Dropshipping is one of the best ways to get involved with e-commerce. Since it requires little capital and even less inventory, practically anyone can start a dropshipping business.
Even better, with the rising profile of online shopping (e-commerce grew by 33.6% in 2020 and will reach $900 billion in 2021[i]), there’s never been a better time to own an online store.
As with most aspects of online selling, however, becoming a successful dropshipper requires time and effort. And that begins with putting in the work to find the right products and sourcing from suppliers that will enhance your business.
This guide takes a deep dive into everything you should know about starting a successful dropshipping business. We’ll discuss how to select fast-selling products, where to find suitable suppliers, and how to attract (and convert) buyers who love what you’re selling.
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Dropshipping is an innovative retail fulfillment model where a merchant only needs to handle the front end of product orders, leaving inventory and shipping to the supplier.
Under this arrangement, the merchant can focus on receiving orders and providing customer service, while a third-party supplier stocks the product, warehouses them, and ships them to the buyer. This way, the merchant never has to handle the goods directly, meaning they are free to focus on growing their business.
What makes dropshipping unique is that it effectively splits up the sales process. As a dropshipper, you can concentrate your energies on finding customers and concluding sales without worrying about buying inventory or maintaining a distribution network.
Because of this, starting a dropshipping store requires much less capital than a traditional retail store. In fact, most dropshippers start their business on their laptop, and many go on to build large, sustainable online stores from there.
Successful businesses are usually built by carefully selecting great dropshipping products and forging partnerships with capable suppliers. Because they don’t produce their own goods, dropshippers only earn the mark-up they add to the supplier’s price.
So, to start a prosperous dropshipping business, you need a good mix of quality products, great prices, and reliable suppliers.
E-commerce has become one of the easiest ways to start a business, and dropshipping has the least barriers to entry. As a result, more people than ever are getting involved in dropshipping and creating businesses that help them make money.
For instance, Wix – a web hosting provider – reported a 123% increase in the number of stores adding dropshipping to their accounts.[ii] Here are some of the reasons for that:
With all that said, you should keep in mind that a dropshipping operation also has its risks. Much of your success is in the hands of your supplier. The quality of goods you sell, packaging and shipping arrangements, and how much you can earn will all depend on your supplier.
That’s why it pays to find suppliers that complement your business and products that sell very well. Luckily, we’re discussing how to find great dropshipping products next.
When picking dropshipping products, the goal is to find good products that you can sell quickly and at a decent profit margin.
Since you’re not producing any of the goods yourself, it’s harder to make a tidy profit on top of the supplier’s price, shipping costs, and other expenses. But with a well-selected product range, you’re much closer to success.
Here are some steps you can follow to curate a catalog of the best dropshipping products.
Product research is a critical part of finding the best products. Typically, dropshippers have millions of consumer goods to choose from, and hundreds of thousands of these are produced every year. However, not all these products are good sellers, with up 85-95% failing.[iii] Before adding any products to your dropshipping catalog, you need to have a reasonably good idea that they will sell.
Start your product research by searching out what people want to buy. Paying attention to the latest consumer trends, what competitors are selling, and what people are talking about is a good start. The following are some tips you can apply:
While it’s easy to jump on a product trend, they might not allow for sustainable sales. Often, that only comes by choosing a product niche where you can build a reputation and attract a loyal fan base.
Besides, selling niche products is a great way to avoid competition as you’re targeting a smaller market. With a smaller target audience, you don’t have to spend as much on marketing. It’ll be easier to get your products in front of potential customers and build solid interest in your store.
Remember that starting with a small niche doesn’t necessarily mean you can’t add more product areas later. If anything, selling niche products helps you build a strong audience early-on and then allows you to cross over into related products with your loyal customers still behind you.
So, as you do your product research, spare some time to identify lucrative niches and the best items to sell within them. For some extra help, read our article on how to find a niche market and find some examples of the demands your business could meet.
The hallmark of successful e-commerce businesses is profitability. It’s no good if customers rave about your products but you struggle to break even. You need to enjoy healthy profit margins for your dropshipping business to prosper.
Focus on merchandise that moves quickly and isn’t too costly. Impulse buys generally fall within this category – they don’t cost a lot and are typically trendy.
To determine if you’re on the right track, consider what competitors charge for the products you’re targeting. Then, factor in supplier pricing, the cost of shipping, and other business costs.
You may want to avoid pricier goods, at this stage at least. Big-ticket items may provide a healthier profit margin, but they’re also harder to sell. You should also avoid hard-to-sell products and goods that are expensive to package or ship. Goods like that only drive your costs up.
The focus here is to find suppliers that make good quality products at affordable prices. They should also have established shipping networks and policies. Your supplier’s errors or inadequacies can affect your business’ reputation, so you should only pick reliable dropshipping suppliers.
