How to Start a Dropshipping Business in 6 Steps

Through keyword data, you can see how many searches have been made for a term in the past day, week, month, or longer, indicating product demand and success potential for your concept.

General keywords (“camping supplies”) can measure consumer interest in a category, while more specific keywords (“portable camping stove”) can give you an idea of product popularity.

Try these online tools for your keyword research:

• Google Ads’ Keyword Planner provides insight into how frequently your keywords are searched and allows you to compile data into a usable advertising plan (although it only displays a range of search volume—i.e., 10K-50K searches—rather than specific figures).

• Ahrefs Keyword Explorer supplies thousands of relevant keyword ideas with accurate search volume, a user-friendly keyword difficulty score, and advanced metrics like cost-per-click (CPC), bounce rate, and parent topics.

Ahrefs’ Keyword Explorer shows that the term “camping supplies” boasts 15,000 monthly searches in the US alone.

Dovetailing with search volume, another aspect of keyword research is getting a feel for how your term’s performance has changed over time.

Trend data can demonstrate a product’s potential for long-term success or provide ideas that could be temporary hot-sellers. The beauty of dropshipping is that your offerings can more easily adapt to changing demands than the inventory of a standard retail store.

Analyzing search trends can also give insight into the seasonality of a product. If an item’s popularity waxes and wanes through the year, it might be necessary to diversify your offerings or skip it altogether

This free tool is our recommendation for trend analysis:

• Google Trends presents search data through graphs showing interest over time. It allows users to see results on a customizable timeline and refine by search channel—such as web search, image search, or Google Shopping search.

The performance of the keyword “camping supplies” over the past five years shows a heavy seasonal impact.

Successful competitors provide valuable insight into what works in your market, and that info can help you construct your own plans.

Here are some effective methods to research your competitors:

• Check out search engine results pages (SERPs): Search for your own keywords on Google and assess which sites are ranking highly. Make sure to explore image search and shopping results as well as standard web results.

• Use social media: Instagram, Facebook, TikTok, and even Twitter are effective marketing platforms that often receive a lot of funding and attention from online stores.

• Sign up for mailing lists: By subscribing to your competitor’s regular emails, you’re getting crucial information sent right to your inbox. Keep an eye on the updates you receive to gauge things like frequency, copywriting tone, and promotion models (like sales and coupons).

If you still haven’t decided on a concrete concept for your store—don’t fret. You can use your research to form ideas from the product options through dropshipping suppliers, which we’ll cover next.

As order volume scales and your business develops, higher profit margins are attainable by sourcing your own dropshipping partners directly.

One way to do this is to form relationships with vendors you’ve previously used on dropshipping marketplaces. If their products consistently perform well with your customer base, it’s worth seeking outside arrangements that are more profitable for both parties.

Once you find your product niche and establish relationships with suppliers, this can turn into selling “white-label” products. These are goods that are manufactured and fulfilled by other vendors, but branded to appear as though your own company produced them.

If you prefer to source wholesale suppliers through other means, here are some resources to use:

• ThomasNet – A supplier-discovery database of over 6 million products. It’s used to source goods from US manufacturers across all types of industries.
• ImportGenius – An import/export data hub that can be used to discover suppliers or directly import wholesale goods.
• Buyer’s Markets – Industry-specific buyer’s markets are a great place to discover all types of suppliers—especially small manufacturers with limited marketing resources who may be open to dropshipping partnerships. America’s Mart, Dallas Market Center, and NY Now are popular digital marketplaces that also host frequent in-person market events. Alternatively, search online for a buyer’s market near you.
• Private-Label Sellers – Some private-label manufacturers—including cosmetics and personal care lines—offer their own branded products to dropshipping sellers.

Most manufacturers and importers have average order volume thresholds, so they’re unlikely to work directly with startups. For most new dropshipping ventures, direct sourcing is a goal to have on the radar for future development.

