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Dropshipping Shop 2021: The comprehensive guide
Starting a dropshipping shop is a great first step into the world of entrepreneurship. This will enable you to sell products to customers, set your individual product prices and market your very own brand. You don't have to keep an inventory, you only order a product after a customer has bought it from you. If you are willing to put in the work, you can use this model to build a successful brand.
And if you're not sure whether to actually start a dropshipping business, it might help to know that e-commerce sales were nearly $ 3.5 trillion worldwide in 2020. If worldwide e-commerce statistics are any indication of the industry's boom, starting an online business is an increasingly lucrative option.
In this article you will learn how to set up and launch a dropshipping shop. We explain what a dropshipping shop is, how to find the right dropshipping business ideas and everything else you need to know to start your online business.
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What is a dropshipping shop?
Dropshipping is a business model that allows you to run your shop without ever having to build your own inventory. Once you've made a sale, your supplier will deliver your products from their warehouse straight to your customers' doorstep. You don't have to worry about storing, packing or shipping your products.
How does the dropshipping business model work?
There are three main players in the dropshipping business model: the manufacturer, the retailer (that's you), and the customer.
The manufacturer's role includes making products, maintaining inventory, shipping products to customers on behalf of the retailer, replacing defective products, and restocking. You sell products to the retailer at wholesale prices, taking the risk of unsold inventory in the process.
In the dropshipping business model, the retailer (you) sells the manufacturer's products under his own brand on his website. You are responsible for the selection and marketing of these products. You are also responsible for their shipping costs and set prices that will bring you a profit.
After all, in the dropshipping business model, customers buy the products directly from you, the retailer. If you have any questions or problems, please contact the retailer from whom you purchased the product.
How profitable is dropshipping?
This is a dropshipping question we hear a lot. Dropshipping can be a very profitable business model because you don't have to pay any manufacturing or shipping costs. This means that profits can be made relatively quickly if you have found the right suppliers with Oberlo. You can use our dedicated profit margin tool to calculate your profit to make sure you are on the right track.
Why is starting a dropshipping shop a good idea?
A dropshipping shop is a low risk business model. In terms of entry costs, you only pay for products that you sell to paying customers. You will not be charged with the costs of manufacturing products, maintaining inventory, maintaining unsold inventory, and packaging and shipping costs.
It's an ideal introduction to entrepreneurship as you can build your dropshipping shop during your evenings and weekends. When it comes to processing orders, you probably need to invest some time every day. However, most of the order processing steps are automated and only require the push of a button. The possibilities in dropshipping are endless, all you have to do is take the first step.
Can you make money from dropshipping?
Yes, you can make money dropshipping like many of our successful retailers already do. Dropshipping enables you to find products with great profit potential and sell them through your online shop. If selling products motivates you, you're more likely to spend more time on advertising and marketing. And these efforts are ultimately rewarded with more sales and profit.
Dropshipping shop: is it really worth it?
The answer is a resounding yes. However, it will depend on you and your commitment. If you don't invest time in your online business, you won't be rewarded either. One of the reasons people give up dropshipping is because of the lack of consistency and persistence. Dropshipping takes time - you need to set up a shop, import products, set your pricing strategy, and start selling. Without the necessary effort, success will not be achieved.
Where to Get a Ready-Made Dropshipping Business
If you don't want to build a dropshipping shop from scratch, check out the Shopify Exchange marketplace for established dropshipping shops for sale. Exchange is a marketplace for Shopify stores, both for people who want to invest in a fully functional store and for those who want to skip the build-up phase and start marketing right away.
Here you will find a large number of online shops, including many dropshipping shops, in different price ranges and niches, from which you can choose depending on your budget and interests. So if you're looking for a dropshipping store for sale, you might find it on the Exchange marketplace.
As you research, consider the cost, design, age of the site, the revenue generated to date, the popularity of the niche, any penalties, and the type of business.
- The costs: Do you currently have a budget to both pay for a prefabricated shop and invest in expanding it? If so, you should first get a clear idea of your budget. What price are you willing to pay for a company? Is there room to negotiate a better deal?
- The design: Does the shop look like it was designed by a professional or a freshly baked entrepreneur looking for a quick sale? If the design of the shop appears professional, clean, and simple, the offer could well be attractive.
- Age of the website: On Exchange you can choose a dropshipping shop based on its age. An older website usually has a better chance of ranking well than a newer one.
- How much money was made with it: Sometimes you will see that a shop made a lot of money. However, you should ask yourself a question: "How much sales did the shop generate at its peak and how much is it currently generating?" With this information you will be able to better assess whether the dropshipping online shop is growing or is on the decline.
- Niche popularity: You probably don't want to sell any more fidget spinners or any other trending product. However, if a business is in what is known as an “evergreen” niche and has trending products, it could work well. Broad themes (beauty) tend to perform better than shops around a specific product type (make-up brushes).
