One of the biggest obstacles for new ecommerce business owners is having enough capital to purchase inventory. If you're starting from scratch, you need to estimate how much inventory you will sale and buy it in bulk before you can start your ecommerce store.
The great thing about drop shipping, is that you don't need any inventory to start and you don't risk purchasing inventory in bulk and then not being able to sell it. Sound enticing? I'm going to show you how to start a drop shipping business from scratch, and how you can scale it to be as big as you want.
Starting A Drop Shipping Business From Scratch
The hardest thing for most people is knowing where to start. That's where we come in. There are a few things you will need to have in place in order to start your drop shipping business. They are:
- Niche Market
- Website / Storefront
- Wholesale companies that offer your niche products
- Payment gateway
We will discuss each one in detail and how to get started. But it helps to have an idea for each of those up front.
Find A Niche Website For Your Online Drop Shipping Store
The goal here is to not choose a topic that is too broad to start with. Just having a store with any random product will be a bad move for marketing your ecommerce website. Why? Because you want to first establish yourself as a niche store or expert, so people keep coming back to you for that specific market.
Think of Amazon, they started out as an online bookstore. Now they are the largest online marketplace today with almost any product you can think of.
To start out, its easiest to begin with a market that you are passionate about and have a strong interest in. This eliminates the risk of getting bored of your website which results in a failed ecommerce store.
If you're interested in fitness, start in the fitness industry selling helpful fitness products for like minded individuals. If you're interested in fashion for pregnant women, then begin with with your top picks for fashion for pregnant women. You get the idea. If you can make a list of 3-5 interesting topics, and choose the one that you think has the biggest market while still being a big interest of yours, you've got yourself a winner.
Setting Up Your Website / Storefront For Your Online Store
There are two ways you can do this. You can leverage the marketplace and customers of well established eCommerce websites like Amazon, or you can set up your own website and attract your own website customers.
Drop Shipping with Amazon
If your looking for quickest ways to profits, then this is the fastest route. The first thing you will want to do is begin by setting up an Amazon Seller account at Amazon Seller Central.
You can choose to set up a professional account, or a personal seller account. The personal account will charge you $0.99 per product sold, and the professional account costs just $39 per month. If you anticipate selling at least 40 products per month, then start with the Amazon Professional seller account.
Once you have your seller account opened, you then need to begin listing products. You can do this by listing a product that you manufactured, or list products already being sold on Amazon.
You Might Also Like: How To Make Money Online With The Amazon Affiliate Program
Have you ever noticed that when you purchase something on Amazon, you can choose to buy from multiple sellers? That's because each seller has a set price and are all selling the same product. Amazon usually lists the top seller that the expect will provide the best experience for Amazon customers.
To begin selling products, make sure you have a wholesaler in place first, which we will cover in the next step.
Drop Shipping with your own website
This option may take a bit longer to get set up, but it is also more profitable in the long run. Why? Because when you sell products on your own website you don't have to pay extra fees that Amazon charges, and you are in complete control of how the business is ran.
To set up a website you need to purchase your domain with a ecommerce website builder. Our preferred pick is Shopify because they are the most user friendly for ecommerce stores, and they provide you the most options to scale your business. Other options for an ecommerce website builder are BigCommerce, HostGator, or Magento.
Another reason Shopify is an excellent choice, is because when you list a product on your Shopify store, you can have Shopify list it on your Amazon storefront as well, giving you the best of both worlds.
Shopify starts out at $29 per month and comes with a free trial to get things going and figure out how they work. Along with their awesome website builder, they provide you with training's, best practices and expert tips on growing your ecommerce store.
Finding Wholesale Companies That Sell Your Products Of Choice
This is perhaps the most confusing part for new ecommerce and drop shipping businesses. As a consumer who usually purchases online and in store, we don't realize what actually goes on behind the scenes of businesses in order to source their products.
