It is not easy to learn how to start a dropshipping store, especially because it takes quite the understanding ad knowledge about this business model in the first place. However, to lend you a hand from the very beginning, it’s an excellent first step to research the basic concepts above anything else, and from there, you can get deeper into the steps and process.
Essentially, dropshipping allows customers to buy your products without you having to keep any items or inventory. Products upfront? That isn’t necessary either.
Now, there isn’t an actual roadmap of how you are supposed to start a dropshipping store, or more like every dropshipper ends up taking several more or even less. It all depends on how the process moves and how it works for them.
However, we will be sharing some that are essential and cannot be skipped + the ones we consider are needed are optional yet vital. But first, let’s leave a few more concepts and information clearly.
Dropshipping: What Is It?
Dropshipping is the option that allows entrepreneurs to set up an online store that sells products directly to customers without having to stock the items. The stores purchase products from third parties and ship them directly to customers.
The customer pays you the retail price. You pay the wholesale price to the suppliers, and the profit is the remainder. You don’t have to manage products or invest in items/stock beforehand.
For this to work, most dropshippers need to register an account with a supplier to be able to sell the best products for this method. For it, you have two ways to find the best supplier:
- Through a supplier database such as Alibaba, or AliExpress.
- Or use an integrated supplier directory in the backend of your store.
Regardless of the one you choose, dropshipping will work the same way, but the latter could simplify handling orders by automating your processes and tasks. Do we recommend any in particular? The one you feel comfortable with the most.
Just remember that dropshipping is a business model where you create a website, your brand, and market the products that you sell. Your business must also pay for shipping costs and establish prices that generate a high-profit margin.
Steps to Start Your Dropshipping Business
With the basics clear, we can move on with the basic yet crucial parts: how you get started.
Overall, there’s nothing like a specific road you can follow to be successful but rather steps that are needed and some additional that will help you make the most out of business.
With this in mind, we will be focusing on the vital steps and add some we consider are the important ones:
Organize All Logistics
The first step in starting a dropshipping company is to complete the paperwork and other steps required to open a business. It can be tedious, but you won’t go anywhere without the right documents and permits.
You’ll need to do the following when setting up your business:
- Register your business name and DBA if applicable.
- Choose the business structure that suits you best (sole proprietorship, LLC).
- For tax purposes, obtain an employer identification number (EIN).
- You may need business licenses or permits depending on your business location and the products you sell.
Focus on Dropshipping Licenses
You will need to have a general operating license in order to open a dropshipping company in your state. There are also a few other licenses required to sell online.
- Many states require a seller’s permit if you are selling products that can be taxed. Like most business licenses, the state you live in will determine whether you need one and how to get it.
- A sales tax license: This license, similar to the previous one, allows you to collect and charge sales tax. You will need to comply with the sales tax regulations and licenses specific to the state and localities in which you reside.
- Home occupation permit: In some areas, you may need a permit to operate a business from your home. This applies to online sellers shipping products from their homes. However, details can vary depending on where you live.
Study the Market and Select A Niche
After completing the above tasks, you can begin narrowing down your dropshipping idea and what you want to sell to start making a profit.
Dropshipping is a way for you to access the same products as your competitors and work with suppliers who offer similar service levels. Your marketing efforts will be the key to distinguishing your business from others and bringing success (and money) your way.
Market success requires you to identify your target audience and to sell a product that appeals to them.
These are just a few of the many tips that can be used to help you find the right niche for dropshipping:
- Consider what interests you. It is easier to sell what you already know and are comfortable with.
- You should identify a market. When you start your business, it is important to concentrate on a small number of people so that you can tailor your products to their needs. In this way, you avoid handling much more than you can actually work with.
- Keyword research. You should conduct keyword research using Google Adwords and Trends in order to identify a niche. This will help you determine if there is a search volume for the products you are selling.
- You can also check the “best-selling” lists of major eCommerce platforms like Amazon and eBay to see what is selling or use other tools some dropshippers recommend online (focus on the free ones for now).
- Social media engagement. This is to see what your niche is doing on social media platforms like Reddit and Facebook, or maybe Instagram based on what users are looking for.
