Have you ever wanted to run an online store and make a bit of extra cash each month without leaving the comfort of your home? Well dropshipping is the retail technique for you.
Imagine you’re launching a lemonade stand but you don’t actually need to buy cups, lemons, sugar or straws. All you need to do is promote the lemonade and take orders. Your supplier will then deliver the glass straight to the customer.
We know what you’re thinking, ‘you’ve probably got to be a tech wizard to do it’. That’s what we thought too. But the good news is you don’t, you just have to know where to start.
This guide will:
- Explain what dropshipping is
- Show how you how to find a supplier and start making money dropshipping
- Introduce you to the best platforms to dropship on
Even before you’ve found a dropshipping supplier you’re happy with, you need to choose the best way to get your products in front of customers.
We’ll run through the best options for creating a dropshipping business, including dropshipping on Amazon, eBay and why a website builder like Shopify makes dropshipping easy.
Our top-rated ecommerce website builder Shopify is currently offering a free dropshipping tutorial to help get you up and running. To take the free webinar, hit the button below.
If you don’t have a huge amount of tech know-how, but are just looking to make a bit of extra cash on the side, this is the guide for you.
One in three internet retailers now use dropshipping as their primary method of order fulfilment and by the end of this guide you’ll be able to join them.
Click on the following links to read the specific sections:
- What is dropshipping?
- Pros and cons of dropshipping
- Is dropshipping legal?
- How to start dropshipping – 4 key steps
- How to find a dropshipping supplier you can trust
- What products should I dropship?
- Dropshipping on Amazon and eBay
- Best website builders for dropshipping
What is dropshipping?
Here’s how dropshipping works in a nutshell:
- You receive an order and payment for a product listed on your website;
- You pass this order, plus shipment details, to a supplier, typically a wholesaler or a manufacturer you’ve built a relationship with, and pay them a wholesale price;
- The supplier delivers the order, packaged and complete with your branding and contact details, to the customer.
- You never need to buy stock – you don’t need to invest your own money to get off the ground.
- You don’t need to see or handle the product yourself, so you won’t have the stress of managing stock, sorting out storage space or spending time and money making sure orders are delivered on time.
- You make a profit on the difference between your selling price and the wholesale price – good for you, good for your supplier, good for the customer. Everybody wins.
It’s that simple.
Customers generally won’t even know that you’re dropshipping because private label shipping lets you deliver products from the wholesaler with a customized return address and invoice.
It will be like you’ve handed that cool glass of lemonade over yourself.
This means you can always be on brand – a real plus because it allows you to build a reputation that customers trust (and so buy from again and again). It also means customers can’t go straight to the wholesaler and find out who is supplying your product. Protecting your commercial contacts is important in the competitive dropshipping world.
The infographic below summarizes the dropshipping process:
What are the pros and cons of dropshipping?
|Pros About Dropshipping|
|#1||It’s cheap to start – you can launch an ecommerce store without spending lots of your own money buying stock. This gives you financial security as you don’t have to buy a product until you’ve already received payment from a customer.|
|#2||It’s easy – you don’t have to deal with physical products, stock levels, a warehouse or an inventory.
OK, so what?
Well, this gives you more time to further improve your platform and hone your store’s design.
|#3||You get great flexibility – you can run your business from your bedroom, the cafe, library – anywhere you can get an internet connection. You’re not tied down in the same way an owner of a brick-and-mortar store is and don’t have to spend money renting a store or hiring staff.|
|#4||It’s scaleable – if your business takes off, it’s the supplier that will have to handle the surge in orders, not you. You can focus on growing your brand with better designs and improved customer service.|
|#5||Great product variety – not relying on pre-purchasing products means you can offer a wide variety of goods. You can jump in and out of markets as and when you identify a red-hot opportunity.|
|#6||Low running costs – with no stock to buy or warehouse to pay for, dropshipping businesses can be run on very little money. Perfect if you’re looking to run your ecommerce site as a side business.|
|Cons About Dropshipping|
|#1||You take the blame – you’re the shop window, so customers will blame you when a supplier makes a mistake fulfilling their order. This means you will have to handle customers’ complaints, even if it’s not your fault.|
|#2||Shipping issues – working with different dropship suppliers can complicate your shipping costs. For example, if a customer orders two items that are only available from different suppliers, you’ll get hit by two shipping charges. Passing costs onto the customer is risky (even if you did, automating the calculations is fiddly), so you may have to up your shipping charges, or limit yourself to one dropship supplier and risk limiting your product range.|
|#3||Staying on top of stock – staying on top of what items are actually available from suppliers takes legwork. You have to do it, or you could end up advertising products that you can’t actually deliver. A recipe for grumpy customers!|
|#4||Low margins – the flip side to low start-up costs and low overheads is low margins. Often it’s a race to the bottom on price and you’ll feel the pressure to sell cheaper.|
Is dropshipping legal?