In this step, you need to find a wholesale company selling your preferred product within your market niche. This may be one company, or multiple companies. Once you find the company, you will need to set up a seller account with them so you get access to the product catalog.
The product catalog will be what you get the product images, descriptions and your wholesale price. You then take that info and put it up on your website or storefront.
The easiest way to find a trusted wholesale company is by using a wholesale directory. Salehoo is a well known wholesale company directory that allows you to search among hundreds of companies and filter through them to find one that fits your store.
Not all wholesalers will offer drop shipping services, so it's important that you ensure your chosen wholesaler offers drop shipping. You can select filters on Salehoo that only list companies with drop shipping services. They will provide you their website, the contact info and potential info that will be requested to begin working with that wholesaler.
Connecting your wholesaler to your website / storefront
Once you have a wholesale company set up and ready to work with you, you will need to start researching how much you can purchase the product for, and how much that product is selling for on Amazon, or on competing websites (depending on your chosen drop shipping model).
You can either manually copy and paste the products you want to list on your website or storefront and list them at the desired price that you have calculated, or you can hire a company to set up an API feed that auto updates all the products for you. If you have an extra $50 per month, I highly suggest the latter option.
We use Inventory Source to list all our products on our websites and storefronts. They connect your wholesale company directly to your website or storefront, and automate the product listing, inventory updates and orders for you.
All you have to do is pass on the orders directly to the wholesale company who then sends out the product to your customers.
Working with a company like Inventory Source will save you a lot of time and headaches, and is worth the extra cost if you have the money starting out.
Setting Up A Payment Gateway For Your Drop Shipping Business
A payment gateway is simply the middle man between your website and the customer's bank account. It is a trusted company that processes the transaction for purchased product and takes the money from your customers account, and sends it to your business.
If you are using Amazon, this step doesn't apply since Amazon takes care of this for you.
If you are building your website with Shopify, then you will want to see which companies Shopify works with and choose one of their trusted partners to set up your payment gateway. A well known company that offers payment gateway services is PayPal and Authorize.net, both of which work with Shopify and are well trusted companies with loads of experience in the industry.
Attracting Customers To Your Drop Shipping Business
Again, if you're starting out selling on Amazon, you have the benefit of taking advantage of their enormous marketplace. You do, however, need to begin getting your Amazon business name known and trusted by Amazon customers.
This is done through creating campaigns on Amazon, and getting customer reviews from sales made.
If you're setting up your own website with Shopify, this is the part that can take some time and is what ultimately makes it a slower option to profits, but remember the profits are also a lot larger in the long run.
There are a few ways to begin attracting customers to your drop shipping store. The easiest way to start is by setting up a paid ad campaign with Google Adwords or Bing Ads.
Google Adwords allows you to create a basic ad, and they will place it on the results of common search terms. Every time a person clicks on your ad, you pay google per click made to your ad. This is the quickest way to getting your website known, and when done right can result in high conversions and lots of sales.
The second option is by getting organic traffic to your website through SEO (Search Engine Optimization) and posting to social media. By creating a blog, and writing content that attract your target audience, you can then refer your blog readers to your drop shipping storefront. This can take a few weeks to months to start seeing some results, but is the best return on investment and the highest converting option.
My advice is to do a bit of both. Figure out what budget you can afford to put towards Bing Ads or Google Adwords each month, and start with that while at the same time start creating helpful and engaging blog posts to attract visitors naturally.
Building A Successful Drop Shipping Business
The success is not always immediate, and will take some trial and error. However, as you constantly work on improving your website visitors and traffic, along with lowering your wholesale costs, you will start to see a very profitable online business very quickly.
I've even known entrepreneurs who have built an ecommerce website and sold it for over $1,000,000 in under 18 months time!
The secret is in attracting customers, and selling products that you can get the highest return on investment from. If you're still a bit nervous to start your drop shipping business, I suggest investing a bit of time in a well respected ecommerce drop shipping training course.