- Research the competition. Once you have identified a niche market, you should research the competitors in that area. To see how your competitors are selling their products, you will want to consult the same platforms (Google, Amazon, eBay, and social media). You should be able to find a niche with some competition since you want one that isn’t saturated but neither alone since it means there aren’t many people interested.
- Assess profitability. Once you have identified a market for your product and industry, you will need to assess the viability of your idea. Dropshipping margins are so low that you need to make sure you are making money in your niche.
Finding a niche is the most difficult step in starting a dropshipping company. However, it is important to spend the time to find the right one.
We would recommend taking several days at full speed to find the right niche and once you are done, do your market research once more to confirm you’re comfortable and confident about it.
Finding the Right Supplier
Once you have identified a niche with a product, you can start looking for suppliers that offer it or them. If you are wondering where to source product dropshipping, it shouldn’t take as much effort as finding a niche.
Dropship suppliers are a crucial partner for your business. We recommend that you prioritize the following criteria in order to find the right one:
- Experience: It is important to ensure that your supplier has both a track record and good customer service.
- Fees: Dropshippers should not charge unreasonable fees because margins are so low.
- Dropshipping is fast shipping: Most dropshippers are located in China, so the product should arrive in one to two weeks. You will be subject to backlash from customers if you delay.
- Dropshipping poses a major occupational risk because suppliers may sell low-quality products. You should request samples of the products you want to sell before signing a contract with any supplier.
Now that you know what to look for when looking for the best dropshipping supplier in your area let’s discuss how actually to locate that supplier.
Dropship marketplaces or manufacturers are the two main options when looking for dropship suppliers.
Marketplaces are usually the best way to start dropshipping. These businesses exist to help eCommerce dropshippers. They sell millions of products, which they buy wholesale from manufacturers or importers and then sell to vendors at an additional markup.
Special plugins are available from the major players in this industry to make integration with your eCommerce site a breeze. While we recommend that you do your research about dropshipping marketplaces, here are some names to keep in mind:
- AliExpress: A free service that provides one of the largest dropshipping product marketplaces.
- Dropship Direct: Get a free service with more than 100,000 products.
- Doba costs $29 per month, and it integrates directly with Volusion and Shopify.
You’ll need to make sure you remember the criteria that we mentioned when looking into suppliers or doing your own Google searches for other marketplaces. The right supplier should offer the products you need and be reliable as a partner in dropshipping.
Other options are importers and manufacturers.
Dropship marketplaces are a great way for anyone to start their businesses, but it is usually best to work with manufacturers and importers in the long term so you don’t have to deal with the cons of working with marketplaces.
The main problem with this is that most dropshippers might not be able to meet manufacturers’ average order volumes thresholds in the beginning. You will also need to do more in order to add and manage inventory.
What we would recommend is that you wait until you are established in the industry before selling direct-source products so you don’t spend more money than you can.
Although working with manufacturers can seem daunting in the short and long term, they can be a great bet.
Create Your Ecommerce Site Next
We have identified a market and aligned ourselves with a supplier by this point. The next step is to build a website that will allow you to sell the products.
The good part about this step is that unlike before, you can get this done in only a couple of days. Instead of relying on sources like WordPress that requires lots of knowledge, you can create an online store using a major eCommerce site like Amazon or eBay.
Another option to build the entire site is using an eCommerce platform like Shopify, Wix, or WooCommerce.
Which one is better? Evaluate both options.
When you decide to sell on established marketplaces such as Amazon, the main prois that it is easy to set up, and customers trust them.
However, marketplaces severely limit your freedom as a dropshipper since you will not have full control over your store’s branding, design, marketing, or design.
Additionally, every platform will charge you fees for every sale, and you must follow their terms of service.
We recommend that you create your own website if you plan to dropship. Online stores under your control allow you to do more with your marketing, which is why you will be different from your competitors.
There are many excellent platforms available. But focusing on another aspect, the dropshipping supplier you choose will play a significant role in deciding which platform is best for your business since one might work better than others based on the products you sell and what your supplier prefers.
When choosing your own platform, always think about what type of store you are looking for. Giants like Shopify offer more product functionality, which will help product-focused stores.
On the other hand, WooCommerce integrates with WordPress to make your store more content-focused and brings many functionalities for stores.
