Wondering how to start a dropshipping business? Great! Our guide has clear, actionable steps to help you kickstart your dropshipping journey like a pro. We’ll cover dropshipping, how to choose your niche, find reliable suppliers, set up your online store, and effectively market your products.

Key Takeaways

• Dropshipping enables entrepreneurs to sell products without managing inventory, relying on third-party suppliers for fulfillment.

• Key steps to start a successful dropshipping business include selecting a niche, finding reliable suppliers, and managing finances effectively.

• Marketing strategies such as SEO, social media advertising, and brand identity are essential for attracting customers and driving sales.

The 7-Step Guide to Starting a Dropshipping Business

Getting a dropshipping business off the ground might appear challenging, but with strategic planning and dedication, it can yield a steady income. Here’s an overview of the seven key steps to establish a successful dropshipping business: 

1. Understand the dropshipping business model.

2. Evaluate if dropshipping is right for you. 

3. Choose your dropshipping niche. 

4. Find reliable dropshipping suppliers. 

5. Set up your online store. 

6. Manage your business finances. 

7. Market your dropshipping business. 

These steps provide a solid foundation, setting you on the path to success. Let’s explore each of the steps below: 

Step 1: Understanding Dropshipping

What is dropshipping? Dropshipping is an eCommerce business model that enables entrepreneurs to sell products without managing inventory or shipping directly. Instead, these tasks are outsourced to third-party suppliers. 

As a seller, your primary responsibilities include marketing the products and handling customer service while your dropshipping partner collects & fulfills the order. This makes it one of the easiest eCommerce business models to adopt. 

This model offers flexibility, as you can start and run a business with little to no capital. However, because of the low barriers to entry, you may face intense competition as you grow. However, you can thrive in this bustling marketplace with a solid understanding of how dropshipping works and a strategic approach. 

How Does it Work?

The drop shipping process starts when a customer places an order from your online store. Then, you forward the order to your dropshipping supplier, who handles inventory management and shipping. The only tasks you must focus on are marketing, payments, and customer management.  

Source

The supplier handles the physical fulfillment process, including order confirmation, fulfillment, shipping, and delivery, while you concentrate on scaling your business and improving customer satisfaction.

In general, it follows this sequence: 

• Customer orders for a product on your online store 

• You place an order with your supplier for a lesser amount 

• The supplier accepts and processes the order 

• The supplier delivers the order to your customer while you focus on customer management 

• The customer receives the order, and you keep the profit 

Pros of Dropshipping

The major advantage of dropshipping is its low starting costs. You don’t need to invest heavily in vitals like physical product listing, order processing or fulfillment, etc., and you don’t need to worry about unsold inventory or overhead costs like warehouse storage. This makes it an ideal business option for new entrepreneurs. 

Other benefits are: 

• It allows you to list and sell a wide variety of products 

• You can run your business from anywhere in the world. All you need is a laptop and stable internet connection 

• It removes the costs of product development, material sourcing, product packaging, or delivery 

• You can scale as you grow. 

• You can start at any age. (Learn more about how old do you have to be to dropship)

Find out how to start dropshipping for free.

Cons of dropshipping 

Just like other e-commerce business models, dropshipping comes with its own disadvantages. One of the major drawbacks is high competition. Since it has a low barrier entry, you’ll likely face intense competition before you finally break through. Currently, 27% of all online retailers use the dropshipping business model, and this is ~ 8 million worldwide: 

Other drawbacks are: 

• The profit margins are low, except if you’re into high-ticket dropshipping 

• Since you are not responsible for inventory and delivery, you have limited control over product quality, shipping times, and stock availability.

• The quality of your products depends on your supplier 

• Suppliers may run out of stock without informing you, and this may affect the seller-buyer relationship  

2. Evaluate if Dropshipping is Right for You

Although dropshipping is a lucrative business, it’s not for everyone. So, before taking a step further, self-check to see if it aligns with your goals and skills. Here’s a quick checklist: 

Your Business Goals

If you need a side hustle or want to start a business that requires little to no capital, then dropshipping is a good fit for you. It allows you to operate from anywhere in the world, and you don’t need thousands of dollars to break into the market. 

