What Is Dropshipping Business And How To Start With Shopify

Assuming you’re much like myself, you’ve understandably already browsed this manual or the table of contents- and thought to yourself, “Holy cow, this is thick.”

It carries all of the knowledge you’ll need to get started with your dropshipping store.

This guide can be evaluated in three ways:

Read the entire thing if you’re new to dropshipping, following the stages. By the time you finish this guide, you will have a functional store and a firm grip on starting marketing effectively and efficiently.
If you already have some drop shipping experience or are making progress with your store, the guide might serve as a reference. You can jump between chapters as you progress through the many steps of developing and marketing your store.
If you’ve already launched your store, skip forward to chapter 7, which has all of the juicy marketing guidance.

Chapter 1 Table Of Content

Dropshipping: an introduction
An Overview of the Dropshipping Process
Advantages and disadvantages of dropshipping
Legal Considerations
Dropshipping FAQs

Introduction: What is Dropshipping Business

Dropshipping and marketing make two of our foremost passions at Top Marketing Funnel, and we’ve been pursuing them for years. We’re all about sharing what we’ve learned to make aspiring entrepreneurs overcome their “aspiring” identity and attain their dreams.

We sorted this guide into chapters. Each chapter addresses a different aspect of Dropshipping.

Given that you’re currently reading this guide, you’re probably familiar with one of the following:

You’re weary of your 9-to-5 office work and seek more flexibility in your life.
You’re looking for a way to earn some extra income from the comfort of your couch.
You always yearned to be your boss but are unsure how to get started.

Whatever drove you here, this guide will offer you all you need to know about starting a dropshipping business.

If you’re unfamiliar with dropshipping, have no fear! This is a comprehensive beginner’s guide. Fortunately, there is no prerequisite knowledge required.

And by the close, you’ll have a complete step-by-step of how to make money with your online store.

Additionally, you’ll get several insights from dropshipping pros – such as (Rick Hayes), who generated six figures in three months with their stores. A $100k plus is a whole lot of money.

But first, a very vital point. I will be very candid with you now: dropshipping is not easy. It’s a time-consuming, laborious process.

Most of the pro hacks you’ll learn in this book come from pros that failed at their first (and second, and third…) store.

Hacks from the pros

These veterans’ success did not come easily, and it was most certainly not their first store that brought in the big bucks. It was their 5th store! They shared some critical insights for beginners during an interview.

To a large extent, when people first start dropshipping, they are held back by their dread of competing with Amazon. So yes, people can get things cheaper on Amazon, but the marketing on Amazon is remarkably cold, as everything looks the same. You can also check out my guide on amazon dropshipping.

Unless your pricing is outrageous, your product pages are unappealing, or your brand is unknown, your customers will bypass comparison, shopping around and shop from you.

By reviewing what Eric Smith the founder of Nichescraper and Copygenius Ai and Rick Hayes, the Debutify CEO have accomplished, you can learn a tremendous lot about being successful in business.

Always plan for the worst-case scenario and be prepared to revert to a previous plan. An unwavering resolve to instep kick asses is necessary.

This chapter will delve deeper into your mindset; check it out.

For now, let’s get down to brass tacks. but before that, you can browse through these amazing dropshipping business ideas

An Overview of the Dropshipping Process

Let us start at the very beginning: What is dropshipping, and how does it work?

Per eCommerce Dictionary, Dropshipping is a business model that enables you to run your store entirely without owning any inventory.

When you make a transaction, your supplier will transport your products directly to your customer’s home from their warehouse. You will never again have to worry about how your products will be stored, packaged, or sent.

The following is a brief overview of how dropshipping works and how merchants make money.

A customer purchases through your Shopify website. Assume the price is $200.
In the second step, you place the order with your supplier and pay the wholesale price of $150.
The supplier arranges for direct delivery of the product to your consumer.
You keep the $50 profit to sock away in your piggy bank or reinvest in your store.

It can’t be that hard, can it?

eCommerce Glossary defines a merchant as one who owns a store and sells products to customers. In this guide, I use “merchant” to refer to the proprietor of a dropshipping store.

Suppliers: Businesses and people who offer wholesale products to retailers. They will store your inventory and arrange for shipping on your behalf.

Wholesale: When products are manufactured in large quantities and sold in bulk, the supplier incurs lower operating costs because they are produced and sold in bulk. As a result, they may offer you a significant discount.

