What Is a Dropshipping Business?
Dropshipping is a business model which you can use to run your store without ever holding any inventory.
Once you’ve made a sale your supplier will ship your products from their warehouse, straight to your customer’s doorstep. You’ll never need to worry about storing, packaging, or shipping your products.
Starting a dropshipping business is a great first step into entrepreneurship. You’ll be able to sell products to customers, set your own product prices and market your very own brand.
You don’t even need to pay for inventory until it’s sold to an actual customer. If you’re willing to put in the work, you can build a successful brand.
In this article, you’ll learn how to start a drop shipping business.
We’ll explain, what a dropshipping business is, how to find the right drop shipping business ideas, how to start a drop shipping business and some low budget marketing ideas for your first few months as an entrepreneur.
How Does the Dropshipping Business Model Work?
There are three key players in the dropshipping business model: the manufacturer, the retailer (you) and the customer.
The manufacturer’s role in a dropshipping business model includes creating products, carrying inventory, shipping products to customers on behalf of the retailer, replacing defective products, and restocking products. They sell products to the retailer at wholesale prices assuming the risk of unsold inventory.
In the dropshipping business model, the retailer, you, sell the manufacturer’s products on your website under your own brand. You’ll be responsible for choosing and marketing those products. Plus, you’ll also be responsible for managing customer inquiries and complaints.
Lastly, in the dropshipping business model, the customer buys the products directly from you the retailer. If questions or issues arise, they contact the retailer they bought the product from.
Why Is Starting a Dropshipping Business a Good Idea?
A dropshipping business is a low-risk business model. When it comes to product costs, you only pay for products that you sell to paying customers.
You don’t become overburdened with the cost of creating products, carrying inventory, costs of maintaining unsold inventory, and the cost of employees for packaging and shipping products.
It’s a great entry into entrepreneurship as you can start your own dropshipping business by yourself during your evenings and weekends.
It will require daily work when it comes to processing orders each day.
Where to Find a Dropshipping Business for Sale
If you don’t want to build a Shopify dropshipping business from scratch, you can easily find a dropshipping business for sale on Exchange.
Exchange is a marketplace of Shopify stores for both people looking to invest in a fully-functioning business or those that want to skip the building phase and start directly with marketing.
They have a great collection of online stores, including dropshipping ecommerce businesses, of varying price ranges and niches that you can choose from depending on your budget and interests.
When choosing to buy a store take into account the cost, the design, the age of the website, how much money it has made, popularity of niche, penalizations, and the type of business.
- The cost: Do you currently have a budget to not only pay for a premade store but also invest funds into growing it? If so, you need to work out what your budget looks like. What price are you willing to pay for a business? Is there room to negotiate a better deal?
- The design: Does the store look like it was designed by a professional or by a new entrepreneur who’s looking to make a quick sale? If the store design looks professional, clean and easy to navigate it may be worth pursuing.
- Age of website: On Exchange, you can choose a dropshipping business based on its age. An older website will typically have a better chance of ranking online than a newer one.
- How much money its made:
- Sometimes you’ll see that a store made a lot of money. However, a question you need to ask is ‘how much money was it making at its peak and how much is it making now?’ This will help you understand if the dropshipping business is growing or dying.
- Popularity of niche: You probably don’t want to be selling fidget spinners anymore or any trending product. However, if a store is within an evergreen niche and has trending products within it, it could work out well. Broad topics (beauty) tend to perform better than stores around a specific type of product (makeup brushes).
- Penalizations: Before buying a dropshipping business you need to double check that the website hasn’t been penalized. You can use a tool like Is My Website Penalized to determine if a website has been penalized by Google. If a store has been penalized it may be harder for you to rank in search engines. You also want to ask if any of their Facebook ads were banned?
- Type of Business: If you plan on buying a dropshipping business, you need to select dropshipping on Exchange. Other options may require you to buy and hold inventory which can cost more money over the long term, especially in unsold inventory.