If you’re looking to start an online store and don’t want to deal with inventory, production, shipping, or other backend systems, a dropshipping business may be the perfect fit.
But how do you take the leap? Read on to learn how to start dropshipping, including tips to help you find success.
What is dropshipping?
In essence, a dropshipper (you, in this case) is a middleman. You find the customers, another company manufactures and ships the products, and you take a cut of the earnings.
That manufacturing company may create products people want and need, but they don’t want to worry about marketing. They’ve gotten halfway to the goal: making sales. Your business gets them the rest of the way. You use your marketing abilities and customer service skills to reach new people, build loyalty, and become their trusted source.
One of the most well-known dropshipping companies is Wayfair. They don’t make anything; they just list an array of home furnishings manufactured by a variety of other companies. All the products are listed in one place, making it like a physical brick-and-mortar store. They buy from vendors, mark up the prices, attract customers, and make profits off their sales.
You can create something similar. Continually add products and set your own prices without worrying about shipping, inventory management, product storage, or manufacturing.
What are the pros and cons of dropshipping?
Dropshipping isn’t right for every store. It’s important that you sit down and consider if it’s the route you want to take to meet your goals. Dropshipping benefits include:
- Relatively low cost. Don’t worry about costs involved with product development, sourcing, or inventory storage — all fees most traditional stores incur.
- No inventory management. You won’t have to store products, risk losing money on unsold inventory, or be concerned about selling out of items.
- Improved cash flow. Receive payment for your products at the same time as you pay your providers rather than waiting to recover your investment.
- No shipping. Avoid potentially complicated shipping processes and trips to the post office.
- Minimal risk. Have the freedom to test new items with your target audience without risking a significant amount of money.
- Passive income. Let your supplier manufacture and fulfill orders while you work on other aspects of your business.
But, of course, there are also downsides of dropshipping:
- High competition. Other stores could potentially sell the exact same products.
- Lack of control. Since you don’t personally create and ship each product, you turn over a lot of control to your manufacturing company. That company can also change its rates and fees at any time.
- Disjointed orders. If you sell products from multiple manufacturers, a customer might receive their order in different packages. This could potentially cause brand confusion or even frustration.
- No bulk discounts. Since you’re essentially purchasing one product at a time, you probably won’t receive supplier discounts and may have lower profit margins.
- Difficulty standing out. Since your products are similar to those of other stores, it’s hard to be different. In some cases, you may have to compete only on price, which is often a race to the bottom.
Learn even more about the pros and cons of dropshipping.
How to start dropshipping
Ready to find out how to start dropshipping? The following is a guide that will set you up for success. But remember, the exact process will vary for every store, so feel free to customize the process based on your needs and audience.
Step one: Choose a niche
You must choose a niche — a specialized area within a larger industry that you focus your products and business on. No business can sell everything to everyone.
A good niche is one with products people are willing to pay for online. There should be some demand — dropshipping isn’t the place to roll out a bunch of untested products.
The good news is, your niche can be almost anything. You can pick any sport or recreational activity and sell to enthusiasts. Or sell products related to food, fashion, home improvement, electronics, entertainment — the list can go on forever.
Each niche also has sub-niches. Hats can be narrowed down to outdoor adventure hats, women’s hats, sports hats, hats with funny messages on them, and more.
Niches can also be defined by demographics — you can choose to target affluent customers, condo owners, car owners, college students, parents, and many others.
Why is a niche so important? Because it distinguishes you from the competition. There are a lot of people trying to get into dropshipping. If you just sell “hats,” you’ll have a tough time finding an audience. It’s too general. But people looking for funny hats will find a business that specializes in those. And they’ll pay more for them because it’s what they want.
Choosing a niche enables you to:
- Charge higher prices.
- Attract a devoted audience.
- Separate yourself from the competition.
- Become the go-to source for that line of products.
Being specific means you don’t have to compete on price and can focus on marketing to the people who are the right fit for your products instead.
