Are you looking for a step-by-step guide or tutorial on dropshipping? Are you thinking of creating an online store? Then this ultimate guide is for you.
Dropshipping is one of those business models where you can make money online from home.
Now, how to do it well to make it profitable? What mistakes should be avoided?
If you want to know the whole truth about this method of eCommerce monetisation, read it on. Because I have curated the most complete dropshipping guide of 2020.
I will explain how to choose the best product and drop shipper to what visibility strategies you can use to improve your sales. In short, everything you need to know before starting to drop shipping.
Shall we start?
What is Dropshipping?
The Wikipedia definition makes it easy to understand:
“It is a type of retail sale where the retailer does not store the goods in his inventory, but takes and passes the order to the wholesaler, who then dispatches the goods directly to the end customer.”
I have an even simpler definition:
Dropshipping is a business model with which you can have an online store without inventory.
The term is not new, but dropshipping indeed became more famous in 2006, when the “boom” of Aliexpress and Chinese e-commerce stores took place.
It was at this time that some entrepreneurs launched and discovered the “retail” or margin between wholesale and retail price, and without the need to have products in stock. Aliexpress and its catalogue of products at such low prices was the perfect ally for all of them.
But beware, the concept and definition are easy does not mean that making money with this method is also easy. I will explain it below.
How the drop shipment works: the business scheme
The mechanism is very simple:
- A user enters e-commerce (intermediary), buys a product and pays for it.
- The intermediary receives the payment and sends the order details to the supplier (wholesaler), who is in charge of preparing it and sending it directly to the buyer.
- The wholesaler invoices his price to the intermediary, which is lower than the price for which he has sold.
- The intermediate earns a commission, which is the difference between the two prices.
Let’s understand it better with an example:
➡ What does the retailer or intermediary get?
A commission for each sale without the need to manage inventories or stocks. No need to have a physical warehouse to store your products.
➡ And what does the wholesaler get?
It is a usual question.
The wholesaler, if you realize it, is making sales through a secondary network of sellers that is giving visibility to their products. You are increasing sales and scaling your business.
Sometimes, it is even internationalizing without investing a single rupee.
It is the biggest beneficiary.
➡ And what does the user who buys get?
The theory would say that the user should have access to products that are not easily accessible if you are not a retailer or company.
Besides, the user will have access to an extra value that you are providing him as an intermediary, either through tutorials, advice or whatever your value proposition is.
Is it the same as affiliate marketing?
No, but it is common to get confused between both models.
In affiliate marketing what you do is sell the products or services of a company in exchange for a fixed commission. This type of business can be done through portals like Amazon, Flipkart and many more.
The key here is that you need to be a partner or, in other words, to be accepted as an affiliate by the company itself; something that does not happen in dropshipping.
Where the sale occurs and who sets the sale price
In affiliate marketing, sales prices are set by the company and what the affiliate does is send the lead to the company’s page so that the sale takes place there.
The way to derive traffic is done through a tracked URL, with which you can measure the clicks and sales that finally occur to calculate the affiliate commissions.
Many companies like Flipkart have their affiliate system, and others use affiliate platforms like Clickbank or others.
Instead, in drop shipping, you can set the price at which you want to sell the product and the sale occurs within your page (or from platforms such as eBay or Amazon, depending on the business model you have chosen).
You can even sell through Wallapop. You would not be the first, nor would you be the last.
Both systems are very valid to earn money online.
Advantages of dropshipping
Anyone can comment on this system, but the truth is that no one can say that dropshipping does not have its advantages.
Some of the benefits of using this system to earn money online are the following:
1. Start without investment or with minimal investment
You can even sell without having your e-commerce set up, for example, through a Facebook page and the Shopify Lite Plan, although it is not the most widely used option.
You would only pay $9 a month.
But if you are going to create your dropshipping store, you will need:
- One domain
- A hosting
You can create your online store yourself easily and economically with WooCommerce, Shopify or others, but you will need time to learn how to import products and design it in a way that maximizes your sales. You can also pay a professional, but that would increase the initial investment.
Besides, you will have to assess how you are going to attract traffic to your store. The fastest and cheapest option is Facebook Ads, but you can also use social networks like Instagram or more expensive resources that require more training, such as Google Ads.
2. Minimum maintenance costs
These depend on the way you attract traffic to your website and the type of store you have decided to set up. If you have created it in Shopify, you will have to pay a monthly fee, but currently, you have 90 days free, more than enough time to test if this system is profitable for you.
What you will need is time, both to find the product you are going to sell, and to set up your store and manage orders when they arrive.
3. No Physical location or inventory
As the wholesaler is in charge of storing the products, you do not need a warehouse or an established physical store because you will not have stock of the product. You can manage your orders from anywhere with an Internet connection and telephone coverage to serve your potential customers.
And nothing more.
