18 Things You Must Know Before Starting a Dropshipping Business in 2023
- Getting to know the industry
- Obtaining a business license
- Niche is key
- Building a responsive store on your own
- Setting up a store with an eCommerce platform
- Connecting with a reliable supplier
- Importing products into your store
- Giving your products a whirl
- Featuring the right product images and descriptions
- Product organization into categories and subcategories
- Flawless customer service
- Customizing offers and promotions
- Handling returns and refunds
- Automation buys you time
- Shipping insurance and tracking numbers
- Being ready to shift strategy
- Keeping tabs on your competition
- Always analyze and optimize
Thinking about starting a dropshipping business this year? It is a great business model you should invest your time and energy into because it pays off. In the last couple of years, dropshipping has seen major growth in the eCommerce game. With the steadily and rapidly growing digital technologies, the dropshipping model is becoming more and more convenient to set up and manage.
Nowadays, there is a myriad of valuable and helpful information on starting a dropshipping business and staying competitive in the industry. But there is also important stuff you need to know upfront before you decide to step into the game. We covered some of the essentials you need to know for the journey to be smooth and without any hiccups.
Getting to know the industry
No one should think of starting a dropshipping business of any kind before understanding what is dropshipping and comprehending the basic principles of the specific industry. Breaking into the dropshipping industry is not an exception. Aside from conducting an industry analysis online, there is an additional good tactic you should take into consideration. Participating in industry events is a very useful way of learning the basics of the industry first-hand from the best. Discover which are the most popular events where professionals from the industry are present and buy yourself a ticket.
Obtaining a business license
After getting to know the dropshipping industry, you need to investigate the available choices for licensing your business. Many dropshippers start their dropshipping journey without registering a private entity but some decide to open up a company first. The latter group has a few options:
- Sole Proprietorship – no personal liability coverage provided;
- Limited Liability Company (LLC) – protects your personal assets by separating them and identifying them as separate assets;
- C Corporation – highest protection guaranteed, but most costly as well.
The second option, Limited Liability Company (LLC), is the license that is commonly obtained in the dropshipping business.
Niche is key
Have you decided what you are going to sell? Having all sorts of products is not a smart idea. Understandably, picking a niche is a big challenge for people who are beginners in the dropshipping business. But thinking long-term, selecting a niche will determine the destiny of your dropshipping business.
The strategy here is to not take your personal preferences and passions into consideration. That won’t bring your business success. On the opposite, you should make broad market research and see examples of dropshipping stores and the types of products that are bringing them profits. Evaluating in-demand niche products will undoubtedly help you decide on your type of store and target shopper. Using Google Trends is one extremely effective way of finding out which are the most in-demand products online.
Building a responsive store on your own
By now, you know the basics of starting a dropshipping business. Everyone knows that having a potential customer come to your website and leave immediately is not a good thing. Before launching your online store, you must test, test, test, and double-check everything. Optimize your website for desktop and mobile devices to be flawless. Only this way you won’t dissuade your customers from making a purchase. On the contrary, with a responsive store, you will have bigger chances to offer them a seamless online store experience.
Setting up a store with an eCommerce platform
If you don’t want to invest in creating an online store from scratch, you can, by default, start your business by creating a Shopify dropshipping website. It is an e-commerce platform that is designed for building online stores in a few minutes. The platform allows you to integrate your store with your supplier’s system and import your first products right away. You can also use WooCommerce as well, although they require more technical skills, or hiring a web developer.
Connecting with a reliable supplier
Once you’ve created a presentable online store, you can continue with the next step – finding reliable dropshipping suppliers. Creating a strong relationship with a legitimate supplier will make your online store a shining star. For this step, you first need to learn the basics, from how to spot fake suppliers to finding the right ones.
Importing products into your store
You learned the core elements of the industry, you built an exceptional online store, and you found the right supplier. What’s next? Are you getting very excited and want to start importing a large number of products? Take a step back and don’t do this mistake. Continue slowly and patiently by importing a small collection of products to your store. This way you will avoid the possible situation where you can’t achieve writing authentic product descriptions and add credible photos.
Giving your products a whirl
This is something that can largely contribute to the next step of this guide. Finding a dropshipping clothing supplier that doesn’t require a minimum first order is of great help. This way you can order products before officially launching your store. It will allow you to ‘get a taste’ of the products you will sell and will be able to better present them in your store. Putting yourself in the shoes of your customers will help you improve your store and your product offers.
