Dropshipping 101: Everything You Need to Know to Start a Dropshipping Business 

Dropshipping is a process where you sell products without buying inventory. You merely display the products online, and then buy them only once your customers have already placed orders in your store. 

I learned a lot in my years of dropshipping, and I want to share with you some of the best practices and methods to succeed. In this article, you will learn everything you need to know how to dropship step by step.  

We will discuss: 

• How to start a dropshipping business
• Tools you need to start a dropshipping business
• How to market your dropshipping store
• Best practices to succeed in dropshipping

We will also talk about the pros and cons of dropshipping, which should help you decide if it is the right business for you. 

Key Takeaways

• Niche selection is one of the most important keys to success in dropshipping
• Use paid tools (work smart, not hard)
• Work with influencers to boost your marketing campaigns

Let’s start!

What is Dropshipping?

Dropshipping is an online retail business model where you sell someone else’s products. The difference between dropshipping and traditional retail is that you do not need to buy inventory. 

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Dropshipping, from a high-level perspective, looks this way: 

1. You choose products and suppliers
2. You build an online store and “upload” or display these products 
3. You set up a payment processing system, like PayPal
4. You advertise your products 
5. A customer goes to your website and makes a purchase
6. You buy the item from your supplier
7. The supplier ships the item straight to your customer

As you can see from that process flow, you will only spend money on the product once a customer has already paid for it. This does not mean that you will get the customer’s money right away. Payment processors usually have a delay when transferring money to your bank account.

Because of this, you must spend your money to purchase the product from your supplier. The profit you make is the difference between the supplier’s price and your selling price. 

To understand this better, let us look at this product from a supplier: 

This product, a dumbbell set, is from a Chinese supplier AliExpress. The cost is $21. In dropshipping, you will post this product in your store. 

We will use Amazon since you can also dropship on that platform. It can look like this: 

As you can see, the price of the product is $39. Once a customer buys this product from you, you will receive $39, but only pay the AliExpress supplier $21. 

The difference, which is $18, is your gross profit. If you manage to sell 1,000 units, then your gross profit is $18,000. 

Of course, there are other fees that you must pay. For example, Amazon takes at least $0.99 per transaction. If you build your store and use a payment processor, like PayPal, they will take at least 2.9% as the transaction fee.

There are many things you can dropship. You can sell coffee, toys, electronic gadgets and items, clothing, and so much more. In the succeeding sections, I will show you the step-by-step process of how to get started and how to succeed.

Steps to Start a Dropshipping Business

There are only four steps to get started in dropshipping. These are: 

• Choose a Niche or Dropshipping Product
• Look for Suppliers
• Plan and Build Your Dropshipping Store
• Market Your Dropshipping Store 

Let us talk about each one in detail.

1. Choose a Niche or Dropshipping Product

A niche is a product category, like cosmetics, health, or electronics. You must choose just one, as it is easier to manage a niche store than a general store. 

If you observe stores in the physical world, they also have niches. For example, you will not see electronic devices in a shoe store. You only see shoes. 

There are two types of niches, and these are “broad” and “specific.” 

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• Broad Niche – this is the top category that covers many specific niches. For example, the health niche is broad because there are so many product types in the health industry. 
• Specific Niche – a product category under the broad niche. For example, shoes are a broad niche, and the specific niche under that is rubber shoes. 

At best, I recommend that you choose a specific niche. The main reason for this choice is branding, you want your dropshipping store to be the go-to store for a specific product type. It is the only way in which you can build a reputation. 

Here is an example dropshipping store that has a niche (hoodies):  

Just imagine if you have a store that sells everything. Your site visitors will get confused and overwhelmed. On the other hand, you can have a dropshipping store that only sells yoga items. If you do this, people will go to your store because they are interested in yoga stuff. 

With a niche store, your site visitors would feel that you are an expert and an authority on that niche, making them feel more secure in making a purchase. 

To learn more about niches, I recommend that you read our blogs about it. These are the Top 15 Best Dropshipping Niches: How to Find and Choose Dropshipping Products and ​​​​Most Profitable Niches With Low Competition.

2. Look for Suppliers

Your supplier is the entity that has control over product quality and shipment. As a dropshipper, your main function is to market these products. Because of this, one must not underestimate the importance of choosing the right supplier. 

