How to start a Dropshipping Business

What Is Dropshipping?

Dropshipping is a retail fulfillment-style business model that doesn't require you to invest significant capital or own any inventory. Instead, you act as the middleman between the customer and supplier who handles order fulfillment. Dropshipping is a thriving industry worth an estimated $196.78 billion in 2022 and is one of the most popular online business models available. But old methods aren't good enough, and you need to be the best in every area of your business. Become an expert in areas like:

How to choose the best dropshipping niches
What criteria make a winning product
How to design scroll-stopping creatives and attention-grabbing ad copy
Where to find a reliable supplier with fast shipping times

You also need to understand customer psychology. Learn how to tap into buyers' pain points. What factors affect impulse buying behaviors? How can your product solve a problem?

Dropshipping relies heavily on paid advertising for quick wins. Especially on social media platforms like Facebook, YouTube, and TikTok. But Meta reports a 24% YoY increase in ad costs from 2020 to 2021, and YouTube paid ads rose 14% in Q1 2022.

So to get the best ROAS for minimal spend, you need to learn how to retarget and launch high-converting campaigns. But there will always be unique products to sell if you can find a winning product in an untapped market. Still not sure? Are you thinking about investing in a dropshipping course? Review my article on Shopify Dropshipping Courses for more information on our top picks in 2023.

Step 1: Learning the Basics

Dropshipping Success Rate

Success rate is around 10% according to certain polls. You can increase your success rate when fine tune your skills with paid ads and creating great looking stores. Also, use tools to find trending products that are going viral right now. In our dropshipping success rate article, we cover even more factors that influence your success rate.

Is Dropshipping Still Profitable?

Yes, dropshipping is still profitable because social media usage & online shopping is only increasing and more suppliers are dropshipping, which means more products you can dropship. Then it's just a matter of leveraging social media's algorithm to target the right person at the right time. Even though paid ads have gotten more expensive, because there's more online shoppers now than ever, with superb persuasive marketing, you can remain profitable. Typical profit margin you see is 10-40% with dropshipping.

How Much Do Dropshippers Make On Average?

If a beginner makes $1000 in net profit in a month, it's considered a success. Results are not so steady in dropshipping, because you're relying heavily on the virality of a product. It's difficult to predict. However, if one sticks with it long-term and masters many of the marketing tactics, then there are cases of dropshippers making over $100,000 in a month. The consistency of these types of results is always questionable because viral products die down eventually. The average drop shipper makes $1000 to $5000 in net profit per month because at 10-40% profit margins you have to risk big money in paid ads to make decent income which most people don't have access to.

Risks & Disadvantages of Dropshipping

Dropshipping is attractive to many people because you don't need to invest in an inventory. However, there are unique dropshipping risks & disadvantages. Since you're selling other people's products, and using paid traffic you're not building long-term assets you own. If a Facebook ad account gets suspended, your business may come to a halt. You may get more negative customer feedback because of lack of quality control since you're relying on suppliers & if they're overseas, the long shipping time is an issue. Without investing in inventory, you're not able to create a powerful brand and get involved with product innovation. Dropshipping is more about creating short-term success, capitalizing on lucrative marketing opportunities by leveraging suppliers & viral products. You can still make good money and decent profit margins playing the short-term game, but it will require ongoing effort & risk taking.

Dropshipping Pros & Cons

Dropshipping is thriving, and it's not too late to start dropshipping. But there's no winning formula for success. So you need to understand the pros and cons of the business model before you start. The biggest downside to dropshipping is your lack of control. But dropshipping is the best way to test multiple products for minimal costs and scale when you have a proven concept, so you mitigate a ton of risk or financial outlay. You can read our Shopify Pros & Cons article for a more comprehensive dropshipping review. It outlines everything you need to know to succeed with a dropshipping business in 2023.

Common Dropshipping Mistakes

99% of people fail with dropshipping. People think dropshipping is easy, but there are a lot of moving parts to the business model. Some people make the mistake of choosing the wrong niche, picking a product void of that WOW factor, or one that doesn't solve a problem for people. But when you know what common dropshipping mistakes to avoid, you're better prepared to navigate the fundamentals of the business model. Learn how you can gain an edge over the competition using one of the best dropshipping product tools and why you can scale faster by outsourcing your creatives to a dropshipping video ad service.

