The beginner's guide to dropshipping

If you're interested in starting a dropshipping business, you have come to the right place. This useful guide breaks down how to set up your dropshipping store from zero.

This business model allows you to sell products without having a warehouse, without purchasing stock, and without sending orders to customers. You choose your supplier or subscribe to a supplier's dropshipping programme, and they take care of the order fulfilment for you. This leaves you more time to focus on marketing your eCommerce site and customer service enquiries.

Dropshipping is becoming a popular way to earn a passive income with revenues in the region of €100-600,000 per year.

So, you have decided to take the plunge with a dropshipping business, that's great! The next few steps will involve planning and creating your eCommerce store. It can be confusing to know what to do first, so we have outlined the process for you.

The 5 stages of starting a dropshipping business:

1. Research

2. Planning

3. Building

4. Marketing

5. Analysis

Keep reading for more detail and what to do at each stage.

First and foremost, research needs to be your priority when putting together your dropshipping business plan. This is the same principle when you start any business, online or offline. The research stage will help you find out how the competition is, which market niche to choose, and which customers to sell to. There will always be some risk involved, as no business idea is guaranteed without any bumps along the way, but putting in research will help you have more knowledge of the business landscape you want to join.

How to find a niche

Use tools such as Google Trends and Google Keyword Planner to investigate a product category you are interested in. For example, you might like watersports and decide to look into the popularity of stand-up paddle-boarding (SUP). Within the sporting goods market, your niche might be SUP and surfing. This narrows down your product offering and appeals to a smaller, more specific customer base.

Read our articles:

How to find the right dropshipping niche for your business

How to use Google Trends for your dropshipping business

Competitive research

Once you have found a niche you want to explore, you will want to check how saturated the market is. Don't be disheartened if there is a lot of competition, as the aim is to find a gap in the market and differentiate yourself. For example, you might notice that in the niche of baby products, there aren't many eCommerce websites in your country selling a certain brand or perhaps you want to stand out with only non-plastic toys and accessories.

Online tools

There are some amazing free online tools to take advantage of. We recommend SimilarWeb, SEMRush, and Moz to find information about company websites and where they rank on Google. Data you can easily access includes how their website ranks globally, how their website ranks by country, how they rank in their product category, plus traffic and engagement rates.

Google search

A search on Google will show you who lists the highest in Google's search engine results page. Your top competitors to watch out for will rank on the first page on Google. Check the paid adverts to see which companies have an advertising campaign and which keywords they are using. To find variations of the keywords you are interested in, try the free KeywordsFX tool. This information is also useful to help you with your marketing ideas further down the line.

Search social media

An easy way to check the competition is to search on the top social media platforms. Take a look at their social media engagement, how big their following is, and the hashtags they are using. Again, take note of the paid adverts to see who has advertising campaigns on Facebook and Instagram, the keywords they have targeted, and the style of their content.

With this information, draw up a list of your competitor's strengths and weaknesses to help you spot opportunities.

Find a supplier

Deciding on a reputable dropshipping supplier is the next important step in your research. Now that you have a niche and product range in mind, you can search for the wholesalers that will provide the stock and order fulfilment.

Google search

An extensive search on Google will bring up some suppliers based on your product keywords. To make it less time consuming, you can use these tips for getting more relevant search results:

Use quotation marks to search for your keywords in the exact order you wrote it, e.g. "elevated pet bowls"

Use a minus symbol to exclude words you don't want to search, e.g. garden bench -wood (to find garden benches that aren't made of wood)

Use a tilde (~) to search for a keyword and its synonyms, e.g. bathroom ~sink

Use two dots to search for a range, e.g. wardrobe €40..€100 will find wardrobes in the price range of €40 and €100

Find results from a particular country by using the word "site:" and the country code, e.g. site:ES garden furniture (this will find garden furniture content only from Spain)

Try using the advanced search setting on Google for a step-by-step method of the tips above

Make use of the search tools on Google to filter results based on when they were published online

Supplier directories

These can be found by searching on Google for a supplier directory. There are many articles with updated lists of suppliers that run a dropshipping programme so it's worth checking to see which companies might interest you. Most of these articles are free but there are some directories that are part of paid services such as Shopify and Oberlo that require you to be a member.