Optimization & Marketing
After you are done with the previous step and finally launch your website, you will need to make sure you market it properly to bring in all the eCommerce leads.
This is regardless of the platform you ended up choosing since you will need clients, so it is natural to market aggressively to optimize your site for search.
Most people rely on the combination of email marketing, paid advertising, and social media + other lead generation strategies. We recommend that you choose the best ones that work for you and based on the main options, for now:
- Email marketing: Most platforms offer a plugin that allows you to use MailChimp or other email automaion software as an email marketing tool. Collect your customers’ emails and send them weekly updates highlighting new products or offers you have for them. Email marketing captures many leads and improves your customer base in record time
- Facebook and Google Ads: You can place ads on your website for keywords related to your business, that simple. If you take the time to look at those two platforms or any other social media platform, you’ll notice there are always ads and posts marketing a product or service.
- Social media: The previous ones bring us to this option, but more in an organic approach by posting your regular content and managing the free strategies.
- SEO (search engine optimization): It should form the foundation of your marketing efforts as it is the most cost-effective and long-term strategy to boost your lead scoring.
Analyze and Optimize.
To grow your business, you need to keep track of all data and metrics. Othrwise, you won’t know what works and what does.
Take one of your marketing options as an example. If social media is your primary channel for customer acquisition, you can track every conversion and see how many customers you are generating with the analytics provided by each plaform.
There will never be a single marketing or advertising solution that works for you since lead generation is more about bringing several ones together. Continuous testing of new opportunities is necessary in order to fine-tune existing campaigns. This allows you to determine when to shift or optimize campaign spending.
All lead generation or marketing strategies can be tracked in a way or another, so take the time to see how you will optimize this.
The Pros and Cons of Dropshipping
With the whole process complete, are you confident this is the type of business you want?
To make your decision, we would recommend going over the pros and cons list we have prepared for you, starting with the current pros:
- Entry requirements are low.
Traditional and online shops often require significant financial investments to create, manufacture, and source product. Stocking inventory, managing a physical location, staffing, marketing to new customers, and maintaining a physical presence can all add up.
Dropshipping is a lower barrier to entry than traditional sales because it doesn’t require you to develop new products or store inventory.
- No inventory management.
Traditional retailers paid upfront production costs and waited for delivery. Then they stock the products in a shop or warehouse. Sales are lost if a product isn’t readily available to customers when they need it.
Dropshipping, on the contrary, eliminates these risks. After all, the inventory is handled by a third party, so products are readily available for customers upon request.
- There is no need to have a physical warehouse.
Dropshipping eliminates the need to have a physical storefront. This means that there is no need to rent, mortgage, or build a new one.
- Cash flow improvement.
Most retailers buy products, wait for them to arrive, and then sell them to their customers. They’ve spent a lot of money and have no way to get it back.
This option, instead, allows you to receive payment for your products while you pay your suppliers, and you make more money for marketing and growth.
- You can test new products at minimal risk.
While innovation is essential for customers to stay engaged, many business owners fear investing in new products without a track record.
This business allows you to test new product lines without spending a lot of money. Dropshipping allows you to test new product lines without spending a lot of money.
- Create passive income
Dropshipping allows you to work on other areas of your business or even fall asleep. You can work on other aspects of your business while orders are processed and fulfilled automatically.
Traditional retail models require that you are involved in order to send out products.
But what about the cons? They need to be considered:
- High competition.
Dropshipping is attractive because of the low entry barrier. This creates a lot of competition. The products that other stores sell are not identical to yours, but they do come from the same third-party suppliers.
- Controllability is not an option.
It is a risky business model. Inventory rarely leaves your company’s hands, so you can’t guarantee that the products you receive are in good condition, which puts your reputation and store’s reputation at risk.
A bad batch of products can lead to unhappy customers and even lost sales. You can’t make your store stand out unless you have a deal with your suppliers.
Fee structures can be complex and subject to change without notice. You can negotiate exclusive deals with suppliers as your store grows. You’ll be less profitable and less likely to get vendors’ attention until then.
- Disjointed orders.
You may have different suppliers if you list a number of products on your website. Customers might receive multiple packages for the exact same order. This can result in high shipping costs, waste packaging, confusing branding, and frustrated customers.
- 5. Race to the bottom.