It is the good thing about making money online, that you can do your work from anywhere.
4. No packaging and shipping costs
The wholesaler will take care of that for you.
Of course, it does not hurt to agree on the type of labelling of the product. Only the details of the retailer (yours) or the data of both: wholesaler and retailer (manufacturer and distributor) can appear.
The logical thing is to use the first option and make sure that the third unexposed case does not happen: that only the wholesaler’s data appears.
5. Varied catalogue of products
You can even work with several suppliers for the same dropshipping store.
There are tons of Chinese manufacturers bringing together products from almost every category, but you can also find American or European suppliers with relative ease. Of course, inventories or units in stock are usually not as large as in the case of manufacturers in China.
6. Very scalable
You can start by focusing on a star product and then expand to sell its complementary products. For example, You can start by selling a thermal coffee mug, and then add custom mugs, coasters, coffee grinders, funny message t-shirts for coffee lovers, and even coffee maker accessories.
And from there, refer to a thematic store with a clear and specific target: coffee lovers.
You can even combine it with affiliate marketing and later expand to sell coffee machines, which is a more expensive product and can leave you higher commissions.
Or directly, a store for everyone with products classified by sections.
7. Minimal risk and easy exit
Are you not doing well and no sales have been generated?
Nothing happens. Perhaps you did not choose the product well or did not take the right strategy.
Since you have not made a large investment, there is no exit barrier. If it doesn’t work you can change it.
Disadvantages of dropshipping
Why fool us? It is not the perfect system and it also has its drawbacks, which may even outweigh the benefits themselves. The ones to highlight are the following:
1. Lower margins than other business models
You have to be especially careful with this point and establish a sale price so that the business is profitable for you. In general, getting 20-30% net profit on the original price of the product is the minimum you should be looking for.
Many dropshippers recommend a sale price, and some even force you to set a minimum price below which you cannot sell. This is relatively positive because this ensures that other intermediaries cannot sell at a lower price than yours.
Competing on prices is not the best option when it comes to dropshipping because the profit margin is already reduced by itself, so the key is to give added value to your product.
💡 For example, you can stand out through support, after-sales service or personalized advice. Create manuals, make tutorial videos and differentiate yourself because that is going to be the added value that buyers find only in your store.
If you want to sell through platforms like Amazon, margins are further reduced and it can become a business that is not even profitable for you. It is a very common mistake not to take into account the commissions and expenses derived from selling on Amazon and other platforms when setting prices.
It happens like this in e-commerce in general, so imagine yourself with dropshipping.
2. Easy entry of competitors: high competition
The low price of Chinese-made products, and the lack of initial investment necessary to sell them, make dropshipping a suitable system for anyone who is starting to make money online.
It is a disadvantage, but we return to the same as before: analyze your competition, offer added value and stand out from the rest. Be clear about your contribution to the sector and work on it.
3. Less control: divided e-Fulfilment:
The customer’s shopping experience is a process in which many variables come into play related to order preparation, shipping, selecting the best transport company, delivery, and return. A set whose sole objective is to maximize the satisfaction of the end customer.
In the case of dropshipping, since the purchase begins, this process is divided between two: the intermediary and the wholesaler.
Therefore, achieving that satisfaction becomes more complicated, since it depends not only on your strategy and your knowledge but also on the manufacturing company. Ultimately, you have less control over the supply chain.
4. Requires time for customer service
Any method of monetization takes time, be it analysis, start-up, or strategy.
When you have a dropshipping store, you only worry about collecting the purchase data and transferring it to the wholesaler to take care of the packaging and shipping.
But, beware, any problem that arises during the purchase, during the shipment or even if there is a return, is your responsibility. At least, it is your responsibility because you are the seller.
Another thing is to take charge of the costs because this will already depend on the conditions agreed with the provider.
Customer service of a store monetized with this system is very time-consuming.
It is recommended to create an efficient ticket system that allows you to manage orders and incidents in the fastest way. It would even be advisable to have a support phone line and online chat.
5. The difficulty of finding a good provider
Despite the numerous provider directories and lists that exist on the Internet, I’ll be clear: until you try it, you don’t know how it works.
The Asian market is full of dropshippers, but not all meet deadlines, have good shipping costs or good return policy.
In the case of local dropshippers, it is difficult to find a company that offers competitive prices to which you can add your commission and that sales occur.
Finding a good supplier will take you a long time and may even require an investment to check its effectiveness in packaging and shipping. The sooner you assume it, the less you will despair later.
6. Mass order management
If you do it right, you can make a lot of sales per day and, if you have to manage them all, it can become a problem, especially if you have to make it compatible with other activities. In any case, with the plugins that exist today, this should not be considered as a disadvantage.
It is a matter of organizing and, in case of massive growth, having other people available so they can help you manage orders.
