Dropshipping 101 – is a sustainable business model that can simplify the retail process.
However, if you’re new to the concept, it can feel a little overwhelming. There’s a lot involved in the operation, from figuring out the best way to drop ship to the best apps for dropshipping.
Thinking about creating a dropshipping business? Look no further than Shopify for your ecommerce store, the platform that makes it straightforward.
Are you thinking about creating a dropshipping business? Look no further than Shopify for your eCommerce store, the platform that makes it straightforward.
Whether you’ve never heard of dropshipping before or you need to learn how to dropship on Shopify, we’ve put together this tell-all dropshipping guide.
What is Dropshipping?
Simply put, dropshipping is a retail business where the seller doesn’t store their inventory or ship items directly. Instead, they pass on the sales orders to the supplier who fulfils them.
To break it down further, the process is as follows:
- Your customer places an order from your online store
- Your platform sends the order to your dropship supplier
- The dropshipping supplier prepares and ships the order directly to your customer
Why Choose Shopify for Your Dropshipping Business?
If you’re an eCommerce business that doesn’t have the resources to manage manufacturing, supply chains and/or fulfilment, choosing Shopify dropshipping may be a good option for you because:
- Shopify has solutions that are specifically made for dropshipping
- There are multiple handy features to transform a website into an online business, helping you to sell products, market them and handle payments effectively
- Shopify is user-friendly to cater for every experience level
How Does Shopify Dropshipping Work?
Well, there are a few steps required. Here’s a little Shopify dropshipping tutorial:
- Define a business idea and profitable niche
- Identify products that you can drop ship
- Set up shipping with a dropshipping supplier
- Build your eCommerce store with the products to be drop-shipped
- Gain the relevant business licenses from the government
- Launch your store
- Market your store and grow online sales on Shopify
Do you need a business license to dropship on Shopify? Technically, the answer is no. Although, it’s strongly recommended to check with your local legislation office.
Even though learning how to set up dropshipping on Shopify seems like a lot when you’re in the beginning stages, take it one step at a time. Focusing on doing each step properly before you proceed to the next will all be worth it, we promise.
Are you brand new to Shopify? Check out our article on setting up your online store using Shopify.
Understanding a Dropshipping Fulfillment and Supply Chain
Before you begin the setup of a dropshipping store, it’s essential to learn dropshipping terminology.
Supply chain: refers to the path a product takes from conception to manufacturing and then into the customer’s mailbox. To sell online using the dropshipping method, you need to understand the three key players of the supply chain.
- Manufacturers: These create the product and sell in bulk to wholesalers and retailers. Even though this is often the cheapest way to buy products to sell on then, most manufacturers have minimum purchase requirements that you have to meet.
- Wholesalers: These buy products in bulk from manufacturers, add profit margins and then sell them to retailers for resale to the public. They tend to operate in a specific niche and sometimes have purchasing minimums.
- Retailers: These sell products to the public directly at a markup, whether they’ve been initially purchased from manufacturers or wholesalers.
A manufacturer, wholesaler or retailer can act as a drop shipper! In other words, the company will ship products on your behalf.
Keep in mind that just because one of these parties claims to be a drop shipper, this doesn’t necessarily mean that you’ll be able to get wholesale pricing.
Also, the drop-shipper is invisible to the end customer. Its only responsibility is to stock and ship dropshipping products. Marketing, customer service, website development and everything else is all up to the retailer.
How to Find Dropshipping Suppliers for Shopify Store
When it comes to finding dropshipping suppliers for Shopify, there are two ways you can do this. The first way is to do some research using supplier databases. The second is to download a Shopify dropship app that will link your store to hundreds of suppliers.
These seven Shopify dropshipping suppliers have the reputation of being the best:
- Worldwide Brands
- Wholesale Central
Or you can do your own Google search simply by typing in “wholesale suppliers for product X.” However, consider this: you’ll have to search extensively to find the highest-quality drop shippers.
Alternatively, you can attend a trade show. If you have the time and money, a trade show is a great way to connect with all the top manufacturers and wholesalers in a particular niche.
Have you located the products you want to dropship? Another option is to contact the manufacturer and ask for a list of its wholesale distributors. You can then talk to the wholesalers about setting up a dropshipping account.
How to Find the Best Dropshipping Products
How to start dropshipping on Shopify as a beginner? The short answer is – find the right products.
Discover What’s Trending
If you manage to source trending products ahead of your competitors, you can take advantage of low costings and establish your brand as a leader in that field.
Some valuable resources include:
- Google Trends
Click here to find out the top 10 trending products to sell on your Shopify store.
Do Competitor Research
Review potential competitors in detail regarding what products they sell, how they source them and how they market them.
