Dropshipping Business in 2021: Everything You Need to Know


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Nowadays you will find dozens of ways to make money online. But there are very few as effective as dropshipping. While the idea is very tempting and the money-making potential it carries is huge, many individuals are often unclear about the concept of dropshipping. That’s why we put together this complete guide, where we’ll talk about how dropshipping works, the ideal platforms for dropshipping, and the right method for getting started with a dropshipping business in 2021. Let’s first start by discussing what dropshipping actually is.

What is Dropshipping?

Dropshipping is an order fulfillment method where you can sell products directly to consumers without ever holding any inventory. When a customer purchases a product from your dropshipping store, a third-party supplier ships it directly to the customer’s doorstep. The customer will pay you the retail price you set and then you pay the suppliers’ wholesale price. The rest is your profit. 

This is mostly a hands-off procedure for you as a retailer, when it comes to ordering fulfillment and shipping because you aren’t stocking products, physically fulfilling orders, or handling inventory. Instead, the third-party supplier will ship products to the customer on your behalf. 

How does the dropshipping business model work?

There are three main players in the dropshipping model. They are: 

  • Manufacturer/supplier
  • Retailer (you)
  • Customer

The role of the manufacturer/supplier in a dropshipping business model is to create products, carry inventory, ship the products to customers on the behalf of the retailer, replace all the defective products, and then restock them. They sell products to the retailer at wholesale prices.

The retailer sells the manufacturer/supplier’s products under his/her own brand name on a self-owned store. As a retailer, you are responsible for choosing and marketing these products. You are also responsible for their shipping costs and setting prices that give you a profit.

Lastly, the customer buys those products directly from you i.e. the retailer. If any issues arise, they contact the retailer they bought the product from.

The entire dropshipping process is summarized in the following steps:

  • Customer places an order from your online store
  • Your dropshipping supplier prepares your customer’s order
  • Your supplier ships the order directly to your customer

Top platforms for Dropshipping Business:

There are multiple platforms for dropshipping that you may find online. However, three of the biggest and the most popular ones are for dropshipping are mentioned below:

  • Amazon
  • eBay
  • Shopify

Dropshipping Business on Amazon:

In Amazon dropshipping, you as a retailer procure products from your preferred vendor while the vendor takes care of shipping, and amazon manages the customer support and returns. One of the biggest perks of taking this route is that Amazon has some of the fastest shipping times in the market, so your customers get their orders quickly. In the 21st century, where life has become fast-paced, customers absolutely love quick delivery.

Amazon dropshipping is one of the most sought methods for dropshipping In 2019. This platform had over 300 million active users and generated more than $280 billion in sales. Using Amazon store dropshipping as a sales channel for your business can lead to huge returns. 

Does Amazon allow dropshipping or not?

In theory, allowing a third party to fulfill orders to customers on your behalf is not tolerable on Amazon, except when it is clear to the customer that you are the seller of record. if you want to check more about the dropshipping policy then click here.

How to get started with dropshipping on Amazon:

1. Set an Amazon Seller Account:

Firstly, if you want to sell on Amazon, you will need an Amazon seller account. You can get one by going to sellercentral.amazon.com. It will offer you two choices for the type of account. You can start as an individual or business. You’ll be asked for details about your business, such as address and tax information, name, password, charge method, deposit method, etc.

individual account:  0.99$ per item

business account:  39.99$ per month

2. Choose a high-demand product:

Next, you will need to find a product to sell on Amazon. You can use different tools for finding such products. If you’re a fresher, be sure to find high-demand, low-competition products to sell. You can find these products on different wholesale platforms like Oberlo, Ali Express, Ali baba. Then show those listings on Amazon. 

Also, when you make a start, it is recommended to keep things simple. Housewares, sports & outdoors,  patio, home & garden are all great categories for beginners because they tend to be low-maintenance.

3. Check different sites to see if the product is available:

When you have some product ideas, you will have to find a supplier. The biggest platform for product sourcing products is AliExpress. It’s a B2B website that sets e-commerce entrepreneurs in touch with suppliers who are available to dropship their goods.

4. Create an Amazon product listing

After getting the product idea and a supplier to fulfill that product, you have to create an Amazon product listing. From the Seller Central account, go to Inventory and add a product and “create a new product listing”. When you choose your product category,  you will need to fill out the information related to the listing itself. 

Advantages of Amazon dropshipping

Following are some advantages of Amazon dropshipping.