7. Total responsibility towards the client
You are solely responsible for the product in front of the customer and that sometimes becomes a problem.
If the product arrives defective, if the shipment does not take place in the expected time or if any problem arises, the buyer will contact you.
For this reason, it is very important to choose a good provider that works smoothly and have an impeccable support ticket management system.
How to dropship in 2020: step by step guide
And now yes, after having understood the concept and having assessed benefits and disadvantages, how about I tell you how to find the best products and suppliers, how to create your store and how to start selling with this system?
Go for it.
1. Choice of niche or product: Product Research
It is the most difficult part along with finding the efficient provider. In general, a good product for dropshipping should:
- Have a low price, but sell at a high price in your country.
- Free or minimal shipping.
- With sufficient stock units. Less than 100, not worth it.
- Have good social acceptance. Must have good buyer feedback. You can search for posts or ads on Facebook and see interaction and comments.
- Have sales. This is essential. Go to Aliexpress or the chosen dropshipping platform and check if that product is selling well. Also, check if it is an interesting product for your country.
Besides, try Google trends to see the trend in searches for the product you are taking.
☠️ Beware of products that are sold only in certain months of the year (products focused on Halloween, Valentine’s Day or related to the summer heat, for example).
You are interested in a product that is sold throughout the year.
📌 Popular products in dropshipping
On platforms like Aliexpress, you can take a look at the highlights and you will surely find an infinity of products to sell in your dropshipping store. In just a first glance, I’ve seen some that I’ve already seen in Instagram Ads:
If others already sell them, they may have already calculated their profitability and social success. Check the competition and see if it is feasible to enter to compete with those who already are.
It is always better to look for a product “less seen” and with little competition, but if you already have notions about online sales you can choose to spy on the competition and enter the market offering that extra value that you have in mind.
A very good tool to spy on ads and see what is working and what is not MagicAdz. It is paid, but perhaps it pays to pay a month to use it during your Product Research.
Besides, you can get ideas if you are going to use Facebook Ads or another method of attracting paid traffic because here you will see the popular ads that are working best on the network.
Some dropshipping products that I have extracted through this method, and that are available on Aliexpress, are the following:
1. LED epilator
It has a price of between 3.02 and 8.25 dollars with free shipping (depends on the country shipping). The dropshippers are selling it at prices of around 20 dollars.
- AliExpress page: https://www.aliexpress.com/item/4000952557244.html
2. Retro console
It has a price of between 17.26 and 21.16 dollars with free shipping (shipping fee changes according to your country). The dropshippers are selling it for $ 39.99.
3. Pet hair cutter
It has a price of between 14.49 and 24.99 dollars without shipping costs and they are selling it for 29.99 dollars.
You can also use other tools to discover trends, such as Facebook ads, search ads, among others.
And apart from all this, you can also search for products in applications such as Alibaba or Modalyst, but you would already be including an extra intermediary in the chain and that means less benefit for you.
📌 Custom Products – Print on Demand (POD)
Custom shirts, mugs, caps, bracelets, badges, purses, mobile accessories and even watches from your brand.
Personalized products are an e-commerce model in itself, but you can also adapt it to your dropshipping store through printing on demand.
The operation is simple: once you sell a unit of the product, you transfer the order to the supplier that offers that product and, besides, is in charge of printing the personalized design (an added service that, hey, is great to offer something differential).
Maybe there is a lot of competition selling coffee glasses, but few offer that personalized glass with a phrase.
Think about it.
Here the key is to be different and offer added value.
Using drop shipping to sell personalized products is a good idea. If you are also a local supplier you can take control of the packing and shipping. Come on, you can turn from dropship into standard e-commerce with a retailer and wholesaler.
You can reach agreements with printers, with sheet metal manufacturers, manufacturers of photo frames. The industrial estate in your city can be a good source of inspiration and the best centre to start talking to potential suppliers.
You can also search for print-on-demand products in the Shopify App Store. Just click on Categories – Find Products – Print on Demand.
Some of the most popular are Printful, Printify, T-Pop or Shirt, among others.
📌 Some themes to inspire you
In addition to going through Aliexpress and spying on Facebook Ads focused on selling dropshipping products, I want to leave you with some ideas that are working very well in the United States and other countries, and that you can reuse for your country.
If you want to do thematic e-commerce, they will surely serve to inspire you:
- Professions: products for a specific professional area, such as nurses or doctors, now that it is very fashionable. Also computer scientists, bricklayers, electricians or teachers.
- Patriotic products: in all countries, some people adore their country and products with national flags or patriotic messages are their weakness. And the best thing for you is that there are countless products to which you can put a flag or a patriotic message to get their attention.
- Religion: It is an area where you can also sell related products, such as bracelets, hats, shirts or the like. Give the idea a spin: e-commerce for Christians.
2. Choosing the best dropshipping provider
Your wholesale supplier must have sufficient stock, good packaging, good return policy and, above all, it must be fast on shipments.
