If you opt to shop online, you’re not alone — ecommerce platforms have become essential to the global retail structure.
According to Statista, more than 2 billion people made ecommerce purchases in 2020. Global ecommerce sales stood at over $5.5 trillion in 2022, with that number on track to increase to $7.3 trillion annually by 2025. That’s a projected growth rate of 11% over the next five years.
For those looking to take advantage of the ecommerce market, dropshipping is an attractive option. Entrepreneurs can market and sell products online without manufacturing or stocking inventory themselves, thus limiting risk and overhead costs.
But what is dropshipping, and how do you start a dropshipping business? Let’s dive in.
What is a dropshipping business?
Dropshipping is an ecommerce business model where a seller moves products directly to a buyer without ever handling the product themselves. Instead, dropshippers invest time and money into customer support, marketing, and branding while their goods ship straight from the manufacturer.
How does dropshipping work?
Dropshipping works like this: a dropshipper sells products on their website and under their retail brand or the brand of a supplier. They choose which products to sell and set their own prices. When they make a sale, the supplier — usually a manufacturer or wholesaler — ships the order from their warehouse straight to the customer’s doorstep. Suppliers are responsible for:
- Packing and shipping orders
- Managing inventory, including renting warehouse space
- Handling returns and exchanges
- Replacing defective products
As a dropshipper, you only pay for items you sell. If issues arise, customers contact you, but you work with the supplier to resolve the problem.
When it comes to what products you can sell, the sky's the limit. Clothing, electronics, and office supplies are popular categories, but if you can think of it, you can dropship it.
Why should you consider dropshipping?
Dropshipping is a low-risk business model because it allows you to sell products to online shoppers without paying the high costs associated with handling inventory. With lower costs comes a faster road to profitability, in theory. It’s a business that doesn’t require the significant upfront investment of many others.
Let’s look at some of dropshipping’s major benefits:
- You only pay for what you sell: You don’t have to buy inventory or keep products in stock. Instead, you pay for a product once it’s sold to a customer and keep the profit. The customer funds the transaction.
- You don’t need a lot of capital: Dropshipping is an entirely online business. You can operate it from the comfort of your home. This allows you to single-handedly manage your online store – or you could hire people for support – while the supplier handles shipping and delivery. This requires fewer resources than a conventional brick-and-mortar business.
- You can enter new markets: Since someone else handles shipping for you, you can market your products and sell them in other countries without first establishing a presence there. Delivery times may be longer and shipping costs may be higher, but the customer pays for these.
The dropshipping industry is growing rapidly. With that growth comes more opportunities to capitalize on dropshipping’s increasing sales. If your business is successful, then yes, dropshipping is profitable.
While dropshipping is a thriving industry, not every business brings guaranteed profits. Factors like market volatility, trends, and marketing success have a huge impact on profit margins, making each an important consideration.
Here are some of dropshipping’s potential drawbacks:
- Low profit margins: Yes, overhead costs are low — but dropshipping isn’t without expenses. Funneling money into advertising, search engine optimization (SEO), and maintaining an excellent website are all necessary expenses to do business. And because revenue from every purchase must go toward the manufacturer and shipping company, you need to do a lot of business to become profitable.
- Competition: The dropshipping industry is growing, and there are competitors in just about every niche. In order to make sales, your business must out-compete a number of other brands selling similar products to an overlapping audience.
- Supply chain issues: Because you don’t store inventory or ship products yourself, your dropshipping business is susceptible to issues in the supply chain out of your control. If your manufacturer runs out of supply and doesn’t loop you in, you could have a number of orders the business can’t fill. If they delay shipments, customers may grow frustrated and choose not to return to your business.
How to start dropshipping in 7 steps
Dropshipping doesn’t have to be a full-time job — at least, not in the beginning. Many dropshippers start small during time off from their day jobs until they reach a sustainable income. Regardless if you’re starting small or going big right away, here’s a step-by-step plan to start a dropshipping business from scratch:
1. Choose a niche and your initial products
Having a niche helps zero in on a target audience. When you cater to a broader demographic, it makes engaging potential customers more difficult. By having a well-defined niche, and curating products that cater to that niche, you increase your chance of conversions.
For example, selling a curated collection of aesthetically pleasing cat trees attracts a more specific subset of potential customers. Those customers' — presumably cat owners — wants and needs for cat trees are going to be better filled by your business than by a big box store.
It sounds obvious, but find something to sell that people want. A good way to understand this is by researching lists of popular products on websites like Oberlo and by observing Google Trends to gauge interest. Once you determine what products to sell, browse other websites selling the same products to get a better understanding of the market, and where you can set yourself apart.
2. Learn the trade by analyzing the competition
Once you know what you’re selling, check Google — a simple keyword search shows who’s on top in your chosen niche.
Check out competitors' marketing and branding efforts before creating your own strategies. You’re looking not only for what they sell, but how they sell it. Those who have been around a while also offer a good frame of reference when it comes to pricing. Learn from others' experiences, read ecommerce blogs, and learn your niche inside and out.
Here are a few examples of what works well on ecommerce sites:
- Meowingtons: Meowingtons is a one-stop shop for all things cats. The company has great products, a catchy name and logo, and a well-designed website. Everything is laid out clearly with plenty of subtle CTAs, such as the bold “SALE” tag on discounted products and the banner with the upcoming holiday coupon code. The top-right-hand corner tells you that orders ship within 24 hours, and Meowington’s social media handles are placed above their FAQs and News sections to make it easier to engage with the brand.
- Best Choice Products: Best Choice Products is a home and lifestyle company that offers goods ranging from outdoor living products to toys and pet supplies. The website has a clean, white background with interactive thumbnails. The top banner clearly outlines Best Choice Products’ motto — “Fast & Free Shipping on all Orders, Always!” — on every page.
