in terms of response speed and the ability to understand each other. If you are not fully confident in the communication abilities of a potential supplier than move on and continue your search.
Alibaba has become world largest online resources to identify and communicate with potential manufacturers and suppliers. Make sure to ask a lot of questions to gave you idea and learn what their production capabilities are in the event that your business grows exponentially. You want to be confirm they have the ability to scale with you.
4. Build your ecommerce website.
The fastest way to launch a website that supports a drop shipping business model is to use a simple ecommerce platform like Shopify. You don’t need a technical knowledge to get up and running, and it has plenty of apps to help increase sales.
Even if you have a sizable budget that would allow you to hire a web design and development company to create a custom solution than also it’s a much wiser move to use platform like shopify, especially in the beginning. Once you are business is settled and the revenue is coming in, then you can explore additional website customization.
5. Create a customer acquisition plan.
Having a great product and a website is great but without customers attracts to buy, you don’t have a business. There are several ways to attract potential customers, but the most effective option is to start a Facebook or google ad campaign.
This allows you to create sales and revenue right from the beginning, which can contribute to quick scaling. Facebook and google allows you to place your offer directly in front of a highly targeted audience.
6. Analyze and optimize.
You need to focus on all of the data and metrics available to grow your business. This includes Google Analytics traffic and Facebook conversion pixel data, if your customers are mostly coming from your ads campaign.This data and matics gives you ability to track every single conversion and it will helps you to aquire new customers.