Tonight, I wanted to write a short, but value packed article that speaks directly to the young and new eCommerce entrepreneur that is in the process of starting a drop shipping business online.
It wasn’t too long ago that I was in the same shoes and it was an amazing experience that set me up to build multiple successful online companies.
When you’re starting a drop shipping business, there are 5 steps that it can easily be broken down into.
At a 1,000 foot level, it’s super important that you understand these 5 steps so that you don’t get lost in the weeds.
So many eCommerce entrepreneurs start their drop shipping business and they lose sight of the end goal a couple of months in.
When that happens, it can lead to frustration, doubt, and an eventual decision that there is not an opportunity to make money through a drop ship business.
That is a very false feeling that many entrepreneurs have. There are many factors that could have gone into it, but I bet that if they knew these 5 steps and stay focused on them, it would not have happened.
Take this guide, print it out, and post it somewhere close to where you’re working.
Read it each morning that you wake up so that you can stay focused on the bigger picture as you’re taking the small steps to bring it all together.
As you read the 5 steps each morning, you will slowly teach your brain to move in the direction of making those a reality.
It’s a practice that I’ve been using for 8+ years and each year, all of the goals that I set forth the year before have come true.
So, let’s get into it.
Step #1: Choose the eCommerce Platform
Since we’ve already decided that you’ll be building a drop shipping business, and not one focused on wholesaling, the next first step becomes choosing the eCommerce platform that you want to focus on.
I highly recommend choosing one platform to start with and to become a master within before moving onto the next.
I made mistakes as a young eCommerce entrepreneur trying to go into too many platforms before perfecting the first.
It detracted from the work that I put into the first and I eventually came around to the belief that you should stay focused on one platform to start.
You can set goals for the level of sales you want to reach from there and then you move on and try to replicate it with another sales channel.
At the end of the day, it’s smart to diversify your eCommerce platforms, but you want to be focused as you get your start.
Your eCommerce Platform Options
There are many platform options now, but there are a handful that still predominantly handle all sales on the Internet.
These are by far the largest eCommerce platforms where the most transactions are being processed within the US.
Now, if you live in a country outside of the US, it’s very likely that this is not the same. I encourage you to do your research to find the top players within your country if that is the case.
For Amazon and eBay, these are eCommerce marketplaces, meaning that you are selling to customers that are shopping on those websites.
You don’t have your own eCommerce website and URL (for example, ConnorGillivan.com). Rather, you have a storefront on the marketplace of your choice.
When it comes to running a drop shipping business on a marketplace, you need to make sure that you are following all of their policies and customer metrics that they hold sellers to.
While it takes more work to appeal to the marketplace, you don’t have to worry as much about marketing because they do it all for you.
They bring customers into their marketplace and it is your job to make sure that your product is in the best position to sell.
Stand Alone Online Stores
Shopify and WooCommerce are both store building platforms where you create your own online store.
You purchase your own domain name (URL) and you market to customers bringing them into your site to make the purchase.
Using Shopify or WooCommerce gives you much more freedom from the atmosphere of an eCommerce marketplace, but you also become responsible for handling all marketing and bringing customers into your website.
Less risk in terms of being dependent upon the marketplace, but more responsibility when it comes to bringing in customers and converting them into paying customers.
It’s important to consider all of the factors when making your decision.
Once you’ve chosen your eCommerce platform, it’s time to figure out which products you want to start selling on your drop shipping business.
Step #2: Choose the Products You Want to Sell
Depending on which platform you choose, you can then choose which products to sell on your new eCommerce store.
Ready to make that decision?
So, if you chose to sell on a marketplace, you’ll want to perform marketplace specific strategies to find products that have a high opportunity of selling through your account.
For Finding Products on Amazon, eBay, or Other Marketplaces
I recommend going to the best seller lists that Amazon and the other marketplaces provide showing you the top 100 products selling in each category at any given time.
Go through a number of different categories of products and search for products that have the following:
(1) A low number of sellers — the less competition, the better.
(2) A smaller manufacturer — you won’t find success trying to drop ship Nikes because there’s no way to form a drop ship relationship with a company that big. You want smaller, privately owned manufacturers that have a product that’s selling well and you can help sell it better.
If selling on Amazon
(3) A low number of FBA sellers — FBA always beats non-FBA sellers unless their prices are ridiculously off. Since you’re drop shipping, you want to find listings where you aren’t competing with FBA.
(4) No Amazon — you don’t want to compete on price with Amazon. They almost always win.
Once you find products that fit those criteria, add them into a document so that you can do more research into who the supplier is and how you can get in touch with them.
