DropShipping Guide 2022: Make Money Selling Without Keeping Inventory

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Do you want to learn how to dropship? Maybe you’ve heard of Shopify dropshipping, Amazon dropshipping, Aliexpress dropshipping and you’re wondering how does dropshipping works? Don’t worry. In this dropshipping guide, I will show you how to start a dropshipping business.

One of the fastest ways to make money online has always been by selling your own products. However, this method has scared a lot of people away due to the fact that you need to have a lot of money to buy the goods, get a store, and market your products.

This rigorous business model of selling scared a lot of online merchants away and with big online stores like Amazon, it’s as though online retailers don’t stand a chance.

Well, not anymore. With the introduction of the dropshipping model, online retailers found a way of cutting down on the process of buying goods or looking for a warehouse or store to stock your goods. As a result, the dropshipping model became a highly accepted business model amongst online merchants. 

But, what is dropshipping exactly and why is it a viable option for selling online? In this article, we will take a deep dive into what dropshipping is as well as how to start a dropshipping business.

Dropshipping statistics to know:

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  • Dropshipping accounted for nearly $85 billion in annual sales globally, and 23% of all global online sales were made in 2017. (Source: Shopify dropshipping)
  • Dropshipping has been adopted by around 27% of online retailers. (Source: Ecommerce Platforms)
  • Dropshippers earn 18.33% more than suppliers who sell to them, compared to making their own sales through their online stores. (Source: TorchBankz)
  • Amazon dropshipping has increased as 34% of Amazon sales are fulfilled by dropshippers who posted their products there.

What is Dropshipping?

Dropshipping is an order fulfillment business method in which the merchant does not have to stock any inventory or ship the products himself when a customer places an order. Instead, the manufacturer of the product controls the entire ecommerce supply chain.

In dropshipping, the customer orders a product from the dropshipper (seller), the seller then forwards the order to the manufacturer after taking his profit while the manufacturer handles the packaging and shipping to the customer. So the item is shipped directly from the manufacturer’s warehouse to the buyer.

The merchant or drop shipper manages marketing and sales, while the dropshipping supplier handles logistics. The most attractive thing about dropshipping is that it allows you to meet customer expectations and increase control over your ecommerce business. You don’t need to keep inventory or pack boxes. This helps reduce inventory costs.

How does dropshipping work?

Dropshipping allows store owners to sell directly to customers without having to stock any inventory. Dropshipping allows customers to purchase products from dropshipping stores and have them shipped directly by a third-party supplier.

You set the retail price and you pay the wholesale price. The rest is profit. You don’t have to manage products or invest in stock. You can easily do this with Shopify dropshipping site.

To start dropshipping, you’ll have to register an account with your supplier to be able to sell the best Dropshipping Products. That’s how to start a dropshipping business.

There are two common ways to find suppliers for dropshipping stores:

  1. Through a supplier database such as DropshipDirect, Alibaba, or AliExpress. You can also use Amazon dropshipping.
  2. Use an integrated supplier directory in the backend of your store, such as Oberlo.

Oberlo is one of the best apps for Shopify dropshipping. The platform allows you to import millions of products directly from AliExpress. Oberlo automatically fulfills orders when customers buy products in your store.

You just need to double-check that your order details are correct before you click the Order button. The product will then be shipped from the AliExpress dropshipping supplier directly to the customer, regardless of where they may be located in the world.

Benefits of Dropshipping

Dropshipping is an excellent business model that aspiring entrepreneurs can start with. It’s easy to set up. Dropshipping allows you to quickly test out different business models. This gives you the opportunity to learn more about how to market high-demand products. Dropshipping is a very popular business model.

Benefits of Dropshipping

1. You will need less capital

Dropshipping has the greatest advantage of all. You don’t have to invest thousands in inventory upfront. Traditional retailers had to invest large amounts of capital in order to purchase inventory.