You have exceptional marketing skills:

As a dropshipper, you act as a middleman between the buyer and seller (supplier). To make a huge success, you’ll need exceptional marketing skills – which is a great plus if you already do. 

You want flexibility:

As we mentioned earlier, dropshipping allows you to operate a business from anywhere. You can add/remove products, manage customers' orders, and build a robust brand from the comfort of your space. If this is what you’re looking to achieve, then dropshipping is the way to go. 

You’re willing to accept the low product margin: 

Can you make money dropshipping? Yes, you can but with a caveat. Dropshipping offers low profit margins because you buy products at wholesale prices and sell them at retail. Although, this also depends on the niche/product/market you choose and your marketing skills. 

If you’re into high-ticket dropshipping, the profit margins are higher than low-ticket ones. Also, if you have excellent marketing skills, you may be able to generate large sales volume to build and sustain your business. 

You excel in customer management: 

Lastly, since you don’t have direct control over inventory or shipping, you must be ready to manage customer complaints, delays, and returns. Sometimes, suppliers may run out of stock or, worse, deliver a subpar product to the customer. If you can manage this effectively, then you can consider dropshipping.  

Key Considerations Before Starting

Here are some vital factors you need to consider to succeed as a dropshipper:  

• Effective financial management. This is because over 80% of new businesses fail due to cash flow issues. You need to understand all associated expenses, including product costs and platform fees. 

• Experiment with different products and marketing channels for the most effective market research. 

• Understand local business regulations, including necessary licenses.  

• Strong marketing skills  

3. Choose Your Niche

This is the foundational step to building a successful dropshipping business. A niche is a specific segment within a market that your product can serve. Though it’s not a disadvantage to run a general store, narrowing down your focus can help you:  

• Build a distinct brand identity 

• Improve your targeting efforts 

• Gain competitive advantage in a sea of brands offering similar products 

Now, how do you choose a niche: 

Conduct Market Research

First, you have to do thorough research on a product’s demand. This is where market research comes in. Basically, there are two different types of stores: 

1. Broad store: This is a store that lists several products. They could be in a similar category, e.g., Home, or different categories, e.g., Home, fitness, electronics, etc. 

2. Narrow store: This type is very narrow and usually sells one product or product in the same category. E.g., Sauna and Sauna Heaters. 

Luckily, there are different tools that help you dig deep into the product market and uncover real-time insights to inform your choice. Some of these tools are: 

• Google Trends: As its name suggests, Google Trends tells you how “Trendy” or “popular” a topic is on Google. You can streamline results by location, date, or search type. Once you enter a query, the data pulls up like this: 

As you can see from the graph, the term “luxury sofa” hit its peak on October 24, 2024. If you scroll below the page, you can also see where most of the searches come from: 

… and the related queries, too: 

• Facebook Audience Insights: This tool combines user data from Facebook, WhatsApp, and Instagram. It can be used to determine the market size of a specific niche and give vital information about the target audience for a particular product, such as demographics, psychographics, interests, and activity. 

• Google Keyword Planner: This is a free tool that can help you find a keyword's average monthly search volume. This can be useful when choosing your dropshipping niche: 

To maximize profit, focus on niches with high demand and low competition. You can also learn more about conducting market research.

4. Find Reliable Suppliers

Suppliers can make or break your dropshipping business. Even if you’ve found the perfect niche, you still need to find a reliable supplier who can deliver high-quality products to your customers. 

Qualities to look out for in a supplier are: 

• Timely and reliable delivery 

• Consistent product quality 

• Warehouse locations in major countries like the US, Europe and Asia 

• Friendly return & refund policies

• Transparent pricing 

• Effective communication skills 

• Good inventory management 

Some top (and most popular) dropshipping suppliers are SupplierHQ, AliExpress, Alibaba, Doba, and Salehoo. 

