Dropshipping Basics. All you Need to Know to Start a Dropshipping Business

Dropshipping business has a lot of pros and cons. What is undeniable is that it’s a safe option to make your first steps in the sphere of online sales without investing a lot. You also don’t have to worry about having all the items in stock, as you order them after you are paid, so you bear fewer risks. But let’s consider all pros and cons of the dropshipping business from the very beginning.

What is dropshipping and how does it work?

Dropshipping is the scheme of online retail business when you resell goods from big marketplaces or manufacturers without having them in stock. The scheme of the work is the following:

1. You create a store or page and attract customers to it (read the What is a dropshipping store section to learn more).
2. The customers choose goods, place orders and send you the payments.
3. You keep your commission and order the goods from the supplier.
4. The supplier sends the goods to the customer mentioning your details as the return ones on the package.

Sounds simple? Actually, it is. Though there are important nuances on each stage of the process.

What is a dropshipping supplier?

Dropshipping supplier is any store or a manufacturer who sells goods at the prices lower than in your local online stores. Most retailers choose to buy goods from AliExpress or eBay and sell them in their own online stores or on eBay, Amazon, etc. or work with the dropshipping platforms which provide you with out-of-the-box solutions.

How to find a reliable dropshipping suppler?

A reliable supplier is half of your dropshipping success, as many key features of your business will depend on it:

• the timely shipping,
• the quality of goods,
• your profit guarantees.

Once you have made an order from the supplier, you cannot have control over the shipping process, but this is you who will hold responsibility if something goes wrong with the order. Before starting your dropshipping business, make a plan of the work; calculate all possible expenses and an estimated profit.

Your profit will depend on:

1. the prices you set in your store,
2. the prices you buy the goods at,
3. additional expenses.
4. additional discounts you get from the suppliers and shopping platforms,
5. bonuses and cash back in online cashback services and on bank cards.

Your expenses will be:

1. The payment for the development and maintaining of the page/website.
2. The compensation of your time. We strongly advise you to “pay to yourself” when you start any business to understand how lucrative it is.
3. Any returns and refunds costs.
4. Any taxes you are liable under the legislation of your country and the counties you work with.
5. Salaries, in case you are going to hire somebody.

When choosing a supplier, read the reviews and contact those who are already in the business. It will help you save time and find reliable options. There are also directories of dropshipping suppliers and numerous intermediates that guarantee you safe deals. But keep in mind that they will take their commission, so you will earn less, though anyway, they are worth examining.

Nowadays there are many scam stores. Use Megabonus.com  to buy from reliable stores only and save up to 40% of the purchase cost (read more in the “Is dropshipping a profitable business” section).

It’s strongly advisable to make a test order before starting to work with any dropshipping supplier. This way you will see how long the shipping takes, check the quality of the goods and make sure the store is not a scam one (also, online reviews help to detect scam suppliers, so don’t skip them).

Those who want to start a big business and buy a lot, may travel to the manufacturer’s office and make a legal contract or at least see everything with their own eyes.

What is the dropshipping store?

To sell the goods, you need to reach your potential customers. It can be done in different ways: with a website of your own or without it.

Where to sell if you don’t have a website?

• On big marketplaces like Amazon or eBay.
• On your social media pages.
• On your YouTube channel.

How to create a dropshipping store?

1. You can buy a ready solution from such platforms like Shopify, Oberlo and others. It will have a set of ready-to-use dropshipping websites. You will have to choose the template you like and customize it, all suppliers will be linked to it and (often) the payments systems too. You will also be able to join the community of the dropshippers using the platform, which is a big plus when you are making your first steps. The minus is that you will have to a pay a fee and won’t be able to choose the suppliers of your own.
2. You can create a website of your own either from scratch or using Woocommerce, Joomla, etc.

Pros:

1. You will have a unique website.
2. You won’t depend on the third-party platforms that can stop to exist one day.

Cons:

1. You must be qualified to create websites or you will have to hire somebody and pay for the website’s development and maintenance.
2. You will have to pay for the domain name and the hosting.

Is dropshipping a profitable business?

Yes, it does if you plan everything right, choose top-selling products and minimize your expenses. Don’t forget to increase the revenue by using bank cards with cashback, promo codes, etc.

Many dropshippers forget that additional bonuses can result in a much higher profit. Where to look for it?

1. Ask the supplier for additional discounts.
2. Use cashback services when ordering the goods. Thus, when you order with Megabonus, you save up to 40% of the purchase cost. In case of wholesale orders, the economy starts from several thousand dollars per month or $10,000 and more per year. Just think about it!
3. Use a bank card with cashback. In this case, you will get cashback from an online cashback service and from your bank too.
4. Order popular items at sales. Also, wholesale orders help to decrease the price of a single product.
5. Avoid customs expenses. Ask the suppliers to mention the lowest price possible.

Dropshipping top tips

This is by far one of the most important paragraphs of this article. We have collected the top mistakes dropshippers make. Here they are:

1. Wrong price on the parcel and other notes disclosing you are dropshipping. Always warn the supplier you are dropshipping and ask them not to add:

• the original price,
• promotions,
• offers from the supplier,
• bonus and review cards of the supplier,
• invoices.

Put this message every time you order from a supplier no matter how long you have been ordering from them: We are dropshipping. No original prices, invoices, brand logos and promotions, please.

2. Choose a correct shipment method. It can either ePacket or another one – just don’t forget to make sure you have chosen the cheapest yet the fast one.
3. Create your shipping and return policy before you start your business and add it to your website to avoid problems with returns and refunds. Clearly state how much time returns and refunds take and the other details.

Dropshipping from AliExpress

Ali dropshipping is a good option, because:

1. There are millions on goods on AliExpress and Alibaba (in case of wholesale orders).
2. The prices are the lowest possible.
3. New goods that will be popular among customers appear here before you see them in any other store.
4. AliExpress has the Buyer Protection Program, so you never risk your money.
5. There are sellers’ ratings, so you can choose the most reliable store.
6. Regular sales help to save up to 85% more.
7. Cash back rate is up to 5%.
8. Goods comparison right on the website.
9. Numerous payment and delivery options.

Free tools for dropshipping

These are the most important notions of dropshipping.  You can also use these tools for better dropshipping experience:

Parcel Tracking – track all your parcels right from the extension.

Smart Cart – add the goods, monitor the prices and buy when they are the lowest.

Cashback extension – buy with cash back without opening additional websites.

Cashback from AliExpress – save more every time you order.