Getting started with a dropshipping business, like embarking on any entrepreneurial journey, can be quite challenging. Nevertheless, it serves as an excellent initial foray into the realm of entrepreneurship.

With dropshipping, you have the opportunity to market products directly to customers without the need to maintain any physical inventory. You’re not required to make upfront payments for products either. And if you’re committed and dedicated to your new endeavor, you have the potential to establish a consistent and sustainable income stream over the long term.

To kickstart your online selling adventure with Shopify, just click the link!

If you’re thinking about trying out dropshipping, consider going through our complete dropshipping guide. It covers a bunch of business and money stuff you should know.

Some of these things are a must-do from day one, while others are just smart moves. But getting them sorted early on will save you time and keep your headaches to a minimum later on.

How to start a dropshipping business: 9 Simple Steps to Create a Profitable Dropshipping Plan

TIP: Shopify makes it a breeze to kick off your dropshipping venture, allowing you to start selling hassle-free without the headaches of inventory management, packaging, or shipping. Your wholesaler sends orders straight to your customers, freeing you up to focus on what truly matters: your products, marketing, and keeping your customers happy.

1: Make a Solid Commitment to Start Your Dropshipping Journey

Just like any other business, diving into dropshipping demands dedication and a long-term perspective. If you’re expecting a six-figure income after a few weeks of part-time work, it’s time for a reality check.

Approach your venture with a clear understanding of the time and effort it requires, and the profit potential it holds. This realistic outlook will keep you motivated and prevent you from feeling disheartened and giving up.

When you’re new to the world of ecommerce, remember this: you’ll need to invest significantly, but it can be done in one of two currencies – time or money.

2: Pick a Dropshipping Business Idea

Now, let’s dive into the fun part! The second step in your journey to start a dropshipping business is all about market research. Think of it like scouting locations, studying the competition, and keeping an eye on trends – just like opening a retail store.

Your mission is to explore a niche that genuinely piques your interest and make smart choices based on its profit potential. But let’s be real here, finding those golden product ideas that are practically guaranteed to sell like hotcakes can be a bit of a challenge.

To find inspiration for your next dropshipping business idea, Shopify compiles a selection of popular products drawn from the highest-selling categories on their platform. When you concentrate on these specialized and up-and-coming items, you can capture the interest of shoppers and build momentum without entering into direct competition with bigger, well-established businesses.

Niche products frequently attract a highly enthusiastic customer base, simplifying the process of selling to particular audiences and increasing awareness of your offerings.

If you’re looking to begin dropshipping with limited capital, consider focusing on niches such as fitness, fashion, beauty products, electronics, phone accessories, and yoga-related items. These categories can serve as excellent entry points for your venture.

Here are a few examples of specialized dropshipping store ideas:

• A store dedicated to dog bow ties, catering to the adoring canine companions of dog lovers.
• An online boutique offering a wide array of stylish iPhone cases designed specifically for iPhone owners.
• A shop specializing in camping gear and essentials, perfect for avid campers and outdoor enthusiasts.
• An e-commerce site stocked with a variety of exercise equipment, tailored to meet the needs of fitness enthusiasts and athletes.

You can also employ these tools to evaluate your dropshipping business concepts:

Google Trends: This tool is your go-to for tracking whether a product is gaining or losing popularity. It also provides insights into the seasons when certain products tend to trend. Remember, though, that Google Trends doesn’t reveal search volume. So, it’s wise to double-check your data by cross-referencing it with a keyword tool like Keywords Everywhere to gauge the product’s search popularity.

Keywords Everywhere. This nifty keyword research tool offers insights into the monthly search volume for your product and assesses its level of competition. This data can be incredibly helpful for understanding the popularity of your dropshipping business idea and sparking new product concepts for the future.

DSers order volume. This feature allows you to search for products based on their order volume, helping you assess the potential of your business idea with ease.

While the growth of ecommerce presents fantastic opportunities for aspiring dropshipping entrepreneurs, it also brings a significant amount of competition into the picture. Therefore, conducting thorough competitor research is crucial when crafting your dropshipping business plan. This research is vital to help you find the path to success in selling your products.

