Hello, I am Andrés García, a specialist in Dropshipping and Digital Marketing. I have created, managed, and scaled Online Stores with the Dropshipping model to 6 and 7 figures. In this Blog, you will understand what Dropshipping is and how it works so that you can apply it to your E-Commerce correctly.
What is dropshipping?
Dropshipping is a shipping and delivery method in which the seller does not ship or store their products. Once the seller has an order, they buy it from a third party (supplier) who does have stock of their product and manages the shipment to the final customer. As a result, the merchant (seller) does not handle the product.
You only need a computer, an online store, and basic knowledge of how to do marketing and sell products online.
How does Dropshipping work?
1. The dropshipper (seller) looks for a supplier and a product catalog(s) to sell in their online store by adding a margin
2. When someone places an order with you, you go to the supplier and tell them to ship to the customer's address
3. As a result, you will have sold a product in your store with a margin without handling the product (logistics, warehouse, customs etc..)
The seller's profit from doing Dropshipping comes from the difference between the initial cost of the item and the price they sell it for.
Once we understand what Dropshipping is and how it works, we will move on to see the costs involved and how to start doing Dropshipping.
Where to find Dropshipping suppliers?
You can contact any company that has products and ask them if they ship to final customers or if they work with the Dropshipping model. The most popular platforms to find Dropshipping suppliers are;
1. AliExpress
2. Oberlo
3. Ebay
Why don't they buy it directly from the supplier?
1. The internet is very big and it is not easy to find a dropshipping supplier, in fact, many only work with intermediaries, not with final customers.
2. When customers buy, it's not just about the product, but marketing, positioning, security, brand etc..
Dropshipping Costs
Dropshipping costs will depend on the budget you have and the sales channels you want to use. Below I will recommend what I would consider essential costs:
- Platform to create your Online Store:
- Shopify, Most used platform for Dropshipping – 14 Days Free, then €29 per month.
- Woocommerce (WordPress), Hosting – €2 per month, minimum time 4 years with Hostinger
- Domain: €9 per year with Google Domains, click here to go to the Offer with a 50% Discount
- Apps or Plugins: This cost is optional, if you add it you will have a higher conversion rate
- Ali-Reviews (Shopify) – 7 Days Free – €9/Month
- Elementor (WordPress) – Create your Professional Online Store – $49/Year
- SMS Bump – SMS Retargeting – €0.06/SMS
- Marketing Cost: My recommendation is that you invest a minimum of €100. You can choose between Google, Facebook, Pinterest, Twitter, and TikTok Ads or choose to work with influencers. On Google Ads, if you invest €25 they give you €75.
- Total cost Dropshipping with Shopify, €29 after 14 days + €9 Domain and €10 Apps, total €48 + Marketing €148
- Total cost Dropshipping with Woocommerce, Hosting €140 – 4 years + €9/Year Domain + Elementor €49, total €198 + Marketing €298
Remember, you will have no product cost until you make your first sale.
How to create a Dropshipping store?
The standout platform for doing Dropshipping is Shopify, with Shopify you can design your Online Store with professional templates, import Dropshipping products, automatically send abandoned cart emails, process orders in a single click, and most importantly; integrate your E-Commerce with the #1 Dropshipping Supplier, Ali Express.
To create your Free Dropshipping Store you will have to head to the following link – Shopify Free Dropshipping and complete the registration. You will not have to add any payment method and you will be able to use Shopify 100% with all its features, apps, templates, suppliers etc..
For more information on how to create your Dropshipping Store with Shopify for Free, I recommend taking a look at the following blog;
Shopify is the most used platform for doing Dropshipping thanks to Oberlo, however you can also create your Dropshipping Store with other platforms, I have always used Shopify but you can research WooCommerce, Prestashop, or even Wix.
After this brief informative pause, we will see how to start doing Dropshipping step by step.
How to start a Dropshipping business?