There are many supplier websites, and the most popular are: 

• Spocket
• Printful
• Dropified
• CJDropshipping
• AppScenic

You can also use AliExpress if you want, but it is always better to use a dropship supplier database like Spocket. These companies weed out bad actors in the dropshipping scene, and they also make it easy to import products to your store. 

Here are some tips when choosing a supplier: 

• Product Quality – only sell products of mid to high quality. You can only know this if you order the product yourself.  
• Shipping Standards – choose a supplier who can ship the item within 48 hours (packing and taking it to the courier). In addition, work with a supplier that offers several shipping options. Preferably, the shipping options must be fast, not like the ones that take 30 days to complete.
• Warehouse Location – some products are subject to customs regulations. For example, you cannot just import food supplements internationally. If this is your niche, pick suppliers with local warehouses in your target geography. A local supplier also guarantees fast shipping. 

It is also important to consider the supplier’s return policies. It is not advisable to work with a supplier who does not accept refunds. Pick a supplier who acknowledges their mistakes and is willing to be accountable for their errors. 

For further reading, I recommend that you visit our blog posts about the best Dropshipping Suppliers in the USA and  What to Consider When You Choose Your Dropshipping Supplier.

3. Plan and Build Your Dropshipping Store

The next phase is to plan your business, which includes colors, themes, logos, business names, etc. I do not advise building a store right away. You must put this plan on paper and have a perspective.  

Think of this phase like you are an architect. You need a grand plan, which includes the following: 

• Store name – pick a store name that is easy to remember and something that best represents your business. 
• Theme – the theme not only refers to the color schemes but also the overall identity of your dropshipping business. For example, if you are selling coffee, do you want your brand and store to look elite, or do you want it to appeal to the masses? 
• Standardization – this process involves the selection of standard fonts, colors, image sizes, etc. You must also consider a standard style in your product photography. This is the key to making your store easy to remember. 

Spend as much time, or more, on your planning phase as you did in your niche and supplier selection. Although you can change your design or theme later on, it makes more sense to get this done right the first time instead of later. 

Part of building your store is choosing the right platform. You can either build it as a stand-alone store or use marketplaces. The most popular are: 

• Shopify and WooCommerce
• Amazon
• Etsy 
• eBay

The last three are marketplaces where you can expect to get lots of traffic. The problem with marketplaces is you are competing with other sellers at any given moment when a potential customer is looking at your product. 

The best option I recommend is to use Shopify. While WooCommerce combined with WordPress will also suffice, there is much more benefit in building your store in Shopify.

Shopify is a platform where you can build an online store without learning how to code. It takes only a few clicks to build your e-commerce site. In addition, you will have no issues integrating a payment processor.

On top of that, Shopify has the support of many program developers. You can add so many apps to your store to make it more functional. 

Here is a screenshot of the Shopify app store:

To learn more about Shopify, please read our post: How to Dropship on Shopify - Step By Step Guide for 2024.

Finally, find out if dropshipping is legal in your country. I am of the opinion that it is. However, not all countries have the same laws when it comes to business registration and taxation. 

4. Market Your Dropshipping Store 

The last step is to market your store. I will not spend much time on this because we have a dedicated section for this. 

What I can tell you right now is that this is probably the hardest part of dropshipping. While it is easy to do things like running ads on Facebook, the challenge really is in the conversion rate. 

In our marketing section, I will show you several ways by which you can find customers and make them buy your products. 

Tools You Need to Dropship

Automation is what will help you build and succeed in your business. In this section, I will provide you with a list of tools that you MUST USE if you want to succeed in dropshipping. The four main categories of these tools are: 

• Product Source or Supplier 
• Store Builder and Payment Processor
• Product Analysis Tools 
• Marketing Tools

Let us review each one. 

1. Product Source or Supplier 

The most common product source that dropshippers use is AliExpress. Although this is good, it is not the best. A supplier database is essentially where you can find all sorts of suppliers for many products and is also where you will place your order.

AliExpress is not, technically, a supplier tool or database. Instead, it is a marketplace like Amazon. Because of this, you have to manually transfer the product pages and descriptions to your store. I do not suggest doing this as it is a waste of time. 