Ask the following questions to determine if you have the right supplier:
Finally, you should never select dropship merchandise without first collecting samples and rigorously assessing them. Samples help you learn first-hand if the products meet your standards, and whether they’re good enough for your customers. It’s also an excellent opportunity to test out the supplier’s shipping experience and product packaging.
Don’t be afraid to ask for free samples. Suppliers know how important quality products are to successful stores, so they might be willing to send you free samples. Even if they don’t give you sample products for free, you can likely obtain steep discounts on the sample items.
We’ve discussed how to find great dropshipping products. But we won’t end this section without providing a starter list of some of 2021’s most popular items. Here’s a list of seven high-performing dropshipping products:
If you’d like a closer look at the trending products this year, check out our list of the 30 best dropshipping products to sell in 2021.
Knowing how to choose top-performing products is one thing. However, you still need to find the best places to access these goods so you can get your dropshipping business underway. If you don’t know where to begin, try out the following sources to see if they have the products that meet your needs.
There’s no better place to begin your search than an online marketplace. Global e-commerce marketplaces typically have thousands to millions of suppliers, and any one of them can provide the goods you need. Examples of platforms you can explore are Alibaba.com, Amazon, Oberlo, and AliExpress.
Once you get on the platform, start by executing a search for the specific products you’re interested in. You should be able to see the suppliers who stock those products, as well as their prices.
Next, create a shortlist of the suppliers whose price and product description fall within your requirements. Most online marketplaces have supplier rating systems and product information pages. You can use this additional information to narrow down your shortlist based on their reputation, efficiency, and quality.
If you have made satisfactory purchases from a supplier before, returning to them for dropshipping merchandise can be a good idea. As a dropshipper, you’re not likely to be moving a large number of goods, at least not at the start. Therefore, even small-scale suppliers can provide items that meet your specifications, so long as their prices are affordable.
Be sure to inform them that you aim to start a dropshipping partnership. That way, they know what kind of standards you expect and can put that extra bit of effort into fulfillment for your customers.
Many prominent manufacturers, suppliers, and online marketplaces maintain fulfillment programs that you could join. A fulfillment program is an arrangement where you use another company’s warehousing and distribution network, allowing you to focus on finding customers and selling to them.
While this sounds like dropshipping, there’s a big difference – you have to buy your own inventory before storing and distributing through your partner. You also pay fees for the warehousing and order fulfillment services they provide. An example of a fulfillment program is Fulfillment by Amazon (FBA).
Although fulfillment programs are costlier than dropshipping, you can use them to complement your business. For instance, they can be a valuable waypoint if you’re shipping from suppliers in remote regions. Structured well, the combination of a low-priced fulfillment program and quality goods from affordable but remote suppliers can be beneficial.
The total costs involved and planning for this arrangement may be tricky to manage, however, so be sure you have an effective plan before opting for a fulfillment program.
Lastly, a direct partnership with product manufacturers can help you source your dropship goods. Since you’re taking the goods straight from the source, there’s an excellent chance of even lower prices. You’ll also have no fears over counterfeit products or diminished quality.
However, you should note that this arrangement might not apply to all producers. For example, not all manufacturers maintain a supply network to ship to your customers. So, before selecting a company to partner with, be confident that they have the distribution network to provide the order fulfillment you need.
Now that you know how to find great product ideas and identify what the best sellers are, let’s move on to the business of selling. How do you attract paying customers to your dropshipping store?
Marketing is another cornerstone of a successful dropshipping business. E-commerce businesses thrive on a steady stream of customers, both new and old. After sourcing products and suppliers that set your store up for success, you need customers to buy all that merchandise.
Thankfully, the field of e-commerce marketing has been around for a while. There are now many ways to attract the right kind of traffic to your online store, even with a limited marketing budget. So, let’s jump right in.
The first thing to note with dropshipping marketing is that more is better. The more traffic you can drive to your store, the higher your chances of profitable sales. E-commerce stores typically only convert 2-4% of their traffic.[iv] So, more clicks and visits to your different product pages will often translate to a bigger slice of successful sales.
How do you bring in the page views, clickthroughs, and sales leads? Try out these methods.
Driving leads to your online store starts with finding your ideal customers where they spend the most time. As of 2021, that place is (and will likely continue to be) social media. On average, people spend roughly 145 minutes on social media daily[v] and up to eight and half hours online in total.[vi]
Apart from this, social media platforms have become some of the most effective marketing tools around. Social ad programs such as Facebook Ads, Instagram Ads, Pinterest Ads, Twitter Ads, etc., all have advanced tools to help you reach and retarget valuable leads. Some of the ways you can take advantage of social media channels for dropship traffic include:
Lists are incredibly effective at attracting traffic and sales. They’re the level of marketing where a prospect goes from awareness to consideration. That’s because, in building lists, you obtain permission to not only get in touch but stay in touch with your marketing leads.
