Dropshipping is one of the fastest-growing types of eCommerce business and more entrepreneurs are choosing the model for their new business ventures each year.
There are many unique benefits to the model, but they are only as good as the effort you put into learning the ropes and understanding best practices.
Read on for a comprehensive guide on starting, growing, and optimizing a dropshipping business.
What Is Drop Shipping?
Dropshipping is an order fulfillment method where retailers sell products they don’t own while the suppliers handle order fulfillment. They essentially operate a storefront that lists and sells products on behalf of another business, similar to the consignment inventory model. However, dropshippers never store or touch the inventory they sell. This model eliminates the need for warehousing, reduces costs, and lets new businesses grow more quickly.
Dropshipping businesses also only pay for the products at the time a customer places a purchase. This covers the cost of the product as well as any fees the vendor requires. Dropshipping businesses don't have to deal with issues like shrinkage or the bullwhip effect in supply chain, so all effort can be put into marketing and selling products.
Pros and Cons of Dropshipping
There are many advantages of the dropshipping business model, both for the business and the customer. Here are the biggest pros of dropshipping:
- Cheap Startup. Since you don't have to invest in warehousing or inventory, you can focus all of your effort and money on setting up a website and sourcing products to sell. This low cost also means low risk, so it's easier than ever to start a new business when you find products you’re interested in selling.
- Broad Product Selection. The lack of a warehouse opens up a lot of doors for business owners. You can pursue as many products and types as you think you can sell. This makes the model ideal for a wide-range of eCommerce business ideas.
- Easy to Grow. Traditional business growth is limited by growing costs. Since dropshipping businesses can invest all of their time and money into eCommerce marketing to increase eCommerce sales, the speed and size of their growth is nearly unlimited.
Unfortunately, there are also a few disadvantages to the dropshipping model that make it not feasible for all businesses. Here are the biggest cons of dropshipping:
- No Inventory Control. Since you don’t own the inventory you have no input on inventory management. This can affect your ability to fill customer orders, so your own demand planning or inventory forecasting is meaningless. Picking quality vendors is key.
- Low Margins. Many dropshipping niches are full of low-cost, low-profit products. Selling in bulk is often the only way to make enough money to cover your costs, so try to focus on providing superior service and find a niche with more room for growth like DTC food.
Now that you know what dropshipping is, let’s take a look at how it works.
The Dropshipping Process
The dropshipping model consists of three parties: a supplier who owns the products, a retailer who sells them, and the customer. The supplier stores, picks, packs, and ships the products. The retailer markets and sells the products. The customer buys the products from the retailer and receives them from the supplier.
This model may seem a bit complicated, but dropshipping process generally follows these steps:
- Customer places order. Like all businesses, the beginning of the order fulfillment process takes place when a customer makes a purchase. However, in the dropshipping model, the customer likely is not aware that the products they are purchasing are not owned by the reseller. After making the purchase, the customer should receive an order confirmation email from the seller using eCommerce marketing automation. This process is made simple for dropshippers who use BlueCart eCommerce. Emails can automatically be generated and sent for receipts, invoices, promotions, and more. We even handle all the hard work in creating a digital catalog, letting you sell B2B wholesale, direct to consumers, or both.
- Reseller passes order to supplier. Next, all relevant transaction data is sent from the retailer to the supplier. The retailer also pays the supplier for the products. This step informs the supplier what products were ordered, where to ship them, and any special requirements for the order.
- Supplier picks and ships order. With the order in hand, the supplier has to pull all products from warehouse shelves and pack them. They seek out each product by SKU number, assemble them, and put them in eCommerce packaging, and turn them over to a shipping company.
- Customer receives order. Once the shipping label is created, the customer will receive an email with an approximate shipping time. The customer may also receive live tracking data. Once the order arrives, the transaction is complete. If the customer runs into issues with the product, they can use a supplied RMA form to begin a return, but this process must go through both the reseller and the supplier.
So, is this process actually a good one? Let’s take a closer look.
Is Dropshipping Worth It?
Dropshipping businesses traditionally have low margins, but there are ways around this limitation. The dropshipping business model offers tremendous opportunity for quick growth if done properly. Dropshippers don't need to worry about overhead expenses growing when they increase eCommerce sales, so all efforts can be directed toward this goal
Here are four ways to make your dropshipping business worth the investment:
Pick a Good Niche
More dropshipping businesses are being started every day. This means the landscape is becoming very competitive, particularly in popular niches like clothing. Before investing in any business ideas, look at your chosen industry, the existing customer base, and their needs. Try to look at smaller niches within larger industries. Instead of selling homemade cookies online, you could sell keto-friendly cookies. This will give you more room to grow and avoid getting crushed by big businesses.
Invest In Marketing
With thin margins, every sale counts. To increase these sales, you need to really hone your eCommerce digital marketing strategie. Utilize email marketing to send promotional emails, use social media to engage with customers, and generate sales everywhere you go. You can also invest in eCommerce marketing automation tools to increase the return and lower the work involved in reaching these customers.
Use the Right Software
All eCommerce businesses rely heavily on technology to reach customers and make sales. Since dropshipping costs are so much lower, many entrepreneurs try to save money on the software they use. You should really make sure you don’t cut corners here, since your ability to market products, grow your brand, and make sales all rely on the tools at your disposal. Whether you use a headless eCommerce platform or online marketplace you need an easy-to-use and scalable solution.
BlueCart eCommerce is just that. We even have integrations with many eCommerce shipping platforms, so starting a dropshipping business has never been easier.
Set Measurable Goals
Don’t make the mistake of ignoring all of the data at your fingertips. Set actual, measurable eCommerce KPIs like conversion rates, site visits, abandoned cart rates, and more. Then, track them and review them regularly to see if there are areas where you can improve and pick up on trends.You can use this data to inform your actions and have a much better chance of increasing sales and growing your revenue.
With all this in mind, there’s a few questions we need to get out of the way before you begin the process of starting your dropshipping business.
Is Dropshipping Dead?
One of the biggest questions to emerge in the past few years, is whether the dropshipping industry is dead or dying. The answer is unequivocally no on all counts. Dropshipping is not dead or dying, it's actually growing faster than ever!
So, if the dropshipping industry is still seeing strong growth, why do people ask if it’s dead? Unfortunately, in the late 2010s a number of dropshipping businesses chose to flood the market with low-quality products, poor customer service, and misleading advertising. Though they made large profits in a short time, they ultimately destroyed their businesses and damaged the reputation of the dropshipping industry.
Today, there is a major shift toward sourcing higher-quality products and a focus toward long-term growth. This shift is what makes dropshipping such an attractive business model.
Important Dropshipping Statistics
To further clarify the current trajectory of the dropshipping industry, let’s take a look at some important dropshipping statistics:
- Nearly 1/3rd of eCommerce businesses have adopted dropshipping. Entrepreneurs who own a B2B business or direct to consumer business all see the value of dropshipping as both a primary and secondary revenue driver.