Here are some best practices to follow in choosing a dropshipping supplier: 

• Order samples directly from the supplier to assess their product quality, samples, delivery times, and packages. This gives you first-hand experience with their service quality.  

• Ensure they’re located in a location that’s closer to your target audience. 

• Choose products eligible for expedited mailing services like ePacket to improve delivery times when working with overseas suppliers.

• If your competitor uses the same supplier, you can order a sample to see how the supplier packages and delivers their products. Also, you’ll know if the supplier offers a custom labeling service. 

• Before establishing a relationship with a supplier, prepare a dropshipping agreement contract that outlines expectations for product quality, shipping times, and customer service standards.

Tip: To choose a suitable dropshipping marketplace, sign up for various services and explore which one best fits your needs. 

Through our proprietary supplier database, SupplierHQ, you can also save time and connect with trusted suppliers in and outside the US. We have over 10,000 vetted high-ticket suppliers and distributors. 

You’ll get their contact details, supplier margins, price range, and dropship locations. The best part? You’ll also get unlimited outreach templates to secure a profitable partnership. 

5. Set Up Your Online Store

Next, you’ll need to choose and set up your online store. Like a first brick-and-mortar store, you’ll need to add product listings and design them to attract the right people. There are two main types of platforms for building an online store: website builders and content management systems (CMS). 

Use an E-commerce CMS:

An eCommerce platform allows you to list products, reach customers, and manage all your payments on one platform. It acts as a virtual storefront for your (potential) customers. You can tailor your storefront to your needs and add other vital pages like blog posts, privacy policies, terms and conditions, reviews, About Us, etc., to make your store look even more legit. 

Source 

Shopify is widely recognized as one of the best platforms for dropshipping, with comprehensive features tailored to this business model. It supports integration with tons of services, such as DSers, Sprocket, Modalyst, etc. You’ll also find a library of visually appealing customizable themes to attract interested visitors and incite them to convert. Most dropshippers use Shopify because of its user-friendly interface, extensive app store, and regular updates catering to dropshipping businesses.

How does dropshipping work on Shopify? Learn more.

However, there are still other online stores available: 

• BigCommerce 

• WooCommerce 

• Drupal 

• AdobeCommerce 

• OpenCart

Design Your Store

After choosing your preferred dropshipping store, you need to design it. 

For best results, you need a professional and visually appealing store design to attract and retain customers. Every platform is different, but here are some tips that work for all: 

• Use a clean layout and easy navigation to enhance customer shopping experience. Platforms like Shopify and BigCommerce offer professionally designed themes that can be customized to fit your brand. If you eventually opt for Shopify, use the Motion theme. It has a beautiful and user-friendly interface.

• Create a logo to represent your brand. Use clear fonts, and pick appealing colors to accentuate your brand identity. For example, see this example from Fresh Juice Blender. The logo is simple yet compelling enough to catch the attention of visitors looking for a juice blender: 

Tools like Shopify’s free logo maker can assist in this process. It allows you to create professional, eye-catching logo designs for your website and marketing materials. 

• If you’re selling more than one product or related products in the same category, create a cohesive product collection page that allows customers to find what they’re looking for easily.

• Use a professional, responsive theme that matches your brand identity. It should have a clean, minimalist layout with ample white space to make your product stand out. 

• Use clear, high-resolution images for each product. Remember, users are 27% more compelled to buy when they see high-quality product images. Go extra by adding multiple angles and zoom options to give your customers an immersive shopping experience.   

Tip: Consider using a professional website design service for your dropshipping business. Instead of a generic template, you’ll get a website tailored for your brand and optimized to turn your web visitors into paying customers. What’s better? Your website is designed by successful dropshippers who have built their own store to produce over $100,000 in revenue. 