Dropshipping is a model that allows you to sell products without having to buy them. It’s possible to source products quickly and start a profitable dropshipping business without large investments. You can easily do this with either Shopify dropshipping, Amazon dropshipping, or Aliexpress dropshipping.

Dropshipping is less risky than traditional retail businesses because you don’t have to sell inventory upfront. This is the major reason why people want to learn how to start a dropshipping business.

2. It’s easy to get started

Dropshipping makes it easier to run an ecommerce store. Dropshipping takes out the hassle of:

  • Management of a warehouse or payment
  • Shipping and packing your order
  • Accounting reasons: Inventory tracking
  • Returns and Inbound Shipments:
  • Continue to order products and manage stock levels

3. Low overhead

Your overhead costs are very low because you don’t need to manage a warehouse or purchase inventory. Dropshipping is a home-based business that requires little more than a computer and some recurring expenses. These costs will increase as you grow but they will remain low when compared to traditional brick-and-mortar businesses.

4. Flexible location

Dropshipping can be operated from almost anywhere that has an internet connection. You can manage and run your business as long as you are able to communicate easily with customers and suppliers.

5. Large selection of products available

You don’t need to pre-purchase items that you are selling so you can offer a variety of trendy products to potential customers. You can list an item for free if it is in stock by suppliers.

This is the most attractive reason why people want to learn how to start a dropshipping business. When you use Shopify dropshipping or Aliexpress dropshipping, you’ll have access to millions of products.

6. It’s easier to test

Dropshipping can be a great fulfillment option for businesses looking to launch new stores or test customers’ appetites for new product categories. Dropshipping offers the opportunity to list and possibly sell products without having to commit to purchasing large quantities of inventory.

7. Scaling up is easy

If you have a traditional retail store, you will need to do three times the work if you get three times as many orders. Leveraging dropshipping providers will allow you to grow with less growing pains.

Sales growth is always a challenge, especially in customer support. However dropshipping scale businesses do better than traditional ecommerce companies.

How to Start A Dropshipping Business For Beginners

How to Start A Dropshipping Business For Beginners

Step 1: Selecting a dropshipping niche

You will need to identify your niche in order to start a dropshipping business. A niche is a section of the market e.g Smartwatches is a niche in the watch industry. The more niche-specific you are, the better.

As dropshipping is becoming more popular, it’s harder to find niches that haven’t been saturated. However, there are always new niches and products that are being developed every week. So there will always be opportunities of new niche discovery.

You will want to avoid any niche already crowded with sellers or dominated heavily by big brands.

These guidelines will help you select a dropshipping niche to make money online..

  • Begin with your passions and interests
  • You can choose a niche that solves a problem you have faced or are currently facing.
  • Participate in the competition: There could be money to be made if there is competition. To be competitive, you will need to have a strategy.
  • Make sure the niche is lucrative

Step 2. Choose a business structure

You will need to establish a legal business entity if you are serious about your venture. Although we are not attorneys and cannot offer legal advice, we can provide a list of three common business structures. This is something to consider when learning how to start a dropshipping business. Even if you’re using the easy Shopify dropshipping model.

a) Sole proprietorship

This business structure is simple to set up, but it does not offer personal liability protection. Your personal assets could also be at risk if your company is sued. There are no filing requirements and your earnings can be reported on your personal taxes. You don’t need to file any other federal or state business filings.

b) Limited liability company (LLC).

By establishing your business as an LLC, you can increase your protection of personal assets. Although the liability protection isn’t foolproof it offers more protection than sole proprietorships. Additional filing requirements may be required and you will need to pay ongoing and incorporation fees.

c) C-corporation

Major corporations are usually set up as C-corporations. This provides the greatest liability protection, provided it is done correctly. Because income does not pass directly to shareholders, they are more costly to incorporate.

Note: Information about the business structure and EIN (employer identification numbers) discussed above are only applicable to entrepreneurs in the United States. It won’t be applicable to entrepreneurs from other countries. You should note this when learning how to start a dropshipping business.

