Research & Refine your Business Idea
Starting a dropshipping business is probably one of the coolest and most trending things you can try in 2019. Many people say it’s the first step into entrepreneurship. Selling products to customers at your own prices is very convenient since you’ll have to pay for inventory once it is sold to customers. Sounds impressive, doesn’t it? So, if you want to build your own successful brand read this article and find out how to start a dropshipping business and everything you need to know about it. Let’s start with the basics.
1) Finding Your Niche
The truth is, it really does matter what you sell. So, it is crucial to take some time and think about what’s the best dropshipping business idea. In an ideal world, you’d sell something you’re passionate about. However, passion doesn’t always lead to money. Thus, you should think about both profit and passion, even a bit more about profit. Isn’t that the reason for starting a business? And, don’t you worry; once you start making money, it’s much easier to be passionate about it.
But, what is a niche? You may think of selling/sale as the broad market that appeals to everyone, and a niche may be everything that falls under the umbrella of selling/sale but targeting specific customers. For example, your dropshipping business may focus on selling fitness, jewelry, fashion, beauty, accessories, tech, gardening, sports clothes, and equipment, or any other products you can think of, and this would be your narrowed niche.
By finding your niche, you will appeal to specific customers and have higher chances to succeed. Targeting low competition niches is always a better idea than targeting an entire market. Here are some things you should consider when choosing your niche:
- Use Google Trends to find out whether your targeted niche is on an upward or downward.
- Check the competitiveness of keywords related to your niche using the Google Keyword Planner.
Analyze the competition by browsing Facebook ads and social media pages and websites for the top brands.
2) Finding the Right Suppliers/Wholesalers
Once you have your niche chosen, it’s time to focus on finding suppliers, i.e., wholesalers. Luckily, this is much easier when you know what products you would like to drop ship. But, this doesn’t mean that finding the right and reliable supplier is an easy thing to do. Actually, it is the hardest part of starting a dropshipping business. And, since the supplier is kind of your most important business partner, you should choose wisely.
Here are some points to consider when searching for the right supplier:
- Does the supplier actually offer dropshipping as a service
- The longer the experience they have, the better service you get
- Charge decent, not huge, order fees
- Provide fast shipping
- Offer good-quality products
Creating your Business Website
In general, online presence is crucial if you genuinely want to have a successful business. The same thing goes for a dropshipping business. Having a website makes your business more accessible to customers.
For example, people have heard of a great store but don’t know where to find it. What do they do if this was the case? They google the store, and if they can’t find it, they are very likely to give up trying. Hence, having a website will ensure your business that your potential customers can find you easily.
Setting up a website isn’t as hard as it may sound, in-fact, many hosting providers have tailored their service around small businesses who may not be tech savvy. We suggest going with BlueHost to host your website, they’re service is simple and easy to use/setup and they’re currently offering 60% off hosting, including free domain registration.
Additionally, creating a blog on your website is also a great way to attract organic traffic and expand your business. Checkout our full guide on the best and easiest way to setup a WordPress blog here.
Your business website should also feature a landing page which will advertise your products and showcase all of your special offers. This will be extremely beneficial and profitable since you’ll present your products as soon as a potential customer visits your site.
You should also include a detailed description and additional information about the products you sell. Plus, you can even feature product reviews so that potential customers can see product ratings. And, for tracking traffic to your website, use Google Analytics which will provide you with detailed traffic reports for a better understanding of your audience demographics.
Marketing Your Business
Having an amazing website and great products is awesome. But, you need to attract potential customers and grow your traffic website if you want to make some money. At this point, you need to focus on marketing your dropshipping business.
There are several marketing strategies you can take into consideration, but a Facebook ad campaign has proven to be one of the most effective options. I’m not saying that it isn’t costly at first, but it’s definitely worth it. Since it is the world’s leading social media networking site, you can expect fast results. Including Google ads is also a great option. Everyone that has a website wants to rank on the first page of Google. You can achieve this organically by posting SEO friendly content, or you can buy ads so that your store appears at the top of the page when specific keywords are searched.