A useful article to read:

Wholesale vs. dropshipping: How to choose

Take a course

If after this research stage you feel as though you would like to improve your understanding of eCommerce and marketing, there are free and paid courses online. We have rounded up a selection of trustworthy course providers for you to consider. You could complete one of the courses before you set up your dropshipping business or learn as you go if you already have substantial knowledge.

Find a course:

Best eCommerce courses for entrepreneurs

Before you create your online store, you'll need to plan a few things to help it run smoothly.

Choose a name

The name of your dropshipping business will feature on your design branding, your website domain name, and marketing. Think carefully about how your name fits with your product range, niche, the customers you want to target, and your competitors. It's beneficial to use keywords to help with Google search results but it's not paramount.

Tips for deciding on a name:

Use a thesaurus to find synonyms and related words

Check the names you have in mind aren't already taken by searching Google and cross-checking a domain provider

Short names do better than long names that have multiple words

Use free business name generators for inspiration such as Name Snack, Wix, Zyro, or Looka

Find more ideas in this article:

How to choose a name for your dropshipping business

Write a business plan

While a business plan is usually required for attracting investors or funding towards your new venture, it is useful to have one for several reasons. It creates a blueprint of your business services by outlining your core business activities and objectives, helping you achieve your business milestones, and providing an estimate of the costs involved. In doing so, it also helps you to identify any potential problems or overlooked details.

What should be included in a dropshipping business plan:

Executive summary: this is an overview of all the information in your business plan. Describe your product, summarise your objectives, target market, competition, and financial overview.

Objectives: define the industry of your business, your customer, and the problem your business will solve (the customer value). After this, you can state clearly what you want your business to achieve, e.g. to generate a net income of X at the end of the second year of operation.

Products: articulate how your products will differ from the competition, the manufacturer and supplier, how product supply will be managed, and anticipated retail prices.

Market analysis: include all of your market research from the research stage. Mention statistics such as consumer spending within your niche, how the market is lucrative, and detail about the target customer. It's good to mention market trends, market growth, and your competitor report.

Marketing plan: showcase how you will reach your customers and generate sales.

Operations plan: this is the what, where, and how you will manage your business operations. Here you should talk about your staffing needs, organisational structure, customer service, inventory, and what will happen when your business grows.

Management team: who are the top leaders in the business or whether it will start with you as the sole person involved. Details about salaries and duties will be in this section.

Financial analysis: this area requires a balance sheet (assets and liabilities), profit and loss statement (to provide predicted revenue and costs), cash flow statement, operating budget, and break-even analysis.

Resources to help you:

UK Government Business Plan GuidePlugins

US Small Business Administration Business Guide Australian Government Business Plan Guide

Vision and mission

Writing the vision and mission of your dropshipping business helps to define your company and its future. It not only informs employees, stakeholders, and customers about your business but it allows you as the business owner, to have a clear understanding of what you offer.

How to write a mission statement

This is the who, what, and why of your dropshipping business

What makes you different to everyone else?

What are you trying to achieve?

Condense your mission statement down to one sentence.

How to write a vision statement

The direction that you want your dropshipping business to go

Be compelling, passionate, and inspirational

Use the present tense

Think about your business in 5-10 years from now

Use clear, brief, and simple language without any jargon

Read this related article:

How to set up the vision and mission for your business?

Now onto the main hands-on part - building your dropshipping store! This is where you will offer your products to customers online. There are two options to try at this stage, either create your own website or use a subscription-based software service.

Creating your own website

Consider WordPress and Magento if you have more technical and coding skills

You can hire a web designer to create one for you

Squarespace, Wix, and Webflow are website builders with a drag-and-drop way to design your site without much technical knowledge

The advantages of building a website from scratch are that it's fully customisable and you have total control of how it functions and looks

Subscription-based software to make an eCommerce site

A fuss-free and less-technical way to set up an eCommerce website is to use subscription-based software

The most popular examples are Shopify and BigCommerce

Both are user-friendly with a huge selection of eCommerce templates to choose from to help you build your store

Shopify is especially useful for beginners as it doesn't require coding and offers great customer support tools

To import products to your website from your dropshipping supplier, they will provide you with plugins. These are software add-ons that allow you to include a specific feature in a computer programme. It sounds more complicated than it is! In the backend of your website, simply add a plugin provided by your dropshipping supplier and their products will pull through onto your website.