Step two: Select products and find vendors
One of the most important steps when considering how to start dropshipping is choosing suppliers to work with. Some suppliers offer a huge variety of products that fit into nearly any niche. Examples of those include AliExpress and Spocket.
But there are also tons of smaller suppliers located around the world that you can partner with. This can be a better option if you’re looking to sell specific items and are starting with products in mind.
When choosing a supplier, consider things like:
- The locations they ship to. Do they ship just within a certain country or to multiple countries? Can they get products to your target audience?
- Their pricing. Some dropshippers charge a monthly or annual fee, while others just charge for the products and shipping. Look closely at any and all fees.
- The reviews. How do existing customers feel?
- Their policies. How do they handle returns? Broken products?
- Integrations. Do they integrate with your WooCommerce store using their own plugin or an extension like WooCommerce Dropshipping?
Next, choose the products you want to sell, if you’re not starting with a specific idea. You won’t want (and don’t need) to sell everything a particular vendor produces. Select the products that fit the niche you’re focused on and that you believe will produce good profit margins.
Make sure to order some samples and test the products you’re going to sell online. This is key to maintaining a high-quality store and ensuring that the items look like their pictures and work as described. The last thing you want is to sell something you can’t personally stand behind.
Then, think about ways you can make your store stand out — remember, other people can also sell these same items. For example, you might have a store centered around outdoor products. In addition to one-off items like sleeping bags and campstoves, you could sell gift sets that include everything someone needs for a hiking trip, or a beginner set for kids. These types of personal touches go a long way!
Step three: Develop a marketing plan
Marketing begins with knowing your audience and your niche. Who are you marketing to, and why? To reach your audience, you have to figure out where they are. Are they best reached with online marketing, through the mail, in person, or somewhere else?
There are a variety of ways you can reach those people, and the right strategy for you is probably a combination of:
- Paid, online advertising. Get your ads in front of potential customers on the websites they already visit. Set targeting options based on everything from age and income level to location and interests.
- Email marketing. Send emails to your list with new announcements, discounts, and tips. Plus, get your products back in front of people who added them to their cart but didn’t purchase.
- Content marketing. Write blog posts, guides, eBooks, and more to show your expertise and lead people to make a purchase.
- Search engine optimization. Reach people who are actively looking for your products or services on search engines like Google.
- Social media marketing. Connect with followers or potential customers through posts, live videos, or paid advertising.
- Influencer marketing. Use the power of influencers to reach a whole new audience that trusts that person’s recommendations.
Or, you might also consider more traditional marketing methods like television ads, radio ads, or direct mail.
But whatever you choose, remember that it might take a little while to start seeing results. Be consistent and keep an eye on analytics, and you’ll earn the trust (and sales!) of the people that will become your loyal customers.
Want even more information? Here are some additional resources:
Step four: Watch your expenses
Though you don’t have to create packaging, acquire materials, manufacture anything, or ship products, your dropshipping business will still have costs. Many marketing strategies (like paid ads) require an upfront investment. You may want to create special, custom packaging if your supplier allows it. You’ll need to purchase a domain name, hosting plan, and any necessary extensions for your online store.
And while these are relatively minimal investments, it’s important that you understand what’s involved before you start dropshipping. Take the time to make a budget and then adjust the pricing of your products to accommodate your overhead.
Step five: Create your website
With vendors, products, and a marketing and business plan in place, you’ll need to consider your website and technology. While there are a variety of tools available to sell online, building your dropshipping website on WordPress with WooCommerce offers two distinct advantages:
- You own all the web content and assets you create. Some other platforms charge you a monthly fee and can delete your store at any time, so it’s more like renting.
- WooCommerce offers hundreds of extensions that allow you to customize your store, speed up your administrative and business processes, and improve your marketing.
WooCommerce and WordPress themselves are also both completely free. All you’ll need to pay for is a domain name and a hosting plan. Depending on the supplier you choose to work with, you may also need an extension like WooCommerce Dropshipping or AliExpress Dropshipping — these help you sync things like pricing, inventory, and shipping.