- Dropshipping revenue was over $100 million in 2020. The industry is also trajected to see year-over-year growth of around 17% growth.
- More than 1/3rd of Amazon sales are fulfilled by dropshippers. Marketplaces like Amazon are a great way to keep costs low and maximize your access to customers. That's one of the reasons so many food suppliers are turning to BlueCart eCommerce. We handle all the heavy lifting to get your storefront up and running, so you can sell DTC, B2B, or both in no time.
- Dropshippers can be 50% more profitable than traditional retailers. Since sourcing products have no upfront cost and often come at a much lower cost, you can markup the products much more than a traditional business. This is a great way to maximize your profit margins without overpricing.
Is The Dropshipping Market Saturated?
No, the dropshipping market isn't saturated. Even though the industry is seeing strong YoY growth in new businesses, there are still many dropshipping niches with little to no competition.
Now, let’s move on to the next question that often comes up at this stage. That of legality.
Is Dropshipping Legal?
Yes, dropshipping is legal and a recognized and respected business model! However, there are two main reasons people tend to ask this question. First, customers who’ve been burned by unscrupulous dropshipping businesses will ask out of frustration. Unfortunately, this scenario happens with many different eCommerce models. Be upfront with your customers and provide them with superior service and you should never cause anyone to ask this question again.
Second, the question is wisely asked by entrepreneurs looking into starting a business using the model. It is regulated like other industries, though some states require special licenses to operate a dropshipping business. Here are the things you need to do ensure your dropshipping business is legal:
Apply for a Business License
Most states will not allow you to run an online business without a license. If you begin operating without one, you can face massive fines, criminal charges, and even jail time. Take the time to look into the requirements your state, county, and city may have for opening a business before taking any other steps. You may also be required to incorporate your business.
Pay Your Taxes
Once you get your business license, you should be issued an Employer Identification Number, or EIN. This number is used by the government to track your business for tax purposes. We can’t stress this enough, but you need to pay all taxes that the federal, state, and local government levy on small businesses. This includes payroll taxes, business taxes, sales taxes, and more. Make sure you set up your storefront to automatically add state taxes to sales as well. This will ensure you aren't audited in the future and keep you from having to eat the taxes on your sales. Luckily, BlueCart eCommerce handles taxation, shipping calculations, payment processing, and more.
Though eCommerce business insurance itself doesn't make your business legal, it protects it from many legal issues. Many states also require you to have some form of insurance just to operate your business within their borders. It’s always better to be safe than sorry by picking up insurance that protects you from litigation.
Pay Attention To Copyrights
One of the most common legal issues that comes up for dropshippers is copyright law. Some countries that you may procure products from have lax copyright enforcement, so you can be reselling products illegally. Make sure you understand the laws surrounding copyrights and only go with suppliers you trust. You don’t have to be producing the products to be sued for selling them.
With those burning questions out of the way, let’s take a look at the things you need to start a dropshipping business. First, you need ideas.
Dropshipping Business Ideas
Not all eCommerce business ideas are winners. This is certainly true of dropshipping business ideas, but the low cost and easy start-up make it the perfect model for experimentation. The key is to start with the right tools to avoid losses. You need to be able to perform market research, procure products, share order data with suppliers, and more.
Here are the types of tools to look for:
The success of your dropshipping business heavily relies on your ability to pick the products desired by your target market. You need to carefully select the tools you use to research products. We recommend Google Trends, Google’s free service that gives you insight into search data and trends since 2004. You can also use built-in data on marketplaces like Amazon or AliExpress if you use them for product procurement. They both track sales figures for all products and often highlight best-sellers and trending products.
Web Platform or Marketplace
A dropshipping business lives or dies by the quality of its website. There are two primary options for your website, you can use a dedicated eCommerce platform and dropshipping website builder, or you can create a storefront on an existing marketplace. Pick the option that you most feel comfortable with and will be able to use to the maximum effect. Coding can be difficult and time-consuming, so stick with a marketplace if you want to spend your time on product procurement and sales rather than web development
Many dropshippers sell online using BlueCart eCommerce for their digital storefront since it’s so easy-to-use. Even better, all BlueCart customers also get listed in our wholesale marketplace where their products can reach 92,000+ buyers in the U.S.
Good Dropshipping Ideas
After you've chosen the tools you're going to use, looked at demand trends, and set eCommerce KPIs, you're ready to pick a dropshipping idea.
With that in mind, here are ten good dropshipping ideas for 2021:
- Sunglasses and accessories.
- Stylish socks.
- Snacks and groceries.
- Chargers and phone accessories.
- Fitness gear.
Now, let’s take a closer look at the dropshipping niches available to you.
Best Dropshipping Niches
There are many dropshipping niches in the market, so it’s important that you put in the effort to research those that you’re interested in. Your main goal is to maximize your return on investment or ROI. If you don’t know the ROI meaning it’s what you make vs what you spend.
With that in mind, here are a few things to look for in a dropshipping niche:
Low Product Turnover
Don’t make the mistake of hopping on short-lived trends for your product offerings, at least not entirely. If your entire product catalog changes with the wind, you’re not going to be setting yourself up for long-term success. Pick a niche that is mostly products that are consistently desired. You can supplement with flash-in-the-pan products, but that shouldn’t be your main offering. Chasing these products is time-consuming and won't help you build a brand that customers can rely on.
Cross Selling Opportunities
Selling in bulk is the cornerstone of all dropshipping businesses. Often, this means that your average order value is low. Try to pick a niche that has ample room for cross selling. For example, if you pick the phone accessories niche, your main revenue driver may be selling phone cases. But, you can also add charging cables, selfie sticks, PopSockets, and more to your catalog. Then, you use a widget on your website to show these accessories on the phone case product pages and increase the chance you’ll sell more products in each order.
Passionate Customer Base
One of the easiest ways to grow your dropshipping business is to target a market with passionate customers. These are customers who tend to be particular about the products they buy, but they’re also very vocal about their favorite brands and products. Done properly, this type of market will become your greatest asset as they spread word of your business far and wide. You can even monetize this and work with some of them as brand ambassadors so they drive as much traffic as possible to your site and you pay them a small commission.
In case you missed our warnings above, you cannot grow a successful dropshipping business on the back of low-cost, low-quality products. Businesses that do all inevitably fail, so it's clear that you need to balance your margins with product quality. Focus instead on keeping customers happy and establish your brand as a trustworthy source of products.
Most Profitable Dropshipping Niches
Almost any industry that involves products can be adapted to the dropshipping model, but not all drive large profits. Here are eight of the most profitable dropshipping niches in 2021:
- Clothing and Accessories
- Health and Grooming
- Food and Groceries
- Office Products
- Car Accessories
Once you’ve chosen a niche, you next need to look into the products you’ll want to sell.
