How to Start a Dropshipping Business (A Guide to Success from Linnworks)

In today’s ecommerce marketplace, starting a dropshipping business continues to remain a popular investment option. But, dropshipping is competitive and in theory, starting a business is intimidating. However, it can be more manageable than it sounds.

With the right components — like quality products, trust in your brand, a balance of manual and automated workflows, and more — there’s potential to create a dropshipping business model that differentiates you from your competitors and helps your business succeed.

Here is a guide on the basics of dropshipping and how to start a dropshipping business that thrives.

What is Dropshipping?

Dropshipping is the sale of products from a business where the business does not actually see, hold, or ship the items it sells. Instead, suppliers physically stock the items in a separate location.

Dropshipping businesses marginally mark-up the prices of these products and manage the online store and customers. After a customer purchases an item online, the dropshipping company places that order with the supplier — who then ships it to the end customers.

Drawbacks of Dropshipping

Dropshipping is a challenging sector of the ecommerce market to master if you don’t already have incoming web traffic. And, because it’s popular, there’s significant competition. A lot of competition means lower profit margins.

Benefits of Dropshipping

Dropshipping is low-risk. There’s a lack of overhead and no need for considerable investment capital because products don’t need to be purchased or physically stored. Like most of the ecommerce market, operating a dropshipping business can be done virtually anywhere, allowing for significant flexibility.

How to Start a Successful Dropshipping Business

Check out the guide below for some dropshipping business ideas that will help your dropshipping business model stand out from the rest so that you can succeed in today’s competitive ecommerce market.

Choose Your Product and Suppliers (Carefully)

What you sell is your business. This means doing your due diligence to find a niche market with unique products and making sure you find quality dropshipping wholesalers.

To decide on a product, look at the most profitable niche markets in dropshipping and consider what you enjoy that falls into one of those markets (but think like a consumer). What are some things you’re always looking to purchase?

(Tip: Your product should be unique but not strictly unique to you. For example, almost everyone likes socks. Very few people want to buy socks with bananas on them — even if they’re all you wear. If broadly specific was a phrase, this would be where it applies.)

After you’ve chosen a product, decide on a vendor or vendors. There are specific criteria you need to take into consideration when looking at dropshipping wholesalers. But first, you need to find them.

According to this how-to guide about dropshipping, begin with Google, but be mindful that wholesalers aren’t always familiar with SEO, so it may take several keyword attempts before you find what you’re looking for. It’s also worth considering contacting manufacturers directly and looking into supplier directories to find your product’s best supplier.

After you’ve found the suppliers you’re looking for, ensure they meet specific criteria that are important to you — reliability, ethics, and well-made products, to name a few. Finally, order product samples (and order samples from their competition, too).

Decide on a Unique Marketing and Branding Strategy

You won’t thrive in the dropshipping business without getting traffic to your e-store. So when reviewing dropshipping business ideas, there are a few marketing and branding questions you should consider. Then, outline your marketing and branding strategies around the answers to those questions.

• What is the goal of your business? Think deeper than “make money.”
• What solution are you providing your customers for a problem they’re having?
• What are the SEO keywords associated with your product? Hit them to drive web traffic to your online store.

Customize Your Workflows

It’s crucial to find a balance between manual and automated workflows. You have to ship enough of your product without working so much that you don’t make a profit.

One of the most manageable workflows to automate is your shipping. Using a shipping management system will allow you to streamline your shipping process. A system like this will manage your entire shipping and fulfillment process — across all of your selling channels. Automating your shipping gives you the freedom to deal with your dropshipping business’s most important aspects — your marketing, suppliers, and customers.

Build Trust in Your Business

Dropshipping businesses often come with the preconceived reputation that they’re get-rich-quick schemes. So how can you set your business apart as something other than a scam? By establishing trust with your customers.

The Deloitte 2021 Marketing Trend Report states that “Trust is the gap between messaging and delivery.” You can close this gap and establish trust in your brand by…

Setting yourself apart as a human being in the digital world of ecommerce: Let your customers know you’re a person, too. They’re more likely to trust a person than a computer.
Having ethical business practices and advertising them: For example, if you sell a sustainably sourced product — say so!
Being consistent: When consumers know what to expect from a business, and their expectations are consistently met, they’re more likely to remain loyal. This is because they trust that the company is always going to meet their expectations.

Provide Exceptional Customer Service

According to Microsoft’s Global State of Customer Service, nearly 58% of customers would terminate their relationship with a business after one instance of bad customer service. That is more than half of your customers. Exceptional customer service equates directly to a good customer experience, and this can make or break your business.

What are some ways to provide exceptional customer service?

• When a problem arises, remind your customers that a person is there to help.
• If a shipment gets lost, stolen, or damaged, always replace the items — quickly.
• Over-communicate when problems arise.
• If your product is out of stock, offer a replacement option of the same or better quality.

While it may take some planning — with the right focus, branding, and management systems, starting a dropshipping business is a profitable way to branch out into ecommerce and find success in a competitive market.