It can be hard to differentiate your store. While many stores attempt to be competitive on price, they end up setting lower prices because of the increased competition.
If you don’t take care, you will sell lots of inventory at low prices and end up losing money.
The Local Lead Generation Process for Your Dropshipping Business
All right! So, everything is about building properties and generating leads. But how does the process actually take place? Are there other steps I need to know?
The steps I mention below are what students from our local lead generation program follow to generate leads for businesses like yourself. So I’ll help you see what we do. And how if you join our program, you can simply generate leads for your own business (unless you want to start a side hustle and build a laptop lifestyle business).
Essentially, our lead generation can be divided into four steps:
The first is prospecting. You need to take the time to do market research on a niche (industry) and determine how many phone-driven businesses are there.
Keep in mind that this is local research as you need to know how many companies need leads. For example, you may search for “plumbing services Youngstown OH.”
You will find dozens or even hundreds of businesses trying to get themselves in front of the customers by ranking on Map Listings, organic results, and even Ad.
The second step, building. When you find a niche (plumbing, tree services, a software company, real estate…), you will need to start building your digital properties. You don’t need to be an expert in HTML or coding. It can be easy with the right tools.
The third step is now taking time to rank your lead gen website. With the site done, you need to work on SEO strategies and start dominating those Google search results. If you’re new to SEO, it stands for Search Engine Optimization.
To keep it simple, it consists of the entire process of growing a company’s visibility on search engines like Google and generating organic traffic. And remember this, local lead generation is part of the strategies.
Moving on to step four, once you rank the site, you will start getting your ROI and profits. You only need to rent it out to a local business interested in the leads the site generates. You can offer a couple of free leads to their move on with the actual pay per lead.
To review steps 1-4 above, I described it to a normal student who is building a lead gen business to help local service providers generate more calls. But replace the student with you as the business owner. And replace sending the leads to a business to simply siphoning the leads to your personal business.
By the way, fun fact, about 20% of our students in our local lead gen program are actually business owners who went through the program. And they use the skillsets we teach to generate leads for their own business.
An Example of Lead Generation: Home Advisor
You must be thinking, “if lead generation sounds so good so far, how come I haven’t seen any company?” That’s the thing; there are many out there. You just don’t know they are dedicated to it.
HomeAdvisor is one of the best examples you can find on the Internet as it is a top lead generation company that has spent millions building its brand but also earned even more zeros for this same reason.
They started small as everyone else but invested in building their brand awareness to make people who are looking for home services go to their website and find what they need. They are over 75% of people’s first choice when they need those services.
If you don’t get HomeAdvisor that much or need a refresh, users need to submit their information to request a service and get a professional or expert who can provide it.
HomeAdvisor’s job is to share your information, which makes you a lead, with local companies so they can contact you and offer the service you’re requesting. For sharing this lead information, HomeAdvisor gets paid by the companies. This happens for every single lead they send to multiple businesses.
Business owners who don’t have marketing skills or don’t even know how to have any online presence will always rely on those pages to list their services. They will save time and effort, but companies like HomeAdvisor can make them spend lots of money as leads aren’t exclusive (one lead is sent to multiple companies after all).
Using Facebook Ads aka Paid Ad Platforms: Do They Generate Leads?
They DO generate leads. If not, no one would use them.
However, you need to remember two facts:
- Paid ads or platforms can be expensive.
- They don’t generate “natural” leads.
Whenever someone sees or clicks in one of those ads, over 80% of them did it by accident or are trying to close/report it.
Why? Because they aren’t looking for those services. At least not at the moment.
What those ads do instead is interrupt their time on the platforms. Users aren’t there to find companies or businesses unless they are searching for a specific company’s user, and for that, there’s a search bar. This is why it is hard to convert them to actual customers who will show interest in the companies’ services. Also, you’re limited by a budget.
When using lead generation, everything is organic. You aren’t forcing others to pay attention to your business but rather being there when they need you. This is why Google’s organic traffic will always beat paid ads, and the reason companies continue investing in it, which is a lot cheaper as well.
What Is Local SEO?
Don’t worry… I didn’t get it at first either. Following the short explanation, local SEO focuses on scaling businesses’ visibility on search engines. However, this is only for those who serve their communities face-to-face.