To do Dropshipping we need a platform to host our Dropshipping Online Store, a tool to find suppliers that work with the Dropshipping model, and a sales channel to promote our products.
Below I will mention the main steps to start with your Dropshipping business. If you want more detailed information to design your online store, import products, configure payments and shipping, SEO, and Marketing, I recommend you read this blog on how to do Dropshipping step by step.
I will apply these steps with Shopify, I have tried WooCommerce and Shopify and I prefer Shopify by far, it is much more designed for Dropshippers, the interface is very easy to use, it has perfect tools to import products from Dropshipping suppliers, it integrates with great ease into Google Analytics and Facebook Business Manager and ultimately it is much more comfortable to use, it will save you a lot of time and headaches.
1. Create your Online Store with Shopify;
Creating an account in Shopify is a quick and simple process. Clicking the button below will take you to the Shopify page where you will have a 14-day trial period without needing to enter a card or any payment method until the 14 days have passed. Once you are on the page, you will see an empty field at the top of the screen where you must enter your email address.
Enter your email address in this field. It will ask you to create a password for your account and enter the name you have chosen for your store. Then, you must answer a few questions related to your experience in the E-Commerce field and provide some personal information.
Once you have completed this form, your Shopify account will be fully functional. Afterwards, you will need to configure the settings for your account.
2. Customize the Design of your Online Store
- Choose the template you like best.
- Customize your Online Store
Shopify stands out for its interface; it makes customizing templates very easy for users. Shopify templates are fully optimized to be responsive on any device, and they will hardly ever give you any errors.
If you want to customize something that the template's own settings do not allow, don't worry. Once you join a plan, Shopify gives you 1 hour of code editing by their specialists for free.
On the other hand, if you have any problems or questions, you can talk to an agent at any time; Shopify offers customer support 24/7 via live chat or email.
3. Import Products with Oberlo
Well, at this point, the only thing left for us to do is add the products and configure the payment methods where we want to receive the money from sales.
- Go to the “apps” section
- Look for the Oberlo app and click Install
- Once you are in Oberlo, go to the “search products” menu
- In this menu you will find a wide variety of products with suppliers that offer dropshipping; AliExpress is the winning platform for dropshipping with Shopify. The vast majority of suppliers who can afford to do dropshipping have their products on AliExpress.
- Identify your niche or a product you think has potential. You need to be clear about what your sales channel will be: Google, Facebook Ads, Instagram, TikTok, etc..
- Once you have found your niche or product, it's time to customize it; click on import product. In the “import list” menu you will find all imported products; here you can set the title, description, and price you want.
- Oberlo's prices are really low; now you have to set your price and give it a personalized touch with the description, images, etc..
- When you have finished your product, click "import to store", it will redirect you to Shopify, here you can further customize the product and add it to collections, sections, etc..
- Finally, having all the products ready, customize the store with the products and do the corresponding branding.
4. Marketing
Once our Online Store is complete, we will have to find a sales channel to promote our products.
Below I will mention the main options:
- Influencers: Promoting your products through an influencer can be very beneficial for your brand, a public profile recommending a product will give your Online Store recognition, trust and surely sales. Influencer marketing is usually riskier than Digital Marketing, you will not have any guarantee that your product will sell or even get clicks. However, if you find the right influencer, you might be able to generate a high ROAS (Return on Investment), difficult to obtain in a Digital Marketing campaign. To ensure that the influencer is the right one, make sure that their publications have likes and comments consistent with their followers, you can ask the influencer to send you the statistics and a photo of the views their story has, you will also have to analyze their audience to see if they are potential customers.
- Digital Marketing: Through Digital Marketing you can have a great reach for a relatively cheap price. Platforms like Google and Facebook Ads allow you to filter by interests/ages/countries or even interactions with your website. By doing a Digital Marketing campaign you will guarantee clicks and impressions. Thanks to the advanced metrics provided by these platforms, you will be able to quickly identify if the selected audience is interested in your product, you will be able to test different interests until you find the profitable one.