The better option is to use supplier databases that come with importation features. Here are some examples: 

• Spocket
• Printful
• AppScenic
• CJDropshipping

Consider these websites as marketplaces where suppliers and dropshippers meet. In these tools, the suppliers will register, and then upload their products. If they meet the requirements of the company, their products will be available to you, the dropshipper. 

You, on the other hand, also have to register as a dropshipper. Then, you can choose the products you want to add to your store. Next, you will integrate the tool, like Spocket, with your store. 

After completing the integration, you can transfer the products to your store with a single click. All product photos and descriptions will now be visible in your store. 

In addition to the importation, these supplier and product tools offer many other features. Here are some examples: 

• Analysis of product performance
• Automatically change the prices of your product in your store if the supplier changes the product price.
• Integration with multiple sales channels
• Dropshipping lessons
• Calculators
• List of winning products 

These tools are not free, but all of them offer a free trial. Before you choose one, make sure that you check for its compatibility with your store’s platform. If you are using Shopify, then you must select a product supplier tool that works with Shopify. 

2. Store Builder and Payment Processor

The next thing you need is a store builder or platform. Although some store builders come with their payment processors, you don't need to look for one that has both. 

While you can build a dropshipping store on eBay, Amazon, and Etsy, I do not recommend these because these marketplaces have thousands of sellers you will be competing with. My suggestion is to do a solo store, and you can do this by building an e-commerce website.

In my experience, the two best options are Shopify and WooCommerce with WordPress. Of these two, Shopify is what I recommend.

A payment processor refers to the system that will charge the credit card once the customer pays for the item online. 

The most popular ones are: 

• PayPal
• Braintree
• Apple Pay
• Google Pay

Like other software programs, you must choose a payment processor that can integrate with your store. Otherwise, you won’t be able to charge money.

The beauty of Shopify is that they have an in-house payment processing system called Shopify Payments. All you need to do now is to enable this feature, and you should be able to charge payments. 

Finally, it is important to note that all payment processors charge a fee. The most common fee is based on a percentage—about 2% or more. 

3. Product Analysis Tools 

Next, you must use product analysis tools, and the best one out there is Dropship.IO. What does it do? 

A product analysis tool does the following: 

• It gives you a list of winning products
• It provides details of product sales in volume and dollar revenue
• It tracks the performance of stores and products
• It gives you other important information about products and stores

Here is a sample screenshot of what is inside Dropship.IO:

In this particular screenshot, I am showing not the product tool but the competitor analysis results. As you can see, this dropshipper is making a lot of money from selling hoodies, which is evidence that there is a market for this type of product.

At the top, you can also see the social channels of the company. Click on these buttons and you will be redirected to their social media pages. You can view their content and then get some best practices from them.

This is not the only thing that Drosphip.IO can do. You can also view what apps they use in their Shopify store, see what their top products are, and so much more!

Overall, a product analysis tool not only helps you find winning products but also assesses your competitors. Sign up now for a free trial account with Dropship.IO and see the tool in action!

4. Marketing Tools

Marketing tools are programs that help you create product photos, videos, ads, and more. Here are the most common types of marketing tools:

• Photography – these are tools like Flair where you can do product photography even if the product is not physically with you. 
• Videography – you can create videos for your products and use these videos for ads. The best one I can recommend is Creatify. 
• SEO – you need to target search engines, and you can only do this with search engine optimization. SEO is a marketing tool that gives you a list of keywords you can see in your product title, description, and also your ads and blog posts.
• Email – there are many email marketing tools like MailChimp and Omnisend that you can use to gather email addresses. With these tools, you can set up a way for your site visitors to sign up for your newsletter. 

There are so many types of marketing strategies and tools, but I recommend that you concentrate on a few only. For starters, your focus should be on making your store visible in a few select places online. Do not be all over the place. 

I will discuss more about marketing in the next section. In addition to that, you may want to read about our recommendation for the best AI tools you can use for dropshipping. 

Ways to Market Your Dropshipping Store and Products

Marketing your products is one of the most difficult facets of dropshipping. Some people say that “if you build it, they will come.” 

Well, there is little truth to that, but building a store is just that—you have a store. To attract customers, you need to do some serious marketing. The best four marketing strategies for dropshipping are: 

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• Blogging
• Social Media
• Paid Advertising 
• Influencers and Affiliate Marketing

Let us discuss each one. 