Low start-up costs:

In Amazon dropshipping, you don’t need to own any inventory. Instead, when you get paid by the customer, you can simply go to your supplier and give him the address and then he will ship that product directly to the customer. use a portion of the amount to purchase the product from the supplier and then have it shipped to your buyer through Amazon.

Fast to set up:

All you need is to sell your products. It is Amazon that handles customer support and returns.

Fully automated business:

There are many online apps and plugins that allow you to fully automate Amazon dropshipping. As a result of this, you no longer need to make interventions in the business every now and again, once you’ve set it all up to run by itself like a well-oiled machine. 

Dropshipping on eBay:

eBay is a very lucrative marketplace for beginner sellers and small businesses, with a constant stream of reliable customers and great business growth potential. eBay is an auction-based platform that allows you to sell items. It is similar to Amazon. eBay has a large audience of active buyers who browse the platform every day. Currently, eBay has about 180 million users who frequently buy products online. 

Does eBay allow dropshipping?

Technically eBay allows dropshipping if you fulfill your orders directly from a wholesale supplier.

Different Types of eBay Dropshipping:

There are three main types of dropshipping on eBay that is popular among sellers:

  • Dropshipping From Amazon on eBay
  • eBay Dropshipping From AliExpress
  • eBay Dropshipping From different Wholesale Suppliers

How To Get Started With Dropshipping on Ebay?

If you want to start dropshipping on eBay, you need to follow the steps below:

  1. Set up an eBay seller account

To start a dropshipping business on eBay, you need to set up an eBay seller account. You can even set up an eBay store, but it’s not necessary. Globally, there are different eBay sites for different countries, so you need to be sure that you sign up for the right one. It all depends on where your target audience resides.

2. Choose your products and dropshipping supplier

Firstly, complete all the research and then decide what you want to sell on eBay. Then, create an account as a retailer with the suppliers of your selected products. You have to reach out to the suppliers and ask them if they would dropship to your customers. It’s also necessary to ensure that the supplier is willing to attach a custom label (that includes your business name and address) to the package. This way, your customers will know that it was you who sent it.

3. List your items on eBay at a marked-up price

Upload professional images of the products from the supplier’s website. If you have product samples, you can perform the product photography on your own. Also, write the product descriptions in detail. For maximum search visibility, make sure you optimize your listings. 

The key point is choosing the right price point. You have to put the prices low enough to compete against similar listings, but high enough to still generate a profit.

4. Pass on your customer’s details to the supplier when you make a sale

When you make a sale, contact your supplier and give them your customers’ shipping information. According to eBay, the supplier is in charge of packing and shipping the product directly to your customer. Make every effort to ensure your supplier ships the product to your customer within the time period you have stated in your listing.

Advantages of dropshipping on ebay:

Simple enough for starters:

Dropshipping on eBay is easy to get started. There’s no need to invest in inventory and costs of setting up your own online store. All you have to do is set up an eBay Seller account and find a wholesaler to dropship on your behalf.

Save on marketing efforts:

Your listings on eBay will be placed in front of thousands of online buyers, saving you time and money on marketing, SEO, and paid traffic.

Grow with minimal risk:

It’s easier to scale your dropshipping business on eBay than a traditional online store, provided you have good connections with your supplier.

Disadvantages of dropshipping on eBay:

Listing Fees:

eBay charges a small fee per listing and also a percentage fee on your total sale price. These charges are known as a “final value fee”. 

Less Customization: 

Fewer customization opportunities for your listings and shop can make it more problematic to stand out from your competition.

Frequent Monitoring Needed: 

If you want to maintain the volume required to make money through product sales on eBay, you’ll have to stay on top of your listings. There are several online tools available that can help you manage the re-listing process.

Dropshipping on Shopify:

For many entrepreneurs, launching a Shopify dropshipping store is a great way to break into e-commerce. It is quite easy to set up Shopify dropshipping stores. You’ll be able to establish your own store even if you don’t have any technical experience. Shopify gives you access to the wealth of themes and apps to enhance user experience in your store. 

What makes Shopify dropshipping so special?

Shopify is a popular platform for dropshipping because of its ease of use and the variety of apps available to add inventory to your store. If you want to determine if Shopify is the right choice for your e-commerce business, start with just a few suppliers or only a handful of products, so you can learn the ins and outs of both dropshipping and the Shopify platform. When you know everything about this platform and are more comfortable with the process, you can grow your business by adding more products and working with a broader range of suppliers.

How to get started with dropshipping on Shopify:

Here’s a detailed review of the steps you need to take in order to get started with dropshipping on Shopify.

1. Create a Shopify account:

Firstly, register with an account on Shopify. When you are starting this process, it’s best to have a name for your store in your mind because that’s the first thing required to set up an account.