Best Dropshipping Products
Clearly, there are many dropshipping niches available to you, so it can’t be that hard to find products to sell, right? Well, you can still miss the mark here if you don’t know what you’re doing. You need to find products that don’t cost you a lot of money to buy from suppliers but are of sufficient quality to ensure customer satisfaction and drive a decent margin.
With that in mind, here are four of the best dropshipping product categories for 2021:
2021 is the year of business products. More companies are choosing to use remote workers, hybrid office models, and more. This means there’s a surge in demand for office mainstay products like pens, pencils, sticky notes, and paperclips. However, many other types of business products are also seeing an increase in demand. Desktop microphones, pop filters, blue light glasses, mechanical keyboards, and other products that make working remotely easier are all going through a surge in popularity.
Nearly every business owner would love to add recurring payments to their revenue stream. Dropshippers can look at products that customers tend to buy on a regular basis like toothpaste and shampoo, or even try selling coffee online. In fact, coffee beans and grounds are one of many subscription box ideas that offer even more opportunity for recurring revenue and pari well with the dropshipping business model. BlueCart eCommerce customers can choose to add subscription products to their storefront and set up subscription billing in a flash.
There are very few product categories that rarely see a change in demand, but clothing is one of them. There are certainly certain products that see seasonal demand trends, but you can get into a market with nearly unlimited upside by simply offering a wide-range of clothing options. In fact, many of the largest and most successful dropshippers get the majority of their revenue from clothing sales.Many of the best dropshipping websites make most of their revenue off of clothing sales. If you do choose to sell clothing, we highly recommend looking into getting your branding added to these items through private label dropshipping.
Food and Groceries
Another segment of the industry with a lot of room for growth is food. With so many options available you can try selling alcohol online, selling liquor online, sell beer online, sell wine online, or even sell whiskey online using this model. However, non-perishable options are best, so it’s not ideal to sell baked goods online or other products that need to be shipped fresh. Many BlueCart customers swear by our marketplace to sell their food products B2B, DTC, or both. It's also a great way to find wholesale suppliers for your dropshipping business.
Now that you’ve chosen your products, you still have to find the right suppliers to procure them.
How to Find Dropshipping Suppliers
You can pick a great dropshipping niche, choose the most desired products and still fail if you don’t have reliable and capable suppliers. Unfortunately, few suppliers advertise their services broadly, so you have to seek them out yourself.
Here are some tips on how to find dropshipping suppliers:
Take Time to Research
You can’t expect to have a good dropshipping supplier fall into your lap, you need to work to find them. The best way to do this is to look through a wholesale directory for the product industry you've chosen. Try to stick with suppliers who have a strong track record and can show they are capable of handling order fulfillment at scale. Often, the suppliers you're looking at are international, so you also need to look into the steps and costs involved with shipping internationally as well.
Make Cold Calls
Once you have a list of prospective suppliers, it's time to reach out to them. Make cold calls, reach out to salespeople, or even sign up to receive email marketing materials. Your goal is to get as much information as possible so you can make the right choice. Pay close attention to the quality of their customer service and their responsiveness to your efforts to reach them. Dropshippers and suppliers need to have good lines of communication, so they're always aware of any stock or lead time issues. If they aren’t good at assisting you this early on, that’s a bad sign for any future relationship.
Test Their Technology
The eCommerce software your suppliers use will play a major role in your ability to make sales and provide superior customer service. Though many dropshipping suppliers have outdated websites and storefronts, the shipping and inventory tracking software they use matters most. Feel free to ask the suppliers for some insight into the programs and processes they use as well as a demonstration if possible. This can help weed out suppliers who have fallen behind the times or who wouldn’t be capable of growing with your business.
Finally, you need to get your hands on some products. Don;t sign a contract with a supplier if you don’t have first-hand knowledge of their product quality. Ask for a few samples or make a purchase to test the speed and efficiency of the supplier's warehousing operations. If the products seem like they’ll be durable and reliable, now you can get to signing a contract. If not, it’s probably time to continue your search.
With suppliers chosen, it’s time to look at the real core of the process, starting your business.
How To Start A Dropshipping Business
Starting a dropshipping business is actually fairly straightforward. You should create a checklist and take a step-by-step approach to ensure you have all of your ducks in place.
Here are the most important steps you should take:’
- Fill out the requisite paperwork. The last thing you want is to lose your new business because you forgot to dot some i’s. First, you'll need to apply for a business license and any requisite permits based on the products you sell. Pay close attention to all federal, state, and local regulations. You need far more documents to sell wine online than you do to sell coffee online.
- Do competitor research. Your dropshipping business should be competitive from day one. You're likely entering an arena with thousands of competitors. Go through their storefronts, sign up for email marketing, research eCommerce PPC ads, and more. Make notes of what you like and dislike and adjust your plans accordingly. Don’t forget to include major brands that compete in your space as well. They often miss smaller niches that you can target for increased revenue.
- Pick a web platform. We’ll go over this more in-depth below, but the platform you choose for your site will set you up for success or failure.You can choose a standalone web platform, online marketplace, or some combination of the two. Take a close look at your own technical abilities and the amount of time and money you have to invest in the venture.
- Create your website. Unsurprisingly, after picking a platform, it;s time to build your site. Start is by creating an outline of the most important pages you'll need to get the site launched. You’ll need a landing page, category pages, product pages, and a shopping cart at minimum. You also need to make sure you're building the pages with on-page SEO for eCommerce in mind. It's particularly important to use SEO for eCommerce product pages, so your products can drive traffic to your website.
- Advertise your site. With your website live, you now need to start drawing in some paying customers. Start investing in some eCommerce marketing to get your brand in front of prospective customers. Social media and eCommerce content marketing are great ways to attract customers and engage with them one-on-one. If using email marketing, you should look into marketing automation tools, so you can set up an email program that automatically sends when someone signs up on your website or makes a purchase.
This is a very broad look at creating your business, so let’s get a little more granular and look specifically at the dropshipping website.
How to Create a Dropshipping Website
Since dropshipping businesses rely so heavily on their website to draw in customers and make sales, you really need to make sure your site is easy-to-use and well-structured.
Here are the things you need to create a good dropshipping website:
An eCommerce Platform
When looking at web platforms for a dropshipping business, there are a few important things to look for. First, you'll want a platform that you’ll be capable of using on a regular basis. Unless you have a coder in-house, you're better off picking a platform that can be used with little training. Second, the platform needs to be able to grow with your business. Don’t just choose the cheapest platform or you’ll be seeking another one sooner than necessary.
A Good Domain Name
Your business name and domain name are vital parts of your dropshipping business. They need to convey who you are and what types of products to sell. If possible, try to make sure the two names are the same so there’s no confusion about your brand. You can use Google Domains to search for the name you come up with and see its availability.