This is a common question so we thought we’d clear it up.
Yes, dropshipping is legal. The number of different people involved in the process – the store owner (you), manufacturer, platform (Shopify, for instance) and the customer, to name but a few – mean there is inevitable confusion about where blame and responsibility lies. There are a number of things to consider when running your ecommerce site.
- Are you obeying anti-spam laws? You’re probably collecting customer emails by dropshipping them products, so make sure any email marketing is above board.
- Have you registered your trademark? Or is your trademark copyrighted by another site? Remember, in the competitive dropshipping landscape, your brand name is one of the things that helps you stand out, so look after it!
- Are you looking after your customers’ data? Just because you don’t touch the product doesn’t mean you’re not collecting important data.
Laws change all the time – not to mention vary depending on which country or US state you’re in – so it’s important to make sure you’re trading within the latest legislation.
How easy is it to start dropshipping?
Are there any barriers?
Thanks to drag and drop website builders, you don’t have to be a Harvard-educated tech wizard to launch an ecommerce business anymore – you just have to know where to start.
Once you’ve set up your ecommerce site (if you need advice on how to do this, follow this link), the first step is to find a supplier that dropships and start taking orders. Despite dropshipping being relatively uncomplicated (we picked it up very quickly when testing out ecommerce ideas), it stills pay to do your research before charging in all guns blazing.
1. Finding a dropshipping supplier
There are several ways to find a wholesaler or manufacturer that dropships:
- Contact the manufacturer directly – once you’ve found a product, contact the manufacturer using the details listed on the product and ask for a list of wholesale suppliers. Then ask these suppliers if they support dropshipping. Make sure your language is professional – they will be less likely to work with you if your email is sloppy!
- Use an ecommerce site – some have add-ons that let you import products to your store from dropshipping suppliers. We like Shopify’s Oberlo (more on this later).
- Pay for a supplier directory – typically ordered by product or industry, most directories will make sure the suppliers they list are genuine. Bear in mind that these aggregators will most likely take a cut of your margins. Many will even charge a membership or sign-up fee and may stop you seeing products until you’ve paid it. Examples include:
- WorldWide Brands
- Wholesale Central
- The Wholesaler UK (free of charge)
- Attend a trade show – a super way of finding suppliers, but will cost you time and money and you need a clear idea of the products you’re going to sell. Meeting your supplier face-to-face is a great way to build a relationship. And who knows, it may even lead to a better wholesale price or repayment terms. Expodatabase is a great resource for finding an upcoming trade show in the US in your industry. If you’re not in America, run a quick Google search to find an equivalent resource.
- Order from rivals – this one is a little industry hack. Say you’re struggling to locate a wholesaler for a particular product; order from a competitor you think is dropshipping and Google the return address to locate the original supplier.
2. Things to do before starting dropshipping
There are i’s to dot and t’s to cross when setting up dropshipping.
Legal requirements for running a dropshipping company vary from state to state, let alone country to country, so check, check and check again that your site is compliant. It could save you trouble further down the line. And remember, laws change all the time so stay on top of things like filing your annual report to make sure once you’re compliant you stay that way.
Most genuine wholesalers and manufacturers won’t work with you unless you can provide your EIN (Employment Identification Number). If you pay tax – one of life’s certainties – you need one of these. Even if you don’t have any employees, you need to have one.
