Dropshipping is a much-discussed topic in the world of ecommerce. Dropshipping is popular among online retailers because it allows them to sell products without having to invest in inventory upfront. However, it also comes with some risks, such as low profit margins, and shipping delays.
In this article, you’ll see tips to succeed and pitfalls to avoid. Find out how to locate good suppliers, quality products, and good shipping times, and learn about profit margins in the dropshipping business model.
- Dropshipping is increasing in popularity. You can still make money doing it, but the competition is stiff.
- Stand out from the crowd by selecting a niche and offering quality products. Work only with high-quality suppliers.
- Many people have achieved success as dropshippers. With hard work and partnerships with the right people, you can be successful too.
- Research e-commerce platforms and players dominating the field.
What Is Dropshipping?
Dropshipping is a retail fulfillment method that enables you to sell physical products without purchasing them first. When a customer buys a product from a dropshipper, a third-party supplier fulfills the order for you from their warehouse and ships it directly to the customer.
In essence, you’re acting as the middleman between the third-party supplier (a wholesaler) and the customer. You can sell using any number of platforms including Amazon, eBay, Wayfair, and so on, or you can build your own ecommerce site.
How Does Dropshipping Work?
Most dropshippers operate in a fairly standard way. First, they have to decide on the platform (or platforms) on which you want to sell. Then they have to find suppliers who can source the products they want to sell. This can be anything — from electronics and gadgets to sporting equipment and housewares.
Once a supplier is found, they will provide professional images of the products, descriptions, and wholesale prices. When a sale is made on your website, the customer’s order is automatically routed to the dropshipper, who then packs the item and ships it. The package will ship with a label listing the business where the purchase was made as the source.
Dropshipping allows sellers to be free of inventory management and shipping.
How To Become a Dropshipper
There are several challenges to becoming a successful dropshipper. The following are the most important steps you need to undertake:
- Select a business niche and identify your target audience.
- Decide what types of goods you are going to sell.
- Research and choose your supplier(s).
- Create your online store using a platform like Shopify or BigCommerce.
- Populate your store with products.
- Create a return policy and publish it on your website.
- Research the basics of digital marketing.
- Make a plan for acquiring traffic and customers
- Market your goods and track progress.
How much does dropshipping cost?
According to Sixads, you can expect to pay around $290 per month for dropshipping, but fees can vary. The costs will depend on the software you use, the volume you’re selling, and how much you spend on marketing.
Your costs will include an e-commerce website like Shopify or web hosting with ecommerce capabilities like Bluehost and Web.com (if it’s not included with your site). Easy-to-use website builders like the aforementioned Shopify or BigCommerce, or WordPress, which are popular and incur modest monthly fees.
Shopify offers ready-to-go online store designs that work equally well on smartphones, tablets, and desktops.
You may also choose dropshipping automation software that allows you to add products, product catalogs, categories, images, and descriptions to your website with a few button clicks.
What Are Dropshipping Suppliers?
Dropshipping suppliers provide sellers with the products and all collateral needed for selling, including product images, videos, descriptions, and categories.
When someone buys a dropshipped product from your website, the supplier is automatically informed via email. They then pack and ship the product directly to your customer.
What are the different types of dropshipping suppliers?
There are three main types of suppliers in the dropshipping business:
- Wholesale suppliers
- Liquidation suppliers
- Retail businesses advertise themselves as suppliers
Wholesalers and liquidation suppliers will get you the best prices. Not all wholesalers offer dropshipping, though. Look for a wholesaler or liquidation supplier who does.
Avoid retail businesses that advertise themselves as suppliers. These are middlemen looking to cash in on the popularity of dropshipping.
How do I find dropshipping suppliers?
Directories provide listings of vetted suppliers. They also typically provide multiple ways to search. For example, you can search for products and discover suppliers. Or you can search for a supplier first and browse their products.
Another way to find suppliers is to do a Google search. The drawback to this approach is that middlemen positioning themselves as suppliers tend to rank high in search results, while true wholesalers are harder to find.
Contact the manufacturer: If you know the manufacturer of the product you want to sell, you can contact them directly and ask for a list of wholesalers they work with.
The following is a list of popular dropshipping directories and suppliers to get started.
- Doba – This is a directory of drop-shipping suppliers, plus syncing software. Over 2 million products are listed.
- Dropified – This software application allows you to easily import and manage dropshipped products into your favorite e-commerce platform.
- Dropship Town – Lists products with same-day shipping. It provides services like automated product import, real-time inventory updates, and coaching.
- Inventory Source – Provides a free directory of suppliers and millions of products. It also offers syncing software for a fee.
- Megagoods – A supplier of electronic goods and video game products.