3: Dive into Competitive Research

Now that you’ve settled on what to offer in your store, it’s time to turn your attention to your competitors and unravel their strategies. Your rivals might just hold the key to your success and can provide valuable insights to shape your dropshipping business’s marketing plan.

In a crowded market, and dropshipping usually is, it’s a good idea to concentrate your research efforts on about five other dropshipping companies. This selection should ideally include one or two heavyweight players like Walmart, eBay, or Amazon. By narrowing your focus in this way, you can maintain clarity and chart your course for the next steps in your journey.

Here are some effective methods to conduct competitor research:

• Run a Google Search: Start by performing a simple Google search using relevant keywords, like “earplugs.” The top 10 results will reveal your main competitors and their promotional strategies. If you’re targeting a specific country, third-party tools like Ahrefs or SEMRush can provide keyword data for that region.
• Utilize Competitor Spy Tools: Platforms such as Similarweb and Alexa are excellent resources for tracking your competitors’ online activities. These tools offer insights into your competitors’ website information, including their social media profiles, top sources of traffic, visitor numbers, and even their own competitors.
• Explore Social Media: Dive into social media platforms like Facebook to search for ads within your niche. Take a closer look at the top brands in your market and analyze their communication with customers, the design of their social media feeds, and the level of engagement they achieve. You can even follow their feed to stay updated. Use this information to identify ways for your business to stand out and enhance your social media marketing strategy.

Now it’s time to dig deep into understanding your key competitors. Explore their websites, study their pricing strategies, dissect their marketing techniques, scrutinize their product descriptions, and gauge their reputation in the market.

Keep all this valuable information neatly organized in a spreadsheet. This way, you can easily refer to it whenever you’re making decisions for your own store. For instance, if you’re considering using an email list to promote your business, just glance at your trusty spreadsheet to see if your competitors are already doing it and the clever tactics they’re employing – all conveniently gathered in one place.

4: Selecting Your Dropshipping Partner

Choosing the right dropshipping supplier is a make-or-break decision for your dropshipping business. Your supplier is the lifeline of your business; without them, there would be no products to send to your customers, and your business would cease to exist.

By this point, you’ve identified the profitable dropshipping products you want to offer. Now, it’s crucial to ensure you find a dropshipping supplier that delivers the high-quality service you need for your business to thrive.

Ecommerce platforms like Shopify simplify the process by offering a plug-and-play option for discovering potential suppliers through connections with apps like DSers.

DSers serves as a marketplace where you can effortlessly locate a wide range of products with promising profit potential from dropshipping suppliers worldwide. With just one click, you can seamlessly add these products to your store.

What’s more, DSers efficiently manages the transmission of customer orders to your chosen dropshipping supplier, removing any concerns about packaging, shipping, or inventory management. And the best part? Getting started doesn’t cost you a dime.

DSers leverages AliExpress to assist you in finding and adding products to your store. Should you wish to delve deeper into aspects like product quality or shipping times or further evaluate a supplier, you can conveniently do so from the DSers product page.

When you click on a supplier’s link, you’ll be directed to their AliExpress page. Here, you can access a treasure trove of information, including customer reviews, their top-selling products, and much more. It’s a valuable resource for getting a comprehensive view of what the supplier offers and the experiences of other customers.

TIP: When selecting products from DSers, prioritize those that offer ePacket shipping, especially if your supplier is based in China.

ePacket is an excellent shipping choice for items traveling from China to countries such as the US, the UK, and Canada. Instead of waiting for months, your customers can expect their packages to arrive in as little as two weeks, and at a cost that’s only a few dollars. This ensures a quicker and more affordable shipping experience, enhancing customer satisfaction.

5: Create Your Ecommerce Store

The next vital step in launching your dropshipping business is setting up an ecommerce platform, and Shopify is a fantastic choice for this purpose. Your ecommerce store will serve as the hub where you drive traffic, showcase your products, and process payments.