Without any of these characteristics, your success will limp and you will have to improvise on the go.
Besides, when choosing, you must take into account that in the supply chain you can find:
- Manufacturers: They manufacture the product and do not sell it directly to the public, but they do sell it to wholesalers and retailers.
- Wholesalers: They buy from the manufacturer in bulk, so they get better prices. Then they sell directly to retailers or the general public (they don’t usually, but some cases do).
- Retailers: they sell directly to the public and have a profit margin that comes between the price difference between what the wholesaler charges and what the buyer pays.
In the case of the drop shipment, to be profitable, you must find a manufacturer or wholesaler and rule out retailers.
Remember that the dropshipper is usually invisible to the final consumer unless otherwise stated in the triangulation contract, which often does not even exist.
Make sure that in the shipment to the customer the name of your store appears and not that of the manufacturer or wholesaler. Or at least both appear.
📌 Beware of fake dropshippers
To find the best dropshippers and ensure maximum profit you must work directly with manufacturers or wholesalers.
Unfortunately, identifying them is not always easy.
⛔ You can cross them off the list if:
- Ask for monthly commissions.
- They sell to the public directly.
- Charge you an order fee.
- Request a minimum unit purchase.
Of course, when you find a supplier with products that you may be interested in selling, I recommend that you make an order and check yourself how they manage it before launching to create your store. In the end, it is the only way to see the result of what will be the shopping experience of your future buyers.
Remember that the most important thing is that the shipment occurs quickly or on time and that it does not generate problems or extra costs at customs if it is an import.
Besides, it is advisable to make a return to see how they manage it and in what period.
Having said that, which seemed important to me, finding a supplier that meets all the requirements is not an easy task. You can do it through a Google search, and even filtering to find suppliers from different countries, or you can search for them like this:
📌 Local or national suppliers: the most profitable option
Moving around your city and reaching agreements with companies in your area is the most profitable way to earn money with dropshipping.
Some companies do not even have their dropshipping system or are digitized and they are so convinced by the idea when you tell them that you are the first to work with them.
Example: machinery sales companies, hardware stores and even printing houses or sheet metal workers.
Make sure that it is a product that leaves you a good commission and, most importantly: that it sells well online.
Keep in mind that, if you have a direct relationship with the manufacturer, you will obtain a higher percentage of benefits on your sale because at the moment that there is already a wholesaler or added platform, your margin will be lower.
Aliexpress is the queen bee when it comes to working with China dropshipping platforms because it sells products from numerous Chinese manufacturers at really cheap prices.
In some places, it has become the second e-commerce with the highest turnover, behind the Amazon Giant.
You can import their products easily through a plugin or Shopify applications.
It all depends on the eCommerce platform you have chosen to create your store, but in general, you will have no problem importing if you use Shopify, Magento, WooCommerce or Prestashop.
It’s another big one when it comes to looking for suppliers from China.
It is quite transparent in terms of the data of the manufacturer of the product, so in each tab, you can find extensive information about the wholesaler and even request personalized quotes and see the full name of the company.
Maybe you can use Google and try to contact the manufacturer directly.
📌 Other dropshipping platforms
Working with platforms like Aliexpress and Amazon is fine, but what if your product runs out of stock?
Having a plan B (or an alternative dropshipper) is a winning move and some of the following may be good alternative dropshipping platforms to Aliexpress:
- DHGate: It is a little bit more expensive than Aliexpress, but it has practically the same catalogue. For example, if a product costs $5 on Aliexpress, DHGate can cost $6 or $7. The good thing is that it is compatible with the ShopMaster plugin for WooCommerce.
- DealExtreme: It is already well known in some countries, but it has a smaller catalogue than Aliexpress and DHGate. It is more specialized in electronic products, so check it out if you are going to work with products in this sector. Products can be imported with the Wooshark dropshipping plugin.
- BangGood: It is another of the great ones with products of very varied prices. It has API, download centre and the option to import CSV file. You can also use the Setup Bangood Dropshipping Store plugin for WooCommerce or the Wooshark dropshipping, which is also valid for AliExpress, eBay and others.
- Gearbest: You can import products with apps like Importify or Dropshipmate in Shopify.
- BigBuy: It has a good presence when it comes to dropshipping in Europe. They offer a product catalogue and online store creation in all its versions (developed by BigBuy or by client)
📌 Provider Directories
If you do a quick Google search, you’ll see the amount of scam that revolves around the world of dropshipping providers.
Do you see all the options that a list of providers offer you in exchange for payment?
Discard all of them.
The best way to find a good dropshipper is to contact the supplier directly and negotiate the conditions, but if you want to go quickly, the most reliable options are those that include applications such as Spocket or Oberlo (both for Shopify).
Now, which of the two is better or what differentiates them?