1. Blogging

Some people say that blogging is dead. I disagree with that statement. There are 8.5 billion searches done on Google per day, which means that people are looking for information. 

Without blog posts, the Google search engine has little information about your store. In that case, it cannot index as many keywords about your store or products. 

Blogging is a free method to market your products. If people who search on Google click on your blog, you are likely to be able to convert them into customers.

Here are some tips on how to blog successfully:

• Frequency – blog regularly. If you can produce blogs weekly, do it. Better yet, aim for two blog posts when you are starting your business. 
• Tutorials – focus on topics that will benefit your customers, not your business. For example, if you are in the kitchen niche, blog about recipes. For toys, blog about the education and learning benefits of toys. For cosmetics, blog about things like “how to have naturally healthy skin,” etc.  
• Keywords – use keyword research tools to know what people are searching for. Use these keywords in your blog title, content, and meta descriptions. 

Keyword tools are expensive, so I suggest that you use Google Trends. Below is an example: 

You can see from the chart that in the last 90 days, there has been a demand for the keyword “best cosmetics.” Since we know that people are typing this information in Google Search, then we can go on and write a blog post about it.  

Finally, read blog posts on the same topic that appear on the top search results of Google. Then, write blog posts that are longer and much more informative than them. You want to publish better blog posts. 

2. Social Media

There are many types of social media, so many that they just become “noise” for your business. One common mistake that dropshippers make is they attempt to penetrate several social media channels at the same time. 

My recommendation is to have only one to three, and nothing more. The best social media channels for dropshipping are: 

• Instagram – become an influencer yourself and teach people something of value. Or you can show people how your products work, and how they benefit the buyers, and then build a brand on the platform. 
• Facebook – use Facebook to build a community of followers who will chat with each other. Keep in mind that Facebook users are tired of sellers and ads. The way to succeed here is to produce content that adds value to people’s lives. 
• YouTube – use this platform to show interesting or entertaining videos. Be subtle in how you sell. YouTube is best for demonstrating your products or comparing your products with other sellers and showing that yours is better. 

Here is a sample YouTube channel:

The image above is the YouTube channel of Dumb Club. They ask questions to random people. If the participant succeeds, they get a free hoodie. If they fail, then they are now part of the “Dumb Club.”

I must say that social media marketing is challenging. You are competing against the best, and your posts can be buried underneath the other millions of social media posts.

For starters, you need to ask yourself what you are really good at. Then, use your skills to create content on one platform for now. Once you have mastered that platform, you can move on and add a new social media channel.

3. Paid Advertising 

You can do paid advertising on many sites. The decision you make here has something to do with your chosen social media channel. 

Google, by far, has the widest reach, and it is what I would recommend. With Google, you can upload a single ad and make it appear on:

• Google Search results
• Inside blog posts of other websites
• YouTube
• Games and apps on Google Play

As you can see, you can reach more people on Google than on any other advertising platform. On the other hand, I recommend Facebook if your target market is on Facebook and Instagram. This works best if you have already built your pages as an influencer. 

I need to note here that paid advertising is not magic. It is an expensive marketing activity, one that can drain your funds easily. 

From my experience, launching an ad requires more than just passing together some words and images. You need many skills like copywriting, photography, video editing, psychology, etc., to be able to convert your ad viewers into customers.

4. Influencers and Affiliate Marketing

Finally, I recommend that you work with influencers. You can either offer them money up-front or commissions through affiliate marketing. 

Do not work with huge influencers because they charge thousands of dollars. Find small influencers who have a decent number of following and reach out to them. 

The most common arrangements for this kind of marketing are: 

• Pay per post – the influencer will post your product on their page. 
• Shoutouts – the influencers will say something about your product and urge the viewers to buy it
• Product Sampling – you will send a product to the influencer and Sponsorship

As for affiliate marketing, it is a process where your marketers get a special link. They will use this link to promote their products. If their audience clicks the link and buys, you as the seller will know where that referral came from.

Once a sale is made, you will give the affiliate a commission. It is up to you to decide how much commission you want to give; you can give a flat rate (like $5 per sale) or a percentage (like 5% of the product cost).

