After the fantastic reality check we all had in 2020 you’ve decided it’s now or never… You’ve got to get a side hustle.
Or maybe you’re fed up with your 9-5… or maybe you even lost your 9-5…
No one can deny, 2020 was ruff AF… So, whatever your motivation for looking into Dropshipping might be, you’ve come to the right place.
Before you can learn how to start a dropshipping business, make sure it’s the right type of business model for you.
It’s important to understand exactly what dropshipping is & how it works… as well as finding out some of the things people don’t tell you…
The Dropship Model:
There’re three parties involved in the dropshipping biz model:
The Retailer (that’s you btw); the Customer; & the Supplier/Manufacturer.
The process goes like this:
- A customer buys a product from you online store
- You send the order to your dropship supplier.
- The supplier picks, packs & ships the product directly to the customer.
In short, you sell items from your supplier to your consumer without stocking it yourself…In fact you never even handle the product.
Sounds too good to be true… No inventory, no warehouse fees, no additional expenses on staff etc. You only place an order after you’ve been paid & you don’t even have to handle the shipping… Sign me up…
…Ok so maybe before diving head first into the piranha tank which is Dropshipping, you should know a few things first…
Reality Check 101:
- 90% of Dropshipping Stores Fail
- Dropshipping is hard work – it’s not a get rich quick scheme
- You’ll need at least $3000 to get started
- There’s plenty fraudsters out there just waiting to scam you
- Profit margins are exceptionally low
Holy Crap – you didn’t see that coming did you…
Does this mean dropshipping is dead… I’d say NO - by no means has the final nail been smashed into that coffin.
There’s still plenty of money to be made. Granted the Golden Area of Dropshipping has past & making 6 figures today is considered a fantastic success…but still…
There’s money to be made people so let’s get going:
- Quick Navigation (Please set up)
- Stop Messing Around
- What You Gonna Sell?
- Become a Master…& a Spy
- Find a New Friend
- Get Some Structure in Your Life
- Getting All Your Green Ducks in a Row
- Build a Kickass Store
- Market the Crap Outta That Store
- Check, Improve & Reapply
1. Stop Messing Around: Mindset, Commitment, Goals & Business Plans
If you’re serious about making a change in 2021 then you’ve got to commit to it.
There’s a big difference between wanting to do something & actually getting down to business & doing it.
Working for yourself is a whole different ball game, no fixed monthly salary, no benefits or holiday, no sick leave or pension…
Get your mindset tuned in & remember why you’re doing this. If you’re not sure how to make the shift by yourself then go to YouTube. There’s loads of fantastic video’s out there - Get Watching.
Dropshipping is a BUSINESS – & just like a potential better half - It demands a significant commitment as well as some long-term perspective…
It’s gonna take a substantial investment from your side to get this going… & I’m not just talking about a money either…
Realistically, most people aren’t able to quit their job & spend the next six months working full time at ramping up their new store…& that’s pretty much what’s required – sorry
Goals & Business Plans:
Have realistic expectations & set yourself business goals that can be achieved. Rather aim for $100K sales in year one than a million…You can always adjust & re-evaluate as you go on.
But the Most Import Thing to Do Is:
You’ve got to formulate a Business Plan - without it you will fail…
If you’re not sure how to go about writing your business plan, click on this link for a free sample of what to do…
2. What You Gonna Sell: To Niche or Not to Niche
When setting up your Dropshipping Store, you can choose either a General Store or a Niche Store.
Yes, I know it’s overwhelming but don’t stress, I got you covered. You can also use the following tools to test if your product is gonna be a winner… or tank horribly…
Google Trends: Google Trends helps you determine if a product is trending upward or downward…It even gives you the seasons they tend to trend in. Pretty cool.
NOTE: it doesn’t show you search volume so best to use it in cross ref with something else (like Keywords Everywhere)
Keywords Everywhere: This keyword research tool shows you the monthly search volume for your product and how competitive it is.
It’s super useful to gauge the popularity of your new product or to find inspiration for future ideas.
Oberlo order volume: If you decide to use Oberlo, you can actually search for products based on order volume… neat.