Choose products and add prices: 

Next, choose and add products to your store. Instead of randomly picking any product, focus on the ones that solve a problem or provide value to the customer. For example, instead of selling trendy kitchen gadgets, you can sell a product that allows customers to cook faster or healthier. This can be your unique selling point since you’re focused on providing value. Also, you can start with 10 to 25 products and scale as you grow. 

The products available in your store depend on your supplier’s inventory. And to select the right product, you need to assess the supplier’s product quality and customer service. To do this: 

• Check reviews from other sellers. This will give you insights into the supplier's reliability, product consistency, and customer service.

• Order samples for yourself to test the product quality first-hand. This is more important if you want to sell high-ticket items. 

• Ensure the supplier provides accurate descriptions and high-quality images of their products. 

• Choose a product eligible for fast mailing services like ePacket shipping 

When it comes to pricing, set a profit margin based on costs and market prices, including the wholesale price. Benchmark your product prices against other competitors in the market to ensure they’re competitive yet profitable. This keeps your business sustainable and positions you to attract customers without sacrificing the bottom line. 

Tip: AI tools like Shopify Magic can help enhance product listings with rich content, SEO-friendly descriptions, and branded visuals. Also, consider adding a dropshipping supplier integration to your store. This can simplify product management and order processing, making it easier to handle multiple suppliers and customer purchases.

6. Finance Management

You need to manage your business finances effectively to maintain profitability and achieve long-term success. Key practices include separating personal and business finances, understanding sales tax obligations, and tracking profit margins. Let’s explore these briefly: 

Separating Personal and Business Finances

Separating personal and business finances leads to clarity, legal protection, and simplified bookkeeping. This separation also creates a level of personal liability protection, safeguarding your assets in case of business debts or legal issues related to a limited liability company.

• Open a business bank account to track income and expenses for financial transparency. Use a business checking account to handle all business transactions and simplify bookkeeping.

• Get a business credit card to pay for all business-related expenses such as software subscriptions, product orders, etc.  

Understanding Sales Tax

Sales tax regulations vary by country and state, so you need to verify whether you have tax responsibilities based on your location and the location of your customers. 

In some cases, you may need to collect sales tax if your business has a “nexus” in a particular region. This includes factors like your business location, storage facilities, or sales volume. Also, sales tax obligations in dropshipping can be complicated and vary by state. 

Here are some key points to consider:

• Dropshipping businesses must collect sales tax if selling to customers within their state.

• Generally, sales tax does not need to be collected for orders outside the seller’s state.

• Staying updated on laws is important to ensure compliance.

Register with your state’s Department of Commerce to learn your sales tax obligations. This

step is essential for compliance. You’ll need a tax ID to track all your business activities related to tax filing. Compliance with tax laws keeps your business from incurring penalties and maintains a good standing.

Tracking Profit Margins

You need to understand profit margins to maintain the profitability of your dropshipping business. Bookkeeping helps manage income and expenses and makes it easier to identify sales needed for profit. You can also use accounting software to automate invoicing and expense tracking. This allows you to monitor your store’s financial health and adjust your pricing strategies for better profitability.

7. Marketing Your Dropshipping Business

Once your store goes live, you still need to market it to ensure it gets in front of the right eye. Marketing helps you to achieve this. Effective marketing strategies include content marketing, paid ads, influencer marketing, etc. 

Search Engine Optimization:

Effective SEO strategies help increase your store's visibility on the search engines and attract conversion-ready traffic to your store. It directly impacts your conversion rates and sales. To optimize your website for search engines: 

• Target long-tail keywords with low competition and difficulty. This more targeted approach allows you to attract traffic with conversion intent. 

• Create helpful, actionable content that caters to your customer's search intent. For example, a user searching for the best ergonomic chairs in 2024 may want an article to inform their purchase decision. 

• Ensure your website loads fast and is responsive on mobile devices 

• Use robots.txt file to direct search engine crawlers to pages you want to show on the search results 

• Use Google Search Console and Analytics to track website performance and improve SEO efforts. 

Learn more: How to improve your eCommerce with SEO.