3. Make sure you have your finances in order

When starting a business, entrepreneurs often mix their personal and business finances. If you are ever audited by the IRS, this can cause confusion and make accounting more difficult.

It is important to keep your personal and business finances separate. It is best to open new accounts under your business name. The following accounts are recommended:

a) Checking account for business

All of your business finances should be managed through one main checking account. You should deposit all business income into this account and withdraw any expenses from it. This will make accounting easier and more efficient.

b) Credit card

A business credit card should only be used for business expenses or dropshipping inventory. You can earn serious rewards by choosing the right rewards travel card, as you will be purchasing a lot from suppliers. Capital One offers the best travel rewards program, while Fidelity Visa/American Express has the best cash-back program.

c) Collect sales tax

Only if you can prove the following:

  • Sales tax is collected by the state where you are operating.
  • Someone living in your state places an order

Be prepared to pay sales tax if your state has it. To register as a retailer in your state, you will need to contact the Department of Commerce. They will also tell you how often you must submit the tax.

d) Licenses for local businesses

Most towns and cities require that businesses obtain a business license which must be renewed on an ongoing basis. Dropshipping businesses may not need to meet this requirement, as many dropshippers will operate from their home offices. To find out what is required, you can check your local laws.

Step 4: Find the right dropshipping suppliers

dropshipping suppliers

Once you’ve identified the niche that you wish to target with a particular product, it’s time to search for a supplier who sells that product. This is easy if you are using Shopify dropshipping as they already vet their dropshipping suppliers.

Unlike Amazon dropshipping or Aliexpress dropshipping where you have to vet the suppliers yourself. Your dropshipping supplier is an important partner in your business. This is something to take note of when learning how to start a dropshipping business. The following criteria should be considered when choosing the right supplier:

  • Experience: Your supplier should have a proven track record in dropshipping and provide excellent customer service. 
  • Fees: Because margins are so slim, you need a dropshipper who won’t charge you excessive fees. It is advised that you should not pay more than $5 per item to stock, package, and ship your items. 
  • Fast Shipping: Choose a supplier that can ship the goods as fast as possible so the goods get to the customer in less than 14 days.
  • Quality of the product: Dropshipping can pose a serious occupational hazard if suppliers sell low-quality products. Request samples of products before signing any contract.

Let’s now discuss what you need to know in order to find the right dropshipping suppliers.

You have two options when you are trying to find dropshipping suppliers: – dropship marketplaces and manufacturers/wholesalers.

a) Dropshipping Marketplaces

Dropship marketplaces offer the best place to start dropshipping. They are available to curate your products and simplify the process of sending the order to the manufacturers. Some of them sell millions of different products.

They purchase wholesale from manufacturers, importers, and then sell to sellers at a markup. An example is Shopify if you are into Shopify dropshipping. That’s how to start a dropshipping business.

Many of the big players offer plugins that make it easy to integrate with your ecommerce website. Here are some dropshipping marketplaces to consider.

Oberlo

Oberlo is an excellent plugin that integrates seamlessly with Shopify stores. The Oberlo directory provides all the items you need. The dashboard shows the number of page views, sales as well as star-rankings every item and seller receives.

If you’ve made an offer, you’ll make use of Oberlo to purchase the product to be delivered to the customer.

The selection of products and the fulfillment is handled by us. This frees you up to concentrate on getting people to your business.

Oberlo offers a lifetime-free Starter plan. To unlock shipping tracking and monitoring of order fulfillment (which I would recommend) you’ll have to change to the basic plan for $30 per month.

The increase will also raise the sales limit for you by 50 percent to 500. Once you’ve reached 500, you’ll move into Pro territory, which costs monthly at $80 and can accommodate more than one user.

Oberlo is 4.2 from 5 ratings in more than 2,000 reviews on the Shopify app store.

