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What Is Dropshipping & How Do You Get Started?
Understanding dropshipping and steps to launch your own online business
May 2, 2024
16 min read
In this article, I will provide you with the key differences between e-commerce and dropshipping. Generally, e-commerce covers all kinds of businesses done online. Dropshipping, on the other hand, is a branch of e-commerce.
Having said that, I will tackle some important aspects of dropshipping. This will help give you clarity as to why a dropshipping business is one of the best e-commerce businesses you can start right now.
In addition, I will cover:
I will also discuss how to use a tool that makes it easier to find winning products. If you are ready, let us start!
Dropshipping is an online retail business model. In it, you do not need to buy inventory. What you do is sell a supplier’s products. Once a customer orders from you, you place the order with your supplier, and the supplier ships the item to your customer.
In a nutshell, dropshipping works like this:
As you can see, you will not physically handle this product. Warehousing, handling, packaging and shipping, are the supplier’s responsibility.
It is important to note here that in dropshipping, you will not pay for stocks or inventory. You only pay your supplier once there is an order.
The profit you make is the difference between your selling price and the supplier’s price. If the supplier sells the product for $15, and you sell it for $30, your profit is $15.
Here are the best reasons dropshipping trumps most online business models.
You do not need thousands of dollars to start dropshipping. $30 should be a good amount to start (monthly).
With dropshipping, all you need is a website, which you can build for $30 or less. If you use platforms like WooCommerce and then self-host, you need only about $4 monthly.
There are also so many tools you can use for free. WooCommerce and Shopify have thousands of free apps that can make your store look more professional and more functional.
Finally, there is no need to buy inventory. In traditional retail, you need to buy stocks and keep them in your warehouse. If you do not make a sale, your money is sitting in that warehouse. In dropshipping, it is the supplier that bears the brunt of the production and warehousing costs.
In AliExpress alone, you will find millions of products for sale. There are tens of thousands of suppliers here. Many of them are familiar with doing this and would be willing to help you out.
Here are some more marketplaces you can explore:
This list does not even include independent dropship and print-on-demand suppliers. For example, you will find coffee brewers who do dropshipping. some companies make lipstick, make-up, etc.
White-label means you are selling a generic product, but it is your brand name in the packaging. Private-label means a company exclusively manufactures the products for you. You will also sell these products with your brand name and packaging.
The benefits of this dropshipping method are:
The one drawback is that most suppliers want wholesale orders. As such, you will have to spend money on inventory. They will keep the items in their warehouse, and ship if you have an order. Warehousing is not free, by the way.
The alternative is to do print-on-demand (POD). It is a combination of both white and private-label methods.
There are thousands of blank products in POD. All you need to do is upload a design. Once you make a sale, the company will print the design on the product and ship it to your customer.
Finally, it is easy to build a dropshipping store. No matter what platform you choose, there are templates ready for your use. You do not need to build from scratch.
There are also marketplaces where you can dropship, such as:
The best part is this: it is possible to sell on different platforms at the same time. For example, if you do POD with Printify, you can integrate it with Etsy and Shopify.
It takes only one click to upload the same product on both platforms. In essence, you only have one control dashboard. Anything you do here will reflect on all your stores.
Now, let us talk about the challenges of dropshipping.
Since the barrier to entry in this industry is low, expect a lot of competition. In my experience, most people who want to start a business online would try dropshipping.
Competition is a part of life. The key to success is to set yourself apart. Do not make a cookie-cutter dropshipping store. Strive to make a unique brand with a unique value proposition.
Here are some general pointers to get ahead of the competition:
While building a dropshipping store is easy, marketing is tough. If you want to know more about marketing, I recommend that you read our tutorial on how to improve your product page conversion rate.
The second challenge is that you have no complete control over the quality of your products. The same thing goes with shipping and handling. If you happen to choose an unreliable supplier, your product quality and business will suffer.
To get around this, take the time to find a supplier you can trust. What I highly recommend is that you buy the products yourself. This way, you can test the supplier’s dependability, handling speed, and shipping timelines.
The last challenge for dropshipping businesses is the low profit margin. Since the competition is high, most dropshippers drop their prices, resulting in low earnings.
Do not do this. There is a way to reduce competition, and this is by:
Again, marketing is an important aspect of dropshipping. You can improve your profit margins if you present your product the right way and if you can find the right market.
Dropshipping, as easy as it may seem, has its fair share of challenges. For one, it is easy to select products, but you won’t know if it sells.
Typically, it can take you so many trials and errors before you can figure out what the market wants. This does not have to happen, provided you use a tool like Tradelle.
Tradelle is a product research tool, supplier, and automator. This means that when you import products from Tradelle to your store, orders will be processed, fulfilled, and shipped out automatically all by Tradelle and their sourcing team. The entire fulfillment process will be taken care of by Tradelle and they will manage inventory for you as well, making sure enough stock is available.