Pros and Cons of Dropshipping

Before you embark on starting a business, it’s critical to understand the obstacles you’ll face. Here are some critical advantages and disadvantages to help you decide if this is the best option.

Pros of Dropshipping

Quick to start. You do not need to have any prior business experience! If you invest some time learning the fundamentals, you can get started quickly and pick up the remaining skills. Because we handle buying and shipping for you, you have more time to focus on marketing.

There is room for growth. As you expand, your business strategy does not need to change significantly. You’ll need to invest more work in sales and marketing, but your day-to-day will remain relatively unchanged. Increases in operational expenses will be limited, and you will have the ability to set the growth rate.

Begin with a modest budget. You can start dropshipping with little investment, as you do not need to acquire goods in advance. Even if your business grows, your expenditures will remain relatively low – you will incur marketing and website setup fees.

Flexible. This is one of its primary advantages. You have the opportunity to be your employer, to set your own rules, and work at your own pace. Again, because no inventory is required in advance, you can easily add new products whenever you want – all you need is a laptop and WiFi. The business model lets you make quick tactical modifications, allowing you to keep experimenting until you find something that works.

Easy to manage. As a dropshipper, your obligations will be reduced, as most of them are run by solo entrepreneurs. You can accomplish anything on your own if you so desire. Once you’ve sourced suppliers and set your storefront, you’re exclusively responsible for marketing and customer service.

The Drawbacks of Dropshipping

Profit margins are small. This is especially true if you’re selling things that compete with yours. Higher margins are feasible when competition is low, although these margins are rarely exceptionally high. Therefore, you must focus on generating a high sales volume to earn a high profit.

You don’t have much in your power. You have no control of product inventory, order fulfillment, and shipping. Instead, you must rely on your suppliers to ensure a seamless operation. Additionally, you’ll need to learn how to deal with obstacles.

According to the eCommerce book definition, Fulfillment is every step a business takes to move an order from the point of receipt to the point of delivery. Dropshipping involves far fewer steps in the fulfillment process than a traditional brick-and-mortar or standard eCommerce store.

Customer service is more complex. Along with the concerns discussed previously, it’s tough to respond to client complaints when you lack control. You will be held accountable for the supplier’s errors. However, if you focus on maintaining a positive relationship with your customers, you should be able to manage in the long run.

Order processing might be challenging when more than a few suppliers deal with it, and the complexity increases. For example, they may provide various shipping options or alternate methods of processing orders and billing you. As a result, I recommend limiting your initial testing to three suppliers.

To discover more about the pros and disadvantages of dropshipping, check this resource.

Legal Considerations

We’ll cover how to register your business and comply with GDPR in this section.

Compliance with the GDPR

GDPR is too critical to ignore whether you reside in the European Union (EU) or sell to EU customers. Consider this even if you do not check the boxes.

To begin, let us define GDPR.

In an eCommerce Dictionary, GDPR is an abbreviation for the General Data Protection Regulation. GDPR creates principles for all Europeans regarding the proper management of personal data. It took effect in May and affects everything from medical data to bank account information and online activities.

And Why is GDPR Important?

The GDPR was implemented to safeguard the personal data of EU citizens. In addition, GDPR requires enterprises to adhere to responsible data collection and usage guidelines to safeguard users’ rights and privacy.

By requiring enterprises to disclose how and why their personal information is obtained and used, the GDPR strengthens EU people’s rights to understand how and why their personal information is gathered and used. Additionally, it allows individuals to specify how they want their data to be used.

If you fail to comply with GDPR, you risk facing substantial fines and penalties – up to 4% of a company’s yearly revenue! For instance, a Polish shop was fined €650,000.

Who Is Bound by the GDPR?

GDPR applies to all enterprises that provide products or services to European customers, regardless of location.

Therefore, if your store is available in Europe, you must comply with GDPR.

Remember that GDPR compliance is not limited to European products selling to European customers. In other terms, it encompasses all consumer contacts in Europe.

GDPR cheat sheet Business Practices That Are Compliant

The GDPR, on the whole, is tens of pages long and runs in upwards of 50,000 words. Therefore, we’ll make the technicalities light and focus on some fundamental guide for ensuring compliance (a fancy term for “following the rules”).