There are different page types that your site will be constructed of. If you come up with plans for the structure and layout of the site in advance, creating it becomes much easier. Feel free to create draft versions of the pages you expect to have on your site. In general, you’ll want to outline the following page types: a branded homepage, category page, product page, shopping cart, checkout, order confirmation page. If you choose to run your store using BlueCart eCommerce, we take care of all these pages and more. All you need to do is provide a list of products you sell and some images and we’ll take it from there.
Finally, the last thing you'll want to have planned out when creating your website is your pricing. This starts with determining the general pricing model (think wholesale vs retail price), if you'll use a subscription payment plan or require minimum order quantities (MOQ). Your ability to offer products at competitive prices and market them accordingly is key to the success and growth of your website.
With your new site built and ready to go, let’s reflect on how to dropship so you can get the most out of your investment.
How To Dropship
You’ve already gone through the trouble of picking a niche, finding suppliers, choosing products, and building your website. You’re still not truly ready to dropship as there are two more considerations: Payments and costs.
Making sales is completely useless if you don’t have the ability to handle transactions and accept payments. Your payment methods should be flexible, but fully secure to ensure maximum customer satisfaction. If you run your own site, you'll want to invest in a high-quality eCommerce payment gateway to handle your transactions. This software gives you the ability to accept various payment methods and all transaction data is encrypted to keep your customers' data safe.
If you use a marketplace like BlueCart eCommerce, you don't have to worry about this step at all. We have a robust integrated payment platform that allows you to send invoices and accept payments with ease. We use HTTPS for all services and encrypt all card numbers used by your customers, so they can feel secure shopping with you.
The other thing to consider are the various costs involved with running your new business. Even though dropshipping is a great model for entrepreneurs and startups because of the low costs, there are a few costs you can expect to deal with when starting your dropshipping business.
Here are the most common dropshipping costs:
No eCommerce platform is free, at least not one that would be used for a dropshipping business. You’ll need to pay a monthly fee for your chosen eCommerce platform. However, most platforms use a tiered subscription revenue model, so you’ll only pay based on your company’s size and sales. BlueCart is a great choice here because we charge the industry-lowest payment processing fees. This lets you invest your money where it counts, selling products.
You’ll pay the suppliers you work with in a few different ways. They’ll certainly charge you for the products you sell, but you’ll also pay for their dropshipping service. Read through the contract you have with them to make sure you know what the fees are and what services are included.
The only way to start making sales is to invest in marketing. In most dropshipping businesses, the marketing costs are the highest expenses. You may invest in PPC ads, influencer marketing, freelance bloggers, or something else. Set a budget and keep track of your costs to avoid any nasty surprises.
Finally, though you don't have to pay for a warehouse or safety stock, you'll still have overhead costs. Things like your computer, utilities, and other operating expenses all need to be factored in when creating budgets and setting prices. Luckily, these are usually quite low, but try to avoid letting any of these costs grow too much as you scale your business.
Now, let’s look at what we know you really care about: Making money.
How To Make Money Dropshipping
The dropshipping model features low overhead expenses, easy set-up (especially if you use BlueCart eCommerce), and vast scalability. Still, you have to put in some effort to ensure profitability.
Here's how to make money dropshipping:
Keep it Simple
Dropshipping can be a bit complicated, particularly when you use multiple suppliers. Though it may seem enticing to pull in as many products as possible from various vendors, this isn’t a best practice. Instead, try to focus on streamlining your business and use as few suppliers as possible. You should also take the time to research everything before making any decisions.
Choosing a platform like BlueCart eCommerce can make this much easier. Our all-in-one platform handles your digital catalog, is built with SEO in mind, and processes all payments for you.
Focus on High-Quality Products
We’ve mentioned this a few times, but dropshipping businesses had a bad reputation for a while due to many new dropshippers flooding the market with low-quality, low-cost goods. Those businesses are all dead now. Luckily, you can avoid this by only sourcing products that are well-made and worth the prices you set. Costs will be higher and you won't be able to sell in bulk as easily, but your customers are more likely to view your business favorably. This is great for creating brand loyalty and increasing the lifetime value of each customer. Not to mention it can prevent you from crashing and burning.
Keep Shipping Short
Since dropshippers rely on their suppliers for all aspects of order management and order fulfillment, you may not think shipping times are your concern. That’s certainly not the case. Customers will always hold you responsible for any issues that occur during shipping because you’re the face of the model. Reach out to your suppliers and work with them to ensure these processes are fast and efficient. The shorter the time between purchase and delivery, the more likely a customer will be happy with their transaction. If you routinely run into issues with manufacturing or delivery delays, you should start looking for more capable suppliers.
Keep Up With Trends
One of the best aspects of the dropshipping model is its flexibility. Since you don't store any products, you can offer a much more diverse range and shift course quickly. Look into search and sales trends regularly to see what products people are looking to buy. Then, work with your suppliers to add new offerings that fall in line with the shifts in the market. This can give you additional revenue and let you use short-term demand fluctuations to your benefit without damaging your overall business.
The final thing you’ll need to understand to make money is your profit margin.
Dropshipping Profit Margin
Dropshipping businesses can often run into issues with low profitability, but a good margin for a dropshipping business is anything over 20%. The actual margins you see will vary greatly based on the products you sell and the market you sell them to. For instance, if you participate in reverse dropshipping, your margins will be much higher since you sell more expensive items. If you sell only low-cost products, your margins will be much lower.
Average Dropshipping Profit Margin
The good margin may be over 20%, but the average dropshipping profit margin is between 15%-20%. This is because many dropshippers rely more on the quantity of products sold and can keep margins low to stay competitive. However, some dropshippers can actually see a profit margin of 300% or more. Make sure to always keep an eye on your competitors' pricing. Then, you can see where you can increase your markup without upsetting customers and still undercut the competitors.
To get the most out of each sale, it’s vital that you know how to calculate your profit margin for each product so you can adjust your approach and increase revenue.
How To Calculate Dropshipping Profit
How to calculate margin for a dropshipping business is pretty simple. You just need to know the cost of the product and the price it's being sold at. You can also increase the accuracy of your calculations by factoring in other costs related to product procurement like additional fees you pay the supplier.
Then, just take those numbers and use the following formula to calculate dropshipping profit margins:
Margin = ((Sales Price - Cost) / Sales Price) x 100
How To Price Your Dropshipping Products
Calculating profit margins is a key aspect of pricing dropshipping products. It can help inform you if your prices are too high or too low and help you avoid losing money and burning out.
Here are a few tips on how to price your dropshipping products:
First, understand that every product you sell will have a different markup and margin. You can't just pick a single percentage and set all prices to hit it. Lower-cost items often have higher margins than higher-cost ones and this is because customers are more willing to pay a high markup on products under $100 than on big purchases.
Second, make sure to plan for the long-term when pricing your products. Don’t just set high margins in hopes of making a quick buck. It may work for a short time, but it will undoubtedly backfire and damage your reputation. This may even destroy your business.