It works with suppliers from all over the world and the average quality of its products is usually higher than that of the products sold on AliExpress, which is very positive for you as a seller and ultimately responsible for what you sell.
This is so because, according to what they say, they carry out interviews with each dropshipper included in their directory, as well as testing the products they sell.
Besides, 60% of its suppliers are of American or European origin, which makes shipments faster.
It is newer than Oberlo and in a short time, it has become the best alternative.
It is an application that works via Shopify and that includes a directory with suppliers from Aliexpress.
Thus, with the integration in Shopify, you only need to import the products of the selected supplier and everything is much easier.
Of course, you will have to pay a monthly fee to use it.
It is a platform that offers integration with Wix, Shopify and BigCommerce for one to create a dropshipping store using its suppliers and products of European and American origin.
It includes all the management of orders with unlimited products, as well as numerous options to work the marketing of the store.
You can try it for free and there is no monthly fee because what they charge is 5% of the sale price of the product on all your sales.
That means reducing your profit margin. Make calculations and see if it compensates you.
It includes a directory of companies that you can use as dropshipping providers, but it is a payment tool that costs $ 67 per year.
📌 List of best dropshipping providers
When choosing a supplier on sites such as AliExpress or Alibaba, it is important to take into account the high price competition that exists in China.
If you want to sell a product that has different prices depending on the manufacturer you choose, you should select 2-3 and make a first-order to compare quality and choose the best option.
In these markets, most of the time, the cheapest providers are the ones that sell the worst quality.
Besides, when comparing and choosing a provider, you should take into account the positive rating on the platform and the level of response (time and resolution of the problem).
For valuations, in the case of AliExpress, always look for 95% or higher with more than 2,000 points.
That said, some of the dropshipping providers classified by business areas that I can provide you with the following:
Gifts and toys
- Last level
- Hibba Toys (UK)
- Red Point Source
Computing and telephony
- Paper leader
Clothes and complements
- Brands Distribution
- Secret lingerie
- Led sneakers
- Acess (UK)
- Axami (EU)
- Magnolia Baby
- Ah goo baby
- Pout in Pink
- Bambini infant wear (California)
- Tigris Wholesale (UK)
- Collective Fab
- Born Pretty
- Volcanic earth
- Koehler Home Decor
- Park Designs
- Auto Gar
Hospitality and food
- D&H Distributing
- Gun Accessory Supply
- Internet Fulfillment Services
- SP Images
- Parkflyers R / C
- AZ Importer
- EZ Dropshipper
- Dropship Direct
- Green Supply
- Farris Brothers
- Kroll International
- Mariell Online
- DropShip 247
- Toy Distributing
- VR Distribution (Australia)
- MA Labs
3. Create a dropshipping store
It is the most common option and, if you start from scratch, the most complicated, since you will need knowledge of WordPress, WooCommerce and the entire part of SEO and online marketing.
But it is also the most profitable, so I recommend it.
📎 Choose the domain
Think of a name and check with any domain registrar to see its availability. If it is free, buy it.
It can be a .com, .in, .pro, .net, .mx, .co or any other.
Depending on what your expectations are at the level of international web positioning, you can choose between some terminations or others.
The prices are varied and vary from one registrar to another, but you can buy a domain starting from $3 easily.
Some popular registrars among webmasters are:
I recommend not only looking at the price of the domain, but also the price of the renewal because more than triple the purchase price can be “nailed” to you.
For example, you can buy a .online for 4 dollars but in the renewal, they will ask you for around 24 dollars per year.
📎 Choose hosting
If it is your first online store and you do not have technical knowledge of servers, you will need managed hosting.
Normally, it usually starts with shared hosting because it is the cheapest, but keep in mind that you will be sharing IP with many other projects.
When buying cheap quality hosting, keep in mind the storage space, the loading speed, the support, if the hosting is optimized for the CMS manager that you are going to use (we assume that WordPress) and security.
Regarding qualities, one of the best hosting providers is Digital Ocean. After doing a study of the most popular and best-priced hostings on the market, we came to the conclusion that DO is slightly superior to the rest and that it helps (and a lot) the SEO of your website.
But hope now the best is coming.
💰 Beware of hosting resellers without their infrastructure because they are more expensive and are still just another intermediary. Much better to have a direct relationship with the company that owns the data centre.
📎 Choose the e-commerce platform
- The most chosen option by the majority is Shopify and not only for its ease of use but for a large number of applications available to create a professional online store. Of course, you will have to pay to use it.
- If you go for WordPress, you can use the free WooCommerce plugin and other free plugins to import dropshipping products.
- You can also opt for Prestashop, although perhaps it is not the most intuitive.
- Others like Magento, OpenCart are equally valid.
If you are going to work with WordPress you have a multitude of free themes for e-commerce that you can download at WordPress.org.
