How to start Dropshipping for Beginners in 2024

Introduction

Dropshipping is a popular business model due to its low startup costs and simple business model. Starting capital for a dropshipping business can be as low as $100 depending on the scale on which one wants to start the business. However, it could also be an advantage that they don't have to own or buy any products, they can offer all kinds of products as a drop shipper. Here are some simple steps for a beginner to start a dropshipping business as listed below. In this guide, we will teach you how to start a dropshipping business from scratch. We will cover the basic steps, helpful tools to launch your business, and key considerations.

What is Dropshipping?

Dropshipping is a business model allowing an organization to sell goods it doesn't own. Customers buy a product and then the company communicates to the manufacturer or distributor that an order has been placed and a product should be shipped to the customer. The manufacturer or distributor sends the product directly to the customer on behalf of the dropshipping company.

1. Choose a Business concept

A business idea is basically what you offer and to whom you offer it. Now since there are so many opportunities with dropshipping, you begin with several products that you believe will appeal to a particular group of people.

For instance, you may have a business idea to sell graphic t-shirts to skaters. The t-shirts will not be general shirts, instead, they will bear unique features that will attract this segment and will be of the standard quality and designs as those taken by skateboarders.

It underpins what you do in terms of the products you offer, the look and feel of your website, advertising, etc so it's important to spend some time in this area. However, what is also important to know is that since there really is very little risk in starting a dropshipping product line, you can easily switch things around if you feel that perhaps you made a mistake or if your passion for the product that you want to offer changed.

2. Source Products

A business idea doesn't ensure that one will have an opportunity to distribute the products to the target market. Before you come up with a website, spend some time doing research on the products. It is recommended to compare multiple distributors that offer the same product to determine the best wholesale price of the product.

Some of the most popular marketplaces are:

> AliExpress

> SaleHoo

> Worldwide Brands

> Doba

> Megagoods

> Wholesale Central

3. Select Suppliers

After identifying the products you want to sell, now it's time to choose the company that will be the actual supplier to your customers.

Quality: Choose a supplier that offers the quality that you want your company to represent. One business model is to charge more for better-quality products.

Profitability: You should be in a position to make a reasonable profit on the product if the total cost of the product has been determined appropriately. If you are selling online you should also factor in shipping and transaction costs in your price. The desired profit margins that most drop shippers seek range from as low as 15% to as high as 20%. Of course, if you can generate higher profit point margins, then it is even better.

Reliability: You should select a supplier that delivers a product in less time and with little shipping cost. Some of the suppliers are in other countries so you have to decide the product arrival time for your customer. To determine the reliability of checking it's better to order several products from the supplier and pay attention to the process.

Return Policy: If possible, try to look for a supplier that has a return policy in their terms and conditions. Many do not, so you have to look at this before deciding on anything that you are going to take. You also have to consider your own approach to stating return policies depending on what the supplier has offered.

Build an online store

You will need to build an e-commerce store to sell your products. An e-commerce store helps you display the products you want to sell and add a checkout method to receive payment every time you sell a product.

To build a website you will need:

> A content management system, such as WordPress, shopify, or Woocommerce.

> Web hosting

> Integrations with your chosen drop shippers.

A built-in payment method to accept online payments.

Register your Business

You will need to set up a company as a business, separating it from your personal assets. This means creating a name and filing an LLC or corporation with your secretary of state. You will get a tax identification number from the IRS after successfully submitting your online application. Use this TIN to open a bank account that is linked to your payment gateway. This bank account will take all deposits and pay the company expenses, including web hosting and maintenance. It will also be the account that will pay the supplier for the products that you buy.