How to Start a Dropshipping Business in 8 Easy Steps (2024)
Wondering how to become a dropshipper and if it’s worth it? With more people shopping online than ever before – 2.71 billion, to be exact – now is an excellent time to start a dropshipping business.
Dropshipping allows you to sell products online without holding inventory. You simply partner with a supplier who ships orders directly to your customers.
In this article, we‘ll cover how to set up a dropshipping business, from selecting a niche to marketing your store.
Disclaimer: This post may contain affiliate links, which means we may earn a commission if you make a purchase through those links. This comes at no additional cost to you.
What is Dropshipping?
Dropshipping is a popular business model where a retailer partners with multiple suppliers or manufacturers to sell products on an eCommerce platform or marketplace, without handling inventory management or shipping logistics.
As a dropshipper, you act as the middleman by selling products made by other businesses on your own online store.
When a customer orders something from your store, you pass the order to your dropshipping supplier, and they’ll handle the rest.
How Do You Make Money With Dropshipping?
Your dropshipping profit margin is the difference between what your customer pays you and the price you pay the supplier for order fulfillment. For example, if you sell a notebook for $10, and the production cost is $3, then you make $7 from the sale – a 70% profit margin.
A big advantage of dropshipping is that you don’t need a warehouse space, which means less financial risk and business expenses.
How Does Dropshipping Work?
Here’s a quick overview of how the dropshipping method works:
1. Find Suppliers
You’ll partner with one or many dropshipping companies offering products you want to sell to your customers.
2. List Products on Your Store
Many dropshipping websites offer automated integrations, making creating and managing your product catalog and customer orders easy.
3. Receive Payments for Orders
A customer purchases a product from your store, and you receive the order details and payment.
4. Forward Orders to the Supplier
You forward the order information to your supplier. In many cases, the dropshipping process is automated.
5. The Supplier Fulfills and Ships Orders
Your dropshipping supplier packages and ships it directly to your customer.
How do I Start a Dropshipping Business?
1. Select a Niche
For your new business to start generating sales from dropshipping, you’ll need to find a niche market.
A niche is a specific market segment that caters to a targeted group of people with particular interests or needs.
Let’s go over how to identify and target a niche.
Turn to Your Interests
Choose a dropshipping niche that aligns with your personal interests and knowledge. This will make it easier to create compelling content and connect with your target audience.
For example, if you adore cats and have a knack for creating funny captions, you could combine the two into a profitable cat t-shirt dropshipping business.
Research Keywords
Conduct thorough keyword research on search terms related to your target market.
Use online tools like Semrush and Google Keyword Planner to identify keywords with high search volume and low competition.
Evaluate Market Size, Growth, and Profit Potential
Choose a niche with a growing customer base and offer unique products in areas with low competition.
Use product research apps to find trending items and understand customer demand.
Test Product Ideas
Order a few products as samples, especially if you plan to sell personalized merch like custom clothing or consumer products.
Evaluate the quality and delivery times and gather feedback to refine your products before settling on a specific niche.
2. Analyze the Market
Once you’ve chosen a niche, it’s time to do some in-depth market research.
This will highlight potential opportunities and challenges, help you assess product demand, and perfect your sales strategy.
How to analyze the market:
Review Customer Demographics
Understanding your target audience’s demographics will help you tailor your marketing strategies and product selection to better meet customer expectations.
Use tools like Google Analytics, social media insights, and market research reports to see their ages, genders, and locations.
Review Your Competition
Identify your future competitors by searching for relevant search terms on popular search engines like Google.
Find the top-ranking websites that also sell to your niche. Analyze what these eCommerce businesses are selling, their pricing strategies, and marketing efforts.
Read both positive and negative reviews to gain insights into what customers like and identify gaps in the market that you could fill.
Understand Market Demand
Get a good read on the market to understand the popularity of the products you plan to sell and how much competition you’ll face.
Engage in niche-specific forums, Reddit communities, and Facebook groups to gain firsthand insights into what your potential customers are discussing.
Closely monitor relevant data on search volume, social media mentions, and sales.
