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Sourcing and Working with Dropshipping Suppliers and Wholesalers
Choosing the right and genuine suppliers or wholesalers is a crucial step in dropshipping business. Your business future depends on suppliers only. Therefore, make sure to select the right one. You can contact manufacturers to obtain a list of trustworthy suppliers.
Further, make sure to get in touch with them via phone calls, emails, or directly meet them. You can investigate if they deal in dropshipping business because sometimes it’s not mentioned on their website.
It is also important to represent yourself as a professional and genuine drop shipper. Because if they have any doubt, you might lose good suppliers.
How do I start and run a drop shipping business?
To kick start your drop shipping business, you need to strategize your plan that would streamline your work process. Let’s study:
The first part includes finding the right niche for your business according to current market opportunities. Although it seems easy to start a drop shipping business in fact, you have to strategize in-depth to make it successful. So, the right approach is to identify and select the perfect niche for buyers.
Note that if you focus on a line of products, it will help you to obtain expertise in selling those products. It works as an advantage over the other competitors when they dropship similar types of products. For long-term success, you can research and evaluate data based on those facts and implement them in your business.
To build your eCommerce website you need to fulfil certain elements. It includes Platform, domain name, themes, and more. You can refer to websites such as Shopify or Magento to create your website. These websites will help you align with your business vision and goals. In addition, make your website convenient for your customers where they can easily access and explore products before purchasing.
Moreover, you can also obtain the benefit of free trials of these platforms. If you liked the working process of these websites then you can switch to paid monthly subscription plans.
You won’t be able to work in the drop shipping business if you don’t have good suppliers. Moreover, suppliers play a major role in the drop shipping fulfilment process. You can do your research via certain methods to find valuable suppliers. It includes referrals, online searches, online directories, trade shows, and more.
Build relationships with various suppliers as it will help to remain on the safer side of the business. You will never run out of stocks and fulfil customers’ requirements and deliver fast. In addition, get into an agreement with suppliers in case they run out of stock. This situation is known as Backorder. Also, make sure to have guaranteed contractual agreements where suppliers deliver products in a specified timeframe.
You initially require a low investment cost while starting dropshipping business. However, after generating revenues with increased sales, you will face trouble handling your finances.
In case, you are not generating any profits or revenue then don’t step back from taking any risks. You can switch to other products that generate a decent amount of revenue. Also, try to re-evaluate your suppliers or other partners from time to time that offers you their services at a lower cost. It would help you to adapt to maximize your business profits.
Though, drop shipping is completely legal. However, a few aspects need to be taken care of. Make sure to check jurisdictions where inventory or warehouse is placed. Then, analyze and calculate sales tax to avoid tax-related issues.
Further, check for counterfeit products too as they might drag you along to legal risks. Also, look for licensing violations or trademarks on products that you shippers supply to customers. Nevertheless, selecting reliable and genuine suppliers reduces such potential risks.
Find the Best Dropshipping Products to Sell for a Profit
Here is the list of best trending products to sell for a profit in 2021:
• Health and Personal Care Products
• Electronics Items
• Kitchen and Grocery
• Office Products and Supplies
• Home and Bedroom Products and Accessories
• Home Improvement Tools
The Commitment to Start a Dropshipping Business
You don’t need to be an expert to start a drop shipping business. All you need is commitment, patience, and a strategic mind. Few aspects could help you to build your own empire. However, no business is successful without roadblocks. You have to stay ready to face some failure before achieving success. And, same goes for the drop shipping business.
You cannot expect positive results in sales, growth, or revenue in a day or two. You have to maintain consistency, effort, and patience when it comes to dropshipping business. Numbers take time to grow and therefore just put all your unrealistic expectations aside when you are into serious business. Once you learn the ins and outs of the business, you will achieve growth and success with time.
Investing Time in your Dropshipping Business
Even if you are in 9-5, you can invest your time in dropshipping business. It might require 8 to 10 hours per week. However, if you are available to focus full-time on dropshipping business then you can easily focus on that as well.