3. Become a Master… & a Spy: Business & Competitive Research
Learn as much as you possibly can about the biz model. I can not stress this enough… Even if you think you’ve got it waxed, learn some more.
Trying to figure this stuff out on your own is gonna take loads of trial & error, end up costing you loads of money & waiting your time… it’s pointless.
There’re tons of fantastic dropshipping courses out there that will give you a tremendous boost…Best of all, some of them are FOR FREE…
Do your due diligent & research the best courses out there & pick the one that’s best suited for you.
Why it’s so important to do your research:
- You’ll learn how the business operates inside & out, which will be crucial for growing & scaling your business.
- You’ll learn how to intimately know your customers & your market, letting you make better business decisions.
- You’ll be less likely to spend large sums on vanity projects that aren’t critical to success.
- You’ll develop several new skills that will make you a better entrepreneur.
After you’ve started getting into the biz model, you’ll wanna have a look at who your competitors are. This will give you a better idea of how they operate & could prove useful in figuring out what works & what doesn’t.
How to go about your spying ways:
4. Find a New Friend: Getting a Supplier
Choosing a dropshipping supplier is one of the critical steps in creating a successful dropshipping biz.
Without suppliers, you’ve got no product. No Supplier = No Business.
There are thousands of suppliers out there so make sure you vet them carefully. If you’re successful, you’ll walk a long road with them to pick wisely.
5. Get some Structure in your Life: Business Structure
There are four main types of business structure. Each one coming with its own set of restrictions & benefits. Do some research & pick the one that’s best suited for your needs.
The four types are:
- Sole proprietorship
- Limited liability company (LLC)
This being said, when you’re setting up your business, you’ll also what to be doing the following:
- Name & register your business
- Get federal and state tax IDs (Yes, you do have to pay tax)
- Set up bookkeeping
- Everything as laid out next in #6
6. Getting All Your Green Ducks in a Row: Finances
!!Do Not Blend Your Personal & Business Finances!!
This causes massive confusion, makes accounting a nightmare & could even lead to personal assumption of business liabilities… You don’t want that I promise you.
You’ll want to keep your business and personal finances separate as much as possible. The best way to do that is by opening up new accounts in your business’ name. You’ll want to open the following:
You should run all of your business finances through one primary checking account.
All business revenue should be deposited into it and all expenses should be withdrawn from it. This will make accounting much easier & far cleaner…
Now guys, remember – it’s the business credit card – Not Yours!!
Be savvy about it - use the card for your business expenses & dropshipping inventory purchases only.
Don’t forget, you’ll be buying a lot of merchandise, so you could rack up some serious rewards…
I’ve found Capital One has the best travel rewards program while Fidelity Visa/American Express offer the best cash-back program.
Bad news: You’ll need to collect sales tax.
Good news: Only if both the following are true:
- The state you operate from collects sales tax
- An order is placed by someone living in your state
For all orders placed by residents of other states, even if those states charge their own sales tax, you won’t need to collect any tax.
There’s a good chance these laws will change in the coming years... but for now, let’s just enjoy the fact we’re not getting hammered with taxes.
Ps: If your state does charge sales tax, be prepared to collect it or else... Contact your state’s Department of Commerce to register as a retailer & find out how frequently you’ll need to submit the tax collect.
It does seem that some cities & towns have different requirements when a business is operated from a home office… Which you will more than likely be doing.
You’ll wanna to look into your local laws & regulations to see what, if anything, is required to operate your biz legit.
It can be complex, but it’s possible for international merchants to incorporate a business in the United States, giving them access to US based dropshippers & customers.
The merchant will need to come to the US to complete the necessary paperwork, have a trusted business partner in the US who can act on his behalf, &/or hire an agency to set everything up.
Honestly, this sounds like a lot of work & quite frankly I’ve no clue as to what you should do as I’m from the State…
My advice to you - Speak to a Legal Professional first before making any decisions in this regard. This comes highly recommended.
But for now, if this is something that applies to you, click on the below link to get some more info.
