When it comes to making money online, starting a dropshipping business is one of the simplest methods. It allows you to source a range of products from wholesalers or third-party manufacturers, selling them as your own via your own online store. Your chosen supplier looks after the logistics and inventory whilst you focus your efforts on marketing and growing your brand.

It sounds deceptively simple and with the right planning and strategy it can be. Read on to explore our ultimate guide that will explain just what you need to know when it comes to starting your dropshipping business.

How do you start a dropshipping business?

When it comes to setting up a dropshipping business there are seven steps to follow.

1. Choose your business niche

Around 30% of existing online stores use dropshipping, meaning there is significant competition, and many of these stores sell the same items but under their own branding. Choosing your niche, the market you want to focus on, will help to counter this.

Consider the following to do this:
  • Do you have a particular interest or area of expertise?
  • What are the trends? Which items are in high demand?
  • Take a look at the Amazon best-selling products to see if a niche has growing or stable sales

Once you have a shortlist, do some market research to see what the industry is doing. This allows you to make estimates on revenue, build marketing strategies and is much easier to do before you start the business.

Once you have chosen your niche; select the products you want to sell.

2. Find a supplier

Having a reputable supplier is essential to the success of your dropshipping business. Use one of the many dropshipping platforms that are available to do this. Things to consider when choosing a supplier include:

  • Do they have a business licence and good reviews?
  • What is their minimum order quantity?
  • What additional fees do they charge?
  • What are their customer support channels like – will they be responsive to issues?
  • What is their product quality like? – check with a sample order
  • What is their order fulfilment process? – how long do they take? and how do they handle returns?
  • Do they offer a website extension with the ability to import products?

A dropshipping agreement contract that outlines the business arrangement, including prices, delivery standards, etc is a good idea once you have found your supplier.

3. Your brand identity

A good niche and strong branding will really set you apart from others in the same field. The more unique your brand identity is then the more likely your target audience is to remember you and return to make more purchases. These are the things to consider:

  • Determine your brand positioning – what are the key features or values you offer that others don’t. This should be focused on in your marketing
  • Create a memorable business name – don’t make it difficult to pronounce or type
  • For your visual identity pick aesthetically pleasing colours that complement each other
  • Chose easy to read fonts for your web content and a distinct typeface for logos
  • The best logos grab attention but are simple
  • Create an online store

A strong website is essential for your business. It is possible to dropship via other online platforms but there are advantages to going it alone. These include being completely in control of your own branding and there are no platform fees, unlike on an eCommerce marketplace.

To create your website you will need:
  1. A domain name
  2. A platform – this is where you will build your store, many who have little experience in this field opt for platforms like WordPress

It is a good idea to opt for something with a good user experience that your customers will find easy to navigate, and that allows several payment options.

Your product descriptions need persuasive copy that is clear to read and great photographs from a range of angles. Don’t forget to add a contact form and also ensure that your website has mobile optimisation.

4. Prepare your finances

Business finances of any kind can be complicated. However they are essential, so it is important to get everything right when it comes to setting things up. It can be a good idea to contact a company like Your Company Formations who have the expertise to help you with all of the issues related to setting up this side of your business.

5. Register your dropshipping business legally

Taking time to make sure you have covered all the legal set up of your dropshipping business is important and can vary from one country to another so it is important to ensure that you have covered everything that you might need.

This may include things like:
  • Do you need a business licence?
  • Registered your business with HMRC
  • Ensuring that you have the right insurance in place
As part of your legal considerations it is important for your website to include the following pages:
  • Refund policy – customer trust is increased when you set of clearly your refund policies
  • Exchange or return policy – online purchasing means trusting what you are seeing is exactly what you get, and this can make customers hesitate. This policy helps to promote customer confidence.
  • Terms and Conditions – Outlining the rights both you and your customers have helps protect your business and manage expectations.
  • Privacy policy – this will show that as a business you are serious about respecting the information of your customers. It explains how you collect, use and disclose any data.

6. Marketing

Finally, digital marketing allows you to promote the things that you sell through a number of channels. If you want to ensure that you are driving traffic to your eCommerce store, then you need to use SEO (Search Engine Optimisation) to help you gain the best visibility in search engine results pages.

Creating content through blogging is a great way to inform your target audience about your products and their benefits; you may want to consider how-to guides or listicles. Social media marketing will give you another platform to share your products and can help you to reach a completely different audience. You can of course link these back to your website.

Add a subscription form in your store and build up an email list to use for email marketing of discount announcements, new product releases and even to just bring products to customers' attention.

Following the steps above can help ensure you’re in the right position to benefit when you start a dropshipping business from scratch. If you need any assistance with the financial or legal setup, why not consider contacting the experts at Your Company Formations, who can ensure it’s all done correctly.

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