Third, don’t forget to cover your advertising costs. You might not think to include this cost when using the profit margin formula, but advertising costs play a major role in dropshipping businesses. They are usually the primary source of website traffic and sales. Try to increase your prices enough to cover these costs.
To further maximize your profit margins, you should also look into dropshipping automation.
What Is Automated Dropshipping?
Automated dropshipping is a method of streamlining the dropshipping business model where software handles many aspects of your business. This method helps eliminate the need for manually handling different aspects of your business. The tools you use can save you time and money when seeking and procuring products, marketing, and more.
Here are the most common ways to automate dropshipping:
The more sales you make, the more complicated shipping can become. You’ll be dealing with various suppliers who each have different shipping methods and times and their own tracking services. While they’ll handle creating and inserting packing slips and RMA forms, you still need to be able to communicate order updates to the customer. Automation software will pull all of this disparate information from each supplier into one single dashboard, so you will be able to assist any customer at all times.
We covered profit margin calculations and pricing above, so you can understand why you might want to automate the process. As your product offerings grow, you’ll want to look for simpler ways to optimize prices without having to manually calculate them. For example, you don't need to know how to calculate markup for all of your products, you can set the software to always increase product prices to give you a certain profit margin. This lets you get products live more quickly and price products competitively.
Email marketing is the single-most effective form of marketing and a valuable tool for any dropshipper. Setting up automated emails that are sent out based on users action or inaction can increase your conversions significantly and help turn missed sales into revenue. Dropshippers who use BlueCart eCommerce for their storefront can send emails right from the platform. It also has a built-in promotional function, so you can set up a deal and send out an email blast in one place.
Seeking out new products is the key to growing a dropshipping business, but it’s also very time-consuming. Automation tools can put product research in the hands of AI to pull live comparisons of pricing, insight into demand trends, and even uncover niches that are underserved. Then, you can use this information to make informed product decisions and pick up only high demand products.
One final area where automation can be helpful is dropshipping advertising.
More than most other eCommerce businesses, the dropshipping model relies heavily on marketing and advertising to attract customers and increase sales. This can make it seem daunting to try and get the most out of your advertising efforts.
Here are a few tips to make your dropshipping advertising successful:
Advertise on Multiple Platforms
The more eyes you get on your products, the more likely you are to make sales. Don’t just pick a single social media platform to stick to because you’re comfortable there or because it’s cheaper. Experiment with different ad types on different platforms. This will not only spread your brand awareness to new audiences, it can help you uncover what does and doesn’t work in your chosen market. Just make sure to tailor your advertising to the individual platforms. Not all types of ads work in every medium, so research best practices for each and feel free to test new things.
Don’t Forget SEO
Advertising gets all the attention, but it’s not going to be truly successful if it isn’t paired with search engine optimization (eCommerce SEO). SEO is basically your site’s natural ability to appear in search engine results for various terms related to your products and brand. The better your pages rank, the more traffic you get and the more favorably Google treats your ads. That’s why you need to make sure your website is built properly and with a focus on SEO as this will help drive traffic on its own and through digital advertising.
Use Email Marketing
We’re going to recommend this time and again, but do not neglect to invest in email marketing. Many modern businesses make the mistake of assuming it’s an outdated marketing channel, but it’s actually still the single-best converting form of marketing. In fact, eCommerce email marketing has a return of $44 for every $1 spent. You can use it for prospecting new customers, enticing return customers, sending promotional emails, and more. You can even use automation tools to streamline it and increase conversions with little effort.
Our modern world has seen a shift from celebrity endorsements to influencers. These are social media users with large followings and their accounts are great tools for promoting your business. You can do this for free by simply engaging with the influencers and their audience, but this may not lead to sales. Instead, reach out to the influencer and see if they;d be interested in affiliate marketing. Essentially, they advertise your products to their followers in return for free products or a commission.
Let’s take a closer look at how this particular marketing model works.
What Is Affiliate Marketing?
The simplest way to explain affiliate marketing is that it’s a type of commission-based advertising. Content marketers, bloggers, and influencers sign contracts with brands to advertise their products in return for compensation. Usually, this compensation is a percentage of the company's product sales made through a specific link provided to the affiliate.
Affiliate Marketing Pros & Cons
Since affiliate marketing is both a business model and a marketing tool, it’s a field that’s been seeing tremendous growth each year. However, that doesn't mean that it's all upside.
Let's take a look at the pros and cons of affiliate marketing for both the businesses and the marketer.
Affiliate Marketing Pros
- Low costs. Both dropshippers and affiliate marketers love the model because it costs so little to do. The business only pays the affiliate marketer when sales are made through the particular link they’re given. This is appealing as you won’t lose anything if the efforts fail. The marketer also benefits since they don’t really have to do anything other than make a few posts and advertise the product. Then they can sit back as commissions roll in.
- Low effort. With affiliate marketing, the business doesn’t deal with advertising directly, they outsource it. This let’s you focus your effort elsewhere and grow your business. The affiliate marketer also doesn’t have to do much. They’re already a big name on their chosen platform, so they likely create multiple posts each day. All they have to do is create the agreed upon posts and wait for sales.
Affiliate Marketing Cons
- Returns may be low. Unfortunately, both the dropshipper and affiliate marketer may make less money than expected. The business may discover that the marketer they’ve worked with can’t actually move products like they wanted. This means you may have wasted time and energy on a collaboration that would have been better spent elsewhere. The marketer also only makes money when sales are made through their link. If links are broken, a customer buys without using the link, or the post doesn’t perform well, you won’t make what you hoped.
- Less control. The business may have control over the assets used, products marketed, and pricing, but they can’t control what happens on the marketer’s end. If the marketer makes a mistake, it’s the business that will pay for it. On the flip side, the marketer has no control over pricing or cross selling, so the amount of money they make won’t be optimized for them.
Now that we understand advertising and marketing, let’s look at another major factor in a dropshipping business’ success: customer service.
Customer Service For Dropshipping
One of the biggest mistakes any dropshipper can make is providing poor customer service. Both existing and newcomers have done this and seen their brand value and sales plummet. We understand that keeping customers happy isn't always easy, but you can follow a few simple guidelines to make it a bit less stressful.
These are the three best practices all dropshippers should follow:
Listen to the Customers
Customers aren’t as much of a puzzle as you may think. Don’t just assume you know what their issues are or try to fix them without listening to the whole story. We assure you, customers will tell you what they want. Just because they have a problem with a product doesn’t necessarily mean they want to return it. They may be seeking assistance or will be happy with a discount on their next purchase. Listening intently will not only keep you from further upsetting the customer, but it will also give you the opportunity to retain them and even help facilitate a sale. If you’re hiring a dedicated customer service rep, make sure they understand this and can really put the best face on your brand.