- Penalties: Before buying a dropshipping shop, make sure that the website has not been penalized. You can do this by using a tool like Is My Website Penalized to see if a website has been penalized by Google. If this is actually the case, it can be more difficult to rank in search engines. You should also ask whether Facebook ads for the shop have been rejected or blocked.
- Type of business: If you want to buy a ready-made dropshipping shop, you need to select the dropshipping option on Exchange. Other options may require you to buy and hold inventory, which can cost more money in the long run, especially unsold inventory.
How to start a dropshipping shop: The success plan in 6 steps
Step 1: Choosing a Dropshipping Business Idea
What you sell matters. You should take some time to find the most promising dropshipping business ideas. It is often advised to choose a niche that you are passionate about. But that's only half the story. It's about a combination of profit and passion, with a slight emphasis on profit. The reality is that the best dropshipping business ideas tend to be the most profitable too. Passion is a lot easier when you actually make money.
At Oberlo, we save you valuable time by creating lists of trending products. It is true that these ideas also attract a lot of entrepreneurs. That’s because they’re proven winners. So it is actually illogical to enter a niche in which there is no competition.
I had to learn this lesson the hard way myself. Fitness, fashion, jewelry, beauty, technology, purses and backpacks are some of the consistently well-functioning niches that top online shops are repeatedly entering and being successful. For example, Tim Kock recently created a dropshipping case study where his pineapple business failed but his watch business generated nearly $ 7,000 in just 8 weeks.
That proves that the niche you choose is paramount. So, spend some time looking into different dropshipping business ideas.
If you want to come up with your own dropshipping ideas instead of using our lists, there are a few things to keep in mind:
- Google Trends is a great way to determine if a niche is in an upward or downward trend. However, that alone is not enough to judge whether a niche is viable or not. Some niches, while on the rise, do not have enough search volume to justify their apparent popularity.
- Use Ubersuggest's keyword tool. What is the search volume for a keyword? How strong is the bidding competition for it. Ubersuggest's Keyword Tool will help you understand the potential of your dropshipping business ideas and provide you with additional ideas for the future.
- Search popular websites in your niche. For example, if you look at a fashion retailer's website, you will see that trend categories are often used here. Based on these findings, you can better determine which trends you should include in your shop right now. You can also browse a store's top selling products to find the most promising products to sell.
- Check the order volume for products. Within Oberlo, you can search products based on their order volume to see how popular a product really is. You shouldn't directly exclude dropshipping items if the order volume is not as high as other products, because these products may just be newer.
The most profitable dropshipping business ideas aren't trends. Instead, they have trends in them. For example, denim clothing is a trend in the fashion niche. Fake eyelashes are a trend in the beauty niche. Marble style cell phone cases are a trend in the cell phone accessory niche. It is advisable to have the trends as products, but not to align the entire shop with them. This is especially true if you want to build a long-term business.
Step 2: Competitive Analysis
So you've decided what you want to sell. Very good. Now you need to research who your competitors are, what they are selling, and how they are marketing their products. There are different approaches to this.
- Type the name of one of your potential products into Google and do a quick search to see who comes up on top. The top ten results on Google or any other search engine give you a good indication of your competition. If you sell products in a different location than where you are based, you can use third-party tools. You can use apps like SEM Rush or Ahref to get information about search results in different parts of the world.
- Search Alexa or SimilarWeb to find niche competitors who may not appear high in general search results. These portals provide a summary of the website you are looking for, including its social media profiles, any advertisements served, information about audience and traffic, and a list of competitors for the company.
- Check out the various social networks. I myself search niche Facebook ads and social media pages from top brands. How many followers do you have? How do you market your brand? How much engagement does the brand get? What can I do differently to stand out? What are you doing right that I should take over?
- With the BuzzSumo tool, you can research the content of your competitors and understand what works well for them. This gives you approaches that you can then implement for your brand. This tool gives you an insight into the content that is getting the most shares, which in turn can inspire you for new blog ideas. Signing up for a competitor's newsletter can also keep you up to date on their blog posts and marketing activities.
Step 3: Choosing a Supplier
- Finding a good supplier can be extremely easy with Oberlo. As soon as you are on the platform, you can search for products and select suppliers from the list of results. On the Oberlo platform, you can see ratings for each provider and find out how long the provider has been on the platform.
- If you have a list of five or six potential suppliers, the next step is to contact these suppliers and ask about important things like minimum order quantities and delivery times.
- After that, your list will likely have narrowed down to two or three suppliers. A very good strategy is to place a sample order for a product and compare the results. Compare shipping times, product quality and packaging. Above all, keep an eye on your customers and what they expect from you.
