Dropshipping: What It Is, How It Works, and How to Get Started

Dropshipping is a sales method where an online store focuses solely on trading, while the storage of products and direct delivery are handled by suppliers.

The profit of the online store is typically generated by setting the retail price higher than the cost from the supplier. For example, you can sell on eBay.

How to start on eBay.

Let's delve into what dropshipping is in more detail:

The store seeks customers, for instance, those who have clicked on an ad banner.
Orders are forwarded to suppliers.
They directly send the order to the customer.
The store receives a commission from the supplier.

The dropshipping model helps entrepreneurs manage their online store without worrying about the shipment and storage of products. Simply create a website and attract customers.

Pros and Cons of Dropshipping

Pros:

1. Low Initial Investment:

Starting a dropshipping business doesn't require huge investments. Whether it's setting up an online store or creating social media pages, a minimal amount at the beginning is sufficient.
Most likely, you won't need assistants. Dropshipping is your chance to work independently for yourself.

2. Less Hassle with Organization:

In dropshipping, you need to focus on three things: maintaining the online platform, attracting customers and communicating with them.
Storage and packaging of products are the supplier's concern. No need to worry about warehouse spaces, which makes dropshipping simpler than wholesale trading.

3. Numerous Collaboration Options:

No warehouse means no limitations on the variety of products.
You are free to collaborate with multiple suppliers.

4. Freedom to Choose Your Workplace:

Manage your business from anywhere. All you need is a laptop and an Internet connection.

Cons:

1. High Competition:

The ease of entry into this market attracts many players.

2. Limited Control over Prices and Inventory:

Delays from suppliers can impact customer satisfaction, and managing pricing can be complex.

3. Dealing with Payments and Subpar Products:

Indirect purchases sometimes yield unexpected results, which can undermine your reputation.

4. Concerns about Supplier Reliability:

Unscrupulous suppliers may easily steal your customers, regardless of agreements.

5. Advertising Investment is Necessary:

Without investing in website promotion, initial sales are likely to be disappointing.

A store with a good rating on eBay. You may have to wait for such results.

Types of Dropshipping

Dropshipping comes in various forms. Here are its main types:

1. Reselling

Some sellers market products from different suppliers in a single store. This is an excellent option for those who have expertise in a specific area or understand their audience well. For example, if you're an expert in Korean beauty products, create an online store, write blog posts on the topic, and sell relevant items.

2. Partnership with Offline Stores

Certain products are challenging to find online. Take advantage of this to acquire an exclusive assortment with low competition. However, this option is more complex. You'll need to find a store with the items you need, negotiate, and try to gain access to the products to take photos. If the store lacks experience in dropshipping, you may encounter certain difficulties.

3. Selling Foreign Goods

Most often, this involves Chinese products, but some stores sell goods from Europe or other Asian countries. Such dropshippers often target business clients.

A store selling Korean beauty products on eBay.

4. Branded dropshipping

Here, you create unique branded products — the necessary design is printed only on the ordered items. This includes printing on mugs, T-shirts, covers, calendars, and much more.

Types of Dropshipping Platforms

Dropship on various platforms. Or create your own website. Or even use social networks. Your choice depends on what you are selling, who your target audience is, and how well you know the platforms you choose. Social networks are a popular starting point for dropshipping, as they attract buyers without significant expenses.

Websites. For example:

eBay. It takes 11% of your income (often, this is too expensive for beginners). Additionally, there are monthly fees if you want to sell a variety of products.

Zendrop. It provides both dropshipping and print-on-demand services. Created by experienced dropshippers who were fed up with issues from other platforms. Cost: $49 per month for unlimited orders after a free seven-day trial.

Zendrop plans.

Your Own Store. This automates processes and allows you to manage your sales on multiple platforms through your own convenient interface. To create your online store, you either need a professional developer or a lot of patience — you'll have to get familiar with website creation tools like Tilda.

Services. Some services simplify dropshipping tasks, such as finding suppliers and showcasing products on social networks. For example, Shopify.

Major Marketplaces. You can engage in dropshipping on Amazon, but it's essential to observe some guidelines, such as ensuring that you’re the sole seller of the products, clearly identifying your business on packing slips and documents, and eliminating any information that identifies any third-party sellers.

How to start dropshipping

Now, let's figure out how to get started.

Step 1: Find your niche

First, determine what interests people. You can use Google Ads Keyword Planner to find average monthly searches. Study product prices and assess potential profits. Research the competitive landscape. After that, understand what you want from your future supplier, taking into account acceptable profit margins, preferred shipping regions, and suitable return conditions.

Step 2: Choose suppliers

Find suppliers using the following methods:

Contact manufacturers directly and inquire if they offer dropshipping services.
Look for partners on popular dropshipping platforms or even through search engines (just google "dropshipping suppliers" or "suppliers for dropshipping").
Use specialized websites such as Doba.

Premium suppliers on Doba.

Choose a supplier based on their terms. Pay attention to payment methods, possible additional expenses, the supplier's role (manufacturer or intermediary), whether they provide branded packaging, and the communication channels they use. Find out if they provide access to information about product availability and delivery methods.

Step 3: Create a website

Your website is your face and storefront. If you can't create a full-fledged store, start with a social media page. Add products from supplier catalogs to your store and list the current prices.

Step 4: Promote yourself

Attract customers through various channels. Take low profit margins into consideration when determining your marketing budget. There are opportunities for free advertising — for example, if you sell something unusual, try giving an interview. Or simply ask your friends to tell their acquaintances about you.

Step 5: Track delivery and analyze feedback

Once your online store receives the first orders, immediately forward them to the supplier. Monitor delivery statuses and read customer feedback. If you realize that improvements are needed somewhere, don't delay implementing them.

Summary

Dropshipping is a streamlined process where sellers handle customer orders, while suppliers manage product monitoring and shipping. The model offers the advantages of minimal investment, low risk, and the flexibility to operate from any location. However, challenges arise due to the absence of physical inventory, complicating marketing efforts. Key steps in starting a dropshipping business involve negotiating with suppliers, creating an online presence, and actively promoting products.