Questions You Should Ask Before Starting a Dropshipping Business
You might have heard about dropshipping. It’s a relatively simple pick-up-and-play eCommerce strategy that requires little starting investment, flexibility and good potential incomes if you’re good at it.
If you’re looking to start a dropshipping project to supplement your income, this article should help you answer the basics when starting out.
What is your niche?
When starting out, it might be tempting to go all gung-ho and start selling anything and everything and act like a mini-Amazon. That unfortunately won’t work so you should first seek to identify what exactly it is you want to sell, and then thoroughly and completely understand the products you offer and the audience who buys them.
Even the mighty Amazon started out by first selling books, and then branching out to other areas until it became the behemoth that it is today.
Who is your dropship supplier?
Once you’ve identified a suitable niche with which you are comfortable, what comes next is finding a suitable supplier that offers the products you want.
Of course, the most important thing when choosing one is the price at which they sell you stuff. But that should never be the only consideration. You need a supplier that is consistent in their delivery, predictable and serious in how he conducts business, even if that means you have to pay a little extra.
In the short run, this will reduce your profit targets. But a good supplier allows you think long term, because you know they will rarely (if ever) be late for an order or go no-contact at a critical moment.
These unforseen logistical issues are enough to completely derail a small business, and send it into a tailspin.
How do you acquire customers?
Of course, this is the most important aspect of a business. Figuring out where you can find customers or how to acquire them should be the second thing you think about after your niche.
An easy way to find customers is to go where they are. In Internet terms, this means setting up shop on popular online market places that already have an solid list of customers.
The most popular ones are:
While they do ask for commisions and require you to pay your listings, they do a good deal of the leg work in helping you find your customers.
Another popular option is to set up your own website, and drive customers there. If you go this route, you’ll have to figure out how exactly you’ll build your website. A popular choice is WordPress, but if you’re not afraid of dabbling in some code you can go ahead and build your landing page in HTML.
Once you’ve built your website, you’ll need to attract traffic. There are a variety of methods to do this, but the most popular ones are either organic traffic or pay per click.
That being said, we are in the world of Web 2.0, so you could instead opt to find your customers through social media platforms. All of them can more or less serve such a role, but the best ones are highly visual and make your products visible.
A good combination that you can try out is Instagram paired with Shopify.
Do you have all your tax and other documents?
Regardless of where you’re operating from, you’ll need to make sure you have all of your documentation in order, and also make sure you are covered in whichever jurisdiction you’re selling to.
If you want to sell into the EU from the USA or vice versa, you’ll need all the proper documentations and licenses.
But the most important documents you should take into account are tax related. These can cover aspects such as VAT, sales tax and more.
Besides having all these in order, you’ll also need a proper way of writing invoices that is automatic in nature and allows you to do other more important stuff for your business.
This is just a short list of the most important aspects you should consider when setting up a dropshipping operation. But even though it’s a simple business strategy, it still has quite a few moving parts you should take into account.