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Quick Guide on “How to Start a Dropshipping Business in 2020?”

Realizing the scope of Dropshipping business in the eCommerce world, we felt the need to come up with a crystal clear guide on How to Start a Dropshipping Business in 2020? and hence, this blog. So, let’s get started straight away.

1) What does DropShipping mean?

[Source: https://www.chinabrands.com]

Dropshipping refers to listing products of a supplier on an online platform (eCommerce store/Marketplace), receiving orders for those products and fulfilling the orders with the help of a supplier (Wholesaler or Manufacturer). To know how to start a dropshipping business in 2020 stay tuned till the end.

DropShipping, as a business, is owner-friendly for the following Pros that it offers:

i) Easy to begin:

DropShipping saves you from the task of having a warehouse, managing inventory, handling refunds and shipping orders. Thus, all you need is an online platform to display products and receive orders.

ii) No stress of inventory:

As a dropshipper, you manage your stocks from a Product Source supplier. Thus, you do not have to worry about the number of your products.

iii) Location-friendly:

To run a successful web store where you can Dropship your products, all you need is an internet connection on your device from where you can easily communicate with your clients and potential customers.

iv) Easy to scale:

In the DropShipping business, you do not have to scare yourself away from the growing demands as the supplier is there to take care of them. Thus, the chances for you to increase your business increase manifolds.

v) Wide Variety:

Being a DropShipper, you do not have to have the products in stock before displaying them on your selling platform. Hence, you can have a wide variety of products on the platform you sell. The display products are provided by the Dropshipper.

2) How DropShipping works?

[Source: https://www.chinabrands.com]

In the Dropshipping business, a vendor receives the order on an online platform (a marketplace or an online store). Further, he conveys the order to the supplier, who then fulfills it to the customer directly. The dropshipper majorly spends his earnings on marketing advertising and managing their online presence.

3)DropShipping statistics: Is a DropShipping business worth your time?

If you are just starting out as a Dropshipper, then your concern about dropshipping being worth your time and effort is understandable.

For a beginner, the following statistics are sure to provide decisive insight:

1) In the year 2016-17, around 23 % of all online sales which yielded $85.1, were made via. Dropshipping.

2) In 2011, Amazon made 34% of its sales via dropshipping.

(Source: https://www.adamenfroy.com/dropshipping)

4) How to start a DropShipping business in 2020?

The future scope of the DropShipping business makes us want to help the ones who are starting and setting up their eCommerce business.

a) Find a niche for yourself:

Become a nerd to search enough and be analytical to select a niche for yourself.

You must consider the following points while choosing a niche that not only caters to your passion but also proves out to be profitable:

Identify your interests and passion-

Recognize what you can do all day long without getting bored or something you can do even if you get no money out of it. Most of us, by the analysis of the demographics of the site of our readers, I can say by now would have come to terms with their passion. Isn’t it?

Identify the problems you can solve-

You need to figure out what change in the society can be brought by your business. Unless you and your business solve a problem, the scope for growth will always seem vague. Solving a problem can help you get connected to a large number of people, forever as they will start looking up to you for help.

Research your competitors-

Get to know your competitors. The best way to go about this is to find the trending keywords related to your business. When you place the keyword in the Google Search Bar, you will see the webpages from your competitors. Analyzing these pages will give you a general picture of your industry.

Having a track of your competitors is important for you to determine your strategies and whether or not you stand a chance to be them (clearly depends on the domain authority of their site and the number of loyal customers they have earned in all these years).

Analyze scalability-

“Nobody does business for time-pass.” Therefore, you have to choose a niche, in which there is a scope for you to grow. Leave no stone untouched while you conduct market research for your niche. The lesser the competition, the greater the chance for you to scale up. But, make sure you do not be the winner only amongst the small businesses.

b) Choose a DropShip supplier-

This is one of the essential processes when you are starting out as a dropshipper. There can be various ways to go about this. You can seek help from various directories available online. These directories include the details of the suppliers that can drop ship products for you.

