In this Dropshipping Guide For Beginners post, I have tried to reverse all aspects of dropshipping for you. You will learn some professional tricks that the great dropshippers make use of, and you will be fully equipped to start your own webshop with dropshipping after reading this guide. The guide is written independently by any companies, or other influences. It is purely my attitudes and my knowledge of dropshipping I have made use of. This means that it is my own experiences that I myself have tested on my own body, and know works. My experience comes primarily from the IT industry and my education as a Buyer, where you use dropshipping in a larger and larger style.
Dropshipping is for some an ingenious way to start a business, while others look down on it and think it presents a number of problems. Of course, there are some things that work differently that make it a slightly different way of doing business. I will address those challenges so that you feel comfortable. However, dropshipping also provides a number of significant benefits that can greatly benefit your business.
What is Dropshipping?
Before we get off to a good start, it is important that we are in agreement with each other regarding what we are talking about when I mention dropshipping. Dropshipping can take place in many different ways, and without your end customer being aware of it. An example of a company that uses clear dropshipping is Amazon .
The webshop looks like a whole, but under each product, you can see where the item is in stock, and you actually have the opportunity to buy the item through several retailers. You pay to Amazon, your invoice comes from Amazon, but the item comes directly from the supplier / store that has the item. A company where it takes place a little more hidden is a company like Bilka. If you buy white goods or mobile phones from Bilka.dk, for example,
I know that in the vast majority of cases they come directly from the supplier, sometimes even so well hidden that Bilka.dk is even the sender of the package.The advantage of these webshops is that they save a lot of handling of the item, and they do not have to have the item in stock and thereby stockpile funds.
There are several methods of dropshipping, but when the word is used in this guide, it is a collective term for the service that a supplier can offer, where the supplier does not ship goods to you, but to your end customer. The supplier may then have several faces. It can be a manufacturer, a wholesaler, or a retailer who can offer you this service.
Dropshipping can easily be used by you who do not intend to make a webshop, but dropshipping is generally aimed at webshops, and therefore the guide will be based on the fact that you want to use dropshipping on your webshop.
Advantages & disadvantages of dropshipping
As mentioned, there are both advantages and disadvantages to using dropshipping. Here I will briefly outline them. They will be addressed later in the guide when we encounter them.
- Less inventory – less capital needed. You do not have to buy a large inventory before you can start your sale, with dropshipping you only pay for your item when you HAVE sold it.
- Easy to get started as you do not need a warehouse that does not need to be packed packages, and in most cases you do not need to handle returns and complaints either.
- Keeps operating costs down
- You can basically place your business where it suits you.
- Easy to expand the range, you do not have to believe much in the product to test the sale of. You only pay when you HAVE sold the item.
- The supplier does the hard work, so with the right setup you can easily turn over large amounts without necessarily doing more than making your webshop.
- Often a low profit on the products as the operating costs are low and thus an easy market to enter, and therefore there is often great competition on the price.
- Difficult to keep track of the synchronization between the stock numbers of your suppliers and your webshop
- Complex delivery matrices occur for multiple items from multiple vendors.
- You must be responsible to the customer for the supplier’s errors. It could be a wrong item delivered, or a package that never arrives.
Find out what you want to sell
It can be tempting just to look at the shelf and take the easiest or the most straightforward. But think about the fact that you, hopefully, get a lot of questions about your goods from all your future customers. So it must be an item that you yourself find exciting, or interested in.
This will mean that it is not a sour duty when it comes to researching products and product info. It is also important to check if there is a good domain available for your new webshop where you need to sell your goods from. I can recommend UnoEuro , which I use both for all my websites and for smaller webshops.
There can be many advantages and disadvantages to choosing certain product categories. You should first and foremost think about the competition on the product. What can you offer that your competitors cannot? Since there is often a lot of competition on the price when it is an item that is easily available as a dropshipping item, then it could be service you have to turn on instead of the price.
It can also be sheer web presence that you are good at, either through social networking or good search engine optimization. It can also happen that you are lucky enough to find an item that is not so easily available online, and you can thereby be competitive on price. So how do you find that item, you will probably ask. It’s downright hard work.
It goes without saying that the lowest hanging fruits are also the ones with the most competition. It is therefore a large, and perhaps most importantly, work to find the right dropshipping supplier and the right item. But again, it is important to keep in mind what you think is interesting, because it is often the item you think is interesting that you are best at selling. If nothing else, you can probably take a small bite out of the sale, which can be a good starting point for expanding your webshop and getting better.
Some have asked what one can expect to have of profit when selling the item through dropshipping. It is not a question of where to generalize, but from what I have seen, the margins are typically lower than items that are not dropshipped. So if you get your business built big enough, then you can most likely start buying for your own stock and thereby earn more.
But should come up with some guesses on margins within certain product categories, then I would estimate an average profit on dropshipping of IT to be around 10%, cables and similar IT accessories about 30%, clothes, watches and accessories up to 70% .
Find a dropshipping supplier
If you have decided that you need to dropship the item that you want to sell on your new webshop, then look at the ads on this page and see if there should be something interesting. Otherwise, you can try writing in the forum and see if anyone wants, or knows someone who will, dropship the item you are looking for for you.
Not all items are suitable for dropshipping. It depends a lot on the supplier. A lot can be done if you are a little creative. So if you do not find anything here on the Dropshipping Portal, try contacting suppliers / wholesalers who have the product you want to sell.
If you encounter a wall, do not let yourself be knocked out. Although dropshipping is not a new phenomenon, there are still many who do not know about it, and may be a little intimidated by it. Explain the benefits both you as a buyer and the supplier as a seller can have from this collaboration.
Suggest the supplier to help investigate the aspects that are the reason why the supplier says no. If it is impossible to get through, then you must either make your own stock or find another item that CAN be dropshipped.
Setting up a webshop
Now that you have found out what you want to sell, and a supplier for it, you already know something about how the product can be displayed in the right way in your shop window, your webshop. You also know if the supplier has any special requirements that you must meet and what requirements the supplier can meet.
The information you need now that you are going out and looking for someone who can make a webshop for you. You can also choose to make it yourself, but I would strongly advise against it if you do not have good technical ingenuity and have worked with it before.
It is something completely different than making your own simple website. Build the page properly from the start, then you will get the best from the start. It will also mean that you have a good partner if you get so far that you will develop more on your side. Because with dropshipping, there are a lot of things that can be automated,
One of the things that you will probably be interested in if you have a large product range is automatic item updates and item creations. Many suppliers can do this over time. This is usually done by them being able to pull, or get the system to pull, a file that has the same format every time where your product range from the supplier appears.
The file is usually created as CSV (comma separated file) or Excel format. You can import this file with your webshop’s CMS system. If the supplier then one week changes the cost prices, then the cost prices on the webshop will also change and result in new sales prices.
In this way, you also automatically get changes in product texts, and you can quickly see if there are new products in the range that you want to create. If you want it fully automated, the file can be automatically uploaded from the provider to your server,
The next step for an automation is automatic order processing between you and the supplier. However, it is a lot more complex, if you want it, ask your web agency with which you have had a good collaboration at that time.