In dropshipping business, you have the convenience to work both ways. Drop shipping offers freedom in certain forms. All you need is a laptop and a marketing mind. And, that’s it! You are not restricted to place or time. This business can be managed from anywhere and anytime.
However, try to invest time to learn skills to grow your sales, promotion tricks, innovative ideas, marketing techniques, and more. Eventually, with growing skills and experience, you can manage to earn an average income of $50,000 for at least 12 months.
Investing Money in Your Dropshipping
There’s no certain answer to this question. You have the option to start with a little chunk of money or you can invest a heavy amount. It is up to you and your requirements. If you are a beginner then we would recommend you to start slow and low. Once you start witnessing growth in your sales and revenue then you can slide to the next step.
Avoid wasting your money on the wrong people who might take advantage of you if you are a beginner. Otherwise, you may spend most of your money on the wrong third-party middlemen, programmers, and marketers. They might overcharge you for resources, websites, and other elements.
It is strictly recommended to learn how the business runs at each level. And, adopting the right methods to invest before choosing your partners. Moreover, during the initial phase, you should invest in free trials of software such as Shopify, Magento, and more. These websites are relevant and safe for use. Once you see the benefits of it, you can move to monthly subscription packs.
Deciding on a Business Structure
Consider these crucial business structure points once you have decided on dropshipping business. Let’s study:
In a sole proprietorship, you won’t find any legal basis for this business. Moreover, it does not offer any personal liability protection. In this type of business, you are solely responsible for all your business debts if incurred.
Simply put, your assets would be at risk in a sole proprietorship that includes your savings, assets, or home.
Also, note that in this business, filing or special paperwork requirements are minimal. However, you need to report taxes. Besides, there are no other filings for other state or federal businesses.
Limited Liability Company (LLC)
Unlike a sole proprietorship, LLC offers protection for your assets. It determines your business as a separate legal entity from you. But keep in mind that LLC is incompletely foolproof.
Suppose, if customers drag you to the court due to any reason such as feeling cheated or misled with your products or services then the court cannot force you to pay the compensation from your personal assets.
Moreover, you have to comply with filing tax returns separately and pay ongoing fees for your company. Note this additional information that LLC varies from state to state so make sure to check the guide.
For drop shippers who have invested a huge capital then C Corporation works the best for them as it offers maximum liability protection. On the contrary, for small businesses, a sole proprietorship or an LLC is highly recommended. In addition, LLC offers liability protection and autonomy from finances and costs.
It is important to register to have an Employer Identification Number (EIN). Further, it is mandatory for all businesses and is processed by the Internal Revenue Service (IRS). Also, it is similar to the Social security number (SSN) and consists of a unique nine-digit number.
Generally, it is required to open a bank account, file taxes, apply for a wholesale drop shipping account, and almost everything related to your business. Note that you can easily obtain your EIN as it is easy, simple, and free.
Follow these mentioned points for finances:
• Execute your business finances through one primary business checking account. Make sure to get deposits and transactions via this account. This step will make your business accounting easy and efficient.
• Have a business credit card. It will be used for drop shipping inventory purchases and also for your other business activities.
Follow these two criteria when it comes to sales tax.
The first includes if you operate from the state that collects sales tax. The second includes if the customer placing an order is residing or living in your state.
However, if you get orders from buyers living in other states. And, their state’s own sales tax then you won’t collect any sales tax.
Note that you need to register as a retailer with your state’s Department of Commerce. Check for filing taxes as well with them.
Local Business Licenses
Though, most places want businesses to obtain their business license that also gets renewed after a certain period. Nevertheless, this idea changes for a drop shipping business. Check with your local laws and regulations to know in detail.
How much do I Need to Invest to Start Dropshipping?
Well, you will find self-proclaimed marketing experts selling the idea of zero investment to build a successful empire. Unfortunately, that’s the most unrealistic and absurd case.
