How to Start a Dropshipping Business in 6 Steps
Katie-Jay aims to put answers in the hands of small business owners by leveraging over 10 years of retail and hospitality experience. With a background in gemology, she specializes in jewelry and luxury ecommerce.
This article is part of a larger series on Retail Management.
To start a dropshipping store, you need an initial investment of $100–$500 for platform fees and marketing, a computer with internet access, and plenty of time for research and setup (along with five to 10 hours a week in ongoing management of your new operation).
Unlike standard ecommerce ventures, you don’t need to buy expensive inventory, invest in warehousing, or spend time fulfilling orders. This makes dropshipping a low-cost, low-risk entry into online retail, with profit margins averaging 15%–20% of each item’s selling price.
Here’s how to start a dropshipping business in six simple steps:
1. Develop a Business Concept
Most successful businesses are based on a concept—around that, you center your brand, content, and product collection. This concept can grow out of something you are passionate about or be based solely on sales trends that you uncover through product research and trial and error. As a dropshipping seller, you can brainstorm ideas, experiment with different concepts, and fine-tune your business as you go.
You can proceed with a fuzzy notion of your business and brand. One of the biggest advantages of the dropshipping model is that you aren’t tied down by expensive inventory, so changes can be made at any stage.
As you explore dropshipping business concepts and research products, keep in mind that focusing on niche products can make marketing more effective, help your website rank high in topic-specific search results, and strengthen eventual buying intent. Also, ask yourself how your business concept and related offerings will solve problems for your buyers.
This approach can help you achieve an edge in the competitive ecommerce world by creating meaningful connections between your customer base and your offerings.
Product Research
Whether you’re niche-focused or casting a wide net, you’ll want to do some product research to get an idea of what’s selling. Seek out products and categories that are trending in order to gain your store traction.
Shopify, our recommended ecommerce platform for dropshippers, publishes a current list of trending products that can be a valuable jumping-off point for your research. This list includes vital stats on global order growth, growth of related sellers, and geographical relevance for each item.
Not sure where to start? Here are the metrics you can use to assess the potential of a product, plus helpful tools and resources to get the data you need:
A new dropshipping venture isn’t ideal for filling a gap in the market. By identifying which products are already selling well, you’re ensuring that there is a demand for your offerings.
To determine which items are selling well, use these resources:
- Amazon’s Best Sellers Lists allow you to see which products are performing best in each category, so you can hone in on what your niche market is buying.
These lists can be viewed by broad category—such as camera & photo—or refined to focus in on more specific sectors like darkroom supplies. This can help you model your concept, as well as identify specific, promising products.
Amazon’s list of the top 100 best sellers in the headphones category
- Oberlo is a dropshipping platform that lists millions of products for store owners to choose from. It connects with your shop to route orders to the suppliers, which means it has valuable order data from its users.
Its customizable search function lets you find high-potential products and rising trends by displaying bulk order volume, sales volume, and other helpful metrics.
Oberlo’s product-finder feature shows sales and order data for its available children’s watches
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).
It has helpful features that can gauge competitiveness, recommend successful related terms, and show how search volume could play into your advertising budget.
- 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.
From a keyword search on Ahrefs, you can also see how each term performs based on location, as well as which competitors are ranking in the results pages.
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 tool also ranks “rising” keywords and suggests related topics to explore. Plus, it’s equipped with a comparison feature to weigh the stats of multiple terms against each other.
The performance of the keyword “camping supplies” over the past five years shows a heavy seasonal impact.
2. Source Products
Your dropshipping store will serve your customers by working with wholesalers and manufacturers who supply your products.
Regardless of how you discover your suppliers, sourcing products is one of the more time-consuming steps in starting a dropshipping business. To be sure that your efforts pay off in profits, you’ll want to consider each item and partner-vendor for its total viability.
Consider these factors as you review potential products and suppliers:
- Item Popularity: An item’s previous sales volume is an easy metric to find on most dropshipping marketplaces. Although you may be able to market less popular products effectively, hot-sellers are usually safer investments of your time.
- Profitability: Your credit card processing fees and shipping costs will take a consistent bite out of your profits, so evaluate each item’s wholesale cost and suggested pricing for potential profitability. Keep in mind you can increase an item’s markup to make your sales more profitable or decrease it to better attract buyers.