Step 4: Create a dropshipping shop
There are a few components that you should consider when building a dropshipping online shop. Below are some of the most important:
- Domain Name - Your domain name is important, especially when building a long-term brand. You can use a free company name generator to make the process easier. If your target market is Germany, you should always try to secure a .de domain. If you want to use your niche as a keyword in the new domain, the term should be as general as possible (e.g. beauty, jewelry, fashion) and not very specific so that you don't have to change your domain name later. You should also refrain from using your name as a domain for your shop.
- Sign up for Shopify - Shopify is the most comprehensive ecommerce platform out there. With new features, tools, resources, and apps added regularly, it's just getting easier to run a successful business on the platform. And if you get stuck, you can reach out to a Shopify guru who will walk you through all the steps personally and for free.
- Shopify Themes - Personally, I prefer the free Minimal Vintage theme. It's easy to use, clean, and overall a great starter theme for entrepreneurs on a budget. You can change your theme over time. In the beginning, however, a free theme will suffice. As soon as you make some money, you can invest in buying a new theme for a better shop design.
- Install Oberlo - With Oberlo Dropshipping you can find products online that you can sell on the same day. Aim for 10-25 products to start with, as it can be overwhelming to write product descriptions for more than that. If you ever have any questions, you can get help through the Oberlo blog, social media pages, or the Shopify support line.
Step 5: start marketing your dropshipping shop
So now you have found your product and set up your dropshipping webshop. So now is the time to kick off marketing. This is a critical step in your dropshipping plan. So avoid constantly making changes to your shop design and pretending to make improvements. Don't be afraid to take the step outside. The first sale is one of the best feelings!
If you're just starting out, you are likely on a very tight budget. However, some of my best marketing ideas came from these very frugal moments. Here are a few approaches to get you started:
- Facebook Ads: I know it can be tempting to spend $ 500 on Facebook ads. Many new entrepreneurs think that your first try will make you massively monetary, but it rarely will. I spent $ 20 on my first ad that didn't generate a single sale for me. I actually shed some tears because of that failed ad. The truth is, I didn't risk much. So I quickly got back to my feet and created a second ad that converted at five cents per click. You should keep your budget low at the beginning in order to be able to afford experiments. At this point, you won't even know what your best-selling product will be. Therefore, you should create multiple ads to see which product sells the best.
- Retargeting Ads: If your budget is actually very tight, retargeting ads might be the go-to option because they keep costs down. This type of ad works great when you have a high-traffic shop. Maybe you are very active on Pinterest and generate traffic from there. Maybe you published a blog post on your website and introduced influencers, after which they would share your post for free. With a retargeting ad, you can take advantage of such free traffic and, with a little luck, turn it into paying customers. The approach usually works better than a standard Facebook ad. It's also far cheaper. I made my first sale in just two days using this tactic.
- Influencer Marketing: In order to be able to set up a dropshipping shop, you have to be inventive and assertive at the beginning. If you can't afford the fees from your chosen influencers, you could offer them an affiliate commission instead. Why is that a good thing? I've learned the hard way that sometimes even a very niche influencer doesn't really convert. It's almost like a shot in the dark. So if you pay an affiliate commission for every sale, you lower the risk for your dropshipping shop. Ultimately, it's up to the influencer to generate sales and revenue. You will also receive imagery that can help increase social proof for your brand. If the influencer has real followers, they can potentially make a lot more money as an affiliate than if they were paid a flat rate. This gives them the chance to earn even more money.
- Get free media coverage: If you have news or just want to announce the start of your business, press mentions can have a big impact. To do this, sign up for free press portals that journalists and publishers can use. Maybe some are looking for influencers or experts in your niche and then come to you based on your press release. Either way, the free traffic from your retargeting ads could lead to some sales. Instead of inserting a link to your homepage “websitename.de”, you should direct visitors to a product category or a specific product. This sharpens the focus and increases the chance of sales.
Step 6: Optimizing Your Dropshipping Business
Once you've invested time building your website, brand, and marketing, you can start analyzing your efforts. You may find that certain marketing activities work very well while others work poorly. You can also compare your pricing to that of your competitors and see if there is anything you can change here to be more competitive.
You can use tools like Google Search Console or Analytics to analyze your online traffic. After all, you want to make sure that your traffic is increasing, not decreasing. If you use third-party tools for email marketing or social media analysis, you should set up weekly or monthly reports. This way you are automatically reminded to analyze this information regularly. Even a quick snapshot from such a tool can be enough to decide whether a campaign is working or not.
Overall, the most important part of a successful dropshipping shop is testing and optimizing to increase the sales generated. This ensures that your website doesn't fall behind best practices and that you are always one step ahead of your competitors.
Open a dropshipping shop: conclusion
In this article, you learned how to build a dropshipping business. If you heed the advice presented here, nothing stands in the way of your path to becoming a successful online shop operator. Do you still have questions about setting up a shop or marketing your dropshipping business? Then please leave us a comment or contact us via our social media channels. And remember: the best way to build a dropshipping shop is to take the first step and just start. We are happy to accompany you on your way.
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