A lot of aspiring entrepreneurs have hopped on the dropshipping boat (no pun intended) because it’s a relatively easy business to start. They don’t have to stock inventory and handle product returns, they can choose from thousands of products to sell, and the overall capital required to start is fairly small.

However, given its drawbacks such as tight profit margins and very little control over the supply chain, dropshipping at a glance seems to be more suited for established ecommerce businesses.

But for the new entrepreneurs who are willing to plan and work hard, dropshipping can be profitable.

So for today, we’re going to talk about how to start dropshipping business in 2022. You’ll learn about how dropshipping works, the general step-by-step process, how to forecast profits, as well as some branding tips like Online Store Name Ideas to help distinguish yours from the rest of the competition.

How Does Dropshipping Work?

Since the dropshipping business model only ships a product once a customer actually orders it, the item comes straight from the third party supplier and the store owner (a.k.a. the dropshipper) doesn’t have to stock inventory.

Dropshippers nowadays usually register with a wholesale directory that can connect them with many third party suppliers that specialize in dropshipping. They then purchase in bulk at a wholesale price and sell the products individually for a retail price. They are effectively the middle man and would usually take care of setting up the online store, marketing the products, and providing the customer support. The third party supplier meanwhile handles the production, inventory, shipping, as well as product replacement.

Step-by-Step Process

Here’s an overview of the six basic steps you have to take to build a dropshipping business from the ground up.

1. Choose a niche

Select an industry that you’re willing to compete in, but be also aware that the more popular a niche is, the more competitors you’re going to have.

So in order to stand out among your competition, you either have to sell something that’s not readily available or you have to have a strong brand.

2. Conduct market research

Market research is an important part of just about any business and dropshipping also greatly benefits from it. Knowing your market helps you create a more irresistible offer to them.

Aside from knowing what their problems and desires are, here are several questions you can ask to guide you with your market research:

• Are people actively searching for your product? This gauges current demand and to a degree, how competitive is the market.

• Do they have disposable income? This indicates if your store can easily convert for first time visitors.
• What makes your competitors successful? This allows you to emulate proven strategies for selling to particular markets but also lets you know if there are gaps that you can fill.

Google, social media, web forums, as well as the email list of your competitors are where you can find the details you need to learn more about your target audience and competitors. And to help you dig a little bit deeper, tools like SaleHoo’s Market Research Labs, SEMRush, SimilarWeb, and BuzzSumo allow you to really get to know the game.

3. Find a supplier

Nowadays, aspiring dropshippers can find a supplier through dropshipping marketplaces like Alibaba, Oberlo, SaleHoo, Spocket, Worldwide Brands, Printify, and others. These wholesale directories connect you to many different suppliers and manufacturers, mostly of which are from China but there are also from other countries.

And what is perhaps the biggest problem for both experienced and new dropshippers alike is looking for a reliable supplier. Finding a qualified one from the get-go saves a lot of time and money. SaleHoo Dropship is particularly known for vetting their suppliers (as well as in helping automate your online store’s inventory), while other directories just offer you more suppliers so you have better chances of finding a good one.

Once you’ve narrowed down your choices, get samples so you can compare the product quality and determine if it meets your customer’s expectations. 

4. Create a marketing plan

Now that you have your offer and you’ve also done your research, it’s time to come up with a sales funnel, whose length and complexity would mainly depend on the awareness level of your market.

The important part here is that you as the business owner should run marketing campaigns on platforms where most of your customers are. If the majority of your target audience are on Facebook and Instagram, then Facebook and Instagram ads would work. If a lot of people are Googling about the problem and/or the solution, SEO content marketing would make sense. If people are also looking for your product on Amazon or eBay, product descriptions with great copy are essential.

5. Build the online store

Platforms like Shopify, BigCommerce, and Wix allow you to build an online store even without web design or development experience. It’s much easier because most of these allow you to just drag-and-drop features you’d like.

Established platforms also offer you native apps that let you manage several aspects of your business in one place. These include tracking sales, arranging shipping, displaying customer reviews and Google reviews, receiving payments, connecting your dropshipping marketplace, starting and managing marketing campaigns, and so much more.

6. Execute and optimize

After you’ve set up your E-Commerce Store and your sales funnel, it’s time to open it to the public.

And as you go and sell to your target market, it’s also important to see which marketing strategies are working and which ones aren’t.