Customer questions should be answered in the clearest way possible. If there’s an issue with shipping, the customer won’t be satisfied with a vague delivery estimate. Since this can be difficult, we recommend working with your suppliers to create a list of frequently asked questions and shipping information. Put this up on your site and give it to your sales team so there’s no confusion as to what to expect. If an order falls outside of these guidelines, then you know there’s a real issue that needs to be addressed. You also don’t want to lie to your customers about where products come from or who manufactures them. You can be vague, but don’t be misleading or it will come back to bite you.
Customers hate to feel like they’re being ignored. In the digital world, you need to answer customer issues within two hours to have any real chance at keeping a customer satisfied. Any longer than that and it can feel like you don’t care about their experience and only want their money. If you can’t handle customer requests in a timely manner, you really need to hire some staff who can. This may be costly at first, but it will pay dividends in the long run.
With that taken care of, let’s take a look at a few business models that pair with or optimize dropshipping. We’ll start with cross docking.
Cross Docking Definition
Cross-docking is a unique method of inventory management where products are directly transferred from incoming to outbound transport. This means that shipments arrive, are sorted, and sent back out immediately. Think of it as somewhere between the traditional warehousing model and dropshipping. You don’t store the product, but you do handle it and ship it directly to the customer yourself.
Most shipments typically spend less than 24 hours in a cross-dock before they are sent out to their final destinations. This saves a lot of money on warehousing, but also let’s the business have the opportunity to quality check the products and add branding as necessary.
Cross Docking vs. Drop Shipping
The real reason we want to talk about cross-docking is how it compares to dropshipping. These two inventory management techniques both keep inventory from sitting in storage in your warehouse, but are not as similar as they seem. Dropshipping lets you avoid ever having to deal with inventory at all and saves you a lot of time and money dealing with order fulfillment. Cross docking let’s you avoid paying for a large warehouse, but you still have to handle the products and pay for shipping on your own. Drop shipping is a popular inventory management technique because the seller doesn't have to pay for storage or any physical counts of inventory.
Cross Docking Advantages
Though it may not save you as much as dropshipping, cross docking does offer a number of unique benefits.
These are the most important of cross docking:
- Reduced Storage. Traditional companies spend between $4-7 per square foot of warehouse space. This adds up quickly when you scale your business. Cross-docking reduces your storage space to a minimal amount, which leads to overall cost savings.
- Reduced Inventory Carrying Costs. Space isn’t the only cost associated with a warehouse. Inventory, staff, overhead expenses, and more can eat up your budget. That’s not even including losses when inventory spoils or is damaged. Cross docking brings these numbers down to a much more manageable amount.
- Increased Quality Control. One of the cons of the dropshipping model is the lack of quality control. You never see the products, so you can;t ensure the quality is stable or products aren’t damaged before transit. Cross-docking reduces this risk because you sort through all products before they go to the customer.
- Decreased Shipping Time. The final benefit of the model is that it can dramatically reduce the time it takes to ship items. This is because products never sit in the warehouse, but they’re shipped to the customer almost immediately. However, dropshippers may see faster shipping since the order goes straight from the supplier to the customer.
The next model we’ll take a look at is drop surfing.
What Is Drop Surfing?
Drop surfing isn’t actually a unique business model, it’s a method of optimizing your existing dropshipping business. To drop surf, you perform market research to seek out the best price for any given product and then buy from that supplier. In action, drop surfing is designed to increase margins without having to increase product pricing. The markup for each product is higher, but you can still sell the products at a competitive price.
Here's an example of how it works in practice. Let's say you want to sell a trendy new product, but there are 3 different, reputable suppliers that sell it. In the traditional dropshipping model, you’d just buy it from your current vendor and move on. With drop surfing, you would compile the pricing from each supplier and choose the cheapest one. Then, you’d sell the product on your site at the same price you would otherwise, thus making more from each sale. However, when that supplier increases its prices (and they will), you repeat the process and go with the next supplier that provides the cheaper price.
Dropsurfing vs Dropshipping
As you can tell from our description above, dropsurfing and dropshipping are essentially the same thing. That being said, there are a few ways that they differ. First, dropshipping is a business model used by hundreds of thousands of businesses to procure products and make sales. Dropsurfing is really just a form of dropshipping aimed at increasing profit margins. Drop surfers are dropshippers, but the reverse isn’t necessarily true.
Second, dropshippers and their suppliers usually build long-term relationships that benefit them both. Product data, manufacturing news, and more are all shared regularly between the parties. Drop surfers use whatever suppliers offer products at the lowest cost. This means relationships are more tenuous and information may not be shared in a timely manner. Drop surfers may not be able to fill orders since they’re the last to hear about developments at the supplier. If bad enough, this problem can even cause a bullwhip effect throughout your supply chain.
Finally, drop surfers websites tend to have a much less stable selection of product offerings. Often, the best margins come from buying the last remaining stock of a given product and cashing in on the tail-end of a trend. Once they sell out, they'll move on to other products. Traditional dropshippers usually stick with products for longer periods of time and get in on trends much sooner.
Now let’s look at one last dropshipping model, reverse dropshipping.
What Is Reverse Dropshipping?
Reverse dropshipping is a form of dropshipping that is built on sourcing products from countries that usually import products and selling them to those that usually export them. For example, many traditional dropshipping companies procure products manufactured in various Asian countries, reverse dropshippers would sell to those countries instead.This may sound odd, but this model let’s you avoid competing with a lot of other dropshippers and can be built on the back of high-quality, and more expensive, products.
Reverse Dropshipping Pros and Cons
Since reverse dropshipping is a niche form of dropshipping, there are a few pros and cons that set it apart from the traditional model.
Here are a few pros of reverse dropshipping:
- Increased Margins. Since the dropshipping business model often has low profit margins, the biggest selling point of reverse dropshipping is that the margins are higher. With reverse dropshipping, you'll focus primarily on selling smaller quantities of high-quality products. This means your markup is higher and so will your margin.
- Less Competition. Reverse dropshipping is still a growing market that can be difficult to get into. This means there’s a lot of space to grow and you have time to hone your product offering and grow your brand without having to worry about losing out to bigger companies. Invest in the right tools and products, make sure your site is a smooth experience, and localize your marketing so you can really stand out from the crowd and take control of the market easily.
Now, let’s take a look at some reverse dropshipping cons:
- Barriers To Entry. Selling abroad comes with a unique set of challenges. To start, many countries have strict requirements regarding what products are allowed to be sold and who can sell them. If you’re interested in importing products like electronics, food and beverage, medication, you're probably going to be faced with a bit of red tape. Second, shipping and transport can be difficult. Though shipping internationally is easier than ever, it's still much more complicated than domestic shipping. Keeping shipping times low, even when bulk shipping is nearly impossible.
- Tariffs Can Be High. Tariffs are fees that a country, province, or state charges when international products are brought into the region. Almost all countries charge tariffs on imported products, but some countries can charge more than others. These tariffs can also change based on the relationship between countries, so you can suddenly see your fees skyrocket in a country you've been reverse dropshipping in for ages.