Learn more about why you should choose WooCommerce and how to get started in our guide to setting up a dropshipping store.
Step 6: Deliver excellent customer service
A guide about how to start dropshipping wouldn’t be complete without discussing customer service.
Customer service is essential to standing out from the competition. And since you won’t control shipping, you must have a plan and a team in place to keep customers informed and happy if anything goes wrong — even if the mistake is your vendor’s, customers will look to you to make it right. But how do you do that?
- Be upfront with product descriptions and photos. Include all the information people need to make a purchase, like dimensions, size charts, and ingredients. Have clear photos from a variety of angles that show scale if applicable.
- Offer support through multiple channels. People prefer reaching out in a variety of ways. Consider mediums like live chat, social media, phone, email, contact forms, and forums.
- Create an FAQ page. Answer customers’ most common questions in one place that’s easily accessible.
- Respond on social media. If your customers reach out with questions, comments, or complaints on your social platforms, respond quickly and professionally.
- Have a clear return and refund policy. Be upfront with your policies and add them to your checkout page, footer, and order confirmation emails. Learn how to write a great return policy.
- Make documentation readily available. Help customers find things like instructions, tutorials, manuals, and tips. You can add this sort of information to the account page, confirmation emails, or blog posts.
- Fix things when they go wrong. If something goes wrong, like a late package or broken item, consider taking responsibility, even if it’s not your fault. This can help you keep a customer for life and protect your reputation.
Start dropshipping with WooCommerce
WooCommerce provides everything you need to start dropshipping, whether you’re opening a brand new store or are already selling other types of products. With full control over your content, a large extension library to help you grow, and the support of eCommerce experts readily available, you’ll be set up for success.
Is dropshipping easy to start?
While it’s not risk-free, dropshipping is one of the easiest types of online stores to get up and running. Because you don’t have to worry about things like developing products and finding a facility, there’s very little overhead.
Once you decide on products and suppliers, you just need an eCommerce platform that supports dropshipping to get your store online.
What’s the best dropshipping tool?
The best dropshipping tool is one that allows you to own your content and customize everything to fit your specific needs. That’s why WooCommerce is such a great choice — it’s open-source, so you have full control and endless flexibility at your fingertips.
What are the best products for dropshipping?
The best dropshipping products are the ones that meet the needs of your target audience. What items solve the problems that they’re experiencing?
But you also want to consider the popularity of items as a whole as well as their profitability. For some concrete ideas, read our post about the best dropshipping products.
Can I dropship with WooCommerce?
Absolutely! There are several ways to dropship with WooCommerce:
- Use the WooCommerce Dropshipping extension. This lets you connect directly with AliExpress or any number of local suppliers.
- Use an extension or plugin from your supplier. Some suppliers have their own, independent WordPress plugin that will allow you to connect your store.
- Connect to your supplier using the REST API. With the help of a developer, you can use the WordPress REST API to connect with any third-party tool that you’d like.
Can I add dropshipping to my eCommerce store?
Yes, you can add dropshipping to an existing store. If you already sell some products that you manufacture yourself, digital items, or memberships, you can also dropship additional products. With the WooCommerce Dropshipping extension, you can assign specific products to suppliers, keeping things from becoming confusing.
How do I handle dropshipping returns?
Start by setting expectations with a clear return and refund policy. Then, it’s important to remember that your customers probably don’t know that you’re dropshipping. They don’t necessarily care who ships the product; they just want it to arrive quickly and in good condition.
In most situations, we recommend offering returns to unhappy customers. They’re an opportunity to keep that person as a customer for years to come, protect your brand reputation, and potentially lead to referrals.
If a product arrives damaged, avoid blaming the supplier to your customer. Remember, they probably don’t know (or care) that you’re dropshipping. Instead, take responsibility and offer an exchange or refund. However, you may then want to reach out to your supplier and ask them to take responsibility for the mistake on their end. Depending on your agreement, they’ll refund you for that product.