You can use Google’s analytics tools as well as the apps in your ecommerce platform to analyze your store’s data. These let you see how your customer behaves when they’re in your store and which products sell faster.

So by optimizing your store where it’s more enticing for customers, you get to maximize the ROI of your marketing campaigns.

How Profitable is Dropshipping?

Generally, there are two ways to make a profit in business and these also apply to the dropshipping model. One is to sell inexpensive products to a lot of customers, while the other is to sell expensive products to a smaller but more specific group of customers.

But your profit margins would ultimately depend on your pricing, costs, gross sales, and your competition. If your pricing is too expensive against your competition, customers are more likely to not buy from you. If it’s too cheap, it may not be able to cover your expenses and you may have to do some cost cutting. If your monthly costs are higher than your monthly gross sales (meaning you’re not breaking even), there is no profit to be had.

That’s why it’s important to study your target audience and your competitors very well so you can sell enough to make a profit.

Eight Branding Tips for Dropshippers

Just like in any business, good branding is important because apart from just showing your customer that you’re a trustworthy seller, this is also what encourages them to buy from you again. That is perhaps one of the best things any business owner can experience: a customer buying from them again.

So here are branding tips to help your online store stand out and stay on the top of your customer’s mind.

1. Create a memorable business name

A memorable business name can either include a person’s name so it feels more personal or a word that associates with the desires of your target customer. To help you on the latter, you can use online business name generators that give you many ideas to work with.

But before you settle on a name, find out if it has, at the very least, an available .com domain name. Hopefully, the name is also not used yet in different social media channels.

2. Create a logo that matches with your name

A logo usually contains a font, one or more colors, and, to an extent, a design inspiration. And people would usually associate these elements to certain emotions. Some logos look happy and encouraging while others look strong and reliable.

Thus, it would be more beneficial for your brand to match your logo to the emotions you want your customer to feel when they see your logo.

3. Use content marketing

It’s a general consensus among marketers nowadays that customers would much prefer to learn about a brand through their content instead of just their ads. What this really means is that customers would prefer to learn about how your products solve their problems instead of just being bombarded with commercials.

The content can mean blog posts, infographics, photos, videos, and podcasts. And pushing these kinds of free and helpful content would benefit your brand much more.

4. Tell stories

Stories are one of the best ways to persuade your customers. Telling your brand’s story makes you relatable and trustworthy because you’re there to provide value to them.

You can also tell the story of one of your customers. This greatly persuades prospects because they can see the change they are looking for and it makes them want to experience the same result.

5. Provide great customer service

If there’s one thing that really makes customers remember your store, it’s customer service. That means fast and cost-efficient shipping as well as attending to product returns or complaints immediately.

Poor customer service can discourage prospects if they see negative feedback, possibly putting your store in a downward spiral that’s difficult to recover from.

But great customer service not only encourages customers to buy from you again, they’re also more likely to recommend you to their friends, which only means more sales!

6. Reward loyal customers

In line with the previous tip of providing great customer service, rewarding loyal customers further puts your brand on top of their head.

You can incentivize them with discounts, store credit, freebies, redeemable points, exclusive access to new products, and many other ways that give value to them.

7. Use branded packaging

Branded packaging tells your customer that you care about the smaller stuff, which they then infer to mean that you can also take care of the bigger stuff. Yes, it may sound a bit irrational, but that’s just how most customers are.

So make sure to check with your supplier if they can do branded packaging for your products.

8. Find influencers that resonate with your brand

Instagrammers and YouTubers who would actually buy from your store look more authentic to their audience, who in turn are more likely to check your store out.

So if you can find influencers that resonate with your brand and are willing to promote you to their followers, you have a win-win situation.

Some Final Words

And that’s how to start a dropshipping business this 2022. Basically you have to find a product you want to sell, research about your market, create a marketing plan, and keep optimizing your store and funnel to yield maximum profit. 

And speaking of profit, fortunately, making a profit in dropshipping is not rocket science. The same business principles still apply and mastering them will only create more profits for you.

There are also many tips you can use to help your brand stand out, which are applicable in your business name all the way to the influencers you choose to partner with.

Meet the Author:

David Nge

David is the marketing manager at SaleHoo, a platform to help eCommerce entrepreneurs build a profitable online store. They focus on providing businesses with tools and resources to help them source from low-cost suppliers and find great products to sell online.