This can be as painless as a quick Google search for a product. Th search should highlight a range of rival websites with information that can help you to decide which products to list in your store.
Search Social Shopping Platforms
Use social shopping sites to determine which products are getting the most traction when it comes to liking, commenting and sharing. These are eCommerce-enabled websites that allow users to engage and shop products directly, such as:
Have a poke around and see how sellers and buyers are using these platforms. Make a list of the products that are receiving the best reviews. You may be able to tap into a niche market.
Speaking of social networking, channels such as Facebook and Twitter can help you understand people’s needs and problems in different areas of the world. You can then use this market research to source practical product solutions.
Dropship from Amazon to Shopify
Given that Amazon had over 300 million active users and made $280+ billion in sales in 2019, setting up a business where you can dropship from Amazon to Shopify is nothing short of tempting.
The good news is that Shopify and Amazon have a partnership where you can use the Amazon sales channel through your Shopify store. To do this, you have three options:
- Connect Shopify to your current Amazon listings
- Create a new listing for a new product on Amazon
- Create an offer for an Amazon product you already sell
Shopify can also automatically update the Amazon listing to align with your product’s inventory in the Shopify admin.
If you’re just starting out with the Shopify Amazon app, you can import products directly from a third-party plugin and then show these listings on Amazon. Some of the best Shopify dropshipping apps can be easily found on the Shopify app store. Just serch for ‘dropshipping’.
Some of you may wonder if there’s a Shopify Amazon Affiliate app that you can use to earn commission on the products you list via your store. Well, the secret’s out — you can use the Buy Now button with your affiliate link on Shopify product pages.
Pros and Cons of Dropshipping
Before you go ahead and put this knowledge of how to create a dropshipping store into practice, consider these cons of dropshipping:
- There are low margins — it’s a very competitive industry, and a lot of retailers sell at the lowest price given the minimal overheads involved.
- There’s a lack of control over inventory — it can be challenging to keep track of which items are in and out of stock, and when suppliers make mistakes, you have to take responsibility for them.
- There are limited customization options — usually, a drop shipped product is designed and branded by the supplier, and you’re unable to make custom changes.
That said, there are also many pros of dropshipping:
- It’s accessible — you can test out different ideas, learn about in-demand products and ditch the ones that don’t sell easily.
- There are fewer upfront costs — you don’t have to purchase a product until you’ve made the sale and received customer payment, which means you don’t have to make significant inventory investments upfront.
- It’s easy to get started — you don’t have to worry about the warehouse cost, packing and shipping cost, new product sourcing, managing stock and order tracking.
- It’s easy to scale — if you receive an influx of orders, you don’t have to handle them, and it’s the supplier who will receive the extra workload.
- You can run a dropshipping business from any location. All you need is an internet connection to maintain it.
The Best Dropshipping Apps for Shopify
Here are 5 of the best dropshipping apps for Shopify if you’re starting fresh.
A Shopify-owned dropshipping app, the Oberlo marketplace sources high-demand, low-competition products from AliExpress that can be imported directly to your store.
Shopify App Store Link
Instead of going through Oberlo, you can add products from AliExpress to your store in just a couple of clicks. This app also comes with an auto-updating system for your pricing and stock levels.
Shopify App Store Link
This app specializes in name brands, but they also offer independent brands, trendy and affordable products and low-cost goods. Its centralized supplier and product management systems allow you to stay on top of the orders from one place — and it’s completely free!
Shopify App Store Link
This app allows you to purchase from countries worldwide at discounted prices, meaning you can sell at 30% to 60% margins. You can personalize your invoices with your logo and branding, and you gain real-time updates of stock levels for free.
Shopify App Store Link
If you’re selling original designs and artwork to be printed on merchandise such as clothing, mugs and posters, this is the app for you. You can create mockups effortlessly, have access to designers and photographers and experience white-label service.
Shopify App Store Link
In terms of setting up shipping on Shopify for dropshipping, visit your Shopify settings in the Shipping area where shipping methods are listed.
Even though you wouldn’t ship the product yourself as a dropshipping business, you’d still be charged shipping fees from your suppliers. To remedy this, you could offer free or low-rate shipping and have the shipping costs come out of your profits, charge the exact cost of shipping to the customer or offer free or low-rate shipping and increase the cost of your products.
Dropshipping or not?
Hopefully, our ultimate guide to dropshipping on Shopify has taught you that this can be a successful business model for retailers who don’t want the costs and hassle of storing their own product inventory.
Even so, hard work is still required not just to make your business grow but to maintain that growth in the years to come.
You need to decide whether you’re up for the challenge.