- Modalyst – Lists suppliers focused on 5-7 day shipping. It integrates with Shopify and BigCommerce.
- Oberlo by Shopify – It is integrated with Shopify and AliExpress, so dropshippers can search, add, and distribute products to their stores and consumers more easily.
- Petra Industries – A wholesale consumer electronics distributor with extensive warehouse and logistics expertise. Offers same-day shipping, no minimum orders, and dropshipping tools.
- Printful – It provides dropshipping and warehousing service that allows you to design and sell custom products online.
- SaleHoo – Has a directory of over 1,000 suppliers.
- Spocket – This is a dropshipping directory and supplier focused on U.S. and E.U-based products. It integrates with WooCommerce and Shopify
- Sunrise Wholesale – Has 15,000+ products, integration with Shopify and BigCommerce, and its dropshipping services include handling returns for you.
- TopTenWholesale – Provides a directory of dropshippers by product category.
- Unfi – A supplier of grocery and wellness products from top brands. Dropshipping for over 35,000 non-perishable products. No minimum order size.
- US Direct – Network of U.S. suppliers with fast shipping. Requires an Inventory Source account, automatically importing selected products to your online store.
- Via Trading – Wholesale liquidation lots. Shipping within 24-48 hours. A+ rating with BBB. Can drop ship/blind ship any order. California-based. Warehouse/product inspection is welcomed.
- Wholesale Central – It also provides a directory of dropshippers by product category.
- Wholesale2B – A dropshipping directory with over 2 million products plus automated software. It has multiple integrations, including Shopify, BigCommerce, Amazon, eBay, WooCommerce, and Ecwid.
- Worldwide Brands – This directory of suppliers is rated A+ by the Better Business Bureau. It lists over 16 million products.
How do I choose a dropshipping supplier?
Before choosing a supplier, you should consider the price and quality of their goods. To determine quality, consult their customer reviews (if they have some available) or order samples.
Also, consider the time it takes them to ship. Some suppliers, like Via Trading, have very fast shipping schedules. Others, like those on AliExpress, can take up to 20 days to ship, not including order processing time.
Consider the supplier’s reputation. Do they have reviews or testimonials on their site? Find out how returns are handled. Finally, you will want to find out how quickly they respond to communications. Test this out by contacting them.
How do I find suppliers with the best prices for dropshipping products?
To find the best prices for dropshipping products, you must check with wholesale or liquidation suppliers.
Avoid suppliers that are marking up their products before selling them to dropshippers.
You can identify these “middleman” businesses by the following:
- Recurring fees: Legitimate wholesalers typically do not charge recurring fees. You should only pay a wholesaler when you purchase goods from them.
- Sales to the general public: The point of wholesale purchases is that you get discounts in exchange for volume purchases. Legitimate wholesalers will therefore require their customers to have a business account and generally do not sell directly to the public.
Note: most Dropshipping directories are legitimate, despite the fact that some charge a recurring fee.
How do I find reliable suppliers on AliExpress?
AliExpress, China’s equivalent of Amazon, is an online retail marketplace that also functions as a dropshipper due to its low prices.
Not all sellers on AliExpress are equal, though. You’ll only want to work with sellers who have good reputations and meet your shipping expectations.
To find those suppliers go to the AliExpress website and search for a type of product you’re interested in, like “backpacks.” Then click on a backpack that stands out to you.
You’ll see that in the example above, you can choose to have the product shipped from China or the United States.
You’ll want to check to see how many reviews the product has. Look for products with 100 or more reviews and high reviews. In the example above, the backpack has 228 reviews and a 4.5-star rating.
Next, browse some of the reviews. Scan for customer images of the backpack, how customers assess the quality, and look for comments regarding how fast (or slow) the shipping was.
Next, view the sellers’ ratings. You can find the seller’s name and rating below the product images on the left.
In the case below, the seller has a 95.4% positive rating.
See if another seller sells the product you’re interested in on AliExpress. Then you can compare seller reputations.
Note: AliExpress now has a “Top Brand” designation for sellers with the highest feedback scores. On the seller’s store page, you’ll see three other scores you’ll want to consider, including shipping speed.
This “Top Brand” seller has a high overall score but scored below average in 3 areas.
Lastly, contact the seller to see how quickly they respond. You may also want to order samples of products you want to sell to ensure quality.
How do I find AliExpress suppliers with good shipping times?
ePacket is the fastest shipping from China: it provides tracking and ensures packages arrive between 10-20 days on average.
Once you install the Chrome extension, you can view each product and see its exact shipping window. Note: shipping time doesn’t include “processing time” – the time the supplier takes to fill the order. Using suppliers that take more than a week to fill an order is not advisable.