Step 2: Choose Your Niche

Dropshipping Niches To Avoid

In dropshipping, you want to sell products that elicit emotions because you need to capture someone's attention that's scrolling on social media and get them to make an impulsive purchase. Therefore, you want to avoid niches that are generic or niches that have heavy brand loyalty such as clothing, electronics, watches, & jewelry. Other niches to avoid are supplements, fragile & bulky items, & seasonal products. To get the full explanation of why you should avoid these niches, you can check out our article dropshipping niches to avoid.

Best Dropshipping Niches

The best dropshipping niches have a large-scale selection of products that invoke impulse buys or solve a person's life problem. You want to choose a niche that appeals to a specific community or percentage of the population with a medium to high sales volume in an evergreen market. Pick a niche with products that have a high perceived value and aren't easily accessible. Not sure where to begin? Check out our article covering the best dropshipping niches and hottest picks for 2023.

Step 3: Choose Your Supplier

Top US Dropshipping Suppliers

Most dropshippers in the past used AliExpress to find foreign suppliers to dropship from. Simply because they offered the cheapest prices. Depending on the product, this might be the only option to stay profitable. However, whenever you ship from China, you will have 4-6 weeks shipping time, which results in many unhappy customers that will request refund or default on their payments. Take a look at this list of Top US Dropshipping Suppliers, some are even Chinese suppliers with US warehouses. You may find great options that can keep your customers happy and stay profitable.

Step 3: Advertise Your Dropshipping Store

11 Strategies to Advertise Your Store

Every online business needs to master traffic. In dropshipping you're using paid traffic. This requires various skills of creating great image or video that catches attention and then converting that attention into a sale by using copywriting and professional looking stores that convey a message to your audience. Tik Tok, Facebook & Adwords is the main strategy for most dropshippers however there are other ways to generate traffic as well and we cover all of that in this article: 11 Effective Ways to Advertise Your Dropshipping Store

Secrets To Creating A Dropshipping Video Ad

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Video ads are one of the best ways to evoke an emotional response from your audience and connect with your ideal customer. When you take advantage of the secrets to create a dropshipping ad, you broaden your reach and your sales. That's how you get to the top percent of how much dropshippers make in 2023. But you need an effective advertising strategy and understand the importance of video marketing to stay one step ahead of the competition, especially if you're dropshipping on Facebook Marketplace.

18 Best Dropshipping Product Research Tools

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Product research tools give you the data you need to uncover golden nuggets. You can research multiple products at the same time to find items with virality potential or that are selling well. But they also allow you to keep an eye on the competition. See where they're lacking and how you can be better. Product research is a key component of dropshipping, so be sure you're choosing the best dropshipping product tool possible.

11 Best Dropshipping Video Ad Services

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If you want to succeed with dropshipping in 2023, you need to be using video ads. Not only are they the most persuasive form of content marketing, but they can increase consumer purchase intent by 97%. But if you lack the skills or time, you need to outsource your creatives to the pros. Check out one of these dropshipping video ad service options, and get your dropshipping store in front of your ideal target market. Build a community around your brand and increase conversions by up to 80% with video ads.

Invest in a Dropshipping Course

Dropshipping is hard, so one of the benefits of investing in a course is the community. Being able to ask questions and get feedback from other students who are also doing the same business model as you is priceless. It can save you lots of time and prevent you from making costly mistakes. We have reviewed a lot of dropshipping courses on this site, and we've come up with strict criteria for what makes it on our top list.

The coach is available inside the program to answer questions & provide support
The coach has proven track record of being successful with dropshipping for at least 3+ years
The training videos are well produced and covers every facet of the business model in-depth
The community is active and engaging

Check out our Best Dropshipping Course page to have a look at what programs made the cut

Dropshipping FAQs

Is It Too Late To Start Dropshipping?

Dropshipping is headed for a market valuation of $196.78 billion by 2022 and thriving, so it's not too late to start dropshipping. But if you want to succeed with the business model, you need to jump on trends fast. Be better at selling the right product with a more effective marketing strategy than the competition. And take advantage of spy software to always stay one step ahead of the curve. Want more information? We cover specific details in our article is it too late to start dropshipping.

Is Dropshipping Saturated?

Dropshipping is more saturated than five years ago. But the business model itself is far from saturated. There will always be new and exciting products to sell online. Add the massive growth of social media, and if you can find the right angle and a winning product, you can be profitable. But product saturation is real. It's so easy for other dropshippers to come in and copy what's working. They offer a lower price tag and sell you out of the market. So you need to jump on trends before they become viral. And have a better offer than the competition. But is dropshipping saturated? Not even close.

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