Plus, unlike the dropshipping marketplaces, the above resources don’t offer plug-and-play connectivity. To work directly with suppliers, you’ll need a more hands-on approach in terms of adding products to your website and forwarding orders for fulfillment. That is usually done through ecommerce management software, which adds to your labor requirements and operating costs.

Some business concepts benefit from having a store structured around applicable content. This is often the case for niches that have an engaged community or require prerequisite knowledge to use—like infrared saunas, custom mechanical keyboards, or rock climbing gear.

Informational content like blog posts, recipes, instructional videos, and user highlights take center stage in content-focused stores. This material supports product listings by elaborating on how your items are used and what benefits they can provide.

A content-focused business provides plenty of fodder to support your marketing efforts. While shoppers will find your store in search of products, this model can also gain traction with viewers seeking information rather than goods—boosting your site’s traffic and encouraging future sales.

Plus, informational content is heavily weighted in Google’s algorithm, so content-focused stores have the potential to rank higher in search results.

This content-focused site sells saunas through informational blog posts, e-books, videos, and educational FAQs—all accessible from the store’s homepage (Source: Celebration Saunas).

These sites also feature standard product listings grouped by category or other filter options for more direct sales.

Volusion is another dedicated ecommerce platform that caters to dropshippers. It boasts a fully integrated partnership with another leading dropship marketplace, U.S. Direct, as well as advanced connectivity with Doba.

Volusion offers advanced dropshipping features and popular integrations.

If you envision content playing a major role in your overall business and branding concept, then a WordPress site is best for your business. You’ll need an ecommerce platform that works as a WordPress plugin, such as WooCommerce.

To automate the dropshipping process and integrate with dropshipping marketplaces, you’ll need to buy a WooCommerce extension for this purpose. The platform itself has a helpful extension, and there are many other third-party options to choose from.

The WooCommerce Dropshipping dashboard

Your customers need a means of contacting you to handle questions, order modifications, returns, and other inquiries. It’s important to offer high-quality customer service to gain loyal customers, get positive customer feedback and reviews, and minimize the need to issue refunds.

Make sure to include a “Contact Us” page that is accessible from anywhere on your site. From there, list at least one contact option (the more you can offer, the better). These can include:

• Contact form — The simplest channel for feedback is a contact form. Your form should have fields for the customer’s name, email address, and a personal message.
• Email address — Avoid using your personal email address and opt to set up an account that inspires confidence in your customers, such as contact@yourstorename.com or help@yourstorename.com. Read about how to get an address with a custom domain for free.
• Virtual live chat — A chat platform is one of the best ways to serve your customers by providing responsive, real-time help. Set up a chat feature for free through Tidio.
• Phone support — With a virtual phone system you can list a number that receives voicemails to respond to later, greets customers with an instructive automated greeting, accepts text messages that are forwarded to your email, or simply redirects to your personal line so you can try to answer every call.

A sizable amount of your customers (roughly 20% on average) will inevitably want to return their orders—it’s a drawback that comes with the ecommerce territory.

The dropshipping model complicates things further. As a seller, you aren’t able to personally gauge the quality of your goods or control the fulfillment process, which makes returns more likely to happen.

Moreover, all of your products are coming from a separate (and often distant) third party, so returned merchandise needs to be sent back to the supplier in order to be re-sold. This is a time-consuming and costly snag.

As a solution, the most efficient way to handle dropshipping returns is to satisfy the customer without having the item sent back. Creating a positive shopping experience is vital to emerging businesses, and 95% of shoppers say that a smooth return process would sway them to buy from a business again.

Here are some ways to handle dropshipping returns:

• Offer a replacement: Allow the customer to keep the original item and receive a replacement at no cost.

• Offer a refund: To simplify things right off the bat or appease a customer who doesn’t want a replacement item, refund their purchase without requiring a return.

If your goods are high-value or your margins can’t take the hit, another option is to have the customer return the product to the supplier at their own shipping expense.