Shopify simplifies the process of building and launching your online store, taking care of everything from helping you find a domain name to integrating marketing and sales plugins. It’s a comprehensive commerce platform that offers the flexibility to sell in multiple locations, accept various currencies, and easily manage products and payments.

The beauty of Shopify is that you don’t need to be a designer or developer to use it effectively. With user-friendly tools like the store builder and a variety of Shopify themes, you can effortlessly customize the look and feel of your store to match your brand and vision. It’s e-commerce made easy!

Need help building your online store? Raptax Media can help you to setup your store.

6: Determine Your Business Structure

If you’re serious about your venture, it’s essential to establish a legitimate business entity. While we can’t provide legal advice, we can certainly give you an overview of three commonly used business structures:

1. Sole Proprietorship: This is the simplest structure to set up, but it doesn’t offer personal liability protection. In the event of a lawsuit against your business, your personal assets could be at risk. Minimal filing requirements are needed, and you report your business earnings on your personal taxes without any additional state or federal filings.
2. Limited Liability Company (LLC): An LLC provides increased protection for your personal assets by establishing your business as a separate legal entity. While it doesn’t guarantee absolute protection, it offers more safeguarding than a sole proprietorship. You may have to meet additional filing requirements and pay both incorporation and ongoing fees.
3. C Corporation: Most major corporations opt for C corporation status, offering the highest level of liability protection when structured correctly. However, the incorporation process can be more expensive, and C corporations are subject to double taxation since income doesn’t directly pass to shareholders.

The choice of which structure to go with depends on various factors. It’s highly recommended to consult with a lawyer before making any incorporation decisions. Many small business owners typically choose between a sole proprietorship or an LLC due to their simplicity and relative protection.

NOTE: The information regarding business structures and EIN (employer identification number) discussed here is specific to entrepreneurs in the United States. It may not apply to other countries. If you’re seeking guidance on incorporating a US-based business from outside the US, please refer to the notes provided at the end of this article for more information.

Secure Your EIN (Employer Identification Number)

The IRS mandates that all businesses obtain an Employer Identification Number (EIN), essentially serving as a Social Security number for your business. This number is essential for various aspects of your business, including tax filing, applying for wholesale dropshipping accounts, opening a bank account, and virtually any other business-related activity.

The good news is that obtaining an EIN is a straightforward and cost-free process. You can conveniently apply for an EIN online, making it a hassle-free step in setting up your business.

7: Organize Your Finances

One common pitfall entrepreneurs should avoid is mixing their personal and business finances. This practice can lead to confusion, complicate accounting, expose you to personal liability for business debts, and raise red flags in case of an IRS audit.

To maintain clear boundaries between personal and business finances, consider opening new accounts in your business’s name.

Here are the key accounts to set up:

1. Business Checking Account: Establish a dedicated business checking account where all your business income is deposited, and expenses are withdrawn. This separation streamlines accounting and keeps your financial records tidy.
2. Business Credit Card: Obtain a business credit card exclusively for business-related expenses and purchases, including dropshipping inventory. Using the right rewards travel cards can be advantageous, particularly if you’ll be making significant purchases from suppliers.

By maintaining a clear distinction between your personal and business finances, you’ll ensure smoother financial management and minimize potential complications down the road.

Manage Sales Tax

You should only collect sales tax if the following conditions apply:

1. The state from which you operate requires sales tax collection.
2. An order is placed by a customer residing in your state.

For orders placed by residents of other states, even if those states impose their own sales tax, you typically won’t be required to collect tax. Currently, tax laws for small online merchants offer favorable conditions, but it’s worth noting that these laws may change in the future.

If your state mandates sales tax collection, be prepared to collect it on a limited number of orders from customers in your home state. To navigate this process, it’s advisable to contact your state’s department of commerce. They can guide you through the registration process as an online retailer and provide details on how frequently you need to remit the collected tax. Keep in mind that tax regulations can vary, so it’s essential to stay informed about your specific state’s requirements.

Learn more about how to pay sales tax and liability by reading Drop Shipping and Sales Tax: A Simple Guide by Bench.