Aliexpress

AliExpress is an online marketplace operated by a Chinese eCommerce firm called Alibaba. The platform has millions of items and is the preferred choice for numerous dropshippers. In contrast to many of the suppliers that offer wholesale service, AliExpress allows you to purchase single units of products.

This lets you not need to keep inventory on the website, allowing you to send directly to customers. Anyone who has learned how to start a dropshipping business will understand that Aliexpress can be a great resource.

You can use the AliDropship plugin to import Aliexpress goods directly into your WordPress website.

Wholesale2B

Wholesale2B

Wholesale2B provides more than one million products that can be dropshipped.

In addition, they allow you to promote your products – eBay, Amazon, WooCommerce, Shopify, Magento, Weebly, BigCommerce, Your very own Wholesale2B store.

You can handle the order yourself by becoming an authorized reseller with every supplier. Pay Wholesale2B a three percent fee to take care of your orders.

Wholesale2B begins at no cost and includes their 1 million items as well as customer support. an unlimited free account.

Using the wholesale2B platform costs $24.99 per month.

Importify

Importify dropshipping

Importify handles import and automated dropshipping for stores that run through Shopify, Wix, Jumpseller, or WooCommerce. With the abundance of dropshipping software that focuses almost exclusively specifically on Shopify storefronts, Importify stands out as one of the most versatile tools to improve your WooCommerce business.

It begins with its search and sourcing tools, which allow you to locate products from prominent wholesalers like DHGate, Costco, Walmart, Sears, Kohls, Bonanza, Etsy, Flipcart, Geekbuying.

Find the product you wish to sell, then add it into your WooCommerce store with just one click.

Importify allows you to change suppliers for the same product in case one goes out or you discover an offer that is better from a different source. It is possible to set price rules prior to import to allow you to switch from sourcing and selling more quickly.

There’s also an editor for your product listings and Chrome extension to make it even simpler to import your products, as well as the support is available 24/7.

All of the above is included with the Basic plan of Importify, which costs $14.95 each month. That’s how to start a dropshipping business.

Doba

Doba is a top-of-the-line dropshipping service that is designed to simplify life for entrepreneurs. With a variety of top-rated wholesale suppliers available You will have no trouble finding products for dropshipping for your business.

The vast database of products allows you to access many online business partners. It is also possible to place customized orders right through Doba.

Doba lets you find the right, list, and even sell products in just a few minutes. Test it for free for 30 days, and you can also benefit from amazing analytics to see what products produce the most value for your company.

Instead of listing only vendors, Doba integrates with drop shippers which allows you to place orders to different warehouses via its central interface. Membership also comes with a Push-to market tool that streamlines selling products on eBay.

While it’s true you can test Doba for no cost, it’s important to note that memberships can be expensive, beginning at around $29 per month. It allows you to be a part of an exclusive network of suppliers.

b) Manufacturers and wholesalers

Dropship marketplaces are a great way for merchants to start their businesses, but it is best to work with manufacturers and importers. Because you don’t have to deal with drop ship marketplaces and can buy directly from the source. You should not do this when learning how to start a dropshipping business.

However, dropshippers might not be able to meet manufacturers’ average order volumes thresholds. You will also need to do more in order to add and manage inventory. We recommend that you wait until you are established in the industry before you start selling direct-source products or working with manufacturers.

Although working with manufacturers can seem daunting when you are just starting your dropshipping company, there are several online directories that you can access to find out what they have to say:

US manufacturers:

  • ThomasNet
  • Maker’s Row
  • Import Genius

Canada manufacturers: 

  • Printful
  • Grosche
  • Gelato
  • Hammock Universe
  • Teehatch
  • Kimmyshop

UK manufacturers: 

  • Avasam
  • SupplyMeDirect
  • Modalyst
  • eSources

International manufacturers:

  • Alibaba: Alibaba is the biggest Chinese online store where buyers can meet with different manufacturers. Depending on the manufacturer, you can get items both in bulk or single.
  • IndiaMart: IndiaMART is the largest Indian B2B marketplace on the internet that connects buyers and suppliers.
  • Sourcify: Sourcify is a single-part product management tool as well as a directory of hundreds of verified manufacturers that are all personally selected and vetted by Resnick and his company.
  • Jumia: Jumia is Nigeria’s number one online retailer and ecommerce store. Both Jumian and individual sellers can sell on the platform.
  • Wix: Wix is primarily a website builder that you can used to build an ecommerce website and have your own shop.