Now that you know the many options available to you, let’s delve into the different jobs in the dropshipping industry.
As any dropshipping business owner will let you know, dropshipping can definitely be a full time job. However, it doesn’t usually start out that way. Many dropshipping businesses start as a side business or an additional revenue stream for an existing business. By focusing on sustainable growth, you can turn your new dropshipping business into a career. With even more growth, you can begin hiring new people and turn it into a burgeoning business.
If you use eCommerce software like BlueCart eCommerce to get your storefront launched and selling in no time, you can make this transition more quickly than ever.
Dropship Job Description
There are three main roles within a dropshipping company: customer service, virtual assistant, and dropshipping manager. However, since the teams are usually very small, each member is expected to cover many of the same responsibilities in the business.
Here are the most common responsibilities for dropshipping jobs:
All websites need regular updating and management, but dropshipping businesses need it even more. Products come and go more quickly and any issue or error on the site can really hurt your ability to make sales. All dropshipping employees are expected to keep an eye on the website and make changes or alert the team if there's an issue.
Obviously the customer service team members are expected to help customers, but everyone else may need to help. Customer satisfaction is key to the dropshipping model, so all employees need to be able to field customer issues and give them support as needed. Be helpful and professional and you’re sure to avoid any major issues. Customer interactions can make or break a dropshipping business, so you need to put customers first if you're going to thrive.
Deal With Returns
Returns are the bane of many businesses. While dropshipping orders are usually shipped with documents to help facilitate returns, these documents may only have the suppliers' information on them. That doesn’t mean the customer won’t reach out to you for support. As the retailer, you’re expected to be able to facilitate returns and make the process as painless as possible. Helping coordinate returns and exchanges between the customer and the supplier will go a long way to building customer trust and avoiding making your business look bad.
At this point, you’re likely pretty familiar with the ins and outs of dropshipping. Let’s break it down into its simplest parts and then look at additional resources that can help you grow.
Drop Shipping For Dummies
Everything you’ve read thus far has shown that the dropshipping model is more complicated than the more traditional direct to consumer businesses model. That being said, when you break it down, it’s not that bad. Focus on procuring quality products, providing superior customer service, and keep your website simple and easy-to-use. Everything else will only take this solid foundation to the next level.
Things to Avoid When Drop Shipping
The most valuable advice we can give you for your dropshipping business is to avoid a few errors in judgement made by those that came before you.
These are the most common things to avoid when dropshipping.
- Relying too much on vendors. Dropshipping suppliers handle much more of the process than traditional suppliers. Product quality control, order fulfillment, and shipment tracking are all handled by the vendor. But, it’s important to remember that they’re still more focused on their own business, not yours.If they run into issues with production, lack decoupling inventory, or otherwise are unable to fill orders you need to have backups in place. Don’t let your vendors dictate your success.
- Uncontrolled shipping costs. Shipping costs are always one of the largest expenses faced by dropshipping businesses. The more vendors you use, the more complicated calculating shipping costs can be. If you don’t invest in the right software, calculating these costs will become overly burdensome and mistakes will happen, costing you money. Your best option is using a platform that automatically handles these calculations, like BlueCart eCommerce.
- Expecting easy money. Too many beginners view dropshipping as a business model that runs itself. It’s true that dropshipping businesses don't cost a lot to start and are relatively easy to run, but you still need to put in some effort. You need to invest in advertising, procure products, help customers, and more. If you truly want to make money, you’ll work hard enough to earn it.
- Poor or missing branding. Dropshipping businesses neither create nor handle products. This means it can be easy for your customers to forget about your business. You should go out of your way to build your brand and get your name and logo out there. Speak to your suppliers to see what options they have for branding. You'll want to get your logo put on eCommerce packaging and all inserts if possible. This will let you build your brand and avoid falling into the cracks.
There are many other things you’ll want to avoid in your new business. Let’s take a look at the most common mistakes you can make.
Common Dropshipping Mistakes
Beyond just the basic things to avoid above, many dropshipping businesses have failed due to poor management and bad decision-making. While unfortunate, this does give us the chance to go over the most common and damaging dropshipping mistakes.
Here are the five most common dropshipping mistakes:
One of the most pervasive issues in the dropshipping industry is selling low-quality products. Many businesses view these products as a good investment due to their low-cost to high-margin ratio, but this is a major mistake. Once the products begin reaching your customers, they’ll start spreading word of their unhappiness. Customers still expect products that function and don't break in a very short period of time. When that isn’t the case, they’ll make it known and very likely hurt your reputation and take away sales. Stick with products that are worth the investment and always work with your customers to ensure you don't damage your reputation and lose sales.
Poor Software Choices
All eCommerce businesses rely on software to make sales, send marketing materials, track shipments, and more. Dropshipping businesses further complicate this by adding multiple vendors and shipping trackers to the mix. It;s vital that you properly research the tools available to you before making any purchasing decisions. Product research, vendor management, order tracking, and more all have associated software that makes them easier to understand and evaluate. You should also set eCommerce KPIs, track their success, and reevaluate your decisions based on the data.
Lack of Research
Uninformed business decisions are a terrible idea. Research is vital in establishing your business as the go-to destination for your market. Even more important, you need to accept that research isn't a one-time thing. You need to continue to look at data about your market, so you can adjust to shifting trends and stay on top of your sales. Products, markets, tools, competition, and more should be routinely researched and measured so you can make informed decisions.
Not Performing Demand Planning
Demand planning is looking at demand trends and planning out product offerings to optimize sales. In other models, you do this to buy products early enough that you don’t miss out on an increase in demand. In dropshipping, you do it to uncover areas where you can make money and increase brand awareness. Not doing demand planning or waiting too long will make you miss sales opportunities and limit your growth.
Pricing needs to be competitive, but high enough to drive a profit. You can;t just pick a price because it’s what you’d like to receive, you need to do some calculations and stay within a reasonable range. Customers will be very unhappy if you price products much higher than necessary and they will let you and everyone else know how they feel. The only exception here is if your business is focused on reverse dropshipping where high markups are the cornerstone of the model.
Now, let’s take a look at some of the books we think you should read to get some more in-depth knowledge about dropshipping.
Best Dropshipping Books
There are a plethora of dropshipping books on the market, but not all of them are actually worth reading. Here are our top five books you should read:
Dropshipping & Shopify: 2021 Edition
The most important book in the dropshipping genre is the fourth edition of Robert Kasey's comprehensive dropshipping guide. Though the book targets entrepreneurs using Shopify as their online marketplace, the content is useful for any business owner. Kasey covers a wide range of topics from starting your business to growth strategies to marketing methods that worked for him. Whether dropshipping is your primary source of income, or a side gig, this book is a must-read for any dropshipper.