- Item Quality: One of the biggest drawbacks of dropshipping is that it’s hard to gauge the quality of your goods. You can order a sample for yourself to get hands-on experience, but this can become overly time-consuming to do for an entire store’s worth of offerings. Most dropshipping sellers rely on marketplace supplier ratings and sales numbers when judging the quality of an item.
- Location: A supplier’s location will have an impact on shipping cost and delivery speed—important factors in the customer’s buying decision. Many dropshipping vendors are based in China, so try to work with vendors who provide ePacket shipping for fast, trackable deliveries.
- Supplier Reliability: Until you’ve worked with a supplier, it’s difficult to assess how reliable they will be. However, most dropship marketplaces are strict with their vendors and won’t keep a vendor with ongoing service and quality complaints. Additionally, supplier reviews are usually accurate and helpful resources.
- Return Policy: Most dropshipping marketplaces aim to avoid returns and handle most problems via no-return refunds. However, each marketplace operates differently, so you’ll want to check out the return policy and process for each platform (or direct vendor) you use.
The two main ways to source dropshipped goods are through dropshipping marketplaces or direct-source suppliers. Here’s an in-depth look at each option:
Once you’re familiar with your sourcing options, it’s time to get your website up and running.
3. Build Your Online Store
To put your dropshipping business into action you need an accessible, user-friendly, and traffic-driving ecommerce website.
For this step you’ll need to plan a model for your site, choose a reliable ecommerce platform, and create standard online store features (like product listings and return policies).
Model Your Store
Is your business concept more product-focused or content-focused? This differentiation is important because some ecommerce platforms are better for content-rich sites, while others cater to product-focused businesses. Plus, this model will play into your advertising strategy, which we’ll discuss later on.
Here’s an overview of these two models:
These sites take on the usual storefront-style design to sell goods, and they’re the simplest choice for new dropshippers.
Product photos, descriptions, and specs play the leading roles, and items are grouped by category or promotion (such as featured items, new arrivals, or sales). Product-focused stores usually have an FAQ section that clarifies shipping details, return policy, and other relevant info. An “About Us” page is common as well, which sheds light on the company’s history and philosophy.
Other than those written sections, additional content is sparse on product-focused sites. This structure is best for general dropshipping stores that sell a wide variety of goods, as well as simple niches that don’t require prerequisite knowledge.
For example, a dropshipping store that sells socks would be a good candidate for a product-focused model. On the other hand, a site selling bird watching equipment would benefit from publishing educational content to bolster its listings.
This product-focused dropshipping site leverages simple, eye-catching visuals with minimal written content.
(Source: Mooshe)
Product-focused stores can still use content to garner engagement and market themselves, but it often exists offsite. Maintaining an active YouTube channel and social media presence are great ways to publish content, as well as sending regular, informative email updates.
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.
With a general plan for your site in mind, the next step is to obtain the right tool to build it.
Choose Your Ecommerce Platform
To easily build a site with shopping cart and payment processing features, you need an ecommerce platform.
You can list dropshipped items on Amazon and other large marketplaces like Walmart and eBay—but proceed with caution. These marketplaces have costly seller fees, strict shipping deadlines, and customer service requirements.
Many dropshipping sellers do well on these platforms, but they’re not startup-friendly by any means. Get to know your suppliers and the process first on your own site, then branch out to seller marketplaces.
The best platform for your dropshipping venture will depend on your store’s model and your plan for sourcing suppliers.
For a more detailed rundown of available ecommerce platform options, check out our buyer’s guide.
Here are some of the top platform options for dropshippers:
For most product-focused dropshipping sites, we recommend Shopify. It makes launching an online store easy, with tools to pick a domain name, design a logo, and build a user-friendly layout.
Shopify integrates with Oberlo, Doba, Modalyst, Sprocket, and many other plug-and-play dropshipping marketplaces. Through the platform, you can automate order routing so your customer’s purchases will be instantly forwarded to the right supplier. From there, monitoring fulfillment and tracking shipments from the Shopify dashboard is simple.
For more info on how Shopify works, read our Shopify full review.