Getting an EIN is also really handy for keeping personal and business taxes and finances separate. They’re simple and inexpensive to get hold of – just apply on the IRS website.
Registering your business name and domain name with the relevant authorities will protect your distinct company name from being copied. The Small Business Administration has excellent advice on setting up companies in America.
It’s very important you get proper counsel if you’re unsure of the boxes you need to tick to run your dropshipping business.
3. Getting traffic to your dropshipping ecommerce site
Marketing your ecommerce store succesfully may also mean you need to get to know tools like Google Adwords and Facebook Ads.
Without traffic to your page, how are you going to make any sales? It would be like writing a brilliant novel but not putting it in any bookshops.
Getting a beginner’s knowledge of tools like Facebook and Google Ads, and developing your Search Engine Optimization skills, which all drive eyeballs to your site, takes a little legwork but is very doable.
Marketing expert Neil Patel has a great step-by-step guide on Google Adwords and Facebook Business offers guidance on running adverts. It’s also worth checking out the social media integration software available on each of the best ecommerce website builders.
4. Dropshipping who’s who
So now you know how to find a supplier, it’s time you got to grips with the key players in any dropshipping business:
Wholesaler – buys in bulk from manufacturers and resells to retailers or the public with a mark up. Typically stocks from a wide variety of manufacturers. Often will only sell to retailers.
Supplier – used in this guide to mean an organisation / individual able to supply you with the product you need to dropship.
Manufacturer – makes the product and typically sells in bulk to wholesalers and retailers.
Retailer – you! If you sell products to consumers at a markup, you’re a retailer.
How to find a dropshipping supplier you can trust
Dropshipping isn’t just about finding a supplier, it’s about finding the right supplier.
Your ecommerce dropshipping business is only going to be as good as the supplier you’re using.
An unreliable supplier can cause all manner of headaches, from missed deliveries and poor quality products to inefficient communication and payment problems and delays.
Any of these will reflect badly on your site, not to mention take up valuable time you could be spending honing your site’s design or checkout process.
It would be like putting all the hard work into building your top-notch lemonade stand, only to work with a grocer that’s using rotten lemons.
Worse still, the supplier might be a fraudster and working with them could cost you a lot more than unhappy customers. You might be left out of pocket.
Spotting fraudulent dropshipping suppliers
One of the biggest challenges is sorting real wholesalers from fake ones – companies or individuals acting as middlemen between retailer and wholesaler, who pop up in search results posing as legitimate wholesalers.
You might think, why is it important? After all, I’m still getting the product I need.
True, but proper wholesalers purchase directly from the manufacturer and will be able to offer you a better price.
The lower your price, the lower you can sell to customers. You’ll be able to buy more for less money and get more stock for your buck.
Middlemen, meanwhile, will levy a charge that can eat into your profit margins.
Here are the warning signs to look out for when considering dropshipping suppliers:
- They ask you for an ongoing fee or a service charge to do business with them. A real wholesaler will nine times out of ten make their money from you buying their products, rather than a regular charge.
- They have a minimum spend – probably best to avoid even if they appear legitimate as you may struggle to fulfil the orders.
- They’re offering products to the public at “wholesale prices” – this is likely to be a retailer inflating their profits.
Not every provider you work with is going to be a world-beater. Don’t worry, trial and error is part of the process.
Finding a trustworthy dropshipping supplier in 6 questions
Different website builders have different mechanisms in place to help you locate reliable suppliers. We’ll run through them later, but for now, here are 6 questions to ask that will help you find a good dropshipping supplier:
- Do you offer you a dedicated sales representative?
- Is your tech up to scratch? For example, do they have a real-time inventory and an online searchable order history? These will really help you make sure your business is shipshape.
- Can you take orders via email? This is important. Submitting every order over the phone or manually on the website will eat up time you could be spending sprucing up your site or optimising your sales channel.
- What is your estimated delivery time? Is it reasonably quick? Shoppers hate to be kept waiting and short delivery times will help your platform stand out. If the supplier is located centrally in the US, for example, they’re more likely to be able to deliver to anywhere in the country in a reasonable number of days. If you’re using a foreign-based wholesaler or manufacturer, such as Chinese supplier AliExpress, check if they support epacket delivery. Epacket is an agreement between the US Postal Service and Hongkong Post that allows for super-fast delivery of products from China to the States.
