Learning how to start dropshipping is a great way for an entrepreneur to establish a small business without the stress and financial outlay of carrying stock, warehousing, and all of the associated overhead costs. A key part of setting up a business from home is to have the right space and resources to set you up for success. Here’s how to convert that spare room into the ultimate dropshipping studio.
Drop what? dropshipping 101
The key difference between dropshipping versus traditional business models is that dropshipping doesn’t require you to hold any stock or inventory. The only thing you might want to have at home is a nice office to handle all your business.
You can picture dropshipping the same as any other retail business — there’s a customer, retailer, and manufacturer. The key feature of dropshipping is that you, as the retailer, sell to an online customer, but their order is shipped from the manufacturer instead of from you.
With this business model, your profit comes from the same place as a traditional retail business — the margin, or difference, between what the manufacturer charges you and what you charge the customer.
If it’s well-organized and executed, dropshipping can be a hugely successful low-budget business venture for a savvy entrepreneur. Here are some of the benefits you’ll enjoy with this type of business:
- Low start-up costs: With no need for a physical storefront, inventory, or employees to support those things, it’s comparatively easy to start dropshipping. There are some initial costs that you can expect, like website design, a short domain, hosting, integrating your supplier’s inventory into your website, adding products, and registering your business.
- Scalability: Since you don’t need to expand inventory space to add new products or increase your sales volume, it’s more straightforward to scale your business than it is with more traditional business models. For many successful dropshipping businesses, scaling relates more to hiring employees to maintain your website and manage orders and customer service than physical growth.
- Adding new products quickly and easily: If your supplier agreements allow, you can integrate multiple suppliers into your operation. This gives you more diversity in the products you can offer customers and lets you quickly add new items to your online storefront. Deciding to offer new products as a dropshipper also carries less risk because you don’t need to purchase an amount of inventory before knowing how well it will sell, which will also help you simplify your procurement management process.
How to start dropshipping
Before you dive in, there are a few critical steps to prepare for successful dropshipping. Before you start dropshipping, getting a space prepared is the first step.
Location, location, location
Most first-time dropshippers will be running their business as a side hustle on top of a regular job, duties at home, and other responsibilities. Oftentimes, the difference between a successful and unsuccessful business is persistence, so it’s important to choose a space that facilitates consistent effort.
Just like setting up a home gym, it’s important to choose a dropshipping studio space that helps you actually get it done. We recommend choosing a location that provides a dedicated space for your business but isn’t so far removed from the rest of your home that it’s easy to avoid. A spare bedroom or part of a master bedroom can make great locations.
As much as possible, include touches in your dropshipping space that help you feel inspired. This might mean putting your desk by a window for energizing natural light, decking out your office with your favorite artwork or memorabilia, or even making space for a happy light, standing desk, or desk treadmill.
Lastly, it’s a good idea to also keep in mind that a successful dropshipping business may require more space as you scale, especially if you need to bring in help.
Outfitting your space
While it’s true that you won’t need to handle inventory for dropshipping, that doesn’t mean you can do it from your couch! Here are the most important steps to converting your spare room into a dropshipping studio. Consider a contractor if you need to build out an office space or want to make some improvements to an existing one.
Internet access. As a dropshipping expert, most of your work is done online. That means a fast, reliable internet connection is the most important part of your workspace. Check your internet speeds to ensure you’re set up for success. You may also be able to negotiate a higher speed for your money from your internet provider.
Workspace. The most important part of running a successful small business from home is making a dedicated space. You’ll likely spend a lot of time at the computer designing new strategies and testing them, so a comfortable desk is key. Look for a desk that facilitates a comfortable and healthy sitting position. We recommend having a work table alongside your desk so you have room to spread out.
Proper lighting. As with any home office, proper lighting is key to reducing eye strain and keeping you comfortable. However, it’s also important to remember that many dropshippers get a competitive edge by customizing their listings with customized photography and videography of their products.
With that in mind, equip both your desk and your spare worktable with the proper lighting setup to take photos and videos as well. You don’t need to have a professional photography studio just yet, but making space for that activity will save you a headache in the long run.
Be sure to have solid overhead lighting throughout the room, plus a great desk lamp and some ring lights for your workspace to start. You can always add in more custom lighting as you scale, but these are essential to getting your business off the ground.
Storage. While you fortunately won’t need to hang on to the actual inventory you’re selling, it’s a good idea to build in storage options to house products. This way, you have somewhere to store sample items that you may order for QA or for listing photography and videography. Storage is also important when it comes to keeping any business paperwork organized. We recommend installing shelving to keep these items off the ground and out of the way of your creative space. You can also use storage cubes and a filing cabinet if that’s more your speed.
Register your business
Find your niche
As a small dropshipping business, chances are you’ll be more successful by narrowing in on a type of product, activity, or industry rather than trying to compete with huge online marketplaces. These massive corporations have the scope to offer nearly any type of product you can imagine, so finding your niche is something that will differentiate you from the big guys.
Dropshipping is becoming more popular, and because it’s relatively easy to start dropshipping, there’s a lot of competition. Offering your customers a unique array of products that are specific to their demographic is a great way to make your business stand out.
