What is Dropshipping?

what is Dropshipping? step by step beginners guide

If you don’t know anything about What is dropshipping, don’t worry! This is a complete beginner’s guide. No experience needed.

Since you’re reading this right now, you probably can relate to one of these:

You’re exhausted by your 9-to-5 office job and you want some more flexibility in life.
You want to earn some extra money from the comfort of your couch (pants optional).
You dream of being your own boss, but you’re not sure where to start.

No matter what brought you here, this blog will tell you everything you need to know about how to start making sales with dropshipping.

Going through the series of blogs, you’ll know every single step you need to take to make money with your first online store.

👉But first, a very important note.

I’m going, to be honest with you right now. Dropshipping isn’t a piece of cake. It takes a lot of work. Most of the pro you’ll hear from failed on their first store (and second, and third…).

College students, office workers, stay-at-home parents, and even retirees can all take advantage of dropshipping. It doesn’t matter how old you are, where you live, or what experience you have.

How Dropshipping Works?

Dropshipping:

A business model that you can use to run your store without ever holding any inventory. When you make a sale, your supplier will ship your products from their warehouse, straight to your customer’s doorstep. You’ll never got to worry about storing, packaging, or shipping your products.

Here’s a quick breakdown of how dropshipping works, and how merchants make their money.

Your customer places an order on your Shopify website. Say the price is $200.
You forward that order to your supplier and pay them the wholesale price, say $150.
The supplier ships the merchandise on to your customer.
You get to keep that $50 profit to put in your piggy bank or reinvest in your store.

Simple, right?

📖E-COMMERCE DICTIONARY:

merchant: A person who owns a store and sells products to customers. In this blog, I use “merchant” to talk about a dropshipping store owner.
supplier: The companies and people who sell wholesale products to merchants. They hold the stock and ship it to your customers for you.
wholesale: When products are manufactured and sold in bulk. Because they’re made and sold in bulk, the supplier pays less to run their business. That’s why they can give you a big discount.

How Dropshipping works

Pros and Cons of Dropshipping

Before you dive into starting a business, you should understand what you’re up against. Here are some key advantages and disadvantages so you can weigh out if it’s the right choice for you.

Dropshipping Pros

1.Quick to start. You don’t even need any prior business experiences! If you take some time to learn the basics, you can get started fast and learn the rest as you go along. Because ordering and shipping of items are taken off your hands, you get more time to focus on marketing.

2.Room to grow. As you grow, your business model doesn’t have to change very much at all. You’ll have to put more work into sales and marketing, but your day-to-day will stay more or less the same. Your costs to grow won’t be huge either, and you can grow at your own pace.

3.Demands less money to start. You can start dropshipping with minimal investment because you don’t have to purchase inventory upfront. Even as your business grows, your costs will be fairly low – your expenses will be limited to marketing and website setup fees.

4.Flexible. This is one of its biggest benefits. Here, you are your own boss, your own rules, and work at your own pace. Again, because you don’t have to buy any inventory upfront, you can easily list new products whenever you want – you only need a laptop and Wi-Fi. Also, you can continually test and adapt until you find something that works – the business model gives you the flexibility to adjust strategies on the fly.

5.Simple to manage. Since the majority of dropshippers run their businesses solo, you can manage everything with little hassle. You can do everything all by yourself if you want to. Once you’ve found suppliers and gotten everything set up, you’re mostly responsible just for your online storefront, marketing, and customer service.

Dropshipping Cons

1.Low-profit margins. This is especially true when you’re selling competitive items. When you have lower competition, you’ll have better margins, but usually not crazy high. That’s why you’ll need to focus on getting a lot of sales to make a lot of profit.

2. You don’t have a lot of control. When it comes to stocking products, order fulfillment, and shipping, things are out of your hands entirely. You have to rely on your suppliers to do everything right and work seamlessly. You’ll also need to learn how to deal with issues as you go.

3. Customer service is tougher. To add to the point above, a lack of control makes it tough when you have customer complaints. You’ll have to take the blame for when the supplier does things wrong. But if you focus on keeping your customers happy, you should be able to manage in the long run.

4. Order processing can be hard. If you have more than one or two suppliers, things can get complicated. They might have different shipping options or different ways to process orders and bill you. That’s why I recommend starting with no more than three suppliers for your first try.

Dropshipping FAQs:

Let’s look at some frequently asked questions (FAQs) about dropshipping.

How long does it take for customers to get their order?

The delivery time depends on where your supplier’s warehouse is and where the customer’s house is. It might take several days or a few weeks, but the rule of thumb for most dropshippers is two to four weeks.

It also depends on the way the order is shipped. Most products have different shipping methods you can choose from, like epacket. We’ll cover this more in further blogs.

How much money does it cost to start?

One of the best things about dropshipping is that it doesn’t require much investment. But it’s important that you consider the basic costs:

Shopify subscription. After your free 14-day trial, a Basic plan is $29 a month plus a small transaction fee for each order.

Marketing budget. You can do your own marketing for very cheap, but if you plan to run Facebook Ads, you should have at least a few hundred dollars to spend.

Custom domain (optional). This is usually about $12 per year.

👉I also recommend setting aside part of your budget to order sample products. This will allow you to test the quality and potentially take your own photos.

What profit margins can I expect?

Your dropshipping profits will depend on these four things:

Product price. This is the cost price given to you by the supplier. Buying items at close to wholesale costs is a great way to improve your overall profit.
Shipping price. It refers to the cost incurred to get your products delivered to the customer’s doorstep. Options like EMS shipping can help you earn a higher profit.
Marketing costs. These are the expenses you’ll incur while promoting your products via Facebook ads, influencers, etc.
Price you charge/branding. This is the price you’ll charge after factoring in your product, shipping, and marketing costs. You can charge more for a product that’s branded as a premium.

How long does it take to make the first sale?

That depends on you. It can be your first day or after a month. It mostly depends on how much work you put in, the type of audience you’re targeting, whether those people actually like your products, and how much success your marketing activities have.

👉I’m sure you have a million more questions. But don’t worry, we’re going to cover everything you need to get started in this Blog.

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