Follow Market Trends
Stay updated on industry trends and emerging tech to anticipate shifts in consumer behavior and adapt your sales strategy accordingly.
For example, if you’re in the fashion niche, monitor current styles and follow popular social media influencers to align your products with the latest in the industry.
Test the Market
Run small-scale ad campaigns on platforms like Facebook or Google to test the market response. This can provide valuable data on customer interest and potential sales volume.
Collect customer feedback through surveys or beta testing groups, and use this feedback to refine your product selection and marketing strategy.
Evaluate Your Business Model
Consider your business model’s scalability, profitability, and sustainability to understand your growth potential.
Determine how much resources you need to invest to reach your goals and consider other business models to diversify your income streams.
3. Select a Dropshipping Supplier
Your dropshipping supplier can make or break your business, so carefully review your options before entering a dropshipping agreement contract.
Since it offers limited control over product quality and shipping, it’s important to choose a supplier with a good reputation who offers competitive prices, high-quality products, fast shipping, and reliable customer service.
Partner with many dropshipping businesses to reduce risks associated with supplier errors and ensure a steady product supply.
Printify is a print-on-demand company with an excellent reputation, multiple suppliers, some of the best prices in the industry, 24/7 customer service, and automated multi-channel selling.
Unlike traditional dropshipping, Print on Demand lets you customize products before listing them in your store. Customization makes it easier to target more specific niches and stand out in crowded markets.
Partner with Printify to access 900+ custom products your customers will love. Use our Product Creator to design merchandise and offer a wide range of unique items to your customers within minutes.
Pro Tip
Check out our list of the top eCommerce dropshipping suppliers to find the one that best suits your business needs.
4. Decide Where to Sell
Once you’ve selected one or many suppliers, you’ll need to decide where to sell your products.
Look for a sales channel that best aligns with your business objectives and target market.
Online Marketplaces
These are virtual spaces where multiple sellers offer their goods in one location, similar to a physical market.
Sales channels like Etsy, eBay, and Amazon give you access to a large audience of shoppers and drive organic traffic to your store, but you’ll have less control over your shop’s layout and aesthetics.
eCommerce Platforms
These sales channels let you create your own online store with full control over your site’s layout, product listings, and customer experience.
Opening a store on a platform like Shopify and WooCommerce takes a bit more effort, and you’ll be in charge of attracting visitors.
Social Commerce
Popular social media channels like Facebook, Instagram, and TikTok Shop let you sell products directly to your followers through integrated shops, posts, and paid ads.
Like online marketplaces, these sales channels offer a large audience and drive organic traffic to your products.
5. Sort Out Your Finances
Now that we’ve covered the fun parts of how to get into dropshipping, we’ve arrived at the step no one really likes but everyone needs to do – getting your finances in order.
Let’s go over a quick checklist to ensure you’re fully prepared to launch a dropshipping business.
1. Open a Business Bank Account
Keep your business and personal finances separate by opening a business bank account and applying for a business credit card.
This will streamline your bookkeeping, simplify tax preparation, and provide access to credit for business-related expenses.
2. Connect a Payment Gateway
A payment gateway is a service that processes online transactions via credit card.
You’ll need to set up a payment gateway to accept payments from customers on your website. Some popular options include PayPal, Stripe, and Square.
3. Set a Budget
Although starting a business with zero upfront investment is possible, knowing your available finances helps you allocate resources wisely, prevent overspending, and secure funds for growth and emergencies.
Include costs for website maintenance, marketing, product sourcing, and shipping fees.
Pro Tip
Review our list of the best productivity tools to streamline budgeting and other essential business tasks.
4. Create a Pricing Strategy
Calculate your costs, including product, shipping, and platform fees, and set prices that cover these expenses while keeping a healthy profit margin.
Review and adjust your pricing regularly based on market trends and customer feedback. To attract more customers, offer discounts or promotions during holidays.
5. Plan for Taxes
Understand your tax obligations, including US sales tax, VAT in the EU, income tax, and other applicable taxes.
Some sales channels like Etsy collect and remit both sales tax and VAT on your behalf, but you may still need to file a tax return.
Set aside funds for tax payments and consult a tax specialist to ensure you comply with your country’s laws and regulations.