Pros and Cons of Dropshipping

Pros of Dropshipping

1. Low-Cost and Easy to Start 

Dropshipping is easy to set up. You do not need a lot of money to start, and you do not even need to know how to code to build an online store. 

You only need $30 to launch a dropshipping store. That, and a lot of hard work and time. Once you pay for your Shopify store, you now have to spend time and effort on the following:

• Researching products
• Designing your store
• Creating branding standards
• Looking for suppliers

All these are free, but you can expedite the process if you have money to spare. Earlier, I mentioned some of the tools you need, such as Dropship.IO and Flair. If you have the budget for these apps, then I strongly urge you to get them.

2. No Inventory Requirement

In traditional retail, you have to buy your stocks, or what we call inventory. These items or products will stay in your stockroom or bedroom, waiting to be sold. 

If nobody buys, your money is just sitting there, and you will eventually suffer financial losses. With dropshipping, you do not need to buy anything. 

Here are the benefits of the dropshipping business model

• You only pay for products that a customer already paid you for
• You can display products from different suppliers
• You do not have to pay for shipping (you can change this from your customers)

Since you do not need to buy inventory, you also do not need space. There is no reason to pay for a warehouse, much less dealing with boxes and packaging materials.

3. Affordable Monthly Cost

If you operate your dropshipping store yourself, you only need around $30 monthly to make it work. However, in this setup, you will do everything. 

Here are some of the things you must be prepared to do: 

• Write at least one blog post every week
• Upload or import products 
• Do research on current product trends
• Create advertising materials or social media posts
• Analyze the performance of your blog and advertising strategies

Do not be overwhelmed by all this. If there is something you do not know how to do, you have the luxury of time to learn them. The other choice is to outsource that work and just pay an expert. 

For example, you can pay a Facebook manager to manage your daily social media posts. You can also pay a video editor to create an ad for you, and all you need to do is launch the ad. 

4. Worldwide Scaling

You can easily scale your dropshipping business. Once you succeed, your options are: 

• Build a new store with a different niche
• Add more products in the same niche category in your existing store

In addition to this, you can reach a wider customer base. For example, you can start your dropshipping store now and target US customers only. As your business grows, you can begin advertising in the UK or Asia. 

Overall, there is no limit to what country you can sell to. The only thing you need to worry about is the legality of what you sell in your target country. 

5. Unlimited Opportunities

You can add as many products to your store as you want. That is not the only thing you can do. You can build as many dropshipping stores as you like.

Of course, I would advise you to exercise caution. You must only expand our business if the first one is in a stable status. Here are some things to consider: 

• You rarely get asked for a refund or returns
• Your ads are working, and you have a consistent sales volume
• You have outgrown the niche, and you are capable of penetrating a new one

Truth be told, your imagination is your limitation when it comes to dropshipping. While most people dropship the traditional way, you can go off course and create your branded products through print-on-demand or wholesale dropshipping.

Cons of Dropshipping

1. High Competition

The biggest challenge you will face in dropshipping is competition. The barrier to entry is low, and this makes it easy for people to build a dropshipping store. 

Here are some ways to win: 

• Do not give up – dropshipping is not a walk in the park; survive the storm and you will make it
• Be different – do not just sell products that are too common; find rare products that no one else is selling
• Be creative – think of ways by which you can make your store entertaining; create videos that entertain people

All businesses have competition. To be able to compete, you must know what your competitors are doing. To do this, you need a tool like dopship.IO, and I demonstrated earlier how it can help you spy on your competitor.

You also need to spy on your competitors’ ads. We have a guideline on how you can do this in this blog: Competitor Ad Copy Monitoring Strategies.

2. No Control Over Products

Since you do not manufacture what you sell, you have no control over the quality of your products. In addition, you have no control over your shipping processes. 

To combat this, you must take the time to test different suppliers. I know that this can be expensive, especially if you want to sell high-end products. 

The alternative is to use dropship supplier databases like Spocket. These companies vet or test the suppliers. If the suppliers do not meet certain standards, they get taken off the platform.

3. Unreliable Suppliers

Lastly, you will face unreliable suppliers in your dropshipping journey. How so? As you go along, you may deal with suppliers who do not ship the items in time. Some suppliers may even ship the wrong product. 

