In my last post, I discussed the drop shipping model and why it’s a great way to build an online business. In this post, I want to walk through the basic steps to get a drop shipping eCommerce site up-and-running.
This won’t serve as a complete checklist of what to do, but should give you a great overall idea of the process involved.
Step #1: Pick a Niche
Picking a niche for any online business model is often the most challenging step. I know, because I’ve done it multiple times. The most important thing I can recommend at this stage is to pick a dropshipping niche based on its probability of success online – NOT based on what you’re passionate about.
That’s right! I recommend a research-driven approach, focused on finding niches with attributes highly predictive of success. For example, you’re more likely to make money in niches with lots of accessories, because those margins are significantly higher. You also want to pick a product that falls into the demand “sweet spot.” This type of product is difficult to find locally (which drives people online), but has enough national demand to support a viable business.
It’s admittedly tricky, and there are many factors to consider which is why I created a free guide to drop shipping niche evaluation. This 55 page eBook outlines the 24 characteristics of profitable drop shipping niches, and is based on my own experience building eCommerce businesses.
The one thing you don’t want to overemphasize is personal passion. If you happen to find a niche that meets all your criteria for success and is something you love – wonderful! But passion shouldn’t be your primary yardstick. Your goal is to build a profitable business, not begin a new hobby. And I promise: Once your business starts making money, you’ll come to love whatever you’re selling.
Step #2: Find Suppliers
Great drop-shipping suppliers are out there, but you need to know where to look. And you’ll have to dig deep to find them, because wholesalers are typically awful at advertising and promotion. Use Google, but make sure you dig far past the first few pages. Often, you’ll need to search through the top 100 listings. Also, don’t be deterred by outdated, 1990s-style websites. Wholesalers are notorious for having antiquated websites, but it doesn’t mean they won’t be a great drop-shipping partner.
You can also use wholesale directory listings, but steer clear of all the scammy lists for sale! If you’re interested in buying a legitimate one, I recommend the World Wide Brands directory. I’ve used – and paid for – this resource and can personally endorse it.
Step #3: Create a Website
Once you’ve found a supplier (preferably more than one), it’s time to build your website! Starting out, I highly recommend using a hosted service that makes it easy to build and launch your store. You can use stand-alone software, but it’s typically more complex and prone to errors and mistakes. Your goal is to get your eCommerce site online as quickly as possible to test demand and learn about your market. A hosted solution will help you accomplish that most efficiently. You can always move to a more sophisticated platform later if the need arises.
To build your site, I suggest using a service such as Magento Go, Volusion or Shopify, my top recommendation.
Step #4: Work on Marketing & SEO
Now that you have a beautiful eCommerce storefront, it’s time to market it to the world! Paid advertising is useful in the short term to quickly test conversion rates and learn about your market. But the real route to eCommerce profit is in free, organic traffic from search engines. Learning about SEO (search engine optimization) and becoming a master marketer will be crucial to the success of your drop-shipping business.
Learning More
Interested in learning more about drop shipping? Let me know in the comments section below! If enough people reply I’d love to teach more about drop shipping here at Internet Business Mastery. Andrew Youderian is the founder of multiple drop shipping businesses and the author of a free eBook on starting a drop shipping business titled “Profitable eCommerce”. He blogs about running his own drop shipping businesses at eCommerceFuel.com.
Photo by ToolStop. (http://www.flickr.com/photos/toolstop/4324416999/)
——
Andrew Youderian is the founder of multiple drop shipping businesses and the author of “Profitable eCommerce,” a free eBook on how to start a drop shipping business. He blogs about running his own drop shipping
businesses at eCommerceFuel.com.
Voicemail Line: 877-877-7507
great series… thanks for putting the content together.
what would you consider a “good” profit margin on a product. Meaning, how much markup should I be looking to add?
Also, what kind of discount do these wholesalers provide on average. From my “brief” research, the discounts aren’t much better than the prices you find on amazon or ebay.
Thanks
Reply
Andrew Youderian Reply:
Thanks! Glad you enjoyed it.
I would consider 20% or above to be a “good” profit margin in the drop shipping industry, but margins will vary widely by industry and niche. You can get by with smaller margins (10% or less), but you’ll usually either need a higher-priced item OR the ability to move significantly more volume.
A real wholesaler should give you a discount to Amazon, but because Amazon works on such small margins it may seem like less than you’d expect. This is one of the reasons it’s so important to add value so you can justify charging a premium price. Otherwise, if you try to compete on price, building a profitable business is much more difficult.
Hope this helps!
Reply
I love the post and yest please write more about drop shipping!
Reply
Andrew Youderian Reply:
Thanks Ruben! Glad you enjoyed it, and I’d love to share more about my experiences here on IBM in the future.
Reply