- Inspire Uplift: Inspire Uplift is an online store similar to Best Choice Products, although their catalog is more extensive: they also sell tech products, jewelry, and beauty and wellness items. The store has a simple blue-and-white aesthetic with messaging meant to inspire confidence and convey ease of use: “Free Shipping,” “24/7 Live Chat,” and “Served Over 1,500,000 Customers.”
3. Find suppliers
The point of dropshipping is to delegate inventory management and control to someone else. For this, you’ll need a supplier. If you don’t already have one in mind, check online dropshipping supplier directories like AliExpress, Wholesale Central, or Worldwide Brands. Contact potential suppliers for information about minimum orders and shipping times. Narrow this list down to a few potentials and place sample orders to compare product quality and packaging.
Here are a few more things to consider when choosing a supplier:
- Product quality: This seems obvious, but quality is the most crucial factor to consider when looking for a supplier. Your brand is only as good as the products it sells.
- Reliability: Your supplier is responsible for dropshipping products, but as a business owner and entrepreneur, you’ll be accountable to customers if anything goes awry. Be sure to ask these questions: Is the supplier honest and forthcoming? Do the product images match the products delivered? Do they ship on time? Do they run out of stock?
- Location: Manufacturing and distributing products from within the US is often more expensive than dealing with suppliers in other countries. But with the latter, shipping times may be longer, and you may not be able to meet a supplier face-to-face before ordering. Find a good balance between a supplier’s location, delivery times, and the quality of their products. Some consumers prefer products made in the US, which could be an additional selling point if your competitors offer similar products from overseas.
- Return policy: A good dropshipping business facilitates customer returns and exchanges. You can advertise this on your website, but it’s up to the supplier to make it a reality. Find a supplier with a reliable return policy and who completes the return and exchange process in a short timeframe.
4. Choose a name and develop a brand concept
A key component of a dropshipping business is a brand concept. When developing one, think about products and buyers. Identify potential customers and consider what appeals to them. Once you’ve found a target audience, create a brand that draws that target demographic to your products. Come up with a brand name that reflects this vision.
For example, Meowingtons’ brand name is playful and easy to remember. “Meow” makes clear the company caters to cats, while the “-ton” plays on stores and cities with the same phonetic ending — alluding to the brand’s purpose as a one-stop shopping destination for cat owners.
Coming up with a catchy brand name takes time and effort; there are no shortcuts. Product catalogs change, trends come and go, but your brand stays with you. The name should be evergreen, meaning it can stand the test of time without becoming irrelevant or difficult to understand as trends change.
To create an evergreen brand, avoid choosing a name or logo that relies on a timely joke or passing fad. Pop culture references, for example, may garner attention in the present — but will potential customers get the joke five or ten years from now? Probably not.
5. Build your dropshipping website
To start on building your dropshipping website, follow your brand concept, choose a domain name, and create your online presence with a strong website. This means focusing on colors, layout, typography, imagery, and a logo that complements your brand — all of which you can learn about in-depth for free at Webflow University.
Your site should be engaging but easy to navigate. Choose colors and fonts that elevate your design and complement your content without making it hard to read. Include CTAs like “NEW” stickers on recently added items and banners highlighting upcoming sales. Keep in mind that people view your website on different devices, so creating responsive designs that adjust to various screens is a must.
Ultimately, the aim is to create content that brings people to your store and gives them a customer experience that drives sales.
Entrepreneurs don’t have to be web designers or developers to launch a website. These are the five basic steps to building a dropshipping site:
- Choose a platform for your ecommerce website, such as Webflow.
- Build your site’s layout or choose a customizable template.
- Design your site with visual elements that support a memorable customer experience customized to the needs of your target audience.
- Create branded cart and checkout experiences.
- When you’re ready, go live and start selling.
6. Market, market, market!
Social media is your best friend: Blast those Facebook ads, collaborate with influencers, and use email marketing. Create engaging and useful content to inform people about your products and why they matter. Write catchy product descriptions for everything you sell.
Focus on SEO strategy and create relevant content that drives searchers to your site. Consider starting a blog to increase organic traffic by providing informational content and defining your brand story. More traffic often leads to more sales — as the number of people visiting your site increases, so does the audience for your product. With a greater number of happy visitors clicking through your site, you’re likely to make more conversions.
7. Analyze and improve
Once you’ve done all that, take stock. The market is always changing, so keep your business relevant by updating your site and products as needed. Here are some tips to constantly improve your site to stay ahead of competitors:
- Use analytical tools like Google Analytics to measure engagement and performance to better hone your market strategy. Ask questions like: Where are your referrals coming from? What pages are most popular?
- Determine the strengths and weaknesses of your business plus opportunities and threats with SWOT analysis, which means identifying the brand’s strengths, weaknesses, opportunities, and threats in your market.
- Keep your product catalog updated with new and enticing products. Stay up-to-date on trends to ensure new products meet market standards. You can do this by regularly visiting competitors' sites and making note of what they’re doing right, where they’re struggling, and where your brand can fill the market gaps.
Enhance your dropshipping journey with Webflow
At Webflow, we know a thing or two about dropshipping websites — we even have one ourselves that donates all profits to charity. Our resources can help you elevate your business, whether you’re a first-time dropshipper or looking to improve your current site.
Learn how to create beautiful ecommerce websites with information from our blog and our no-code visual development platform. And if you’re completely new to designing, don’t worry — there’s plenty of inspiration to go around. Here are some great ecommerce websites designed in 2022 to get the creative juices flowing.