There are two avenues you can look into when you’re planning what types of products you’ll offer in your dropshipping storefront. Ideally, you’ll be able to find a mix of both, bringing in revenue from different sources, you can also use a product search tool to help you find the right product for you.
- Sourcing unique new products. Researching new products that are being developed can be a great way to bring traffic to your web store. If you are sourcing digital content to redistribute, make sure you check it for plagiarism. Finding and connecting with burgeoning companies takes some time and dedication, but putting in that time can mean big profits for you when their brand goes viral. Kickstarter and other crowdfunding platforms are wonderful for getting ideas and connecting with new companies.
- Jump on trending/ seasonal products. The advantage of selling products you know are trending is that they’re established. You’re not having to gamble on whether a new product will flop — you know it’s a strong seller.
- Secure suppliers. Reliable suppliers are key to successful dropshipping businesses. You can do everything right — offer a great online experience, carefully curated product selection, and friendly customer service — but if your supplier isn’t reliable, your customers won’t have a good experience.
When you start dropshipping, it’s smart to go with an established supplier with strong online reviews from other retailers. It may cost slightly more compared to smaller suppliers offering rock-bottom prices to get a toehold in the market, but you’ll get that value back in reliability.
Create a presentation plan
How you present your products can make all the difference in how successful your dropshipping business is. While custom photos will always give you an edge over widely available stock photos from your supplier, they are expensive. Here are a few ways you can make the best of photos that are available to you from the brands you carry:
- Post more than one photo of each item. Three photos are ideal — one a front shot of the product on a white or neutral background, a second from a different angle, and a third of your product in use.
- Take care to ensure you have good-quality photos. Nothing spoils a potential customer’s impression of seeing a small, grainy photo. Modern digital consumers are savvy and can spot a poorly constructed website easily. Pixellated and small photos give the impression that a business isn’t on the up and up and can quickly deter potential customers.
- Cropping (or not) is crucial. The positive impact of high-resolution photos can rapidly be lost if the image is overly zoomed-in or so small a customer can’t see the details. This normally results from the photo settings in the website design program you use. Checking your theme or template for photo resolution and size requirements will help you present your images best.
As we discussed earlier, there’s a lot you can do with an at-home photography or videography setup. Look at other listings and customer-generated reviews to get an idea of what types of images others find helpful. If you’ve implemented a photography workspace, you can recreate them in your own studio.
Protecting your home-based dropshipping business with home insurance
For many entrepreneurs, operating a dropshipping business from their home offers flexibility and convenience. However, it’s essential to recognize that traditional home insurance policies may not cover business-related activities and assets adequately. To safeguard your home-based dropshipping business, here’s a guide on how to protect it with your home insurance.
1. Evaluate your existing home insurance policy
Begin by thoroughly reviewing your current home insurance policy. Understand what is covered and what isn’t, as most standard home insurance policies do not cover business-related losses. This initial step will provide you with valuable insights into your existing protection.
2. Communicate with your insurance provider
Reach out to your insurance provider to discuss your home-based dropshipping business. They can help you understand the extent of your current coverage and suggest necessary adjustments. Be transparent about your business activities to ensure accurate guidance.
3. Consider specialized business insurance
Since home insurance is primarily designed for personal use, it may not sufficiently cover your business-related assets and activities. To bridge this gap, consider the following types of business insurance:
- Home-based business insurance: This tailored coverage is specifically designed for businesses operating from home. It typically covers business equipment, inventory, liability, and business interruption.
- Commercial property insurance: If your dropshipping business involves substantial inventory or expensive equipment stored at home, commercial property insurance can protect these assets.
- Liability insurance: Protect yourself from potential legal claims by obtaining liability insurance, which covers injuries on your property or product-related issues.
4. Accurately value your assets
Determine the accurate value of your business assets, including inventory, equipment, and any valuable items related to your dropshipping operations. This valuation will guide you in establishing appropriate coverage amounts.
5. Keep business and personal property separate
Maintain a clear separation between your personal and business property. This delineation ensures clarity when filing claims and helps avoid disputes with your insurer.
6. Document your business activities
Maintain meticulous records of your business activities, transactions, and financial statements. These records will be essential in the event you need to file a claim, serving as evidence of your business operations.
7. Update your policy
Work closely with your insurance provider to update your policy to reflect the necessary coverage for your home-based dropshipping business. This may involve increasing coverage limits or obtaining additional policies to protect your assets adequately.
8. Understand policy exclusions
Be aware of any exclusions in your policy. Some business activities may still not be covered, so it’s crucial to understand what is clearly and isn’t protected under your insurance plan.
9. Consider business interruption coverage
Business interruption coverage can be invaluable if your home-based dropshipping business is temporarily unable to operate due to a covered event, such as a fire or natural disaster. It can help replace lost income during downtime.
10. Consult an insurance professional
If you’re uncertain about the best insurance options for your home-based dropshipping business, consider consulting an insurance professional or broker specializing in business insurance. Their expertise can help you tailor coverage to your specific needs and circumstances.