- Do you have a robust tracking system in place? Proper tracking information doesn’t just put your mind at rest, it also means you have accurate updates to give your customer.
- Can I use your product photos? Using top-quality product pictures will make your site look more professional.
If the answer is yes to most or all of these questions, you’re probably onto a winner.
What products should I sell dropshipping in 2017?
Dropshipping is very competitive because it’s so cheap and easy to start out, so the products and platform you choose need to stand out.
Margins (the difference between your selling price and the amount you paid a supplier) vary by product, but typically fall in the 10-15% range. High-end electronics tend to yield smaller profits and low-cost accessories higher. For example, if you buy $100-worth of iPhone cases, you can expect to make between $100 and $115.
First, though, you need to check there are enough customers ‘hungry’ for your product to make it profitable.
How to do product research for your ecommerce business
Running a keyword search for your niche and checking out the number of advertisers can help you gauge whether there’s a market for what you’re offering.
Use Google Trends (a tool that measures the popularity of different search topics over time) to find products that have seen a surge in interest. Enter a generic term such as ‘buy online’, set the time to the past 90 days and look out for related queries or topics that could be potential product ideas. It’s less an exact science, more a useful springboard.
For example, we put the term ‘buy online’ into Google Trends, set the country as the United States and the time period as the last 90 days. Here are three product suggestions that came out the ‘related queries’ section of our section (related queries are terms users who searched our original entry, ‘buy online’, also searched in Google):
- Video games
- Glasses and eyewear
These terms are rising in popularity and are being looked up by people searching ‘buy online’ into Google. There’s clearly a demand, so you might want to think about setting up a supply!
How to spot knock-off products
Here’s a quick checklist to help you avoid being caught out:
- Is the profit margin suspiciously high?
- Is the product different on the wholesaler’s website to the manufacturer’s? Look out for colors, styles etc.
- Has the manufacturer verified the wholesaler? To be completely sure, contact the manufacturer and ask them if the supplier is selling genuine goods.
Selling fake products can be a deadly blow to your ecommerce business: your customers won’t trust you and you could run into serious legal problems.
As ever, better to be safe than sorry.
Once you’ve created your ecommerce store, it’s essential to make your products look as eye-catching and attractive as possible. If you don’t know why you’ve chosen your products, or why people should buy them, how will your customers? Look now further than our guide on How to Design a Customer-Winning Product Page for Your eCommerce Store.
Dropshipping on Amazon and eBay – get ready to give up control
Amazon and eBay are the world’s two biggest shopping sites.
We’re guessing you’ve heard of them. Both platforms help connect you to customers (although Amazon also stocks and sells its own products).
And both come with broadly similar benefits if you’re looking to dropship online:
- You don’t need to spend heaps of time and money on marketing or SEO (search engine optimization). Amazon and eBay get tons of traffic already.
- You can set up very quickly – just create an account, add a product and off you go.
- Customer service teams mean you’ve got help on tap when things go wrong.
Fulfilment by Amazon – the company’s warehouse service – even allows you to dropship your own products.
OK so why wouldn’t I sign on the dotted line with Amazon or eBay?
Well, you’re immediately giving up control of your ecommerce business. From how your products appear to your store’s design, you’ve got to play by Amazon or eBay’s rules.
With website builders like Shopify, this is not the case; you have far more control over your own business.
Amazon in particular can and will access your sales data to strengthen its own position. These companies didn’t get where they are by giving out free lunches.
Because both platforms look favourably on users with low prices, selling on Amazon or eBay can feel restrictive. It limits your creativity because you won’t be able to include as much of your own design, and affects your profitability because listing and subscription charges will eat into your margins (already slim because you’re dropshipping). Amazon’s charges vary by product type but are typically over 10%, while eBay levies 10% on the total amount of your sale.
Users have also complained about PayPal withholding funds earned on dropshipped products through eBay because it thinks the risk of an unhappy buyer is higher.