What does this mean?
Experts and professionals like painters, plumbers, and dentists (but not only them) offer their services to their local customers. Why? Because they can’t deliver them unless they are located in the same area of their customers.
To make sure those businesses get more leads, you need to rank them locally by claiming the business listing on Google to place them on Map Listings. Local SEO also involves online reviews, citation management, and how you manage your entire online presence in the local area.
If you are going to bet on lead gen, you need to adapt yourself to today’s world: The Internet.
Keep in mind that although traditional channels and methods like billboards, warm calls, and pamphlets still work, they aren’t part of your tools. Whenever someone needs a service, they go to Google and search for it.
“Dentist in Miami” or “plumbing services in Orlando,” etc. And you can keep coming up with services or professionals people need and look for. Thus, you need to make sure you’re using Google to get the companies in front of their clients.
Users will always click on the first search results (those near the top), and many of them will be either Ad links (people paid to place their websites there), Map Listing, and then you get websites. Almost all of them are your goal and where you should always aim to place yourself.
Can My Dropshipping Business Utilize a Local Lead Generation Strategy?
If you want customers, you better know you need it. Following the previous explanation, lead gen is all about placing businesses in front of their customers, choosing them over their competitors.
Put it simply – it’s all about closing deals and having clients for those companies to make money. The main difference with the usual methods companies use for this is how lead generation approaches different channels to get them in the right place of the market to get customers.
Those channels are all focused on the Internet as most people are searching for products but also services across the net. The issue is that the Internet is way too broad, and businesses don’t know how to place themselves. They usually try, but they get one common result: losing money and time.
How Powerful Are Organic Dropshipping Leads from Google?
For companies looking for customers, it’s everything. For you? Pretty much the same. When you build a business with digital properties, you get to make thousands of dollars a month.
This isn’t a “get started today and get rich tomorrow” thing, but it is HIGHLY scalable, and ROI + positive results are guaranteed. Learning a fairly decent and very needed set of skills to create your digital properties and start ranking them on Google is required.
I have invested in several online businesses over the years, and if there’s something uncertain, whether you will get your ROI or not, even more than the actual profit.
However, this business moved my earnings from five figures a year to a month in ONLY passive income while sitting comfortably at home.
On my laptop. Anywhere. Anytime.
You can look at one of the first sites I built back in 2016, and it continues making me over $1.000+ every month. The best part is that I don’t need to touch it or the rest I’ve built over the years, just like this digital property.
What Makes Lead Generation SO Alluring?
Here it goes: you can work from home.
The main issue with regular business opportunities is how much you need to invest in staff, equipment, or rent to have a place to sell your products or offer your services.
We all know the hassles of traditional businesses that involve regular expenses, which are extremely high. Can you afford it? I don’t think so, and even if you can, is it worth it? Now, it isn’t only about the money. You also need to put in a lot of work, and it isn’t only during the first couple of months or years. Usually, it is as long as you continue running it.
You can save yourself those headaches and bone-breaking tasks and expenses with lead gen since it is more about generating leads with digital channels—mainly websites.
Websites can be VERY cheap to build, and with many tools online, you get to do it in a couple of hours instead of days. Any virtual or digital business is scalable and won’t need constant maintenance.
So, let’s summarize this:
- You save money in regular expenses with traditional and most online businesses as what you need is yourself and digital properties (websites).
- You can bet on passive income.
- There’s no need to hire more people to get started.
- You can generate leads in multiple industries, which allows you to work on any niche you want.
How Can I Get Started in the Local Lead Generation Program?
Anyone can start and learn. That’s the beauty of this business model. I knew nothing about SEO, Map Listing, and everything I’ve mentioned so far. It is all about learning the skills, gaining experience, and deciding to take the step.
Remember that this business model will never get old as business owners are always looking for leads. They need to do business and scale their companies. Why not do the same while helping others and still making money?
You can start with this local lead generation course highly recommended for anyone wanting to grow in the business. It is a close training that will take you through each step and make sure you are able to get your ROI, profits and take control of your life.
You will be added to an incredible lead generation family ready to help you 24/7 when asking questions on the group. Anyone is welcome who’s willing to put in the work. Click here to watch the lead gen webinar.