Helped several with their global e-commerce, HuiQian have sorted out the basic procedure to start your dropshipping business.
1. Decide if dropshipping is the right business model
2. Choose a dropshipping niche
3. Research competitors
4. Choose a supplier
5. Select products and set prices
6. Build an ecommerce store
7. Decide on a business structure
8. Set up finances
9. Market your dropshipping business
1. Decide if dropshipping is the right business model
Dropshipping is just one way to run an online store. Before diving in, take time to ensure it’s the right business model for your goals.
Typically, dropshipping is suited to people with marketing skills who want to run a store with minimal upfront investment. Since you don’t need to stock products, it’s possible to start with just a laptop and an internet connection.
However, this accessibility comes with tradeoffs. Dropshippers tend to have less control over the goods in their catalog, and because other retailers are likely to sell the same products, competition can be tough.
If you plan to focus on marketing and aren’t looking to build your business around a flagship product, then dropshipping could work for you.
A niche is a segment of a market. You can target a niche with your store, brand, and product selection.
Selecting a dropshipping niche helps you identify a target audience. With specific customers in mind, it’s easier to search for products to dropship.
There are two general methods for choosing a niche:
1. Select a niche that you’re knowledgeable or passionate about.
2. Select a niche based on market demand.
The aim of the second method is to find niches with high customer interest but low competition. Dropshippers assess market demand through keyword and product research.
Finding a niche with keyword research
Keyword research shows you what people are searching for online.
Tools like Google Trends, Facebook Audience Insights, and Keywords Everywhere reveal popular product-related searches that your online store might serve.
When assessing search demand, look at historic interest as well as search volume to find a niche with sustained or increasing popularity.
For example, eBike Generation founder John Murphy used keyword research to build a $3 million dropshipping company, by identifying an underserved niche: ebikes for hunters.
Product research helps you discover trending products and understand consumer tastes for different product categories.
Dropshipping apps like DSers let you see product order volume on marketplaces such as AliExpress to gauge the potential size of your business.
Use both types of research together to build a full picture of a dropshipping niche. Consumer habits change rapidly, so perform regular check-ins on keyword trends and product popularity.
To align your business with product availability, you could also decide to choose your dropshipping supplier before you select a niche.
Competitor analysis helps when starting a dropshipping business. Spend time gathering information about rival stores in your niche.
By observing what your competitors, especially other dropshippers, are offering, you can identify potential products and marketing strategies. Review product pages and social media ads to see what appeals to customers.
Conduct thorough competitor research with these tasks:
Run a Google search
Use competitor analysis tools
Browse social media
Check marketplaces
Start by searching for keywords relevant to your niche to see which businesses appear. For example, if you’re starting a dropshipping business in the pet supplies niche, you might search for “pet toys,” “pet food,” or “pet brushes.”
Look closely to see which businesses consistently show up in the search results. These are likely your main competitors for organic search audiences. For more in-depth insights, try an SEO tool.
You may find top-ranked competitors optimize their content for long-tail keywords, which are longer, more specific phrases that customers are searching for.
Long-tail keywords have less competition, making them a strategic target for smaller dropshipping websites.
For example, your competitor analysis might reveal the keyword “dog collars” is contested by large retailers, while “LED dog collars” has less competition—and “LED dog collars for small dogs” has room for your new business.
Competitor analysis tools are another way to find insights into rivals’ strategies. Uncover data by monitoring traffic sources, visitor counts, and social media engagement.
For instance, if you find a competitor relies heavily on paid ads, you could consider a rival campaign, or invest more in SEO content. If they’re active on a social platform you’ve overlooked, starting a channel might be beneficial.
Follow competitors’ social media pages to understand how they engage with followers. Pay attention to the types of posts that generate the most likes, comments, and shares.
For example, if a competitor in your pet supplies niche is going viral with DIY grooming videos, consider creating similar content. Also, watch for any gaps—perhaps there’s underserved demand for content on pet wellness tips.
Sellers within your niche on marketplace platforms like eBay, Amazon, and Etsy also offer insights.
Note how many listings exist for similar products. If the market looks saturated, consider how you might differentiate your product listings, either by reducing your prices or offering a premium customer experience that’s not possible through a marketplace.
Track all your competitor research in a spreadsheet to make it easy to search and reference your findings.
A dropshipping supplier sources and manages inventory, accepts orders and payments, and organizes shipping to customer addresses.
With such core responsibilities, your choice of supplier will have a large impact on the success of your dropshipping business.
Depending on your niche and the products you sell, you might work with a single supplier, or partner with multiple suppliers using a supplier directory.
Popular supplier directory apps automatically connect your store with a large network of dropshipping suppliers.
For example, the DSers app lets Shopify users dropship from AliExpress, the global marketplace.
The products in your store are dictated by your supplier’s inventory. You’ll encounter many of the same products in rival dropshipping stores, so it’s important to curate a selection that resonates with your niche audience.
A well-chosen product catalog creates opportunities for cross-selling, where shoppers add additional items to their shopping carts.
When picking products from an app or marketplace, study reviews from other sellers, as well as the supplier’s performance history. Once you have a shortlist, order product samples to assess quality and consistency.
If your strategy includes partnering with overseas suppliers, consider choosing products eligible for expedited mailing services such as ePacket shipping from China. This can significantly cut down delivery times.
Pricing your dropshipping products
Whether it’s electronics, clothing, or toys, you will need a pricing strategy that keeps your dropshipping business sustainable and allows you to make a profit from each sale.
No matter the price point, set a profit margin for every product by calculating your costs, including the price paid to the supplier and other operating expenses. Balance this against the price of similar products in the market to ensure your store is competitive.
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