Since digital marketing skills far exceed financial capability, drop-shipping is a remarkably common business model for new entrepreneurs, particularly gen-z and millennials. You can begin a drop-shipping business on a shoestring budget because you don't need to stock or handle the items you sell.
A drop-shipping eCommerce website obtains the products it wants to sell from a third-party manufacturer or supplier, fulfilling the order. This mostly reduces operational costs and provides more free time to use your time to focus solely on customer acquisition.
1. Pick a niche
The niche you choose should be laser-focused and something in which you are genuinely interested and enthusiastic. A non-focused product line would be hard to sell. Since it takes a lot of work and effort to scale a drop-shipping business, you will be more likely to become discouraged if you're not passionate about the niche you choose.
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Here are some things to think about when deciding on a niche:
- Seek out profitable opportunities.
- Ensure that your product is appealing to impulse buyers with disposable income.
- Low shipping rates are critical.
- Ensure that people are actively looking for your product.
- Offer something that's not easily accessible in your area.
- Establish your brand.
2. Conduct a competitor analysis
Keep in mind that you will compete with other drop-shipping companies and retail behemoths like Walmart and Amazon. Many would-be drop shippers make the mistake of looking for a product with little to no competitors in the market. That indicates that there is no desire or demand for that specific product.
There are multiple reasons why an item may not have much competition, such as high shipping charges, provider and production issues, or low-profit margins. Look for products with competition because it indicates that there is still a huge demand and that the business model is sustainable.
3. Find a supplier for your drop-shipping business
Collaborating with the wrong vendor can be disastrous for you and your business, so don't rush this step and do your research. Carry out proper due diligence. Because most drop-shipping suppliers are abroad, communication is critical, both in terms of response time and mutual understanding. If you are not completely confident in a possible future supplier's communications skills, move on and continue your search.
4. Create your e-commerce website
Using a simple e-commerce platform like Shopify is the quickest way to launch a website that endorses a drop-shipping revenue model. You would not need a technical background to get started, and there are plenty of apps to help you increase sales.
5. Analyse and improve
To reach your audience and grow your business, you must track all available data and metrics. This includes Google Analytics traffic and conversion pixel data from Facebook if your primary customer acquisition channel. Once you can track every conversion – knowing where the customer came from and what route they ended up taking on your website that ultimately led to a sale – you can scale what actually does work and completely eradicate what doesn't.