- Manual Marketing: If you don't have much initial capital you can do manual marketing, promote your products manually on platforms like Facebook, WhatsApp, Pinterest, Instagram, Youtube, Twitter.. The reach will depend on you, if you already have an established audience you can benefit from it by promoting your products for free, however, manual marketing will be limited based on your audience and the interactions you generate manually.
Is Dropshipping profitable?
Asking if Dropshipping is profitable in 2020 is like asking if people are going to continue buying on the internet. Dropshipping is not a secret online selling technique, it is a shipping model that has been used for about 10 years, as long as there is demand Dropshipping will be profitable,
The question is, will the increase in competition with large E-Commerce like Amazon, AliExpress or Wish make it difficult for small Online Stores to sell on the internet and make good profits?
As you may already know, Ali Express and Amazon are in the middle of a trade war to see which one dominates internet sales, Ali Express has started investing heavily in Google and Facebook Ads in recent years, considerably increasing its sales in Spain and Amazon is scaling in other areas. Both companies directly affect dropshipping, however if you find your niche and position yourself well between these two large companies you can continue to make very good profits.
Unlike Amazon and Ali Express you have access to many other sales channels to differentiate yourself, Influencers, Pinterest, Youtube, Tik Tok.. For now they are practically not promoting themselves in these sales channels, take advantage and promote your brand there.
Another advantage compared to these E-Commerce monsters is the option for personalized branding, you can create your Dropshipping Store around a specific niche with which you can differentiate yourself and give an image to the consumer specialized in that niche.
In short, Dropshipping continues to be and will continue to be profitable, take advantage of this business model to learn and generate income online with hardly any investment, Dropshipping is one of the best business models to start in digital entrepreneurship, don't wait any longer..
Below we will make a comparison of the advantages and disadvantages that Dropshipping has;
Advantages
- Very Reduced Investment compared to a Standard model
- Low Risk by not having to store or place bulk orders
- Easily Scalable once you have validated the demand and sales channels
- You will save a lot of time by not having to look for a manufacturer, logistics etc..
- No need to hire staff to store products and manage shipments
- Perfect product validation, low investment, broad catalog
- Easy to find suppliers thanks to tools like Oberlo
- Platforms like Shopify Optimized for Dropshipping
- Easy to automate, order processing, marketing, and customer service
Disadvantages
- Product cost higher than if we place bulk orders
- Slow shipping, depending on the supplier shipments generally take 3-14 days
- You do not have total control of the products and their shipments
- Branding, adding your logo to the product will be more complicated
Dropshipping Conclusion
After analyzing the Dropshipping business model I will give you my personal conclusion.
The main differences between Dropshipping and a standard sales model are distinguished by the entrepreneur's budget;
- If you have a high budget (+10,000€), you know that your product can sell, you find a manufacturer, you know how to promote the product and manage the logistics of shipments and stock, then placing bulk orders can be a good option. It is riskier as you have to make a fairly high minimum investment and after all the only or best way to validate the demand for a product with low initial capital is by doing Dropshipping.
- Medium-low budget (-500€), if you have a limited budget and are new to the world of E-Commerce, Dropshipping is the best business model to start selling online, you can start dropshipping for less than 50€, with only 100€ you can validate the demand for your product in the largest sales channels available (Google, Facebook, Pinterest, Twitter and Tik Tok Ads).
By doing Dropshipping you will learn to create an Online Store, sell physical products online, serve customers, brand your brand, manage social networks and ultimately manage an online business. Once you have guaranteed the profitability of your Dropshipping, know how it works to perfection and have enough budget to afford bulk orders, then I do recommend moving on to the standard model (high budget), you can create a solid brand offering express shipping, packaging and personalized products.
I hope this article has helped you understand what Dropshipping is and how it works, if you want more information about this business model I recommend you take a look at the rest of the articles we have, click here to see more Dropshipping blogs.
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