If you ever wanted to start an ecommerce business, dropshipping is one of the options to consider. Dropshipping is a low-risk business model and it does not require a large budget to launch compared to other ecommerce business models.
On this page:
- What is dropshipping?
- How to start dropshipping
- How much does it cost to start dropshipping?
- Tips on starting a dropshipping business
What is dropshipping?
Dropshipping is a business model where you run a store without holding any product inventory yourself. With dropshipping, you don’t buy products up-front to keep an inventory while you wait for sales to come in. Instead, you only buy products when you make sales. You also don’t have to worry about product shipping, storing or packaging. You can run your business from anywhere in the world and sell products to almost any country in the world.
In short, this is how dropshipping works:
- Your customer purchases the product for 200 USD from your online store.
- You purchase the product from the supplier for 150 USD and make 50 USD profit.
- The supplier ships the product directly to your customer.
How to start dropshipping
Shopify makes it easy to build an online store and receive orders from your customers. While Oberlo helps you connect your Shopify store to the suppliers that stock various products and ship them to your customers once you receive orders.
You can run your store from anywhere in the world and you can sell products to almost any country. However, you must be at least 18 years and have a credit/debit card to collect payments from your customers in Shopify and purchase products from suppliers in Oberlo.
Shopify is an ecommerce platform that makes it easy to set up and manage your online store, sell products imported through Oberlo, collect payments, and manage orders.
Shopify provides you with beginner-friendly tools to build and run your online store, therefore, you don’t need to have programming or design skills. In Shopify, you install a free or paid store template that is called a theme and use user-friendly settings to design your store.
Oberlo is a platform that gives you access to various learning material on a variety of topics: from building a dropshipping business to mastering marketing, and many other subjects.
With Oberlo, you can source products from various suppliers that are available on the www.aliexpress.com platform. Products are usually shipped in plain packages with no branding, however, once you make more sales, you may connect with suppliers to negotiate product or package customization.
It takes just a few clicks to add products to your online store. Oberlo also makes it easy for you to customize product listing information such as title, description prices and images to attract your audience.
With Oberlo, you can fulfill orders with just a few clicks. After you make a sale, you purchase the products from the supplier and they ship it directly to your customer. This means, you focus on adding products to our online store, making sales, and fulfilling orders
Oberlo is available in 6 languages: English, French, Spanish, Italian, German, and Portuguese (Brazil).
How much does it cost to start dropshipping?
Dropshipping is a low-risk business model and it does not require a big initial budget compared to other business models. However, you still need a minimal budget before starting your business.
You should expect the following expenses:
- Shopify subscription plan (from 29 USD/month). With Shopify you build and run your online store. Shopify offers a 14-days free trial and multiple paid subscription plans.
- Oberlo (from 0 USD/month). Oberlo helps you source products, add them to your Shopify store and fulfill orders. Oberlo offers a forever free plan and two paid subscription plans to meet your needs if you wish to learn more or to scale your business.
- Custom domain (from 14 USD/year). A custom domain is optional, but it strengthens your brand and adds credibility to your business in the eyes of your customers.
- Marketing costs (average of 250 USD for initial product testing). Marketing costs depend on the market you target and which method you choose: free or paid marketing. Free marketing may take more time to attract an audience (engagement via social media, networking in local meetups, building website SEO, etc.) and get sales. Paid marketing helps you quickly test the products you are selling and different audiences (Facebook and Instagram ads, influencer marketing, YouTube ads, TikTok, etc.).
- Additional apps (some apps are free, while others charge a monthly fee). Apps are optional, but they can help you drive sales and run your store more efficiently.
Tips on starting a dropshipping business
To have more direction on starting your dropshipping business, here are some tips that may help:
- Have the right mindset. Dropshipping is like every other business - you have to put a lot of effort and time to make it work. No one gets rich overnight, however, the more you try and learn, the more you will achieve.
- Have the right equipment. You need to have a laptop or a desktop, and internet connection to be able to run a dropshipping business with Oberlo. Oberlo does not work on tablets or mobile devices.
- Understand your responsibilities. When you start a dropshipping business, it’s important to understand the responsibilities you are taking upon yourself as a business owner: taking ownership of the products you are selling, handling customer support, managing returns and refunds, and others.
- Sell a minimal amount of products. It’s best to add just a few products (5-10) to your online store. In dropshipping, products are usually promoted and tested to a possible audience one after another to save time and money. You should put most of your effort in a few main products. Other products in your store can work as a background.
- Define your goals. You can get your first sale on the first day, after a week or even after a month. Everything depends on your marketing activities and the amount of work you put into your store. It’s better to spend less time on the store setup, but to put more effort on the product research and marketing. Even without sales, every business you start teaches you a lot about different marketing strategies, different product markets, and how to manage your time and budget effectively
- Focus only on the essentials. There are many useful and advanced features both in Oberlo and Shopify, however, you don’t have to set up everything at the beginning. It’s best to focus only on the essential settings and launch your store as soon as possible. To start building your dropshipping store, check out the essential dropshipping store setup checklist.
- Understand the order fulfillment process. Once you are done building your store, it’s useful to make a test order and order something for yourself to better understand the whole ordering process. Once you are familiar with the process, then you will feel more confident to fulfill your first real order.
- Register a business entity. Once you start making sales on your store, then you might have to register a business entity. However, this requirement varies from country to country, therefore, it’s best to check with your local legal advisor.