A list typically includes the contact information of your marketing leads. For example, you could collect their email addresses, Facebook Messenger details, or WhatsApp contact. With the information you possess, you now have a steady line of communication and can nurture them through your sales funnel.
Besides, lists have a jaw-dropping return on investment (ROI). One survey found that email marketing produces a 50x ROI – it brings in $50 for every $1 spent.[viii] You can start building lists for your store by doing the following:
Influencers are people who can affect your target market. They could be celebrities, other business owners, or highly influential individuals like bloggers. These influencers typically have an audience or can reach a large number of people. If they were to talk about your business or endorse your products, it could help increase traffic to your store.
To find the right influencers for your business, start by searching out social media accounts or personalities that have authority in your niche.
Here’s a tip: you can find influencers by searching for topics around the same products you sell. You’ll find several hits on search pages for blogs and social media accounts that have large followings around those products. Places to search include YouTube, Google, Instagram, and Facebook.
Be prepared to send them free samples of your merchandise in exchange for a shout-out. Another thing to keep in mind: you don’t necessarily have to find influencers with super huge followings. Even accounts with a few thousand followers can be valuable if they have a dedicated audience.
Blogging is one aspect of content marketing that is another great way to grow your e-commerce traffic. People buy goods for various reasons, including solving problems, having fun, or self-improvement. With a blog, you can help them understand their buying motivations and facilitate better buying decisions.
In any case, providing helpful content such as “5 best sunglasses to buy in 2021” will make them love you. This way, even if they don’t buy immediately, you can stay at the top of their minds when they finally decide to buy.
Word of mouth is still one of the most effective means of advertising. People may not trust big business claims on the internet or social media, but they are often willing to trust a friend’s recommendation or a referral from a family member.
Make the referral program sweeter by giving something in exchange for a successful referral. For instance, you can offer coupons, product discounts, or a free item.
Attracting traffic is still only half the job. Leads come and go, but what makes the difference is turning those leads into loyal fans. Here are some of the best ways to convert leads into customers.
People love to feel like they’ve got a good deal and if you can show them a good deal, they’ll be more likely to buy from you. For instance, including “free” stuff with product offers is a great way to drive conversion. According to Copyblogger, “free” is one of the most influential words in the English Language, and for good reason.[ix]
Bundled deals, discounts, coupons, and free shipping can make for very compelling offers. For example, one study found that 44% of people made a faster decision to buy because they had received a discount.[x]
Roughly half of all Internet traffic now comes from mobile devices.[xi] Dropshipping benefits from this because mobile navigation is so seamless and it’s easier for leads to view a product offering and click through to your product catalog on a mobile.
Even knowing this information, however, many e-commerce stores still fail to optimize for mobile. As a result, some of the highest cart abandonment rates occur on mobile devices.[xii] To avoid this, you should ensure your product pages are mobile-ready.
Present your offers one at a time. Great offers are nice, but the customer gets “analysis paralysis” if there are too many of them.[xiii] Essentially, they become overloaded by so many choices and take longer to choose or just put off the decision entirely.
So, make your offers short and sweet and your store visitors will take the exact actions you want them to.
Cart abandonment is one of the most common challenges e-commerce businesses face. It’s what happens when a buyer starts the buying process but fails to checkout and pay. The average cart abandonment rate is 69.8%, according to the Baymard Institute.[xiv]
There are many causes of cart abandonment. Some 44% of users abandon their carts because of high shipping fees, 18% leave because of a lengthy process, and 50% exit without paying due to hidden costs.
Streamline your sales process and implement transparent pricing to reduce cart abandonment. Another way to tackle this phenomenon is to adopt user-friendly payment methods. Read more about this in our guide to payment methods in international trade.
Let your prospective buyers see that your business is authentic. You can convince them of this by providing user reviews. Reviews are a big part of online buying for many customers, and when they see you have good reviews, they’re more likely to buy from you.
Another way is to include a money-back guarantee. Tools like this create an emotional connection with the buyer, and with that trust, you can attract higher sales.
Lastly, it’s a good idea to stay on top of your performance metrics. Web analytics and research tools like Google Trends can help you understand how you’re performing by giving you the information to answer important questions such as:
You can answer these questions and improve your store with analytics tools.
Now, you’re just about equipped with everything you need to find awesome dropshipping merchandise and sell profitably. Before you leave, however, take a look at these important tips that can help you gain that extra bit of advantage as you start your business.
While dropshipping is one of the easiest ways to get into e-commerce, remember that success doesn’t come without careful research and effort. Start today by sourcing quality products and suppliers from the world’s largest online marketplace.
Alibaba.com has millions of suppliers from countries around the world. Visit today to explore an impressive collection of items from experienced global dropship suppliers.