Shopify currently integrates with about 140 dropshipping marketplaces, tools, and apps.
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
Once you’ve made an account with your chosen ecommerce platform, the process of building a usable site is simple. We’ll cover the details in the next section.
Build Your Site
Building an ecommerce website starts with laying the groundwork, like setting up payment processing, connecting a domain, and designing a layout.
If you’ve chosen Shopify as your ecommerce platform, check out our guide to setting up a Shopify store for detailed instructions.
If you’re using another ecommerce platform, refer to the provider’s website for tutorials, FAQs, and helpful articles. Most platforms offer helpful customer support or even free setup assistance sessions to make this step as easy as possible.
These resources can help you sort out all of the aspects of your store—from integrating your shipping strategy to listing your products. However, some critical details may apply differently in a dropshipping operation. Here are some areas of your site to focus on:
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.
If the product they received was damaged or incorrect, offer to have another order delivered quickly without the hassle of returning the problematic item. Try asking them to send photos of the issue during the customer service process—this way you can validate their claim and get useful info to take to the supplier for a potential refund.
If the customer is dissatisfied with the product in general, allow them to choose another selection from your store or suggest a similar product as a suitable replacement. They’ll likely be pleased by the opportunity, and if your margins are big enough the transaction might still be net positive in revenue.
- 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.
Depending on your supplier’s policies, you may be able to receive credit or compensation for the loss. Ask the customer to send photos or a description of the issue.
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
Not quite sure how to put it? Try using Shopify’s convenient refund and return policy generator.
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.
After you’ve created an online store, it’s time to work on the operational side of your ecommerce business.
4. Set Up Your Business & Finances
To launch a legitimate venture, you’ll need to take care of these legal and financial aspects of your business:
5. Drive Sales Through Marketing
Once your site is up and running, you need to market it in order to attract shoppers.
Each of the following marketing tactics is startup-friendly and can be very effective at getting sales flowing:
Create accounts for your business on Facebook, Instagram, and Pinterest and use them to promote your store through audience engagement and shoppable posts.
You can easily populate a Facebook Shop from your Shopify or WooCommerce product listings. Then, use those new listings to create posts and share across your personal network. Both Instagram and Pinterest let you create shoppable posts, as well.
This method is a great approach to reach interested customers in their natural habitat. Plus, it reduces the steps for conversion, helps you gather data, and builds your online presence.
Take a look at the impact on the NY-based intimate wear brand The Natori Company: After creating shoppable Instagram posts and becoming active on Facebook and Twitter, the brand saw a 100% increase in revenue and a 1,416% increase in Instagram referral traffic to its website.
How shoppable Instagram posts work to refer traffic and create sales
(Source: Motion Ave)
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.
Facebook ads and sponsored posts like this one appear on the newsfeed of qualified customers, which means their activity and interests align with your business concept.
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.
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.
6. Run Your Dropshipping Store
Once your business is set up and your marketing efforts are in place, you’ll soon see orders start to trickle in. Running your dropshipping store mainly comes down to overseeing your orders, serving your customers, and basic accounting.
Then, as your business develops, another task is to use analytics to refine your offerings and find ways to drive growth (and make more money).
Here’s what the duties of a dropshipping store owner look like:
Part of running a successful business is identifying ways to improve. Your ecommerce platform likely has analytics features that convert your store’s data into clear, helpful reports to aid in this step.
An example of Shopify’s sales reporting feature (Source: Zenstores)
To learn about the top metrics and KPIs (Key Performance Indicators) you should monitor to improve your business, read our guide to retail analytics.
Keeping up with these day-to-day duties as well as site maintenance and marketing efforts is the way to run a successful—and profitable—dropshipping business.
Bottom Line
The dropshipping business model is a highly accessible solution for sellers seeking low-cost and low-risk entry into ecommerce. It’s flexible enough to work for part-time entrepreneurs and has the potential to earn a steady stream of real income. However, it often takes a few months for dropshipping stores to gain traction and be sufficiently profitable.
The initial investment of time can be hefty, but your store’s success relies on proper research, site building, marketing, and management.
Starting a dropshipping store is best done through Shopify and Oberlo, which integrate to make the process simple from start to finish.