📎 Importing products: best dropshipping plugins
Currently, there are millions of plugins for dropshipping.
The important thing is that it is compatible with the platform you plan to use. For example, if you are going to use DealExtreme, Aliexpress and DHGate, it is logical that you use a plugin that is compatible with all 3 stores.
- Product CSV Import Suite. It is an annual payment WordPress plugin for WooCommerce, priced at $ 49.
- Import Products from any CML or CSV to WooCommerce. It is a free plugin that works together with the WP All Import add-on for WooCommerce in WordPress.
- Dropshix, for WooCommerce. It is compatible with Aliexpress, Amazon, Banggood and Adihara.
- Woo AliDropship, for WordPress. This plugin links your store to AliExpress to import its products and update them easily. It works with WooCommerce and can be purchased for $ 89, one-time payment. It has the great advantage that it sends automatic notifications to your client so that they know the delivery status of their order and it also allows you to edit images.
- WooShark. It is a WordPress extension that works in Chrome and that allows you to import products from Amazon, Etsy, eBay and AliExpress directly to your WooDommerce store. Also, allows image editing, but not free.
- DropshipMe. It is a specific free plugin for importing AliExpress products via API. It supports AliDropship and WooCommerce and only allows you to import 50 products for free. For starters, more than enough.
- Spocket. This plugin is WooCommerce compatible and includes a list of dropshippers originating, in 60% of cases, from the United States. It is not a simple importer. It has its dropshipper directory, allows you to test products, manage inventory and shipments.
There are many more. I recommend you install and test them to see which one works better or which one is easier to handle on a day-to-day basis.
📎 User experience (UX)
Here’s the best advice I can give you is to go simple and think about the basics:
- Prepare a website which is easy to use by anyone at any level, which includes a product search function and allows you to find what you want quickly.
- Think of mobile. Your website must be perfectly responsive and the purchase via smartphone must be easy and intuitive.
- Pay close attention to the related and complementary products that you show in each product sheet. If they come to buy a product and you can sell them more, why not take advantage of it?
- Offer real-time customer service, either through a live chat or a phone number where you can serve your potential customers. You can also offer support via social networks or email. It will give reliability to your store and perhaps differentiate you from the competition.
- Invest in an order tracking tool. Many dropshipping platforms already offer this option that will allow your client to locate their package and see the evolution of the shipment and the estimated date of receipt.
- Multiple payment options. Please, we are in 2020. There are many options to allow different payment options in your store. Don’t stick with the bank transfer because, believe it or not, conversions will be negatively influenced.
📎 Don’t sell products, sell experiences
Take a look at this dropshipping store: Piper Lou.
They sell thermal glasses, t-shirts and custom caps.
In just a glance you can see photos of people smiling, having a good time, drinking together.
There are always photos of accompanied people who are enjoying.
If you enter the collections you will find colourful designs with very funny phrases; And if you go into the individual product sheet, the level of customization is brutal: you can choose between more than 14 colours and two types of sizes. Besides, you can personalize it with the phrase you want.
The best of all is what comes just below the description (quite improvable at copywriting level).
Photos that are uploaded to social networks and that are the greatest social proof that e-commerce can contribute to its products.
Besides, they include a star rating, the type of product you have purchased, your name and a verified buyer check.
Take note and apply these tricks in your store to get started. The social proof is extremely important, especially at the beginning of your business.
📎 Eye to the images
Write some persuasive product sheets and accompany them with images that convey the experience you want to sell.
If you have chosen your product well, the positive results are yet to come.
👎 Most people who start dropshipping make the mistake of using the photos and product descriptions that dropshippers submit.
Endless stores with the same texts (somewhat penalized by Google) and with the same images (without differentiation).
Think about what image you want to transmit and adapt your website to be consistent: the typography, the style of the images, the videos, etc.
Even the smallest detail matters.
Your online store must comply with all legal issues.
Besides, you must comply with everything related to the management and storage of personal data of clients to comply with the LOPD, as well as use secure payment methods.
For the issue of payments, keep in mind that you must comply with the PCI DSS (Payment Card Industry – Data Security Standards) through which the processing, storage or transmission of data of debit/credit cardholders is regulated.
It is best not to keep credit card information and problem solved. If you use Shopify or similar, you forget about this problem, at least in its beginnings.
You must install an SSL certificate on your domain to be reliable both in the eyes of Google and the potential buyer. You can install a free one through LetsEncrypt.org and renew it when it expires.
It is also recommended to install extra security measures to avoid fraudulent payments. For example, 3-D Secure is one of the best known and easiest to use because it works as a PIN for online purchases.
And finally, it is advisable to have an address verification system to avoid fraudulent purchases. Thus, the AVS function will assign the shipping address incorporated in the credit card.
It is your responsibility to send a product to a different address than the one that would be assigned to the order taking into account the personal data assigned to the credit card.