Navigate Local Business Requirements

Local business licenses may be necessary for your dropshipping venture. Many cities and towns mandate that businesses obtain licenses, typically requiring periodic renewals. However, the specific requirements can vary, especially for dropshipping ecommerce businesses that are often operated from home offices.

To determine whether you need a local business license and what the requirements are, it’s crucial to research and understand the laws and regulations in your specific area. Local government websites or contacting your local city or town office can provide you with the necessary information.

Incorporating Outside the United States

For international merchants looking to establish a business presence in the United States, it’s indeed possible. This allows access to US-based dropshippers and customers. The process can be intricate, but it can be accomplished in a few ways:

1. Physical Presence: The merchant visits the US to complete the required paperwork.
2. US-Based Partner: The merchant has a trusted business partner in the US who can act on their behalf.
3. Professional Agency: The merchant hires a professional agency to handle all the necessary setup processes.

Each of these methods has its own set of complexities, so choosing the right approach depends on your individual circumstances and resources.

Certainly, here are some resources that can assist you in understanding the process of incorporating a business outside the United States, particularly a non-resident Delaware LLC or Corporation for foreigners:

• Delaware Corporate Headquarters: This resource provides insights into establishing a non-resident Delaware LLC or Corporation for foreign entrepreneurs. You can explore their guidance to gain a better understanding of the process.

8: Promote Your Dropshipping Store

Now that you’ve learned how to start your dropshipping business, let’s delve into marketing your new store. To stand out in your market and build a successful dropshipping business, consider putting extra effort into your marketing and advertising strategies as part of your dropshipping business plan.

Given the automation inherent in dropshipping, you can focus your time and effort on marketing and promoting your business through various avenues:

1. Paid Advertising (Facebook and Google): Paid ads on platforms like Facebook offer scalability, effective product promotion, and capitalize on impulse buying tendencies. Google Shopping Ads can also be a valuable avenue, targeting long-tail keywords where shoppers are more likely to make purchases. While there may be more price competition with Google ads, it’s worth testing to see how it performs for your business.
2. Influencer Marketing: If you have a limited budget as a new dropshipper, consider influencer marketing. It’s a cost-effective way to reach your target audience, as influencers often enjoy higher trust levels among consumers compared to traditional advertising. When engaging with influencers, consider negotiating an affiliate fee rather than a flat rate, creating a win-win situation.
3. Content Marketing: To build a sustainable stream of traffic for your store, incorporate content marketing into your dropshipping business plan. Initiate a blog focused on your dropshipping niche, creating content that entertains and educates your target audience. You can also explore opportunities on YouTube, develop infographics, or even start a podcast to enhance brand visibility.
4. Community Engagement: Join and engage with communities of individuals passionate about your niche. Platforms like Reddit, Facebook Groups, and online forums provide opportunities to initiate conversations with potential customers. Remember to avoid overly sales-oriented interactions; instead, aim to offer help and establish relationships that foster trust in your brand.
5. Mobile Marketing: Connect with your customers on their mobile devices. Establish a VIP text club, encourage website visitors to sign up for exclusive deals, and provide customer support through live chat via Messenger.
6. Email Marketing: Email marketing is a potent tool for dropshipping businesses. It helps build lasting customer relationships and drives repeat purchases. Send targeted, personalized content such as promotional offers, product recommendations, and informative newsletters to enhance customer engagement and increase sales.

Track the performance of your marketing channels, especially if you’re investing in paid advertising. As your business grows and evolves, be ready to adjust your marketing strategy to optimize costs and maximize revenue.

9: Evaluate and Enhance Your Offerings

Once you’ve been actively marketing and managing your dropshipping business for a while, it’s essential to examine the results of your efforts. Shopify analytics can provide valuable insights into your online store, helping you address key questions, such as:

1. Sales: Which channels are delivering the best performance? Where should you allocate more advertising budget? What are your top-selling products? Who are your most valuable customers?
2. Shopper Behavior: Are people making more purchases on desktop or mobile devices? What’s the conversion rate for each type of device?
3. Profit Margins: Which products and variant SKUs are the most profitable? How do your sales and gross profits compare month over month?