The big downside to dropshipping on Amazon or eBay is the lack of freedom to build an ecommerce business with personality. Your branding, UX (user experience), marketing, colour scheme and everything else must follow Amazon or eBay’s guidelines.
Not a very exciting prospect for someone like you who is trying to establish a business and brand, right? If you can’t express your business’s personality, how can you stand out and make yourself memorable?
It’s like you’re paying to use another person’s van: you can tour the country selling your wares, but you can’t put your own photographs, colours or features on the chassis.
Website builders offer you far greater flexibility if you’re looking to launch a personalized dropshipping business.
Another reason you might think twice before using Amazon or eBay is potential difficulties managing stock. Without the kind of inventory management tool available from some website builders, you might have to put in a lot of groundwork sourcing multiple suppliers for the same product to ensure you can actually deliver on customers’ orders.
No seller wants to tell a customer who has made it all the way to the checkout ‘sorry, we’re out of stock’. It reflects badly on your brand and may cost you in refunds and loss of sales.
This doesn’t hurt the wholesaler, it hurts YOU!
Best website builders for dropshipping – the easy way to dropship
Website builders also let you set up your ecommerce store cheaply, quickly and without any coding knowledge, but unlike Amazona and eBay they allow you to build a store with personality.
You can fill your ecommerce site with expert content, create a distinctive and smooth sales process, engage in personal outreach and seamlessly integrate apps that hook you up to social media channels and suppliers, help you manage payments and provide marketing guidance.
You might want to pick from one of our top 5 ecommerce sites if you’re ready to go.
When it comes to dropshipping, not all website builders are created equal. Some are better for drop shippers than others.
To help you decide, here’s how each of the main website builders cater to drop shippers.
We think pretty highly of Shopify, which is why it’s the top-rated ecommerce store builder in our comparison chart.
But it also leads the way on dropshipping, which is why Shopify is a builder we recommend you taking a look at.
We take a closer look at what makes Shopify so great in our detailed review, but here are five key features we like:
- Integration with Facebook – and very recently Instagram – and Amazon.
- A host of free and paid apps – so that you can add all the bells and whistles to your dropshipping service.
- Professional storefront themes.
- Top-notch store security: most pricing plans offer a free certificate at no extra cost.
- Email and newsletter integration – so you can send personalized marketing messages to your customers.
We also find the instant messaging support service to be really helpful as it meant any issues we ran into could be solved as quickly as possible, letting us focus on building our store
Dropshipping on Shopify
As we mentioned earlier, Shopify are currently offering a free tutorial to help you start dropshipping. A webinar teaches you how to set up a profitable dropshipping business, from sourcing products to competing with Amazon. To get the deal, hit the button below:
The top service you’ll be interested in is Shopify’s extension Oberlo.
Oberlo is a Shopify app that you can easily add onto your account to connect with wholesalers and add products to your existing Shopify store. Oberlo will ship products to your customers and update your inventory automatically.
It’s like having a full-time business partner!
By linking your shopping cart with your supplier’s database, tools like Oberlo help you dodge one of the biggest pitfalls of dropshipping: an out-of-date inventory and customers ordering products that you can’t actually supply.
The real benefit is peace of mind. Shopify told us any suppliers displayed on Oberlo have been vetted. Oberlo even make physical visits to ensure the supplier is legitimate and scalable before allowing them on the platform.
While Oberlo doesn’t 100% guarantee product quality or shipping speed, it’s a great safety net; to remain on the platform, suppliers have to satisfy Shopify’s guidelines. It’s like using a filter with your coffee to sift out any of the unwanted stuff.
You don’t have to spend your time sorting out reliable wholesalers from unreliable ones, Oberlo has already done a lot of the work for you.
Oberlo is super easy to use and lets you search products from a wide range of industries. It connects you with Chinese-based AliExpress – one of the biggest retail suppliers in the world. Suppliers on AliExpress have a Feedback Score and a Feedback Rate, so you have the power to pick one that scores highly for both.