A few of these dictionaries can charge a feasible amount on account of the data it has.

c) Avail a Sales Tax id or EIN:

If you want to dropship in the US, you need to register with the IRS (Internal Revenue Service) to get a unique EIN (Employer Identification Number). Apart from this, you can request for a Sales Tax id from your country’s tax department. Such practices help you legalize your business.

d) Choose a platform:

In order to start as a dropshipper, you need to have a platform where you can display your products and receive orders. Either you can start with an Online Marketplace or build your own online store.

Starting out on a Marketplace: This is the easiest way to begin your Dropshipping business. Dropshipping on leading Marketplaces like Amazon and eBay can help you in many ways.

But, as we always believe in introducing our readers with both sides of the coin, we would like to bring the Pros & Cons of starting a dropshipping business on the table:

Pros of dropshipping on a Marketplace:

Easy to begin:

Most of the credible marketplaces like eBay and Amazon have a very simple registration process for dropshippers. Create an account, add a listing and you’re in business.

Exposure to a larger audience:

Marketplaces like eBay and Amazon have been in the market for a long time, thus they have earned the trust of a lot of buyers. For eg: eBay had 183 million buyers in 2019. Thus, you get a chance to display your products to a wider audience.

Less customer acquisition cost:

As the Marketplaces provide a wider audience, you do not have to market a lot to gain traffic. Thus, you save a lot of money due to curtailed marketing costs.

Cons of dropshipping on a Marketplace:

Listing fees:

Most of the popular Marketplaces charge 10 % – 15% on each listing that a seller does. Thus, you end up gaining a lesser profit than you could have actually earned.

Zero to less personalization:

Marketplaces largely focus on the “products” than promoting a particular merchant. Most of the marketplaces even don’t provide for a direct means of communication between a seller and his customers. Thus, a long-term business cannot be brought into the picture with the “Dropshipping on Marketplace” model.

With Marketplaces like eBay that additionally have auction listing method, you need to follow pre-defined templates (Business, Shipping & Return policy), the control over your listings get even reduced.

Dropshipping on an online store:

If you want to go far with your DropShipping business, starting out on an online store is the best option for you to go with.

It’s time to discover the Pros and Cons with this type of Dropshipping model:

Pros of dropshipping on an online store:

More Personalization:

While dropshipping on an online store, one has complete control over his listings and everything. Thus, the dropshipper experiences a controlled selling process.

Simple Design:

When you have your own online store, you can design it the way you want. You can choose and go for a user-friendly design that simplifies your listing process.

No listing fee:

When you dropship on an online store say for eg: you dropship on Shopify, you do not have to pay any fee for the listing and displaying your products to your store’s visitors.

Cons of selling on an online store:

Less free traffic:

Unlike the Marketplaces, there is no pre-built traffic for you to exhibit your products. Thus you have to build your audience from scratch.

e) Implement a strategy to increase conversions

If you have your Dropshipping business set-up, then you need to have some strategies to increase your conversion rate.

Use High-Quality Images:

Make sure the images you choose are the high-resolution images so that you can give your customers a clear glimpse into the products available for dropshipping.

Optimized Product Description:

The description of your products must include some keywords and should be catchy The keywords will help your pages in the Search Engine Page Results (SERPs) and the attractive language will cause your audience to stick to your webpages and get converted into customers.

Run promotional shipping offers:

A major part of the online audience looks for the offers that save them some bucks. Therefore, consider running offers (for eg: free shipping on some profitable goods) that connect you to more people.

Add trust factor to your sites:

When a visitor reaches your site, he must have access to something that can refrain him from being sorry from wasting his time on browsing your products. To suffice the purpose, you can ask your customers to add reviews beneath your products. If you dropship on an online store, you can even put the customer reviews on Google (Google Business).

Offer exceptional support:

Be there for your customers. When any of your customers or potential leads get stuck anywhere during the course of his consumer journey with you, make sure that you are there to help him through. This will again cause the customer to have unshakable trust upon you.

Listen to our Spotify Podcast for emerging trends shaping the eCommerce in 2020!

Conclusion:

If you are planning to start a dropshipping business then you must be well-versed with all the essentials for the same. From selecting a passion-driven and profitable niche to marketing your products, you must focus on everything to have a successful dropshipping business.

Happy Dropshipping!