Why do people start with dropshipping?

It offers an entry point for people without the capital to open a traditional retail store or stock an e-commerce business. That low barrier is genuine, but it is a way to build a viable business rather than a get-rich-quick scheme.

What are the first steps in setting up a dropshipping business?

Sort the logistics first: register a business name and any trading name, decide on a structure such as sole proprietorship or LLC, and obtain a tax identification number where your jurisdiction requires one. The specifics named here apply to US businesses; other countries have equivalents.

How do you choose a niche for a dropshipping store?

Identify the market before the products, because the niche determines which suppliers are relevant and what the store has to look like. Choosing products first tends to produce a catalogue with no coherent audience to sell it to.

How important is the supplier in dropshipping?

Decisive, since the supplier controls the product quality and the delivery your customers experience while your business carries the blame for both. Finding the right one is a distinct step in setting up rather than an administrative detail to settle later.

How to Start a Dropshipping Business in 5 Steps

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TL;DR

Dropshipping is an accessible way to start an ecommerce business without significant capital. This article outlines the key steps: setting up business logistics, selecting a niche, finding reliable suppliers, and building an ecommerce website (ideally on Shopify for seamless integrations).

One of the positive things about dropshipping is that it offers an entry point for people who don’t have the capital to start a traditional retail store or ecommerce business. .Dropshipping can be used as an opportunity to grow a viable business but it is not a get-rich-quick scheme.

Step 1: Figure out the logistics.

When you’re setting up your business, you’ll want to:

Select and register your business name and DBA (if applicable).
Decide on a business structure that best suits your needs (sole proprietorship, LLC, etc...).
Acquire an employer identification number (EIN) for tax purposes.(for US based business only).
Depending on where you do business and what you are selling, you may need to acquire business licenses and permits from your federal, state, county, and local government.

Step 2: Identify a market and choose a niche.

For more info on choosing a product read our article: How to Find the Right Dropshipping Product

The basic step to learning how to start a dropshipping business will be narrowing down the specifics of your dropshipping business idea.

How to Find a Niche in Dropshipping

Think about what interests you: It’s easier to sell what you know.
Identify a specific market:When you first start you’ll want to focus on a smaller subset of people because you can tailor your business to meet their specific needs.
Keyword research: Use Google Adwords and Trendsto see if there is any search volume around the products you wish to sell. But be careful, the higher the search volume, the higher the demand can be for that product.
See what’s selling online:Another way to find products in demand is by checking “best selling” lists on major ecommerce marketplaces like Amazon
Social media engagement:Check to see what people in your niche are engaging with on major social media platforms, like Reddit, Facebook, and YouTube.
Evaluate profitability: Finally, once you have identified a market and a product, you’re going to want to evaluate the profitability of your concept. With dropshipping margins being so low, you want to ensure you can actually make money in your niche.

Step 3: Find the right supplier.

The major players in the industry offer special plugins to make integrating with your ecommerce website a cinch. Although we encourage you to do your own research on dropshipping marketplaces, some names to be aware of include:

Oberlo: Free service that integrates with Shopify
AliExpress: Free service that offers one of the largest dropship product marketplaces
Wholesale2B: Costs $24.99 per month and integrates directly with BigCommerce and Shopify
Doba: Costs $29 per month and integrates directly with Shopify and Volusion

However if you want to use manufacturers and cut out the middle man, then use the following resources:

For domestic manufacturers: ThomasNetMaker’s RowImport Genius

For international manufacturers: AlibabaIndiaMart

Sourcify

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Step 4: Build your ecommerce website.

If you’re going to be a dropshipper, we recommend building your own ecommerce website. Choosing which platform to use for your business will partially depend on who your dropshipping supplier is, as some offer direct integrations. If you use Oberlo, for example, it makes a lot of sense to sell on Shopify.

Read our other articles in our Series on How to Start Your New Dropshipping Business:

Lucent Innovationis a full-service Shopify web design and development company. We build ecommerce websites that are ready to sell, scale, and grow.--

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shopify@lucentinnovation.com

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