Shopify have produced a handy YouTube video running through dropshipping:
BigCommerce may rank just behind Wix in our ecommerce website builder comparison table, but it has the edge over Wix when it comes to dropshipping.
This is mainly because you can integrate your store with wholesale suppliers like Alibaba and services like Inventory Source for free. As with Oberlo, you can import dropship products straight into your BigCommerce store at the click of a button. On the left-hand dashboard, hit Channel Manager to integrate Amazon and eBay, and Apps to add on tools that connect you to dropship wholesalers.
Inventory Source is similar to Oberlo. It’s super easy to sync with your BigCommerce store and lets you pick a dropship supplier from the app’s directory; every supplier in the list has been vetted, so you can trust they’re reliable, and stock lists are monitored so you don’t need to worry about taking an order your supplier can’t deliver.
Inventory Source’s design is not as smooth as Oberlo and adding products is not as intuitive.
We just didn’t find it as easy.
As a directory, it connects you with suppliers not products directly. You have to select a supplier to load their products and images and this extra layer makes it clunkier than Oberlo when you’re looking to populate your store with goods. It does, however, give useful guidelines on wholesale prices and the margins you can expect to make on particular products.
We also like the dropshipping integration between Printful and BigCommerce.
Printful is a specialist supplier for products like tee-shirts and posters. Link it up to your BigCommerce site and you can make a personalized tee-shirt, for example, and add it to your store in just five minutes. When a customer orders one from your BigCommerce site, the order goes straight to Printful, who handle the delivery.
A bit of inspiration for you: since BigCommerce added dropship integration with Printful, sellers have made more than $4.9M (source: BigCommerce).
BigCommerce offers a heap of paid tools that have free trials, so experiment and find the right one for you.
3) Wix eCommerce
We tried Wix eCommerce but for the time being they are lagging behind Shopify and BigCommerce on dropshipping functionality.
It’s not currently possible to connect Wix Stores with a dropshipping service.
Wix is slowly waking up. We’ve spoken to them and they’re partnering with a leading 3rd-party printing company that offers a complete drop-shipment solution. It looks like this will work in a similar way to BigCommerce’s integration with Printful.
Watch this space.
Like Wix, Weebly has been late to the dropshipping party. The website builder says on its forum that it’s considering adding a dropshipping feature, but it’s not coming quick enough for Weebly users.
A recent comment asks if Weebly can “consider it faster”.
Squarespace may be the leading website builder for swish design, but does it support dropshipping?
The builder does provide a dropship solution, but not directly; instead of being fully integrated with a fulfilment service (like Shopify is with Oberlo), Squarespace hooks you up to third-party providers such as Shipwire, Printful and Amazon Fulfilment through its integration with ShipStation.
ShipStation is a very effective tool, but it’s only available to Basic and Advanced Store Plans. Orders you’ve received on Squarespace will be communicated to ShipStation, which will then manage the labels, fulfilment and shipping.
Overall, Squarespace’s integration is nowhere near as effective for dropshippers as Shopify’s solution.
Conclusion – time to get dropshipping!
Hopefully this discussion has given you a clear idea of how dropshipping works and how you don’t need to be a Silicon valley hot shot to start a dropshipping business.
By now some of your doubts about dropshipping should be melting away.
We sure wish there was a guide like this around when we first tried dropshipping the first time. It certainly would’ve saved us a lot of time and money!
If you do decide to start dropshipping, we hope this guide and the resources we’ve included help you do so successfully and safely, avoiding some of the classic pitfalls along the way.
It’s a good investment to do your homework when finding a supplier. The tools available from ecommerce website builders like Shopify and BigCommerce are an invaluable help and can save you a world of pain further down the road.
Now you’re clued up about dropshipping, what next?
We’ve given you a snapshot of how the different website builders help a dropshipper like you, but that’s just the beginning.
A smooth dropshipping process is only the cherry on the top of a flourishing ecommerce site; you still need to design your store, pick the right products, iron out the sales process and produce top-quality content to attract customers. Picking a highly-rated ecommerce website builder is essential.
If you choose the wrong product, all that work finding a dropshipping supplier will have been for nothing. We’d strongly recommend reading our guide on what to sell online next.