With Tradelle, you can:
All of these things start with one step: search the database with a keyword. You will see thumbnails of the product you searched for. Click on one, and you will see something like this:
You can immediately see important product details here and decide if you like the profit margin. The rest of the buttons are supplier links, except Facebook. The Facebook button will take you to the Facebook ad library.
If there is an ad on Facebook for this product, you will see the details of the ad. From there, you can investigate the audience, market demographics, likes, comments, target countries, etc.
Scrolling below, you will find this:
To determine the shipping cost to other countries, just hit the drop-down and search for a destination country. The IMPORT TO SHOPIFY button is what you need to click to transfer this product to your store. However, make sure your Shopify store is already integrated into your Trade account before you do this.
The saturation meter tells you how many stores are selling the same product. You want that needle to be in the green zone. Orange and red mean that you will face a lot of competition.
The Product & Saturation chart indicates the demand for this product over the last several years. Finally, the regional interest is where you will find the most responsive markets for this product.
Scrolling further below, you will see this:
This area is where you will find:
Overall, Tradelle is a tool that eliminates the hard work of dropshipping. It allows you to spend more time marketing than researching, or dealing with third party suppliers.
e-Commerce is an umbrella term. Most business done online is e-commerce. There are many ways by which it works, and below are a few examples:
Although e-commerce covers all types of businesses online, most people think of it as physical retail.
E-commerce is enticing because of the reduced overhead costs. It is much cheaper to build a website than a physical storefront. You also do not need land.
Because of this, you will save a massive amount of money compared to paying rent. You can use this money to buy inventory. You can also use it to fund your marketing activities.
You also do not need to rent a warehouse. If your house is big enough, you can surely use a spare room as your stockroom.
Once your ecommerce business succeeds, it is easy to add more products. If you sell in traditional physical stores, you would need a wider space. It also means higher rent.
With e-commerce, you can store all your items in your house, at no additional costs. As far as your website goes, you may need to add a little bandwidth or digital storage. However, this additional cost will not break the bank.
A physical store can only sell to people who physically visit the shop. Online, you can reach audiences far and wide.
Just think about this: if your physical shop is in California, there is no way you can expect people from New York to physically see your products.
Online, the world is your market. The only challenge you will face is logistics. The thing is that shipping companies have a solution for this. Most of them will even pick up the item from your house. All you need to do is print the shipping label.
Since you have to own inventory of the products that you’re selling, you have to preorder everything in advance, and have to pay for the goods, before you even know you can sell them, taking a risk that it might not sell in the end. Meaning, you need a higher initial investment, than in dropshipping.
Since e-commerce is easier to set up, more and more people now prefer to do business this way. The only exceptions are restaurants and gyms, or similar businesses that need a physical space.
Retail, however, has changed. Even giants like Walmart have online stores now.
The sheer number of website stores is whelming. As such, you must prepare for tough competition. Only those who are highly motivated to succeed will survive this game.
One big downside to e-commerce is hacking. Yes, you may think you are just a small fish in the sea, but hackers do not care. For as long as they can mine data from your online store, you are a target. Hackers will attempt to penetrate your website to steal financial details.
It may sound scary, but there are many ways and best practices by which you can protect your store. You do not even need to be a technical expert to do this. There are many apps you can install to increase your security.
Here is a quick comparison of dropshipping and e-commerce.
| AREA | DROPSHIPPING | E-COMMERCE |
| Cost to start | At least $30 monthly | Depends on your inventory |
| Product Stocks | No need to buy inventory | You must buy stocks per color, per size, per product, etc. |
| Overhead/Monthly Expense | Very low | Very low |
| Marketing | Huge audience | Huge audience |
| Product Type | Physical only | Can be physical, digital, or services |
| Packing & Shipping | The supplier takes care of the logistics | You will ship the item |
| Scalability | Easy; just import more products at no added cost | You must spend money to scale (buy inventory) |
| Profitability | Low margins; you can increase this with high-ticket dropshipping products | Low margins |
As you can see, dropshipping has a tremendous advantage in terms of these two:
Between the two, dropshipping is the clear winner. The products and suppliers are there, waiting for you to build your store and sell. E-commerce, on the other hand, poses a significant financial risk.
Overall, dropshipping is better because dropshipping does not require inventory.
Online selling is a generic term. Dropshipping is a much more specific business model.
As far as retail goes, the only better option is branded retail. However, you must only do this if you believe that your product is unique. Your product must also be exclusive.
No, Shopify is a platform. E-commerce means business is done online.
What I recommend that you do today is sign up for a free account at Tradelle, and look out for profitable products with potential. Do this, and you can begin to explore the dropshipping world. Tradelle will help you find profitable products, import products, automated your fulfillment process and much more. Try it now and see what it can do for you!
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