Protecting your home-based dropshipping business with home insurance requires careful consideration and appropriate adjustments to your coverage. By taking these steps, you can safeguard your assets and operations, providing peace of mind as you continue to grow your business from the comfort of your home.
Choose the right platform
Choosing a platform to get started with your dropshipping business is an important part of the process. Different platforms boast varying capabilities, ease of payment processing, and tiered service packages. As an entrepreneur, here are some key things to consider while weighing different platforms like Shopify, WooCommerce, and Wix.
Website. There are countless platforms to design your website, but not all provide the backend infrastructure to support dropshipping. Do some thorough research before committing to a web design platform to avoid the extra cost of migrating your website to a platform that’s better optimized for dropshipping.
If you’re feeling creative, take a swing at designing your website yourself — you never know, maybe you’re an undiscovered website design genius! Don’t be too hard on yourself if you’re not enjoying the process or find that you can’t create what you’re picturing. There are plenty of design professionals and dropshipping plugins that can help.
E-commerce platform. This might sound like it should be an available part of your web development platform, but some providers offer a built-in e-commerce feature, like Shopify or even eBay. If you choose to, you can include your site on the marketplace that Shopify hosts — think of an Etsy-style marketplace that allows you to build a fully custom website to connect to.
Payment processing. Like e-commerce features, payment processing is important to consider before deciding to go with one platform over another. Most e-commerce tools, plug-ins, or apps connected to a store will take a percentage of each sale. How much they take and how your earnings are sent to you will differ between platforms and plans. In this case, it’s worth reading the fine print!
Marketing your dropshipping business
Affiliate marketing is another powerful tool that can help boost your dropshipping business. You only pay your affiliates a commission when they make a sale, so there are no upfront costs or advertising expenses. Look for affiliates who have a following that aligns with your target audience. The more relevant the affiliate is to your niche, the more likely they are to bring in sales. This can be a cost-effective way to reach new audiences and expand your customer base.
To succeed in affiliate marketing, you need to create compelling offers that will attract affiliate marketers to promote your products. You can also use email marketing and social media to recruit affiliates and provide them with the tools they need to promote your products effectively.
Tracking and analyzing your affiliate marketing campaigns can help you identify what works best and optimize your strategy for maximum results.
Social media marketing is one of the most powerful channels to get your business out there and increase customer awareness. However, that is not enough just to be there and hope that your target audience will notice your small business.
Content is (still) the reigning monarch. To stand out in a sea of other dropshipping businesses, your content needs to be well-planned and executed. You must put in the effort — from interesting and unique videos and photos to catchy, thumb-stopping captions — to get noticed on social media. The great news is that when you do that, the potential payoff is huge.
On-page SEO refers to the structure of your website content and the number of times relevant keywords are used in page copy. If you’re an online shoe store, but all your product names and descriptions hardly use words like ‘active footwear,’ ‘boots for women,’ ‘business casual men’s shoes,’ etc., search engines will be less likely to rank your page at the top of a search for your types of products. Instead, you’ll need to use these keywords in your listings and across your site to increase traffic. Research SEO for your particular niche to help make sure your ranking goes up so you reach more customers.
Creating digital content to bring customers to your e-commerce platform is the reason why many websites have a blog, ‘resources,’ or ‘DIY’ section. While this is money they’re spending to create content that isn’t directly tied to their sales, it gives potential customers a value-added experience without asking anything from them. In the end, that’s seen as an altruistic act by your potential customers, which can be the thing that sways them to purchase with you over another seller.
Blogging – Long-form content can be very helpful to inform your potential customers more about your products, but it can also be used to give them tips to get the best performance from something you sell or use it in a way they might not have thought of.
Copywriting – Copywriting can mean writing blog articles, but it can also include the text on your website, social media captions, advertising media, etc. A great copywriter will help you connect your brand to your products and tell your potential customers a story, culminating in their motivation to purchase from you.
Using marketing tools can help you improve the effectiveness and efficiency of your efforts. These tools can enhance your ability to reach and engage your target audience, making your accident prevention initiatives more successful. You can optimize your campaigns and achieve better results by leveraging marketing strategies, such as targeted messaging, creative content, and data analysis. Marketing tools enable you to communicate your message clearly, capture attention, and inspire action, ultimately making your accident prevention efforts more impactful and productive.
Content marketing also gives you a chance to leverage your blog posts for affiliate marketing, where you earn money by promoting products or services from other companies.
Social shopping – If you’ve noticed over the past few years that when you search for an item, a dedicated ‘Shopping’ section comes up before the regular search results, then you’ve already experienced social shopping.
Banner – Banner ads on another company’s website can be very influential. Platforms like Google Ads will do the legwork for you on where to place your banner for the best result.
Pay-per-click – PPC ads, like the ones you commonly see on Google and Facebook as ‘Sponsored Ads’, are incredibly powerful. They do require some dedicated targeting to get right, and budgets can go fast, so it’s best to have a pro do your PPC campaign setup. Don’t forget to monitor your efforts with a customer engagement platform to find out what is the best way to allocate your resources.
With a little research and the proper setup, you’ll be well on your way to being a dropshipping master!