What Is Dropshipping? The Ultimate Guide to Selling Without Inventory in 2024

What is dropshipping?

Dropshipping is a business model in which a third-party supplier manufactures, packs, and ships orders for businesses.

The dropshipping business model allows you to offer a wide range of products without the overhead costs associated with traditional retail, such as warehousing and large inventory investments.

Most dropshipping suppliers offer on-demand order fulfillment, meaning that you only pay for products that are ordered. This business model is popular in ecommerce for its low entry barriers and flexibility in product offerings.

What is a dropshipper?

A dropshipper is an individual that sells dropshipping products without holding inventory.

Dropshippers focus on marketing and customer service, while their dropshipping suppliers manage the logistics of order fulfillment. As a dropshipping business owner, you can run a successful online store without worrying about:

• Inventory management
• Product manufacturing
• Finding and keeping up a storage space
• Production equipment
• Shipping

Instead, you can focus on planning your product catalog, running marketing campaigns, and growing a customer base

1. Find a dropshipping niche

To successfully start a dropshipping business, it’s important to first identify your niche. A niche is a specific area of the market that you can specialize in and advertise to a targeted audience. Your niche should be based on market research, identifying customer interests, and potential profitability.

Think about how you can create products that align with your niche, such as items with designs that resonate with your audience or products that are directly related to your niche. This will ensure you’re offering products your audience will be excited to buy.

2. Name and register your business

Now that you’ve identified your niche, it’s time to name your dropshipping business. Choose a memorable name that resonates with your business idea.

Depending on your location, the typical dropshipping business structures include sole proprietorship, partnership, and limited liability company (LLC). Find out what they are and their pros and cons in our dropshipping business guide.

3. Find a supplier

Finding an excellent dropshipping supplier will make or break your business.

There isn’t one dropshipping supplier to rule them all—each has perks tailored to different customers. That’s why we’ve listed the main criteria you should look at to find a supplier most suitable for your needs.

• Fast fulfillment times: Prioritize suppliers with quick fulfillment from order receipt to shipping readiness. This doesn’t include shipping time, but faster fulfillment leads to happier customers.
• Efficient shipping: Look for suppliers with swift average shipping times and partnerships with multiple couriers. Multiple fulfillment centers worldwide shorten the distance to customers and facilitate global business expansion.
• Positive customer reviews: Assess the supplier’s reliability through customer reviews on their website, social media, and third-party sites like Reddit or Yelp. An honest supplier will show all reviews, both positive and negative.
• Product samples: Order samples to personally evaluate delivery speed, unboxing experience, and product quality. Suppliers offering sample discounts are preferable, though not essential.
  

  4. Set up shop

  To sell your dropshipping goods, you need an online store. The choices are:

  A storefront on an ecommerce marketplace

  • Pros: an already established large audience and low costs (listing costs are mostly under $1)
  • Cons: constantly competing with other sellers who sell similar goods

  A standalone store website

  • Pros: highly customizable, visually better-looking than a marketplace, you’ve got the whole place to yourself
  • Cons: high monthly costs, you have to gather an audience from scratch

  Before deciding, check if your dropshipping supplier supports your chosen platform.

  5. Connect the store to the dropshipping supplier

  Fulfillment processes can only be automated if your store can be integrated with your supplier. Otherwise, you’ll have to spend a lot of time manually forwarding orders from your store to your supplier. With 10 orders a week, that’s nothing. But imagine if you ever reach 500+.

  If you can connect your store with your supplier, your orders will be automatically transferred to your dropshipping supplier. This system allows suppliers to promptly begin fulfillment and ship directly to customers without your assistance.

  6. Add products to your store and choose a pricing strategy

  Select products from your supplier’s catalog and add them to your store. There are multiple ways to price your products, but this one’s the easiest to start with:

  Consider all costs, including the product price, ecommerce platform fees, and any outsourcing expenses like design or accounting services. Include a margin for potential future discounts in your pricing strategy.

  7. Prepare product photos and descriptions

  Your product descriptions and visuals should give your brand a personality. To create compelling product descriptions, focus on niche-specific language, including slang and humor, that resonates with your audience.

  Be thorough and transparent about product features, sizing, and quality, and include SEO keywords to improve discoverability.

  8. Market your business

  Marketing is key to attracting customers and driving sales. Focus on creating a strong brand presence online through social media, SEO, email marketing, and paid advertising.

  Tailor your marketing strategies to target your specific audience, highlighting the unique aspects of your products and store. Engaging content and promotions can also boost visibility and encourage customer loyalty. Efficient marketing increases traffic to your store and establishes your brand presence in the competitive ecommerce landscape.