If you find enough products that have a good chance of selling well, you’ll be able to land a fraction of the actual suppliers, and you’ll start seeing sales coming in in no time.
For Finding Products on Your Own Website
While the process of choosing which products to sell on a marketplace is very data driven, selling on your own drop shipping website can be less analytical.
However, you still want to have some research done on the types of products and their product category so that you can understand what type of opportunity there is.
Let me give you an example:
You are starting your drop shipping business and you would like to start selling children’s scooters. You’ve seen how popular they are with the moms and dads in your neighborhood and you see a lot of new brands popping up.
Love that idea!
So, you want to look deeper into the scooter market before you put all of your eggs into that basket.
First, I would perform some SEO research into the keyword “kids scooter” and other related search terms to see:
- who is mainly dominating the space on Google,
- what people are searching for
- how much room there is to make a splash.
Second, I would go to a marketplace to see how those types of products are selling and which brands are selling the best.
This may push you in the right direction when finding the right suppliers to go after.
When choosing a product to sell on your own online store, it’s more important to be unique and make yourself slightly different from every other online store out there.
And there you go, you’ve chosen your products and you’re ready to build the website for your drop shipping business.
Again, it will vary depending on which platform you chose, but don’t worry…I’ll cover both 😉
If you have any questions, be sure to re-read through the first two sections so you’re all caught up.
Step #3: Build the Online Store
And we’re back…
So, let’s now go through how you build the online store for your drop shipping business once you’ve chosen the platform and picked the products that you’re going to start selling with.
An important thing to keep in mind is that these are the core factors to any online store:
- listing products
- choosing and editing the design
- adding any additional content
- setting up payment methods
Once you have those 4 steps set up, your store is ready to start generating sales.
Building a Store for a Marketplace
This step for marketplaces is definitely shorter than for a stand-alone eCommerce website.
For a marketplace, you simply create your account, add all of your key information, and are then welcomed to the marketplaces dashboard where you can manage all of your eCommerce business.
For example, on Amazon, you get access to Seller Central.
This is the dashboard where sellers can see orders coming in, messages from customers, Amazon notifications, seller metrics, and inventory levels.
On a marketplace, they pre-create you a templated “storefront” where all of your products will appear once you start listing products.
Build the store portion of selling on a marketplace is much less important than if you are selling from your own website.
You almost want to skip over this step and move right into listing products and competing on the listings of the marketplace.
Now for those of you who are selling through your own website…
Building Your Own Drop Shipping Website
If you’re selling products from your own eCommerce website, you still have the follow the same steps as outlined above, but you’ll spend more time on designing the website.
For the most common eCommerce building platforms (Shopify and WooCommerce), you can go through all of the settings to configure the functionality of your store.
You can also purchase a pre-created theme that adds code to your website that makes the store look completely different, modern, and sleek.
Within the theme and eCommerce platform, you can then edit certain aspects of the website to customize it to your branding and style.
After designing, you need to create all of the products that you are planning to list.
And make sure to include as much information as possible. It also needs absolutely stellar pictures and videos if you can get them.
Online shoppers want a lot of information as they are making their decisions buying online.
The better content, images, and videos that you have, the easier it makes it for the customer to check out.
Both of the most popular platforms also have App stores where you can download plugins (WooCommerce) or apps (Shopify) that add more functionality to your website.
For example, you want to add a special offer advertisement on your Cart page. There are plugins and apps that can do that.
Once you’ve gone through the steps outlined in these two sections, you’ll have a drop shipping business that is ready to start getting sales and customers.
Before going live, make sure to test all functionality of the website multiple times…
…the last thing you want is a portion of your first customers having a poor experience on your website or mobile experience.
Once you’re confident that it is all working well, LAUNCH!
Step #4: Market the Store and Generate Sales
You’ve launched your drop shipping business website and you’re well on your way to your first sale.
Now you need to start marketing your products to the right customers in order to generate sales.
As with every step above, it will differ depending on where you decided to sell online.
Getting Sales on Marketplaces
When selling on a marketplace, you are directly competing with other sellers looking to sell the same products.
For example, on Amazon, they have their own ASIN’s (Amazon Specific Identification Number) that is assigned to each product.
So, if you are looking to sell a Brita Water Filter, there is a good chance that other sellers are as well. You all compete to sell the product on the same listing meaning that a lot comes down to price.
The other marketplaces are also similar to Amazon where you’re battling against other sellers to get sales.
Marketing is less of a concern on marketplaces, but you need to have a good strategy for re-pricing your products.
There are tons of software companies out there now that offer accounts where you can easily use their software to reprice your products based off certain rules and your competition.
For example, if you know the lowest price that you can sell a product and still make a small profit, you can set that as the floor price so that the repricing software never goes below that.