95% of fraudulent orders have a different shipping and billing address (Shopify).
📎 Return policy
The return is the worst thing that can happen to you when you make money with dropshipping because it does not depend on you.
Note that the online user does not have access to touch and test the product.
Therefore, for returns to be the minimum possible, it is necessary that:
- Your product sheets are as complete as possible.
- Include multiple images of the product, even from different angles.
- Allow reviews in your e-commerce.
- Have a FAQ section and a return policy page where you transparently explain how they work and how long they can take.
Now if they do happen, what to do?
Like packaging and shipping, the return is a process that must be carried out with the manufacturer or wholesaler that has shipped the product.
When it comes to a provider with whom you have direct contact, it is as easy as agreeing on a return policy that is reflected in the triangulation contract and does not expose you.
Many dropshipping stores explain how the supply chain they use works so that problems with defective products or returns do not fall directly on them.
Blaming a third party will not help you because the only thing you will get is to further confuse that customer who is already pissed off about the quality of the product or some other issue related to the purchase.
The best way to manage a return in dropshipping, and in any e-commerce business model, is by taking charge of the error, compensating the client and getting the supplier to bear the cost.
➡️ You take responsibility. The dropshipper must bear the cost.
How dropshipping returns are made
In any case, dropshipping returns work as follows:
- The customer contacts the support of your store requesting a return.
- You request a return authorization number from your supplier for the customer to include in their shipment. This number is called RMA (return merchandise authorization).
- The customer mails the merchandise to the supplier’s warehouses, with the corresponding RMA.
- The provider returns the money to you.
- You return the money to your client.
4. Choose the sales channel
Where are you going to sell your products? Where are you going to send web traffic?
Bring traffic to your online store
If you are going to set up an online store, and think big, it is best to have absolute control of everything: your relationship with the supplier, your website and your product import system, either via API, with plugin or similar.
But still, keep reading because creating your dropshipping store also has its disadvantages.
- Greater profit margin: there are no fees of any kind.
- Brand creation and possible customer loyalty.
- Full control and more automated product update (depends on how you set it up)
- You need a domain and a hosting.
- Greater investment in the technical configuration. If you do not know, you will have to pay a professional to create the store and configure the crones, etc.
- Greater time and investment in SEO and online marketing.
Dropshipping on eBay
eBay allows dropshipping with a single condition, and that is that the wholesale supplier makes the shipment in less than 30 days after the end of the ad.
- It is very easy because it only requires creating an eBay account and uploading each product with its photo and description.
- Less investment in marketing, as you are taking advantage of the “eBay” brand, and all the marketing and SEO behind it.
- Unprofitable for low volumes.
- You can only put 50 free ads and the following have a rate of 10% on the total sale price, which is quite high if we talk about dropshipping margins of 20-30%.
- Less customization than your e-commerce.
- High level of monitoring to control and update all your ads.
Dropshipping on Amazon
Amazon also allows the sale of dropshipping products, but its requirements are very strict.
For example, any problem with shipping or a return can result in the ban of your account if a user makes a claim.
- It is very easy to create your store because it only requires registration.
- You take advantage of the Amazon brand and save yourself marketing costs that you would have in your online store.
- You also pay a fee for each product and it is variable.
- The design is limited and not very customizable.
- Unprofitable for low volumes.
- Very strict conditions to stay banned.
Dropshipping on a Facebook page
It is another option that perhaps you had not thought of.
You can set up a store on a Facebook page. You will have to create a Facebook page for your business and turn it into a store as explained in the help service for companies. Then you will have to add the products.
If you plan to use an external platform to control the inventory of your store, you can also automatically synchronize it with your Facebook store.
They currently work with:
- You don’t need a website to sell.
- The entire purchase process, including payment, is done on Facebook.
- It’s free.
- Uploading products is very easy and intuitive, as well as payment management.
- It requires investment to get traffic.
- The most logical thing is to dedicate a monthly budget to Facebook Ads.
- You cannot create a brand.
- Little customizable.
5. Management of orders and incidents
For many, the worst part of dropshipping, especially if you work with different providers.
Stay calm because trying to have complete control of everything will only lead to a stressful situation that will not solve anything.
It is a system in which you must be organized in the part that corresponds to you, but some things cannot be changed regarding the provider.
Even the best providers make mistakes.
The key is to learn how to manage these errors so that the client is satisfied.
That said, controlled inventory management will greatly reduce some types of errors.
For example, you have the responsibility to show which products are out of stock or to provide the same product from a different supplier if the purchase occurs due to the lack of updating your inventory.
You can also use inventory management tools, like Ordoro.
Or, if you use drop shipping applications like Oberlo or one of the ones I mentioned above, they already integrate this type of system that controls inventory, so for that part, you can forget.
