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Dropshipping is a popular business model due to its low start-up costs, zero overhead and simple business model. It is possible to start a dropshipping business, which makes it a good option for those looking to start a new business. Best of all, dropshippers can sell a full range of products without having to buy or maintain any inventory.
In this guide, we will teach you how to start a dropshipping business from scratch. We’ll cover the basic steps, helpful tools to get your business up and running, and key considerations.
What is Dropshipping?
Dropshipping is a business system that allows a business to sell products without ever maintaining an inventory of the products. The customer places an order, and then the company notifies the product’s manufacturer or distributor that an order has been placed and is due for shipment to the consumer. The manufacturer or distributor ships the product directly to the consumer on behalf of the dropshipping company.
Ordering is simple: the consumer pays the dropshipper. The dropshipper pays the manufacturer or distributor. The manufacturer or distributor ships the product to the customer. Essentially, the dropshipper is a seller.
Because no inventory is required, dropshipping is a cost-effective way for new business owners to sell products without too much overhead. It also avoids getting stuck with inventory that you can’t sell or don’t want to sell.
Here’s how to start a dropshipping business in six steps:
1. Choose a business concept
A business concept describes what you are selling and to whom. Because there are so many options with dropshipping, you want to start with a limited number of products that you think will sell to a specific demographic.
For example, you can develop a business concept that says you will sell graphic tees to skateboarders. The shirts will have specific designs that appeal to this demographic and will be of the quality and style worn by skateboarders.
The concept is the foundation of the products you sell, your website design and your marketing, so spending time on it is crucial. However, it’s good to keep in mind that since there are limited costs to implementing a dropshipping product line, you can change things if you think you’ve made a mistake or your passion for the product changes.
2. Products of origin
A business concept does not guarantee that you can get the products to serve your demographic. Take the time before developing a website to research products. Search multiple dealers selling the same products to find the best wholesale price for the product.
Some of the most popular markets are:
Flipkart Amazon Indiamart OLX Myntra
You can also search for print-on-demand clothing, home goods or books. Print-on-demand apparel companies print a custom graphic onto various brands and styles of clothing, such as t-shirts, socks, and jackets.
Choose a product that you are excited about, has a good profit margin and looks good in the images displayed on the website. Many of these suppliers also provide statistics on popular items so you can pick things that are more likely to sell because there is already a market for them.
3. Select Suppliers
Once you find the products you want to offer, it’s time to choose the supplier who will be the actual company to ship the products to your customers. There are a few things to consider with the provider you choose:
Quality: Choose a supplier that offers the quality you want your company to represent. One business model is to charge more for better quality products. This is in contrast to being a discount provider of products that may not be of the best quality. How do you want to position yourself?
Profitability: You should be able to make a reasonable profit from the product. Factor shipping and transaction costs into your calculation. Most dropshippers are looking to make a profit margin of 15% to 20%. Of course, if you can generate higher profit margins, that’s great.
Reliability: You want to choose a supplier that ships products in a timely manner with reasonable shipping costs and times. Many suppliers are overseas and you will need to determine whether or not you want your customers to wait for products. You also need to have a supplier that keeps a product in stock, as it is frustrating for you and your customer to have an order that cannot be filled. The best way to check reliability is to order a few products from the supplier and note the process.
Return Policy: When possible, look for a supplier that offers a return policy. Many do not, so you should check before making any final decision. You need to think about how you state your own return policies based on what the supplier offers.
Most dropshippers use online marketplaces because they usually have a better inventory of products with reliable suppliers. It is possible to get a direct source supplier if you have a specific product in mind. This requires additional work to see who distributes the product for the manufacturer and often requires a minimum number of sales per month to be eligible.
4. Create an online store
You will need to create an eCommerce store to sell your products. An e-commerce store is a site designed to help you display your products for sale in a nice way, while providing you with the shopping carts you need to make your purchase transactions.
Building the shop can be complicated for a newbie. The reason is that there are some moving parts.
To create a website you will need:
A content management system (CMS) such as WordPress, Shopify or Squarespace A domain name Web hosting (if you use WordPress) Integrations with your chosen dropshippers An integrated payment gateway to accept online payments
The best e-commerce websites automate the sale of the product with the order to the supplier. If this step is not automated, you enter orders manually every day, which can be cumbersome and error-prone. Shopify is one of the top choices for those starting a dropshipping business. However, it is not the only option available, so it is worth learning more about the best e-commerce platforms.
Additionally, you may also want to consider selling your products through other platforms, Amazon or even social media (i.e. Facebook or Instagram). Multi-channel selling helps your business gain visibility and generate more sales, so it’s generally recommended to do so. That is, if you have the bandwidth to handle multiple sales channels.
5. Register your business
Registering a company in India is an essential step in establishing a legal and recognized entity. The registration process provides the business with legitimacy, legal protection and access to various benefits and opportunities. To register a company in India, you need to choose a suitable business structure such as the following:
Sole proprietorship Limited liability company (LLP) Joint-stock company
The registration process usually involves obtaining a unique identification number, such as the following:
Permanent Account Number (PAN) Tax Collection and Deduction Account Number (TAN) Goods and Services Tax (GST) Registration Obtaining necessary licenses and permits
It is recommended that you consult with a legal professional or business registration service provider to ensure compliance with all applicable laws and regulations during the registration process. By completing the registration process, businesses can operate legally, gain credibility and access a range of opportunities in India’s vibrant and diverse business ecosystem.
6. Market your business
You can’t just set up a website and expect thousands of people to find it. You must market the new business. Because it’s online, you’ll probably go beyond the word-of-mouth marketing you would with other businesses in your community.
Join social media groups relevant to your business and start participating productively. Don’t just try to sell; help people with questions they may have. Become an expert in the community to be seen as a resource. People will find your business through this. Have specific business pages on Facebook, Instagram and other social media platforms. Post regularly about new products, sales, or tips and tricks in your industry of focus.
In addition to your social media efforts, you may want to invest in actual advertising and sales. You can run low-budget Facebook ads targeting specific demographics. Consider starting an ad campaign with a daily budget of INR 500 to drive traffic to your e-commerce store.
You can also write a blog that helps consumers find you using search engine optimization (SEO) tactics. For many new eCommerce stores, doing a little bit of each of these marketing strategies is the key to getting enough eyes on your store to convert into buyers.
Test products to gauge interest in them
The great thing about dropshipping is that you can test new products to see if the market is hungry for them. This is easy to do and doesn’t cost you much more than the time to update your store and advertise a new product.
Work with your suppliers to see what new products are coming out that suit your demographic. Then choose one product at a time to launch. If you feel strongly about the product, set a marketing budget for it. Run a specific ad campaign for the new product and see how it compares to the rest of your products online.
Dropshippers should always be testing new products. This helps sell more items to existing customers who have already purchased and trust your brand. It’s easy and cost-effective to do and should be part of the ongoing development of your business.
bottom line
Almost anyone can open a dropshipping business using marketplace providers and templated websites. It doesn’t have much overhead to begin with, and you can quickly start turning a side hustle into a main gig with the right product line that appeals to a specific demographic. You can own a business for just one lakh and grow from there.
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