Make that your visitors have provided you with their explicit consent. Numerous alternative methods for capturing someone’s attention do not rely on pre-ticked boxes or the presumption that they desire your information.
Capture only what is needful. The golden rule is never to request unnecessary information.
Be open about your GDPR compliance efforts. Make it simple for customers to understand how their personal information is being utilized; instead, make it simple to opt out. If your business has earned certified trust marks, display them publicly.
Be candid and open. While complete GDPR compliance may not be a stroll in the park, if you are honest about your practices, regulators may overlook any mild infractions and even assist you in resolving them.

Please keep in mind that this GDPR checklist is merely a guide. Each firm will have its own set of GDPR requirements and policies to implement.

Check with the following resource to gain a better knowledge of GDPR which is vital for dropshipping for beginners.

Securing a License for Your Business

It is not necessary to register your business immediately upon launch.

You can wait until you’ve looked at some sales and the viability of your store concept before proceeding. However, as I previously stated, it is highly likely that your first – or second, or third–store idea will not be as successful as you expect. What an obvious choice!

It is relatively simple to register a business in the United States.

It’s That Time Again Tip Time!

If you reside in another county, conduct a Google search for “how to register a business in [your country/city].” Make the information public on official government websites to confirm the accuracy of your assumptions.

Become a USPTO-registered trademark holder (USPTO). You may check if the name you’re contemplating is already taken using the USPTO’s free service.
Pick the legal structure of your business. When forming a business, you have two options: a limited liability company (LLC) or one of the two types of corporations (S corporation or C corporation). In general, an LLC requires less paperwork and incurs fewer expenses. However, before making a choice, ensure that you understand how the entity type will affect your taxes. I did a detailed post on how to set up an LLC business for non-US resident
The following step lands a one-of-a-kind employer identification number (EIN). This federal tax identification number enables you to register your business with the federal government.
Open a business bank account. Once your business is registered, you can open a bank account for it. Maintain a separation between your business and personal finances, which will prove incredibly useful at tax time. Additionally, it might enhance your business’s professional impression. Learn how to set up A US bank account using Wise

FAQs around Dropshipping

Consider the following commonly asked questions (FAQs) about dropshipping e.g is dropshipping worth it? or how to start dropshipping for free?

When can customers expect to receive their orders?

The delivery time is determined by the distance between your supplier’s warehouse and the customer’s address. It can take several days or several weeks, but most dropshippers adhere to a two- to a four-week timeline.

It’s That Time of Year Again!

If you’re concerned that customers would be dissatisfied with the shipping time, make it clear on the product page or your store’s FAQ section how long it may take.

Additionally, the way by which the order is delivered varies. For example, most products come with various shipping options, including ePacket. This will be discussed in further detail in Chapter 4.

How much does dropshipping cost upfront?

Dropshipping has the benefit of requiring low initial investment. It is vital, however, that you include the following costs:

Shopify subscription. After your free 14-day trial period, an entry-order plan costs $29 a month plus a small transaction fee. Sign Up fo 14 days Fee Trial
Spending power on marketing. While conducting your marketing can save you a lot of money, you’ll need at least a few hundred dollars to run Facebook Ads.
Personalized domain (optional) costs roughly $12 per year on average.

Additionally, I recommend dedicating a portion of your cash to purchasing trial products. This enables you to evaluate the image’s quality and even shoot your own.

What profit margins should I expect?

Profitability in dropshipping is predicated upon four factors:

The price of the product. This will be the final cost price determined by the provider. Purchasing items at close to wholesale costs is an excellent way to increase your overall profit.
The cost of shipping. It refers to the cost of delivering your products to a customer’s doorstep. Options such as EMS shipping can help you increase your margins.
Marketing expenses. These are the costs associated with advertising your products on Facebook or influencers.
Your price/branding strategy. This is the price you will charge after deducting the cost of the product, shipping, and marketing. A product labeled “premium” may fetch a premium price.

Pricing is a subject we’ll explore in greater detail here (Chapter 5).

How long does it take to close the first sale?

That is all up to you. It makes no difference whether it’s your first day or a month afterward. It is largely determined by the amount of labor you put in, the type of audience you target if those persons love your products, and the success of your marketing activities.

I’m sure you have a dozen related inquiries. Fortunately, this book has all of the information necessary to get started. The next place is to develop the ability to manage your expectations and retain a positive frame of mind.

In the next guide, we take you through how to select a niche.