6. Get a Business License
Obtaining a license is important to run dropshipping businesses as legal entities.
You could run your enterprise as a Sole Proprietorship or form a Limited Liability Company, but consult local authorities or legal professionals to understand the specific requirements in your area.
Requirements for licenses, permits, and certifications vary depending on your business structure and location.
7. Market Your Dropshipping Business
Marketing your dropshipping business is one of the most effective ways to attract customers and drive sales.
Here are some key strategies to consider when marketing your online business.
Build a Social Media Presence
Social media is a powerful tool for reaching your target audience. Platforms like Facebook, Instagram, and TikTok can help you showcase product quality and drive engagement.
Share nice images and videos, interact with your followers, and use platform-specific features like Instagram Stories and TikTok Challenges.
Use Email Marketing
Create a mailing list and offer incentives like discounts or exclusive content in exchange for sign-ups.
Send regular newsletters with updates on new products, special promotions, and valuable content related to your niche.
Personalize emails to make them more engaging and relevant to your audience.
Optimize for Search Engines
Doing Search Engine Optimization (SEO) can increase visibility on popular search engines like Google and drive more traffic to your website.
- Use relevant keywords in your content, product titles, descriptions, and metadata to improve your search engine rankings and make it easier for potential customers to find your products.
- Update your website regularly with fresh content, such as blog posts or product descriptions, to keep it relevant and attractive to both search engines and visitors.
Join our SEO Masterclass to learn how to elevate your search engine rankings and drive more traffic to your dropshipping store.
Use Advertising Tools
Advertising tools like Google Ads, Facebook Ads, and Instagram Ads can help you reach a wider audience and increase your visibility.
These tools let you target specific demographics, making it a cost-effective way to drive traffic to your website and increase sales.
Experiment with different ad formats like video or carousel ads to see what your audience interacts with more.
Partner With Influencers
Find social media influencers in your business niche to reach a larger audience and increase brand awareness.
While influencers with a large following can provide broad exposure, micro-influencers (with 10,000 to 100,000 followers) often offer higher engagement rates and more targeted audiences.
Collaborate with influencers through product reviews, giveaways, sponsored posts, and unboxing videos.
Utilize Content Marketing
Content marketing helps establish your brand as an authority in your niche and attracts organic traffic to your website.
Create valuable content that resonates with your target audience. This can include blog posts, how-to guides, videos, and infographics that provide useful information related to your products and niche.
Try Affiliate Marketing
There are two distinct ways to use affiliate marketing, and both offer powerful opportunities to grow your dropshipping business.
There are two main options for affiliate marketing:
- Launch Your Own Affiliate Program – Invite bloggers, social media influencers, and industry experts to promote your products in exchange for a commission on sales they generate. This approach has minimal investment and helps grow a network.
- Join Existing Affiliate Programs – Partner with other companies and promote their products on your website or social media to generate additional income while enhancing your brand’s credibility.
Pro Tip
Become a Printify Affiliate to earn a 5% commission on every sale your referrals make for the first 12 months.
8. Monitor and Optimize
It’s essential to monitor and fine-tune your operations regularly to keep your business running smoothly and growing effectively with the dropshipping fulfillment model.
Track Store Performance
Monitor your store’s traffic, sales conversions, and customer feedback to stay ahead of other sellers and make informed decisions.
Many sales channels offer built-in analytics tools to help you track performance metrics and optimize your store.
Track Financial Performance
Regularly monitor your financial metrics like revenue, expenses, and profit margins. Track sales tax and VAT collected through your online store to ensure accurate reporting and compliance.
Use accounting software or apps to keep accurate records and generate financial reports.
Refine Your Strategies
Adjust your marketing tactics, optimize your budget, and tweak product offerings based on data insights.
Use tools like Google Analytics and Facebook Ads to refine your targeting, try different ad formats, and analyze the performance of your campaigns.
Review which marketing channels and strategies drive the most traffic and conversions, and allocate your budget accordingly.
Why Is It Worth to Start a Dropshipping Business?
Global eCommerce sales are expected to grow by another 8.3% in 2025, resulting in worldwide sales of $6.86 trillion.