Email marketing: 

Email marketing is a powerful tool for building customer relationships and encouraging repeat purchases. You can set up pop-up forms with lead magnets, like a free eBook, to incentivize visitors to subscribe to your mailing list. Also, personalized emails with special offers should be sent to keep new and current customers engaged. Scale efficiently using High Ticket’s automation solutions and master email marketing to keep customers coming back.

Social media marketing: 

Social media is equally effective! Facebook alone boasts over 3 billion active users, which is 4X bigger than the current population of Europe. That said, join social media platforms to attract and connect with your target audience. It’s also a great way to build your brand online, increase reach, and establish credibility for your dropshipping business.

Paid Advertising:

With paid ads, you can reach people interested in your products faster. Platforms like Facebook ads are scalable and great for tapping into impulse buying. However, you can still advertise your products on TikTok, YouTube, Google, and Snapchat. 

It’s better to consult a professional when advertising via Google. One false move could result in your account being suspended.

Build a Brand Identity

Brand positioning defines how your brand is perceived in comparison to competitors. It is a unique way to stand out in the market and become the go-to for all related search queries. In fact, the most successful drop shippers today owe their recognition to a well-defined niche. Take our founder, Brook Hiddink, for instance—he hit millions in sales after pivoting into high-ticket dropshipping. This is the power of effective branding. It is the perfect way to attract the right customers, gain competitive advantage, and increase your profit margins.     

Also, effective branding is not merely about aesthetics. It’s a strategic tool to help you gain a competitive advantage in a crowded marketplace. With the right business name, voice, font, and color, you can easily communicate your unique selling proposition (USP) in a way that truly resonates with your audience. This kind of targeted approach not only attracts customers but also helps you to connect with them.   

Summary

Starting a dropshipping business involves several critical steps, from understanding the

business model to choosing a niche and managing your finances. You’ll also need to market your business effectively to attract customers and drive sales.   

But keep in mind that it’s no cheap work. Dropshipping is not a get-quick-reach scheme; only those willing to invest time, effort, and persistence will see lasting success. 

Also, any program that promises to take you from $0 to six figures without doing any hard work is only as good as it sounds. For example, although our coaching program is self-paced, we designed it to help you build a successful dropshipping business – only when you do the work. Don’t take our word for it, though. See this review from one of our students, Yashar M from California: 

This is another from Kabrin Johal, after hitting seven in revenue in one year: 

As you can see, it takes hard work! 

That said, always monitor your business performance, adapt to market changes, and stay committed to providing excellent customer service. With determination and strategic planning, you can build a profitable and sustainable online business.

If you’d rather cut through the learning curve and get results faster, join the HIGHTICKET eCommerce Program! We’ve designed this course to fast-track your success as you’ll learn

from mentors making over $100K/month. You’ll also be given free access to our support community, the Kajobi community, where you get to meet like-minded people and scale your dropshipping business even better.  

Frequently Asked Questions

What is dropshipping?

Dropshipping is an eCommerce model that allows retailers to sell products directly to customers

without maintaining inventory, as fulfillment is managed by third-party suppliers, enabling business owners to focus on sales and customer service.

How do I find reliable dropshipping suppliers?

To find reliable dropshipping suppliers, utilize supplier directories and platforms like DSers and

assess their performance through product reviews and quality ratings before establishing a partnership.

What are the benefits of starting a dropshipping business?

Starting a dropshipping business offers low startup costs, eliminates the need for inventory management, and allows for the flexibility to work from any location with internet access.

How do I market my dropshipping business effectively?

To market your dropshipping business effectively, focus on digital marketing strategies such as

SEO, email marketing, and social media marketing, while also considering paid ads on platforms like Facebook and TikTok to boost traffic and sales.

What are the common challenges in dropshipping?

Common challenges in dropshipping include high competition, dependence on suppliers for fulfillment, and the need to maintain customer satisfaction. Effective financial management and strong marketing skills are essential for addressing these issues.