- Doing Business in the USA: A “Bullet Point” Guide for Foreign Business People, by New York attorney Aaron Wise
7. Build a Kickass Store: Presenting Your Store
Building an online store is child's play these days. Most online platforms come with a standard readymade theme, that you can tweak somewhat to give it that personal touch.
If you’ve got the cash, it might be worth investing in one of those High Converting Personalized Themes… But that’s up to you.
Choose your store/business name carefully. It’s gonna be the lifelong brand for the products you’ll be promoting.
Other elements to consider are things like your logo; slogan or not; specific colors, font type & size, content… Sounds a bit frivolous I know, but there’s actually a science behind it.
If used correctly, all those elements work together to create a lasting, memorable brand.
8. Market the Crap Outta Your Store: Advertising & Marketing
To stand out from the crowd, you’re gonna have to put in some extra effort when it comes to your marketing & advertising efforts.
The go-to marking strategy for most Dropshippers is Facebook Ads…I personally think it’s getting far to expensive & complicated to be profitable… But that’s just me.
The more the merrier… As you continue to grow & improve your store, you can always adjust your marketing strategy to lower costs and maximize revenue
Just remember to keep an eye on which channels are working & which ain’t - Especially if you’re investing in paid ads..
Some Marketing Streams for You to Look At:
- Paid ads (Facebook and Google).
- Influencer marketing.
- Content marketing.
- Mobile marketing.
9. Check, Improve & Re-apply: Collecting & Applying Analytics
Once operational for a while, you’ll finally be able to have a look at the results of your hard work.
Using an analytics tool will help answer those important questions you might have in different departments like sales, clients & margins.
- What’s for my channels are performing the best?
- If & where should I up my ad spend?
- What’s my best-selling product?
- Who are my best customers?
- Are people buying more on desktop or mobile?
- What’s the conversion rate for each device?
- Am I targeting the right group demographic?
- What products & variant SKUs are the most profitable?
- What are my sales and gross profits looking like month over month?
- What are my KPI’s?
Plus, if you’re using a third-party app for your social media or Messenger marketing, you can check the reports monthly to make sure your overall strategy is working for your business.
You want to create a data-informed analytics system that remains consistent with what you analyze over time. This is how you measure your store’s performance against clear KPIs.
Know that Dropshipping is not gonna work for everyone & that’s ok.
There are plenty of other opportunities to make money online…
In fact, if you wanna see my #1 biz model recommendation for 2021 click here… Link Lead Gen
But for now, I leave you with a few final words of wisdom…
It’s kinda more like list… ok that’s exactly what it is… here’s another list
5 Things to Always Remember When Starting a Dropshipping Store
1. Product Quality
Don't go for cheap suppliers without checking the quality of their products first!!
This will hurt you brand & your pocket big time… Place an order & see for yourself what your client will receive.
2. Don’t Rely on One Supplier
Your suppliers form the foundation of your dropshipping business. Choosing a good supplier is crucial to your success.
But don’t forget that even the best suppliers can run outta stock.
That’s why you should look for three to five reliable suppliers. Vet them carefully & identify which one will receive the bulk of your orders.
3. Provide Great Customer Service
Don’t forget your customer can’t call the supplier to check on shipping or to request a refund. Dealing with the customers is your job.
There’s nothing that brings the Karen out in all of us faster than not getting answers or getting the runaround when it comes to queries.
4. Diversify Your Traffic Sources
Make sure your website traffic is coming from multiple sources.
As Facebook Ads becomes more expensive, you’ll see less & less profits. Having all your eggs in one basket, could cause major profit losses overnight…how you ask? Imagine your ad account gets banned…
5. Try the Global Market
The beauty of dropshipping is being able to sell globally when you already have systems in place.
There are plenty of opportunities in overseas markets where you’ll often find less competition for your products.
Check if your payment gateway supports the different currencies & if there’s any additional fees.
That was a mouthful, right?
But if you managed to read all of that, then it shows you're serious about learning - and that's key to your dropshipping survival! Se be a sponge and absorb as much as you can.
Success comes from hard work (and following the advice from successful people who have been through the ringer before you).
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