Lightspeed, Magento, and WooCommerce are plugins supported by dropshippingXL.

What pages should I have on my webshop?

Obviously, you will need more than just the product pages. Consider including these pages as part of your eCommerce website:

Home page: include compelling copy to entice your website visitor to stay and browse your items.

Products by category: for example a separate page for garden products and home products if you are selling both.

Subcategories: for example within garden products you might have a section for outdoor lighting, patio furniture, parasols and canopies, swimming pools).

Blog: a place to post informative articles, product trends, and news related to your market niche.

Contact: you should give a phone number, email, and space for submitting an enquiry online.

Refunds and returns: include information about your refunds and returns policy.

Delivery: let your customers know how long they can expect to wait for their orders.

About us: some interesting information about your business, who you are, and why your customers can trust you. Your mission and vision statement can go here.

Payment: details that your customers will want to know about payment options and how to use discount codes if you offer any.

Read our articles:

A complete guide to WooCommerce Plugins

How to start dropshipping if you don't have a website

A brief guide to Amazon dropshipping

What is Shopify and what does it mean for dropshippers?

After you have your dropshipping website up and running, you need to decide how to attract business. Your marketing plan will include all the ways you intend to promote your store, get traffic to your website, and increase sales.

Recommended marketing channels:

Social media: Facebook, Instagram, Twitter, Pinterest, TikTok, and Tumblr are a few big ones to use. Creating advertising campaigns on these channels will boost interest in your products.

Email: sending content to interested customers that sign up to your email list.

Blog: egularly publishing articles on your website blog can help generate more visits to your store by providing useful information to your customers and improving your search engine optimisation (SEO).

Organic search: how you rank on Google for the keywords related to your dropshipping business is the biggest way to attract customers. This is part of your SEO strategy.

Paid search: reap the benefits of Google paid adverts and guarantee your customers will find you with the right keywords. Search engine marketing (SEM) is a great tool regardless of how high you rank on Google with organic search.

Display ads: you can pay websites related to your dropshipping business to feature an advert for your store.

If you created a business plan in the planning stage, most of this marketing strategy will already be thought of and ready to implement. It's helpful to put all your marketing intentions into a spreadsheet so you can clearly see how you will take advantage of each marketing channel.

Read our articles:

A complete guide to marketing principles

7 Personal branding tips to kickstart your dropshipping website

Get noticed with these marketing tools

5 Highly effective strategies to advertise your dropshipping store

What is the best time to post on TikTok

How to advertise your dropshipping store through Instagram marketing

Make sure your sales and marketing efforts are tracked so you can see how effective your business is running. If you are using subscription-based software for your eCommerce store, then they will likely have a sales dashboard. Shopify for example will give you a sales report so you can see sales by month and channel. It's also worth creating your own sales report in a spreadsheet to review your profits, expenses, and sales levels. This will help you tweak your marketing and advertising to improve or increase efforts when necessary.

Tracking the success of your socials

Social media channels have an analytics tab to show the level of interest and engagement your business profile has with social media users. You can access statistics such as the number of clicks on your posts, the number of views, the number of comments on your posts, and the number of interactions. Adding this data into a key performance indicators (KPI) dashboard will give you a full overview of online interactions with your dropshipping brand.

Tracking your ads

You are paying to advertise on social media and Google so you will want to monitor the success of these campaigns. Review the analytics dashboards in your social media channels for your advert engagement data. Check your Google Adwords account to review the traffic you received as a result of your Google pay per click ads. Again, add this data to your KPI dashboard so you can see a full overview of your digital marketing success.

Track your sales

Keeping track of your dropshipping sales is important. With this information, you can see which products are your best-sellers, which products aren't popular, and how the price point may be affecting sales. To maintain lucrative profits, amend your product range, prices, and offers based on these statistics. You can use a spreadsheet and manually track this information, however, once your business starts to scale you can benefit from using software to organise this large volume of data. Oberlo and Spark Shipping are two examples.

That's everything you need to know to get your dropshipping business off the ground. The least exciting but most important step will be your research and planning stage. This will make the hands-on part of building your eCommerce store and promoting your goods a lot easier and with a better idea of who you are selling to.

For a reputable dropshipping supplier with logistics hubs in the US, Europe, and Australia, sign up to dropshippingXL. Our business team are on-hand to support you. Should you have technical or commerce queries, you can contact us for help.