Another option you can try is influencer marketing which is one of the key parts of any customer acquisition strategy for 2019, especially if you are in a popular niche. All you need to do is contact a social media influencer who will include your product into a post and tag your business.
You can also build your email list and send marketing emails containing information about your new products, sales, reviews, or any content you create. But, how to get potential customers’ email addresses? Request visitors to sign-up at checkout or maybe include some special offers that require the visitor to enter an email address.
Setting Goals and KPI’s
Running a successful business requires constant tracking of key performance indicators which will provide insight into the areas that need improvements. Therefore, for improving the performance of your dropshipping business, you should have the following KPI’s in mind:
- Shopping cart abandonment rate
- Cost of marketing strategies
- Conversion rate
- Average order value
- Order fulfillment
- Gross profit margin
- Lifetime customer value
- Inventory management
- Dropship management
Knowing your key performance indicators will help you understand where your starting point is and will also allow you to make attainable and realistic goals. Start by accomplishing smaller amounts of progress and then gradually work towards achieving a goal.
If you want to increase sales, the best thing to do is focus on offering excellent customer service. You can do so by:
- Improving your site’s performance and design
- Including high-quality photos in the product reviews and descriptions
- Providing quick response to customer’s questions
- Managing inventory regularly to avoid stock-outs or oversells
Plan your Finances
The biggest mistake that you can make when starting a business is not planning your finances or combining your personal and business finances together. If you do the latter, you will make you accounting quite more challenging and difficult and probably end up having problems with the IRS.
Thus, keeping records of your finances and separating your personal and business finances is essential. The best option to help you do this is opening a separate business bank account. You may choose from the following:
- Business Checking Account – your primary account with all of your business revenue deposited into it and expenses withdrawn from it.
- PayPal Account – it is always a good idea to accept PayPal if you’re starting a dropshipping business, so you’d better have a special PayPal account for your business.
- Credit Card – you’d be buying lots of merchandise from suppliers and having a credit card that offers some serious rewards can be quite beneficial.
Once you have separated your personal and business finances, it will be much easier to plan all of your business-related expenses such as marketing, supplies, and probably some travel or employee costs.
Adopt an Entrepreneurial Mindset
Success doesn’t come overnight. Instead, if you want to be successful, you should definitely work on yourself as a person and always seek knowledge. Acting like an entrepreneur isn’t an inborn trait. In fact, it is a mindset that anyone can adopt.
Here are some strategies to help you adopt an entrepreneurial mindset:
- Take responsibility
- Think of the ‘big picture’
- Learn constantly
- Accept uncertainty
- Embrace failure
- Be consistent
- Keep trying
As a bonus here are some books that will help you grow as an entrepreneur:
- Shoe Dog by Phil Knight
- The Code of the Extraordinary Mind by Vishen Lakhiani
- Originals by Adam Grant
- Building the Internet of Things by Maciej Kranz
- Tools of Titans by Tim Ferriss
and some podcasts, too:
- Shopify’s TGIM
- Duct Tape Marketing
- The Jason and Scot Show
- The $100 MBA Show
- Shopify Masters
Other things to consider when starting your dropshipping business
If you’re serious about your business, you’d better set up a legitimate one. So, now it’s time to think about some legal requirements.
First, you should decide on the business structure. The three most commonly used business structures which you can choose from are Sole Proprietorship, Limited Liability Company (LLC), and C Corporation. The first one is the smallest structure, but it doesn’t offer any personal liability protection. The LLC provides increased protection compared to the Sole Proprietorship. The last, C Corporation, offers the most liability protection.
Another thing you should do is request an EIN Number (employer identification number) which is needed for the IRS. The EIN number is required for filing taxes, applying for wholesale dropshipping accounts, opening business bank accounts – in short, everything connected to your business.
A business license may also be required, but this pretty much depends on the city your business is registered in. Just take some time and check out your local regulations and laws to see if you need a license or anything else. And you should also apply for a tax ID.