Step 5: Create your ecommerce site

dropshipping websites

The next step in learning how to start a dropshipping business is to build a website that will allow you to sell your products.

This can be done in two ways. 

  • You can create an online store using a major ecommerce site like Amazon or eBay or
  • Build your own website using an ecommerce platform like Shopify for Shopify dropshipping, or WooCommerce for Aliexpress dropshipping. 

Let’s take a look at each option.

a) Ecommerce marketplaces – Amazon Dropshipping

Selling on established marketplaces such as Amazon has the advantage of being easy to set up, and customers trust them.

The downside to ecommerce is that you have very little control over your store’s branding, design, and marketing. These platforms will charge you fees for every sale, and you must follow their terms of service.

b) Ebay Dropshipping

Are you considering eBay dropshipping?

Dropshipping, which is where you take orders directly through wholesale suppliers and is permitted on eBay. Be aware that even if you choose to use drop shipping you’re accountable for the delivery of the product within the time period specified in your listing, as well as for the customer’s satisfaction overall with the purchase.

But listing the item for sale on eBay and later purchasing the item through a different seller or marketplace which ships directly to the customer is not permitted on eBay. If you don’t adhere to eBay policies could result in various action

c) Ecommerce platforms

We recommend that you create your own ecommerce website if you plan to dropship. Ecommerce websites allow you to do more with your marketing, which is why you will be different from your competitors.

There are many reliable ecommerce platforms available. The dropshipping supplier you choose will play a significant role in deciding which platform is best for your business. Some offer direct integrations. Oberlo is a great platform when you do Shopify dropshipping.

When choosing a platform, think about what type of store you are looking for. BigCommerce and Shopify offer more product functionality, which will help product-oriented stores.

WooCommerce integrates with WordPress to make your store more content-focused. This could help you in your marketing and SEO efforts. Knowing how each one operates is important in learning how to start a dropshipping business.

Step 6: Optimize your site and market it.

After you have launched your dropshipping website, you will need to make sure you bring in customers.

No matter which platform you use, you will need to market aggressively to optimize your site for search. This is usually done via a combination of email marketing, paid advertising, and social media. Each approach to ecommerce marketing has its merits. We recommend that you choose the ones that work for you.

  • Email marketing: Many ecommerce platforms offer a plugin that allows you to use MailChimp as an email marketing tool. Collect the emails of your customers and send them weekly updates highlighting new products, sales, or content on your website.
  • Facebook and Google Ads: You can place ads on your website for keywords related to your business. Both allow you to reach a large audience and target your niche. To ensure that your ads reach the right market, you can pay more.
  • Social media: You can organically market your company by posting content on Facebook, Instagram, and Twitter that is relevant to your business.
  • SEO (search engine optimization): SEO should form the foundation of your marketing efforts. This is a combination of strategies that will improve the ranking of your website on search engines. You can improve your ecommerce SEO by working with a website developer that values SEO (such as WooCommerce), engaging keyword-based content marketing, and increasing the number of backlinks linking to your site.

In Conclusion

Dropshipping is a great business model if you are in the right niche, have the right product, and market properly. This guide has provided dropshipping business ideas you can start even if you are a beginner.

This is how to start a dropshipping business that succeeds. So whether you choose Shopify dropshipping, Amazon dropshipping, Aliexpress dropshipping, or find your own dropshipping suppliers, you can still make money with dropshipping.

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