By repricing your products based off your direct competition, you move up in the ranks on the marketplaces and are able to generate more sales.
There are plenty of advanced strategies that you can learn about with repricing on marketplaces.
Marketing and Generating Sales on Your Own Website
When it comes to marketing traffic to your own website, there are lots of more options…
The challenge becomes choosing the right ones and focusing your time on them enough to get lots of traffic.
Here are a few of the marketing strategies that you can use:
- Social media channels: Facebook, Twitter, Instagram, Youtube, etc.
- Facebook groups: getting more specific, dive into groups where your ideal customers may be.
- Facebook advertising
- SEO strategies: create high quality content targeting specific key words in your industry
- Podcasts: appear as a guest on podcasts to gain traffic back to your site
- Guest articles: find publications or companies online where you could write a guest article and reference back to your website.
- Referral program: set up a referral program to encourage visitors to refer their friends.
- Opt in forms and email marketing: Create a subscriber list of people from your website that you can market your products to.
At the end of the day, your goal is to drive as much traffic to your website as possible so that you can then convert a certain percent of them into paying customers.
Once you start to get traffic, you also want to make sure that you have all of your product pages optimized for the user experience.
The smallest things can make someone not trust your site or push them away from completing the purchase that they started.
With the bar being raised so high for eCommerce around the world, customers expect a flawless experience on both desktop and mobile.
This is where things start to get fun running your drop shipping business.
You’re at a point where you are experimenting with different sale generation tactics and you’re starting to see regular sales for your products.
Wooo! That is amazing!
It starts to get fun from here because you don’t have to continue to do all of the operations that you were starting to set up….
Customer service, order fulfillment, inventory management…you name it and it can be easily outsourced for an affordable price so that you can stay focused on marketing and getting more sales.
The best eCommerce owners know that they can’t get stuck in the operations and they must stay focused on growth.
Step #5: Set Up eCommerce Operations with Remote Workers
Let me premise this section by saying that I’ve been hiring remote freelancers for the past 5+ years and it’s 110% changed my philosophy on how you can build a business.
When I was running my first eCommerce company, I was under the impression that the best way to scale a company’s people was to hire full time employees that could work full time and be 100% committed to the company.
As I got more and more into hiring with my business partners, I learned that you can run a company at an extremely lean level so that you maximize profits and earn a location free life.
Step 5 in getting your drop shipping business off the ground and to a profitable point is to outsource the right operations within your business so you can stay focused on growth.
Without going into a full guide of how to hire a virtual assistant or freelancer (you can learn about that in one of my other guides) , here are the eCommerce operations that you should outsource…
For a Marketplace Business…
- Customer service — hire a customer service assistant that can monitor all emails from customers, send out tracking information, and manage reviews for your products.
- Order fulfillment — with a drop shipping business, you need someone that can relay order information to the right supplier so it’s shipped out to the customer.
- Optimizing product pages — we want your content and product pages to be as trustworthy and converting as possible. Hiring a freelancer that specializes in that can make a big difference on your sales.
- Inventory management — drop shipping relationships require checking on inventory levels with your suppliers so you don’t start selling products that are OOS.
Additionally For Selling On Your Own Website…
- All of the above 4
- Facebook advertising — hire a Facebook Ad expert to start, run, and optimize your ad campaigns. They are going to be able to run them SOO much better than you if you know nothing about FB ads.
- Blog writer — start a blog page, research SEO keywords for your products, and write long form (2,000+ words) articles to bring in organic traffic.
- Google Adwords — similar to FB ads, outsource to an expert to run your Google Adwords account if you choose to go that route to bring in new customers.
- Social media management — hire an affordable social media manager to run the content calendar for your various social platforms.
Bonus Step: Get Started!
If you follow these 5 steps as you start your drop shipping business, you’re going to see success.
Nothing is guaranteed, but you’ll be putting yourself on the right path to understanding if you have a home run with the eCommerce business that you’re trying to start.
Remember to not get discouraged if you don’t see groundbreaking sales in the first 1-3 months.
It takes time to ramp up your sales through a drop shipping business, but that’s okay…
…learn the operations, create processes for each one, and then put yourself in a position to let the company run on its own while you focus on growing sales and making more profits.
If you enjoyed this article, be sure to check out this article as well…
It’s a comprehensive (5,000+ words) guide on how to start drop shipping online. It focuses on my experience selling over $25 million drop shipping on Amazon, but the strategies can be applied to building any drop shipping business.
If you enjoyed this article, please share it with your community on social media.
If you have any questions, reach out to me on any of my social media platforms or via email in the Contact section of the site.
Until next time…