Featuring the right product images and descriptions
Having a presentable online store goes hand in hand with having good product images and descriptions. Poor product images and descriptions are bad, but missing them in your store is even worse. Regardless if you have better offers than your competitors, if you are missing product pictures, your customers will still order from them. Therefore, before importing your first batch of products, ensure you have a plan for their proper visual presentation.
Product organization into categories and subcategories
How would you feel if you visit an online store and can’t manage to find what you are looking for? Before going live, you need to make a good organization of your products in categories and subcategories. Imagine a treelike structure – your products should be well-organized into categories and subcategories just like a branching tree. Moreover, their descriptions and images have to include specific keywords so your customers can find them without a hitch. In addition to this, in order for customers to be able to locate your products even faster, generating SKU and UPC codes is another crucial point to take into account when organizing your store’s catalog.
Flawless customer service
There’s a saying that goes “Your customer service is the backbone of your business”. So before launching your store, you must be sure your customer service will be kickass. If you have flawless customer service, people will choose you over your competitors. On the other hand, having poor customer service can result in a bad reputation which your competitors will take advantage of.
Impeccable customer service will help you get noticed. So, don’t think twice if you should invest in it, because you should. It may seem like a lot at first, but it will be worth it in the long run.
If you’re thinking about getting a US phone number for your business, one of the best ways to get started is by using a virtual phone system. A virtual phone system will allow you to have a US phone number without actually being in the US. This can be a great way to get started with your business without incurring the cost of setting up a physical office in the US.
Customizing offers and promotions
In every industry is vital to differentiate yourself from the crowd. In the competitive dropshipping business it is a challenging element, but not impossible. If you find yourself offering similar products to your competition, you must think of different ways to stand out. Customizing your offers and promotions is one way to attract and retain new customers. Make special offers, promotions, and discounts based on your customers’ experience and preferences, and your business will bloom. Starting your subscription box business might be another great way to differentiate yourself and get ahead of the competition.
Handling returns and refunds
Knowing how to handle returns the right way is part of providing a seamless customer experience. And, in the end, it can have an impact on the overall brand image of your store. Handling dropshipping returns, however, can be tricky in the dropshipping business. Therefore, you should reflect on whether the products will be returned to you or your supplier. Additionally, who will cover the expenses if your supplier sends the wrong product? Don’t get started before having figured out this aspect, because you will find yourself in this situation sooner or later.
Automation buys you time
These days, automation can guarantee you to do more with what you have. Automating your dropshipping business in terms of store management and product importing will save you valuable time. If you automate your business, you won’t have to struggle with tedious everyday tasks because you will have streamlined processes. So, remember to look into the possibilities for store automation in the early stages of your business. This is one of the most important steps of starting a dropshipping business, so always have it in mind.
Shipping insurance and tracking numbers
Another thing that is worth investing in at the very start of your business journey. It will cost your business extra but it is a smart move if you want to avoid future unnecessary worries. Think about it like this – your customer orders a product from you and your supplier should manage the shipping. What if he doesn’t provide a tracking number and insurance and the package gets lost? Have into consideration this potential hurdle that could damage your business, before even starting it.
Being ready to shift strategy
When starting a new business, it is natural to come across challenges and obstacles along the way. Having this in mind, you should be open to adapting or shifting your strategy ahead of time. Different situations can occur that will demand you to change something in order to grow your business. You should plan for ‘what-if scenarios’ beforehand and be prepared for taking action when is needed.
Keeping tabs on your competition
If you think that once you have launched your business you can forget all about your competitors, you’re wrong. Doing a competitor analysis is inevitable before starting an online business, of course. But keeping tabs on your competition will remain vital for your dropshipping business even in the future. To be at the forefront of the industry, you must stay up-to-date with the industry news and with your competitors’ offerings.
Always analyze and optimize
Once you start running your store, don’t just lay back and relax. Don’t think that if you follow all the previously mentioned steps you will have a successful business. Managing a dropshipping business means you keep analyzing and optimizing your activities. Starting from your product offers to the relationship you have with your suppliers – it’s vital to measure your efforts and optimize when required.
This sums it up about starting a dropshipping business. We hope this article will clear up things for you. If you have any comments or questions, please leave them below and we’ll get to you.
About the Author
Kristina, Head of Content at BrandsGateway. Eternal inspiration: The Doors music and lyrics, Bernardo Bertolucci's timeless “Stealing Beauty”, and the dynamic and meditative Ashtanga Yoga.