To begin with your drop shipping venture, you have to invest some chunk of money that helps you to get started. However, you might have to invest at least $150 to $1,000 and that entirely depends upon the size and requirement of your business.
Furthermore, as mentioned earlier, you do not have to invest even a single penny in owning an inventory or warehouse. Also, you don’t have to invest money in production, packaging, labelling, and more. Basically, the major part of your investment would be limited to creating websites, sales, marketing, and suppliers.
Here’s a bonus tip for you: Make sure to get the benefit of free trials of available software tools. It will enhance your drop shipping business at zero or minimum cost depending on if you buy a monthly subscription plan.
Moreover, you will definitely see positive growth in revenue and business with time. All you need is to start with drop shipping.
The Right Approaches to Dropshipping
We have listed the right approaches to drop shipping. Check out:
It is the main factor to consider if you are drop shipping. It helps to learn about trending products in the market. Also, you get to know what your customer demands. Further, you can fulfil their needs accordingly with drop shipping. Interestingly, dropshipping allows you to experiment with new products as well.
Shield from Overselling
The next right approach to drop shipping is to consider the overselling concern. It is obvious that the market fluctuates every single day. However, you don’t have to waste your money by increasing inventory costs. And, prefer to move to suppliers to save money.
Shipping stands on the top of the complications list as it might affect your business if not done properly. Therefore, you need to implement strategic shipping when planning for drop shipping. And, it is the topmost approach to consider and follow.
Some products are highly expensive to stock and deliver to customers. Therefore, use the right approach of drop shipping to curb those losses. Further high-maintenance products include fragile items that need special care, valuable items such as antiques or jewellery that require security, heavy items, and more.
How do I Incorporate Drop shipping into my Business?
If you are planning to incorporate dropshipping into your business then you can easily manage to implement it. Check out these below-listed points:
1. Have the Right Tools: Integrate drop shipping in your website store. This would further put you in contact with suppliers, products, and other social channels. It is the same as distributing ad banners to inform customers about products and shop locations.
So, these tools will ensure that your customers know about your store when a customer needs to order. To have easy access to multichannel management tools, you have to set it up with data synchronization and SKU differentiation.
2. Get in touch with Suppliers: Next step is to reach out to your existing suppliers or new suppliers. Check and verify with them if they offer drop shipping fulfilment orders, and what products they manufacture and could incorporate for your business. Nevertheless, suppliers help in a way to save tons of money if they handle customs and shipping.
3. Reach out to Customers: Make sure to research well before randomly selling any items or products. Learn and know what your customers want and then act on it. Further, you can implement it via conducting surveys such as email surveys, market calls surveys, and social media post surveys. You can check out these free survey tools. It includes Zoho Survey, Google Forms, Survey Monkeys, Type form, and more.
4. Choose Trending and Best-Selling Products: Narrow down your extensive research to the final list of products. It should be based on trending, market evaluation, and popularity among customers. Make sure to use tools like Buzzsumo, Google Trends, and more. Check other popular social media influencers who are marketing products. It will help to have more ideas to select products to sell online.
Drop shipping on Amazon and eBay: Evaluating Sales Channels
On both these popular eCommerce websites, millions of buyers shop from them every day. However, there are certain aspects that you need to consider while drop shipping. These aspects include fees, existing competition, and fulfilling orders. All of these points actually matter.
Talking about active users, Amazon has over 310 million active users and eBay on the other hand has over 182 million active users. Amazon surpasses eBay in terms of active users. So, if you are a beginner you will give preference to Amazon because it has a wider audience. And, it could offer larger exposure to your products.
However, you also have to face higher competition on Amazon than on eBay. And, you are also in direct competition with Amazon. On the contrary, you are not in direct competition with eBay, instead, you are in competition with other sellers. And, it makes it far less competitive than selling on Amazon.
Next, you need to fill in crucial details on Amazon for product listings such as barcode, UPC, and more for approval. And, it takes 24 to 48 hours to make those listings live. However, that’s not the case for eBay. You don’t have to fill those requirements such as UPC, and barcode. The process on eBay is quite simple on the eBay platform.