In addition to Shopify analytics, you can utilize tools like Google Analytics and Search Console to track search traffic trends and refine your search engine optimization (SEO) strategies. If you’re using third-party apps for social media or Messenger marketing, regularly review their reports to ensure your overall strategy aligns with your business goals.

When building your dropshipping ecommerce store, prioritize the establishment of a data-informed analytics system. Consistently monitor key performance indicators (KPIs) and measure your store’s performance against predetermined benchmarks. This approach will empower you to make informed decisions for your business and steadily elevate your small enterprise to the next level.

What is the mechanism behind the dropshipping business model?

Dropshipping is a fulfillment method that empowers store owners to sell products directly to consumers without the need to hold any inventory. When a customer buys a product from a dropshipping store, a third-party supplier takes on the responsibility of shipping it directly to the customer. The customer pays the retail price established by the store owner, while the store owner, in turn, pays the wholesale price to the supplier. The difference between these prices represents the profit, all achieved without the need to manage physical products or make investments in inventory.

To begin selling products, all you need to do is create an account with a supplier.

Here are three common methods for finding a supplier for your dropshipping store:

1. Supplier Databases: You can utilize supplier databases like Alibaba or AliExpress to discover potential suppliers.
2. Integrated Supplier Directories: Some ecommerce platforms, like DSers, offer integrated supplier directories within your store’s backend, streamlining the process.
3. Print-on-Demand Services: For specific types of products, such as custom merchandise, you can consider print-on-demand services like Printify.

Among these options, the most convenient process for Shopify store owners is often through DSers. DSers enables you to access a vast product selection from the DSers marketplace on AliExpress and seamlessly import them to your store with a single click.

In the dropshipping business model, you bear the responsibility of website development, brand creation, product selection, and marketing efforts. Additionally, you manage shipping costs and establish pricing strategies that yield a profitable margin for your business. This model provides you with a high degree of control and flexibility in building and managing your online store.

Is dropshipping really profitable?

Certainly, dropshipping can indeed be a profitable business model for entrepreneurs. One of its key advantages is that you’re not burdened with responsibilities like shipping or manufacturing. This results in a low-risk business model that avoids large upfront costs typically associated with wholesalers. By partnering with the right suppliers, you can establish a healthy profit margin.

A useful business tip is to utilize tools like Shopify’s free profit margin calculator to assess the profitability of specific products, simplifying the decision-making process.

It’s worth noting that there are numerous dropshippers who generate substantial annual income, sometimes reaching up to $100,000 or more, even as a side hustle. Achieving success in dropshipping involves selecting the right suppliers and diligently building your brand.

However, it’s essential to acknowledge that the dropshipping landscape can be highly competitive. The accessibility of starting a dropshipping business for free has led to many companies offering similar products at comparable prices. To stand out, it’s crucial to differentiate your business through effective branding and marketing strategies.

Embarking on your own dropshipping venture with Shopify is a straightforward process, whether you’re a novice entrepreneur or an experienced business owner. This low-risk, cost-effective approach to online sales provides an excellent opportunity to get started. Here’s how to launch your dropshipping business on Shopify:

1. Sign Up for Shopify: Start by signing up for a Shopify account, selecting a plan that aligns with your budget and requirements.
2. Install the DSers App: Visit the Shopify App Store and install the DSers app. This app will be instrumental in streamlining your dropshipping operations.
3. Source Suppliers and Products: Utilize DSers’ marketplace to identify suitable suppliers and products that match your niche. Import these products to your store.
4. Customize Product Listings: Enhance your product listings by customizing titles, descriptions, and images to make them more appealing and informative to potential customers.

With these steps completed, you’re poised to begin selling your chosen products through your dropshipping business. Hopefully, this dropshipping guide serves as inspiration, guiding you toward a pathway to success and financial independence, similar to the journeys of countless other ecommerce entrepreneurs.

How to start dropshipping FAQ