The problem with this is that you will be accountable for their mistakes. Because of this, you will also be financially liable. Similar to the advice earlier, it is best if you deal with suppliers who go through a third-party variation like Spocket or SaleHoo.

Best Practices to Succeed in Dropshipping

Before setting up your store, there are some best business practices that I want to share. These are things I have learned over the years as a dropshipper. 

1. Choose winning products

It is difficult to sell products that nobody is interested in buying. Time and time again, manufacturers would introduce new products that you may find attractive. Then, you will realize that nobody wants it. 

When picking products, choose those that have a proven market share or revenue. I am not saying that you must not sell new products. However, I suggest that you fill your dropshipping store with winning products. 

You can only find winning products if you use a tool like Dropship.IO. Only statistics will prove if a product is a winner or a bummer. To learn more about dropshipping product selection, please read our blog How to Find Winning Products.

2. Find a dependable supplier

Your supplier can make or break your dropshipping business. Despite having a professional store and excellent marketing strategy, your customers will be unhappy if your supplier messes up. 

The most common supplier problems are:

• Product not available
• Shipping is delayed (packing and drop-off to the courier)
• Long shipping times (in transit)
• Incorrect product set
• Defective product sent

All this can make customers anxious and dissatisfied, prompting them to return the product and ask for a refund. There is also a high chance that they will leave a bad review. 

Choose your suppliers carefully and use the tools that I recommended earlier. In addition, I suggest you read our guidelines called What to Consider When You Choose Your Dropshipping Supplier.

3. Concentrate on a niche

Beware of the shiny object syndrome. Many niches in the e-commerce industry work, and you might get tempted to shift from one niche to another. If you do this, you are only increasing the likelihood of failing.

This is not to say that you cannot change niches. We all make mistakes in this aspect of dropshipping. Because of this, I cannot emphasize enough that you need to select the right niche the first time. 

Here are some tips on how to choose a niche:

• You must be knowledgeable about it
• It must be your passion
• This niche must be popular and must have a market

It is best that you choose a niche that has a low turnover. These are niches where customers are not likely to ask for a refund. In addition, choose a niche that has disposable products, like lipstick and cosmetics. Once these products are depleted, the customers will buy again. 

Here are two resources you can read for more details: 

• Top 15 Best Dropshipping Niches: How to Find and Choose Dropshipping Products
• ​​​​Most Profitable Niches With Low Competition
• 7 Best High-Ticket Dropshipping Niches

4. Focus on Customer Experience 

All businesses only grow because of sales, and sales can only happen again and again if the customers are happy. 

Once you got the marketing and suppliers right, the next critical step is to make customers satisfied. You can do this in many ways, some of which are the following: 

• Answer their questions within 24 hours
• Use a chatbot that site visitors can communicate with
• Make your website or store easy to navigate
• Ensure that your return and refund policy is easy to find 
• Disclose everything necessary (i.e. batteries not included)
• Be honest in your product presentation 

Integrity is the key to making customers satisfied. If your customers cannot trust you, or if they have a bad experience with you, chances are they will never even recommend you. Make the experience of your customers worthwhile, and you will be able to grow your dropshipping business in no time. 

Dropshipping is not a get-rich-quick scheme. 

Having said that, do not quit. There are many skills that you must learn along the way, especially marketing. To succeed, you need to be flexible and adaptable. It is a never-ending competition. In the end, only those who stick at it and learn what they can triumph over those who quit.

FAQ: Dropshipping 101

What are the basics of dropshipping?

Dropshipping is an online retail business where you sell someone else’s products. You only pay for the products once a customer has already ordered from you. 

Is dropshipping a good idea for beginners?

Yes, dropshipping is a good idea for beginners. It is easy to set up and it does not require a huge amount of capital. 

Is dropshipping actually hard?

Yes, dropshipping is hard. But this does not mean you will fail. You will succeed in dropshipping if you have the patience to learn its different facets and keep moving forward. 

Can I start dropshipping with $100?

Yes, you can start dropshipping with $100 or even less than that. At a bare minimum, you only need $30 to pay for your Shopify store. 

Summary

Your dropshipping success will come from taking the right approach and your hard work. For now, I suggest that you take the time to sign up for the free trial of Dropship. IO. Experiment with the tool so you can see how it will help you find the right products and spy on your competitors!