Furthermore, on eBay, the fees include a 10 per cent fee to use the platform. For example, if you sell a product for $10 then you have to pay $1 to eBay as a commissioned fee. In addition, eBay does not have any membership fees. However, on Amazon, you have to pay roughly 15 per cent referral fees. Also, it includes membership fees that are $0.99/unit or $39.99/month. Also, you need to pay FBA fees on Amazon.
Lastly, if you have few items to sell then you should consider the eBay platform as it is free to use, has simple listings and has less competition. However, if you are actually inclined into growing a business with larger products to sell and want others to sell products. Then, Amazon is the best for your sales. It offers a wider marketplace, fulfilment services, and the best for business growth.
Is Dropshipping Legal?
Yes. Drop shipping is completely a legal business. However, you still need to make sure with suppliers and other partners on legal matters such as trademarks. Nevertheless, make sure to keep yourself on the safer side with Dropshipping Agreement Contract.
Is Dropshipping Profitable?
Of course. Drop shipping is a profitable business and worth your time, effort, and investment. You have to start with low startup costs to venture into your drop shipping business. Moreover, you save a lot of time and money as you don’t have to own an inventory or warehouse. Also, you are free from other workloads such as packaging, labelling, or shipping. Lastly, drop shipping is a low-risk business model and scalability of average profit margins of around 15 to 20 per cent.
Do I Need to Register a Business Entity to Dropship?
Absolutely, you have to register as a business entity once you start generating sales and revenue.
Why Is Starting a Dropshipping Business a Good Idea?
As stated earlier, the major aspect of the drop shipping business is that it is a low-risk business model. Further, unlike traditional business methods, you are not bound by certain areas of business such as possessing an inventory, handling packaging, labelling, shipping, and more.
All these elements help drop shippers have a lot of time and energy. They can utilize their time to strategize marketing tactics, focus on customers, increase sales, target potential audiences and more.
Once you set your hands on drop shipping business and customers, you will see a spike in sales, and business growth, and generate tons of revenues. Ultimately, you are investing in the right business with a low cost and a higher probability of growth. All these aspects make drop shipping a perfect option to start with.
How to Make Drop shipping a Success
To make the drop shipping business a success, avoid committing these mentioned steps:
• Leave selling the wrong niche or products for your business.
• Lack of resources.
• Avoid investing money and time in the wrong partners.
• Do not take your customers for granted. Instead offer the best customer service.
• Avoid delayed shipping.
• Inconsistency in streamlining the business processes.
• Avoid creating a website on the wrong platform. Instead choose Magento, Shopify, and more.
• Unattractive or non-user-friendly website
Avoid all these wrong decisions to make your drop shipping business a success
Here’s a quick summary of what we have covered so far. Let’s have a look:
• Drop shipping is a retail technique used for order fulfilment processes to sell products or items without possessing inventory.
• Drop shipping supply chains have three main aspects. It includes manufacturers, wholesalers, and retailers.
• Benefits of drop shipping: Lower Startup Cost, Scalability, Easy Process, Broad Products, Flexibility, Inventory Management
• Disadvantages of drop shipping: Third-Party Suppliers Errors, Highly Competitive, Inventory Management Issues, Customer Service, Profit Margins
• Choosing the right and genuine suppliers or wholesalers is a crucial step in dropshipping business.
• All you need is commitment, patience, and a strategic mind to start a drop shipping business.
• Drop shipping offers freedom in certain forms.
• Avoid wasting your money on the wrong people who might take advantage of you if you are a beginner.
• Business Structure: Sole Proprietorship, Limited Liability Company (LLC), C Corporation, EIN Number, Finances, Sales Tax, Local Business License
• Right Approaches to Dropshipping: Market Research, Shield from overselling, Strategic Planning, High Maintenance
• Drop shipping is a profitable business.
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