One of the simplest ways to start a business is through dropshipping. This is a business model that eliminates the need for obtaining inventory, printing address labels, and shipping packages. You can work completely from your laptop and make decent money too. Businesses can earn anywhere from $50 to $5,000 per month depending on how many sales are made.¹ To learn more about how to make money through dropshipping, start an online search.
Before starting a business, you’ll have to understand the ins and outs of what’s involved with dropshipping. You can discover plenty of information and web tools to help launch your ecommerce store by searching online.
Novikov Aleksey / ShutterstockHere’s what you need to know about dropshipping businesses.
What Is Dropshipping?
Dropshipping is a business model that involves selling products, but not actually having to own any inventory. Entrepreneurs can list items for sale on their website and have third-party suppliers ship the item on their behalf when they get an order. To make a profit, you would markup the price of the item on your website and purchase it cheaper from the supplier
So when a customer purchases something on your website, you would then order it through your supplier. The supplier then ships and delivers the item to your customer. Around 33 percent of online stores use dropshipping and it’s something anyone can do.²
Benefits of Dropshipping
There are some major benefits to dropshipping as opposed to more traditional business models.³ For starters, almost anyone can do it. You can work from home on your laptop to create a website, connect with a wholesaler, and market your business online.
Dropshipping minimizes financial risk for start-ups and small businesses. That’s because you don’t need to pre-order stock and gain the pressure of selling it all to make a profit. With dropshipping, you wait until a paying customer makes an order before giving the money to suppliers.
Convenience is another big perk. Your supplier will handle everything from storing inventory to creating shipping labels to getting it in the hands of customers. All you really have to do is market the product, contact suppliers when you make a sale, and handle customer service inquiries.
Before starting a business, you should also be aware of the negatives to dropshipping businesses.⁴ Some of them may include:
- Low-profit margins;
- Highly competitive;
- Legal liability issues;
- No control over the supply chain, and;
- Could be difficult to build a brand through it.
How Much Does It Cost to Start Dropshipping?
You have to spend money to make money when starting a business. Dropshipping businesses are no exception.
First, you will need a web store that customers can visit and purchase items. User-friendly platforms like Shopify and GoDaddy are just two examples that can help you build an online store. You will also have to pay for a web domain. The above examples each come with their own subscription plans:
- Shopify ecommerce plans start at $29.99 monthly, while;5
- GoDaddy ecommerce plans start at $39.99 monthly.6
You will have to pay money to dropshipping companies in order to sell their inventory on your website. Businesses like Spocket, AliExpress, and Amazon offer subscription plans that connect you to their product catalog. Compare these plans online to find one that best fits your business needs.
One of the biggest costs involved in dropshipping will be marketing. To entice customers into buying your products, you have to make the products you’re selling look attractive on the website through photography, descriptions, website design, and other creative ways. Advertisements will also be an important part in drawing users to your store.
Something Oberlo recommends doing is order sample products from the dropshipping third-party you plan on ordering from.7 This will give you a customer experience and allow you to see how long shipping will take, what the packaging looks like, and the quality of the product. If you find the experience wasn’t that great, you can move onto another supplier to ensure quality control in your business.
Search Online to Start Your Dropshipping Business
Dropshipping is a business that anyone can try. You can work entirely from home and start a low-risk business with minimal capital required.
First, you just need a platform to sell the items. See if website builders like Shopify or GoDaddy offer free trials. This will allow you to explore each platform and see which one you like best. It also gives you a chance to compare the features available. Each website builder comes with their own costs, so make sure to do your research on what the charges are.
Search online to learn more about how to build a successful dropshipping business. There are plenty of resources and web apps that can help you with everything from choosing products to marketing your shop and everything in between.