6. Transport, logistics and customs: the import problem
Transportation and logistics are the responsibility of the supplier and you, in the end, can only choose between the transport options offered by him or the platform where you buy his products.
One of the problems when importing products from countries like China is the shipping time.
Oberlo highlights the possibility of using ePacket shipping because it is the service that achieves a faster and more efficient delivery.
And, besides, it has a delivery confirmation service (your provider will give you the location and tracking codes of the package).
Shipping times vary depending on the destination countries. For most, shipping takes around 7-10 days, except for Mexico, one of the countries with the highest shipping times, which can go up to 20 days.
The biggest shipping problem is the cost of customs, and with epacket, it also exists.
The responsibility lies with the recipient of the package and it is impossible to predict whether or not they will retain your products through customs.
The best thing would be for you to notify it in the conditions of your store saying that the products are imported and that it may suppose an extra surcharge that the buyer must assume.
It happens in international eCommerce in general, so it’s not just a drop shipping problem. And no, it’s not something that ePacket fixes.
8. Set prices
This is one of the most difficult parts of dropshipping.
The vast majority will tell you to look at the prices of the competition and that can be a good strategy.
However, keep in mind that dropshipping is not a highly profitable system, and less if you are just starting.
Taking into account what the competition does is fine, but you should also keep in mind something very simple that I explain below:
To make it profitable, industry experts such as Oberlo defend the idea that you should add a minimum of 10 dollars to the price set by the dropshipper.
So, for example, if the product costs 3 dollars, you must sell it for 13 dollars. If it costs $5, you should sell it for $15. And so.
However, when we talk about higher prices, starting at $30, it is best to multiply the price of the dropshipper by 2. Thus, you could sell a product of $40 for $80.
The difficult thing is justifying that price increase so that they buy it from you.
Therein lies the key to differentiation and success with a dropshipping store.
If you know what your value proposition is, you can set the price “as you please.” Within limits, of course.
9. Where to look for clients
- Social networks: free traffic. This today requires a very good strategy to work well. You can capture traffic through Facebook, Twitter, Instagram, Pinterest or YouTube and you can do it for free, but not in any way.
- Facebook Ads. Its cost is much lower than Google Ads and you can optimize your ads to pay the minimum possible for each impression. Besides, thanks to its filters and infinite customization, you can drive qualified traffic to your website or your Facebook page.
- Google Ads. It is more expensive than the previous option and is more complicated to configure. Perhaps, at first, you need an expert to configure your first ads and monitor them and that already means an extra investment added to what they charge you for each click.
- Organic traffic doing SEO. It is the slowest, but most effective way to get huge amounts of traffic coming from Google. Qualified traffic that is looking for a product like yours.
- Platforms: Amazon, eBay, etc. If you are going to sell on these platforms you can take advantage of their marketing and SEO and the traffic will reach you practically alone, although you will need to have a perfectly optimized and complete product file that gives you visibility to appear in the first results of the platform search engine for certain searches.
🙋 Frequently asked questions about dropshipping
1. Can you make money with dropshipping in 2020?
Is it profitable to do dropshipping in 2020?
You are right.
By following all the steps that I have explained in this guide, dedicating time and with some effort, you can generate benefits with this system.
2. For whom is it recommended?
Dropshipping is a good first step to understand the world of e-commerce and to learn how online commerce works.
It is a perfect system for people who are just starting and want to earn money with an online store but do not have a big budget.
It is also an ideal system for people with great knowledge of Facebook Ads, Instagram or getting high volumes of traffic.
3. How much should I invest in the beginning?
Little or much, that depends on what your budget and strategy are.
It depends on many factors.
With a domain and hosting you can start, but the more resources you invest (well invested), the more possibilities of increasing sales and, therefore, profits.
4. Can I use different providers for the same e-commerce?
Yes, there is no law prohibiting it.
Another thing is that you organize yourself and it does not become your worst nightmare.
Remember that the same customer can buy different products in your store and, if they are from different dropshippers, they will not receive them at the same time.
This sometimes happens even with Amazon; so it is not a big problem either, except if they are complementary products that need each other to work efficiently.
5. Can I do dropshipping with Amazon FBA (Fulfilment by Amazon)?
Many people tend to confuse it with dropshipping because you, as a retailer, would still have no store of your own, but in the end, you are “renting” it to a third party. You are adding one more intermediary to the chain: an Amazon logistics centre.
This business model involves an advance purchase of products by you or, which is the same, an initial outlay of money with the risk that the expected sales will not occur. And for this reason alone it does not meet the requirements to be a dropshipping.
Depending on the type of e-commerce you have in mind, you may be more or less interested in the dropshipping I’m talking about here today.
And so far the complete guide to dropshipping.
Do you think it is the best method to monetize your e-commerce? If you think so, don’t waste time. Get your batteries, find a provider, learn how to get online visibility and set up your online store!