From there, Shopify will ask about different types of details like your email address, password, etc. When you’ve entered your details and your account is created successfully, you can start setting up your store on Shopify.

2. Set up a Shopify store:

To set up your store, a few questions will be asked about your business and e-commerce experience. Once you’ve answered these questions, click on “settings”. There you need to enter your business address and banking information, to receive payments. After that, you can set up other important things for your store, such as shipping information and the policies of the store. Next, you can set up the theme for your store.

3. Add a sales channel:

After you’re done setting up your Shopify store, it’s ready for dropshipping. Now you’ll need to add a sales channel. To do this, select “Sales channel” from the settings of the Shopify dashboard.

You’ll see a menu from where you can choose a variety of sales channels. For your store, if you want to use a Shopify dropshipping app, you can find one by scrolling down the menu and selecting “Visit Shopify App Store”.

4. Add the products:

Once you’ve set up your account, and added the sales channel, it’s time to add the products. Click the “Products” option from the left-hand side of the dashboard. Then select “More actions” and click on “Find more products to sell”. You can search for products and suppliers by entering your products into the search bar. Now select the items you want to add by clicking the “Select product” button. You will see the product page where you’ll see the supply and shipping cost of your selected item along with a pricing field. Click on “Add product” when you are done.

Edit the details of the product:

When you have added the products, go to your Shopify store. You should see all the added items there. You can now go through each product and edit details as necessary. For best results, try making the items more appealing with catchy content.

Set up your collections:

Set up your collections as products that allow your customers to find items according to their category. Here are examples of the types of collections that you can create:

  • Products on sale
  • Customer type (men, women, kids)
  • Product color
  • Product type (dresses, shirts, etc.)

Click on “Products” to add the collection and then click “Collections”. From there, click the “Create Collection” button, and you’ll arrive on a page where you can enter the collection name and add a description.

5. Making Your First Sale

It’s time to start making revenue and sales from the store. Use marketing campaigns to draw potential customers to your store. This is necessary because it’s not enough to generate a huge volume of traffic by simply launching your store.

Go to different marketing channels that are available, and do some research to find out which will work well enough to drive traffic to your store. The important thing is to keep testing, and you’ll find out the marketing strategies which will work best for your e-commerce business.

Advantages of Dropshipping on Shopify:

Here are some advantages of dropshipping on Shopify:

Convenience

Thanks to dropping on Shopify, you won’t ever have to worry about any of the following:

  • Controlling revenues and inbound shipments
  • Continually ordering products and managing stock level
  • Managing or paying for a warehouse
  • Packing and shipping your orders
  • Tracking inventory for accounting reasons


There’s nothing to worry about in terms of technology.

A simple Shopify shop may be launched without any technical knowledge; all software and hosting are supplied by Shopify.

Secure and trustworthy

Customer data, especially credit card information, needs to be protected on an ecommerce platform. On Shopify, it’s possible to encrypt your store’s data with an SSL certificate, and Shopify will handle PCI compliance for you.

Mobile optimized

As a result of Shopify’s mobile adaptable designs and the platform’s free built-in mobile commerce shopping cart, both your store and your customers’ shopping experience are enhanced across all devices.

Exceptional SEO capabilities

SEO (Search Engine Optimization) is a significant selling point for Shopify, and its robust SEO tools make it easier for buyers to locate you.

Disadvantages of Dropshipping on Shopify:

Here are some disadvantages:

Fewer options for customization

Self-hosted systems, on the other hand, enable you to make almost any alteration you can imagine, but Shopify only allows you to tweak a few of its features.

Migrating to a new location may be difficult

If you ever decide to move from Shopify to another platform, you’ll find that it supplies much less data points than other platforms, such as product photos, product descriptions, price, and so on.

There are limitations to content management

If you’re looking for a content management system, you won’t find it with Shopify. Shopify isn’t the best option if you plan on putting a lot of multimedia material on your site, like videos, carousels, and more.

Conclusion

We hope this guide has helped you develop a good sense of running a dropshipping business. You have to consider that in dropshipping the competition is tough. But the best way to distinctly position your business is to create an extremely focused idea, partner with the right supplier, choose the right e-commerce platform, and invest heavily in your marketing efforts.

If you have any comments, queries, or suggestions regarding this article, please state them in the comments section below. 

Need help setting up and running a dropshipping business? Feel free to contact us and we would love to manage it all for you while you just sit back and relax.

author

Steve Smith is a entrepreneur and Experienced in making money online with a demonstrated history of working in freelancing field.

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