However you decide to structure your returns policy, create a clear page for it on your site and include the following info:

• Any items that may be exempt from your returns policy (usually due to hygiene or value reasons)
• The cost of your returns process (or if is it free of charge)
• If you offer exchanges
• Which countries are eligible for refunds and returns
• The period of time after a sale during which an item is eligible to be returned

Listing Items

If you’re using a dropshipping marketplace, the process of listing items in your store is very simple. Start by integrating your chosen marketplace(s) with your ecommerce platform. On Shopify, this is done by installing the marketplace app.

From there you can browse the marketplace’s entire catalog of products. You can search by keyword, category, name, or brand—or via filters, like top recommendations, best-selling items, specific suppliers, and even fast-shipping products.

For example, you can search for mugs on Oberlo through its integrated Shopify app.

Search results display product thumbnails with item cost, average shipping times and prices, and the number of times the item has been ordered. More details are available by clicking on each item.

To add the item to your site, simply click “Add to Import List,” and Oberlo will automatically prep the listing for your Shopify store.

Before fully importing new items into your store from Oberlo, you can review and modify the items in your Import List. Here, you can add a category, edit the description, and inspect other data by clicking the product, description, variant, and images tabs.

You can change your selling and shipping prices, as well. Under the variant tab, your item and shipping cost is visible (which is what you’ll pay the supplier when an item sells), along with updated inventory status. Oberlo even suggests pricing based on how other sellers have listed the product—which can help you stay competitive.

Once your edits are complete, clicking “Import to Store” sends the listing live to your shop, ready for customers to order. This entire process takes a couple of minutes for each item.

Once listed, products can be edited from your ecommerce store dashboard.

If you’re using a dropshipping marketplace, the process of listing items in your store is very simple. Start by integrating your chosen marketplace(s) with your ecommerce platform. On Shopify, this is done by installing the marketplace app.

From there you can browse the marketplace’s entire catalog of products. You can search by keyword, category, name, or brand—or via filters, like top recommendations, best-selling items, specific suppliers, and even fast-shipping products.

For example, you can search for mugs on Oberlo through its integrated Shopify app.

Search results display product thumbnails with item cost, average shipping times and prices, and the number of times the item has been ordered. More details are available by clicking on each item.

To add the item to your site, simply click “Add to Import List,” and Oberlo will automatically prep the listing for your Shopify store.

Before fully importing new items into your store from Oberlo, you can review and modify the items in your Import List. Here, you can add a category, edit the description, and inspect other data by clicking the product, description, variant, and images tabs.

You can change your selling and shipping prices, as well. Under the variant tab, your item and shipping cost is visible (which is what you’ll pay the supplier when an item sells), along with updated inventory status. Oberlo even suggests pricing based on how other sellers have listed the product—which can help you stay competitive.

Once your edits are complete, clicking “Import to Store” sends the listing live to your shop, ready for customers to order. This entire process takes a couple of minutes for each item.

Once listed, products can be edited from your ecommerce store dashboard.

Your business structure dictates how your business will be legally recognized and taxed.

The limited liability company (LLC), S corporation (S-corp), and C corporation (C-corp) structures are all options for businesses and differ in how much liability protection they offer. Read our guide to learn more.

If you don’t register your business in your state, it’s by default recognized as a sole proprietorship. This is a common choice for dropshipping store owners and definitely the simplest route to take.

In a sole proprietorship, your business earnings are reported on your personal taxes, with no additional state or federal filing requirements. Plus, you don’t need an EIN to operate (although it’s still a wise idea to get one for licensing and banking purposes).

The biggest drawback of a sole proprietorship structure is that you have no personal liability protection. This means that if a customer were to ever sue your business, your personal assets would be at risk. If a judge ruled your business at fault, they could order the liquidation of personal assets or garnish wages to pay damages.

For this reason, many store owners opt for an LLC, but it’s up to your assessment of your own risk of being sued. Selling certain offerings—such as skin care products or baby goods—may increase that risk.

Most businesses need to obtain and renew a local business license on a regular basis. Your dropshipping venture may not have this requirement, depending on your offerings and location.