Also, note that some products on AliExpress are available for shipping from China or the US. Typically, the price for the item being shipped from the US will be higher.
How do I find good dropshipping suppliers on Alibaba?
Alibaba is the world’s largest online B2B marketplace. Like AliExpress, you’ll want to vet suppliers according to their reputation. You can do this by filtering search results by:
- Trade Assurance: a program that provides a transaction guarantee
- Onsite Checked: Described as “Onsite operations checked by Alibaba and legal existence confirmed by third-party verification service.”
You can also choose suppliers designated as Gold Suppliers, who support Onsite Checks and Trade Assurance.
Note: Alibaba is a wholesale marketplace, and not all its suppliers are dropshippers. You can use the search term “dropship” to find available products. Or you can purchase by minimum order size and ship to Amazon FBA. Then when buyers purchase the product on Amazon, it will be dropshipped for them by Amazon.
Is dropshipping worth it in 2023?
Dropshipping has many positive traits that make it a worthwhile endeavor, even in 2023. For one, it is a low-risk business model.
Dropshipping can be an easier way to build a profitable business than designing and manufacturing your products or purchasing and storing inventory. You’ll essentially be selling someone else’s products. You also don’t need an office or a brick-and-mortar location.
You can leverage the internet to reach and market to customers worldwide. And you can run your business as a solopreneur with no employees and no overhead.
Is dropshipping profitable?
Dropshipping can be a profitable business model. One of the primary reasons for this is the low overhead. You’ll have no warehouses, offices, brick-and-mortar stores, employees, or payroll to handle.
Buying in bulk increases profit margins. Some wholesale suppliers offer “light bulk” purchases (e.g., around $500) which provide higher profit margins to dropshippers.
The dropshipping business model tends to favor goods with lower profit margins. This limitation means you will have to sell a larger quantity of goods to turn a reasonable profit for your business. Focus on maintaining a high average order value.
Can I start dropshipping with no money?
It is possible to start dropshipping with no money, but it will be difficult. You could code your website and shopping cart and find free hosting, but this would be pretty time-intensive.
Domain name registrations and subscriptions to e-commerce platforms aren’t expensive, and can be fast to set up. To be successful, you should also plan on spending money on marketing and advertising. That way, you can turn dropshipping into a successful online business.
Making money with dropshipping is ideally done with at least a small budget in hand.
How do I pick a niche for dropshipping?
The best niche for dropshipping is a fairly narrow one. Not only does this make it easier to market your products, but you will also face fewer competitors.
When choosing your niche:
- Be specific
- Look for something that you are passionate about
- Check if your idea will see steady sales in the long run
- Conduct research (e.g., review what users on social media platforms are interested in)
- Choose something that isn’t expensive since high-value goods extend the length of the sales funnel
Can I dropship on Amazon?
You can dropship on Amazon using Amazon FBA (FBA stands for “Fulfillment By Amazon”). However, there’s an extra step involved in this form of dropshipping.
You need to first purchase products from a wholesaler. Suppliers will ship your products to an Amazon warehouse and ensure they’re credited to your Amazon Seller account.
When an Amazon customer buys one of your products, Amazon will fill the order and ship it for you.
You should be sure to familiarize yourself with Amazon FBA’s rules and how returns are processed.
Frequently Asked Questions About Dropshipping
How much does it cost to start a dropshipping company?
The cost of starting a dropshipping business can vary depending on several factors such as the types of products you plan to sell, the platform you choose to host your store, and the marketing strategies you intend to employ. Typically, it is possible to launch a dropshipping business with as little as $50 to $100.
Keep in mind that there are other costs associated with running a dropshipping business such as domain registration fees, ecommerce platform fees, dropshipping platform fees, product sampling costs, marketing costs and LLC company incorporation fees.
What are the risks of dropshipping?
Since you don’t have control over the shipping process, you may face issues such as delayed shipments or lost packages. Additionally, since you’re not storing the products yourself, you may face inventory issues such as stockouts or backorders. Finally, since you’re relying on a third-party supplier to fulfill orders, you may face supplier errors such as incorrect product shipments or damaged products.
What are the benefits of dropshipping?
Some of the benefits of dropshipping include low startup costs, no inventory management, and the ability to sell a wide range of products.
Since you don’t have to invest in inventory upfront, you can launch a dropshipping business with relatively low startup costs. Additionally, since you’re not storing the products yourself, you don’t have to worry about managing inventory or dealing with stockouts. Finally, since you’re not limited by physical inventory space, you can sell a wide range of products.
How much work is involved in dropshipping?
Running a successful dropshipping business requires a significant amount of work and effort. You’ll need to research and identify profitable products, find reliable suppliers, create an ecommerce website or storefront, manage customer orders and returns and handle marketing and advertising.