E-Commerce Business Model 2020
Our next selection is a 3-in-1 guide for eCommerce. We also included this one in our list of best eCommerce books, because it covers such a broad spectrum of online marketing strategies, store-building, and dropshipping. If you're looking for a book that gives you a holistic view of the digital marketplace, you're in the right place. Since the early 2000s, Jim Work and George Brand have been distilling their vast knowledge into these books to help you make informed decisions. E-Commerce Business Model 2020 is a must-read for any eCommerce business owner and aims to teach solid thinking and long-term planning over making a quick buck.
The Ultimate Guide to Dropshipping
Next up is Mark Hayes's Ultimate Guide to Dropshipping. It's an older book, but it’s still one of the most comprehensive books on the market. Hayes takes an in-depth look at the industry and leaves no stone unturned in helping demystify the industry and make it more accessible to all entrepreneurs and business owners. The only real drawback is that the book was written in an era before dropshipping businesses began sourcing high-quality goods, so anyone who uses the reverse dropshipping model might not get the most out of it.
Dropshipping: The Ultimate Step-by-Step Guide for Beginners
For beginners one of the best choices is Ronald Anderson's Dropshipping. You might as well call it Drop shipping for Dummies because it's truly written with beginners in mind. It covers basic topics like setting up a dropshipping business across a slew of platforms or online marketplace. But, he also covers more complex ideas like performing niche research, competitor analysis, and more. This book is a great option for beginners looking to build a sustainable and profitable dropshipping business.
Beginners can also benefit from reading Dropshipping 101 by Frederic Gosset. This book has been updated for 2021 and is available in paperback or eBook format. Gosset covers the entire business-building process from start to finish and does a great job of not only explaining how to start your business, but highlights many of the risks and mistakes that can happen along the way. It's a particularly great choice for entrepreneurs looking to start their business on a shoestring budget.
Once you’re done with those books, we also recommend taking a few courses on dropshipping to stay on top of new trends.
Best Dropshipping Course
Like the books listed above, there are quite a few different courses available to you. Some courses are free while others cost money. Remember, cost isn’t necessarily correlated to quality. When looking at dropshipping courses, we really looked for ones that were covering all aspects of dropshipping websites. You should try to find a course that covers how to find vendors (you need to know how to find dropshipping suppliers that are reliable), buy wholesale items to sell, how to build a storefront, a few dropshipping business ideas, and more.
With that in mind, here are the three dropshipping courses we recommend:
Udemy’s Drop Shipping Products for Beginners
Our second pick for the best free dropshipping course comes from the online education site, Udemy. Drop Shipping Products for Beginners is taught by Matt Bernstein, an author and dropshipper with nearly 15 years of experience. The major focus of the course is on procuring inventory and setting up a business legally. Topics covered include Tax IDs and eCommerce business license, international product sourcing, how to markup products, and more. You can access the basic course for free or pay to get a few extra benefits like access to a Q&A. We suggest starting with the free course and paying if it seems to resonate with you.
Shopify's How To Start A Dropshipping Business
Our final choice for dropshipping courses is taught by Corey Ferriera, an entrepreneur and Shopify education expert who has his own dropshipping ventures. This course is specifically geared toward businesses that use Shopify as their platform, but it can be adapted to nearly any marketplace setting. It’s a fairly comprehensive course that teaches you how to find your niche, build relationships with suppliers, best order fulfillment practices, and more. Even better, it's entirely free!
Finally, we recommend that you check out some of the best dropshipping sites to get business ideas and find areas to expand into.
Best Dropshipping Websites
Checking out other websites is one of the best ways to find new products, evaluate the competition, and gain insight in demand. However, there are so many dropshipping websites that it can be hard to find the best ones.
Let's break them down into two categories: Dropshipping platforms and dropshipping sellers.
Best Dropshipping Platform: BlueCart
This isn’t just a marketing ploy, we really do have the best dropshipping platform around. BlueCart eCommerce is the perfect tool for finding dropshipping suppliers, running a digital storefront, issuing invoices, and more. For finding suppliers or selling B2B, we also have our own eCommerce marketplace that will connect you to a wide-range of suppliers so you can buy and sell online with ease.
Not to mention, we also have the most robust library of dropshipping articles and tools to help you get your business profitable in a flash. Our team has a serious passion and comprehensive understanding of the challenges you face as you work to grow your business.
Best Dropshipping Sellers
Picking a platform and finding suppliers are a great foundation, but you should also take the time to look at how other sellers run their sites.
Here are our top five favorite dropshipping websites:
- Inspire Uplift. Very few dropshippers can make the “general store” approach work. Inspire Uplift is one of them. They’ve built a brand in a very broad category and continue to stand out. That’s because they put a lot of time and effort into building their site with SEO in mind. Their organic traffic plays a major role in creating sales. Not to mention they have a very strong customer service program and they outline all of their activities and policies clearly on their site.
- Meowingtons. This cat product-focused dropshipping website shows the power of targeting a single niche. Though pet products can be a very competitive field, they’ve managed to stand out and compete with much larger businesses. How? They chose cats, not pets in general, and leaned heavily into the theme. The business name, domain, and marketing materials all do a great job of expressing who they are and what they do. This is a great way to limit your competition and stand out.
- HYGO. Another general dropshipping store, HYGO’s success lies in their ability to upsell and cross sell a wide range of products. They make great use of an on-page "frequently bought together" widget and social media to increase their order values and drive sales of larger-margin products. Not to mention, they've also got a pretty sleek storefront that helps push customers through the sales funnel.
- Trendy Goods. Using a very interesting approach toward product procurement, Trendy goods is a dropshipping website built around customer demand. They do this by curating their product catalog based entirely on the level of interest expressed online, mainly through Facebook. This ensures they always have a market for the products they list. However, it also means they need to put a lot of time and effort into seeking out the right products and catching trends early.
- Mooshe Socks. Our final website is a niche dropshipper that only sells socks. Why socks? Well, Mooshe Socks have used the power of branding to take an unimpressive product with high margins and make them seem unique. They also have a strong and engaging social media presence and have also expanded into selling the socks through a subscription business model.
Frequently Asked Questions About Dropshipping
Cross Docking vs Drop Shipping: What's the Difference?
Cross docking reduces or eliminates the need for warehouses while drop shipping transfers the role of the distributor to an entity to complete the shipping process.
What is the Difference Between Shipping and Drop Shipping?
The difference between shipping and drop shipping is that with shipping you handle the entire packing and shipping process. With drop shipping, once you sell the product online, the manufacturer or wholesale supplier handles the shipping process for you.
What Are the Advantages of Cross Docking?
The advantages of cross docking include:
- Reduced labor costs
- Reduced shipping times
- Fewer transportation costs
- Environmentally friendly shipping options
What Is Drop Shipping vs Order Fulfillment?
Drop shipping is a method where wholesalers or manufacturers handle the customer order process entirely, including the shipping. The order fulfillment process involves the merchant or 3rd party fulfillment provider handling and shipping customer orders.