Check out our guide to business licenses to see what steps you need (or don’t need) to take.

As a dropshipping store owner, you’ll need to think about consumption tax paid by your customers, and your own tax exemption for goods purchased from your suppliers.

Since your customers are ultimately consuming your products, they are responsible for paying the sales tax—otherwise called consumption tax. This rate and its regulations vary state by state (refer to your state’s revenue department website), but generally you only need to collect sales tax if:

• Your business has a physical presence (known as a nexus) in a state that charges sales tax

and

• The order was placed by a customer in the same state

For more info on what tax rates to charge, check out our guide to sales and use tax for small businesses.

Influencer marketing is another social media-based approach. It’s an affordable, flexible, and effective way to reach your target audience.

You can recruit affiliate influencers by finding them yourself and reaching out or by going through an affiliate network such as CJ.

Negotiate an affiliate fee with an influencer or online personality who aligns with your target customer base. Depending on the marketer’s reach, this cost is often less expensive than traditional advertising and more valuable in the eyes of your audience.

Nearly all consumers check their inbox every day, which makes email a crucial channel for marketing your store.

Start building your email list from day one and send out regular updates. Use these messages to inform about new collections, highlight exciting products, and draw attention to sales or promotions.

Shopify and other ecommerce platforms have tools to maintain contact lists and manage email campaigns.

Pay-per-click advertising is a great way to boost your store’s visibility to a qualified audience. Google Ads, Facebook Ads, and Facebook Sponsored Posts are the primary channels for this, but other platforms like Instagram, Reddit, Pinterest, and YouTube offer effective advertising as well.

The average cost for a Facebook ad is 97 cents per click, which makes it one of the more affordable paid ad channels. To learn how to get started, check out our guide.

Google is a costlier platform to advertise on, but you can reach shoppers with strong buying intent by targeting distinctive, longtail keywords. This can make your ad spend go further by bringing in highly qualified clicks.

A Google search for this keyword brings up shopping ads at the top of the results page.

For more info, read our guide to boosting your business through advertising on Google.

Search engine optimization (SEO) helps your website rank higher in online search results. SEO tactics are crucial to ecommerce success, seeing as roughly 93% of online experiences begin with a search engine.

SEO can get complicated—shaping how you structure your product descriptions, image files, title tags, meta descriptions, and more. Your search engine rankings take over 200 factors into account, but you don’t have to tackle them all to be successful in your niche.

Start by carefully identifying your chosen keywords and working them into your site’s content. Then, use your ecommerce platform’s site builder to carve out effective title tags, meta descriptions, and headers. Read Oberlo’s beginners’ guide to dropshipping SEO to learn more.

Dial in SEO tactics on your Shopify store by navigating to the Preferences tab.

Whether your site is product- or content-focused, adding appropriate content to your marketing plan is an effective way to build a long-term traffic stream. It also benefits your SEO, nurtures brand recognition, and can help grow your contact list.

Content marketing can be done by creating a few blog posts about your niche, starting a YouTube channel, recording a podcast, or adding custom infographics to your site.

If you don’t have the means to create content yourself, try seeking help from a freelance professional on Fiverr. Alternatively, you can work with established content creators to score guest spots on their media channels. Any amount of content is a useful tool to get the word out about your store.

Personally reaching out to those interested in your niche is a great way to garner attention. This is especially effective if your concept appeals to those in active, engaged communities.

Niche communities exist on thousands of Facebook groups, online forums, and Reddit pages. Members of these groups are enthusiasts who love to talk shop, which often includes discussing products and sources (like your new store).

The mechanical keyboard Reddit community has 940,000 members, with thousands online at any given time.

These audiences are welcoming to like-minded participants, but they usually don’t respond to intrusive sales techniques in their spaces.

Try building rapport with these communities by leveraging your own knowledge of your niche. Build relationships, start conversations, offer advice, and post reviews. While engaging with other members you can mention your store or recommend some of your products.

When done tactfully, community involvement can build trust for your brand from well-qualified customers.