The dropshipping model is an attractive option for launching an eCommerce business because it is a low-risk, low-cost way to get started.
With no initial investment, no inventory costs, or no need to handle shipping logistics, all you’ll need is an internet connection to start learning how to do dropshipping and open an online store.
How Profitable is Dropshipping?
Dropshipping is an increasingly popular way for store owners to run a profitable eCommerce business with minimal financial investment.
Low Startup Costs
Dropshipping eliminates the need for large upfront investments in inventory, warehousing, and shipping logistics, significantly reducing the financial risk of launching a new business.
Partner with Printify to create custom products and start selling for free.
High Profit Margins
You can source products at a wholesale price and set your own retail price to make a higher profit.
Keep in mind that you may need to set lower profit margins in highly saturated markets due to price competition and frequent discounts. However, if you go with Print on Demand instead of traditional dropshipping, you’ll be able to maintain higher profit margins thanks to reduced competition.
Multiple Dropshipping Suppliers
Dropshippinig gives you the flexibility to work with various suppliers, letting you offer a broader product selection and easily adjust to market trends.
Printify provides access to a global network of Print Providers who ensure a wide range of high-quality, customizable products and fast shipping services.
Scalable Growth
Dropshipping lets you expand your product offerings and reach new customers without the constraints of physical inventory.
It’s easy to create new products and test product quality and markets without financial risk.
Advantages of Print on Demand
It’s important to consider the clear benefits of using Print on Demand over traditional dropshipping.
POD empowers you to stand out with unique products, boost brand loyalty, and enjoy higher profits than standard, off-the-shelf items.
Print on Demand makes it easy to:
- Skip the costs and risks of maintaining inventory.
- Quickly test new product ideas.
- Offer a large collection of custom products.
- Enjoy higher profit margins.
- Quickly scale your product selection as demand grows.
Launch a POD Dropshipping Business With Printify Today
Dropshipping FAQ
What is the dropshipping business model?
The dropshipping model is a streamlined approach to retail where you don’t hold any inventory or manage order fulfillment and shipping.
Instead, when a customer orders from your online store, you forward the order details to a third-party supplier, who then fulfills the order and ships it directly to your customer.
How can a beginner start dropshipping?
- Choose a profitable niche aligned with your interests and market demand.
- Research your target audience, competitors, and market trends. Understand what customers want and where you can stand out so you don’t offer the same products as everyone else.
- Find suppliers that offer quality products, reliable shipping, and excellent customer service.
- Choose your sales channels, whether it’s an eCommerce marketplace like Etsy, a platform like Shopify, or social media channels like TikTok Shop.
- Organize your finances to keep your business and personal assets separate and establish a clear budget for operational costs.
- Obtain licenses and permits to ensure compliance with local laws and regulations.
- Market your business through social media, email marketing, SEO, and paid ads to attract your target audience and encourage customer loyalty.
- Track performance metrics to refine your business strategy and improve your chances of success.
How much does it cost to start a dropshipping business?
While it’s possible to start dropshipping for free with Print on Demand using Printify, the actual costs of running an eCommerce store can vary wildly.
As a dropshipping business owner, you’ll need to account for eCommerce platform fees, marketing costs, product samples, and any payments related to your status as a legal business owner, including sales tax, VAT, and other regulatory fees.
That said, spending $50 to $100 might be all you need to launch a successful dropshipping store.
Is dropshipping legal?
Yes, dropshipping is legal in many countries worldwide, including the United States.
To operate your dropshipping business legally, you must comply with local business regulations, tax laws, consumer protections, and product safety standards.
Ready to Start Dropshipping?
Dropshipping is a low-risk, high-reward business model. It’s an excellent way to earn a living while doing something you love.
Printify offers over 900 customizable products, an easy-to-use Product Creator, and seamless integrations with popular sales channels to make your Print on Demand journey easy.
Whether you’re a seasoned entrepreneur or just starting, Printify can help you build your dream dropshipping business.
So, how do you start dropshipping? Sign up today to create and sell custom products with Printify.
Make It Happen Today!
Written by
Zane Bratuskina
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