What is a Dropshipping Business & how does Dropshipping work in 2020?

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What is a Dropshipping Business

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What is a Dropshipping Business

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I have been wondering for years how Dropshipping works but never found the time to really research and find the answers for myself. I found a lot of Dropshipping Gurus who wanted to sell me a Dropshipping Course for hundreds- or thousands of dollars but I kept on searching. In my research I found out that I (or you) don’t need a guru to start a successful Dropshipping Business. 

All it takes it to read this article which explains every detail about how Dropshipping works and how you can make your own Dropshipping Website.

Dropshipping works, it is a totally legal system. It will take some time and effort, like everything else in life, to get successful. But it’s an intriguing business model which can set you free from the 9-5 lifestyle and help you live an extraordinary life with your own rules!

Enjoy my article about Dropshipping and comment below or share it if you find it useful!

What is a Dropshipping Business

1. Dropshipping definition

1.1 How does Dropshipping work?

Dropshipping is a retail fulfillment method where you as a Dropshipping Business Owner don’t have to keep the inventory in stock. This means you have a partner (i.e. Aliexpress) who keeps the items and when you make a sale your partner does the fulfillment. You don’t need to buy items, they will be directly delivered from your partner.

What is a Dropshipping Business
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If you are looking for a cheap and reliable WordPress hosting company, Siteground is the way to go.

Starting at 3.95$/Month

How does Dropshipping work

1.2 What is Dropshipping about?

 

Dropshipping is about making money online with an Online shop that sells products form retailers

 

Dropshipping is a great way to make money online. You have zero risk, you just have to provide a platform where you sell the items of your partner.

This makes Dropshipping a great Business Model for anyone who doesn’t want to invest a lot of money to get started. So Dropshipping is about making money with good researched products which you can sell worldwide.

The greatest benefits of starting a Dropshipping Business

 

 

Dropshipping is a great way to start an online business with only a little investment involved. You can quickly test different products and choose high demanded items. 

I will provide you with more details about how the Dropshipping Business is a great business model here:

1.3 You don’t need to invest a lot of money in your Dropshipping Business

For new entrepreneurs and digital nomads this is the biggest concern. But you don’t have to worry about it. Dropshipping isn’t expensive. You just need to set up a website (or let other companies do it for you – more on that in this post) import products, do proper SEO (Search Engine Optimization) and promote your items on Facebook or Instagram.

You don’t have to buy the items firsthand. They are in stock at your supplier. This makes it super cost effective!

1.4 It’s simple to start a Dropshipping Website

Yeah, it’s simple to start a Dropshipping Website. As mentioned before there are companies that will do the work for you. 

But if you know WordPress, you can easily set up your own Dropshipping Website in a couple of days and then start selling products!

You don’t have to worry about managing a warehouse. Packing and shipping is done for you. You’ll get a tracking number for every sent package which you can send to your customers.

You will have to install Woocommerce for WordPress and a Dropshipping Plugin.

Dropshipping Plugins for WordPress.

Alidropship 

Is a well known company which offers the AliDropship Plugin for 89$. The also provide more custom plugins to increase the speed of your site, Social Rabbit for your Social Media Accounts and more. 

Another great thing about Alidropship is that you can order a Custom Dropshipping Website starting at 299$
(If you don´t have any skills, you can let Alidropship make a custom Dropshipping Website for you!)


Ali2Woo 

Ali2Woo offers the same products as Alidropship. But they have other plugins and other pricings. You can buy the AliExpress Dropshipping business plugin at the envato market for just 42$. They also offer custom Dropshipping Websites but they charge per month. One very good plugin is the eBay Dropship for WooCommerce which lets you import products directly from eBay.


Hand Import Products to your Dropshipping Website

Another way is to manually go to the suppliers website and copy and paste all the products you want to sell into your woocommerce Store. This isn’t a very convenient way so personally I would go for a Dropship Plugin.

I will cover the Pros and Cons about Alidropship and Ali2Woo in an upcoming post. For now, those 2 plugins are the best on the market. If you find a better one, let me know!


1.5 Low overall costs for a Dropshipping Business

Since you don’t have to deal with purchasing inventory or managing a warehouse, the only things you have to do is keep your Dropshipping Website clean and stylish, running fast and employ the right SEO strategies

You can be location independent, work from anywhere in the world, simply by using your laptop.

That’s the freedom of a Dropshipping Business. As long as you have a good internet connection, you are good to go everywhere and see your Dropshipping Business grow!

1.6 Huge selection of products you can sell on your Dropshipping Website

There are thousands of suppliers for your Dropshipping Website out there. This means you have a fast selection of products to sell. And you can sell them with profit – worldwide. 

The best way is to contact the suppliers and make a good deal with them beforehand.

Also, you’ll find a lot of websites showing you trending products, which you can then test on your Dropshipping Website.

1.7 It’s easy to test new products

As you have almost unlimited products to sell, it is pretty easy to test new trending products. Promote them on your social media channels or test them with google shopping. 

But one thing to remember.
If your product is on Amazon or at Walmart, you probably won’t sell anything.

Your products have to be unique and not easy to find. A good price and free shipping are to key components to becoming a successful dropshipper.

1.8 You can scale your Dropshipping Business easy

You start selling more and more, you might switch to a faster webhosting provider (wpengine). You might want to sell more on other channels, it’s easy to connect to Amazon or eBay. 

You only have to handle the orders, everything else is done by your supplier.

All of that makes your Dropshipping Business easy, stress free and location independent.

2, The downsides of a Dropshipping Business

2.1 Low margins due to high competition

If you choose a very competitive product, the margin will be low because you will have a lot of competitors. They will sell the product at a very low price, and you have to do the same if you want to stay competitive. 

Choosing a product which isn’t as competitive would be the better option since your margins will be much higher and the competition much lower.

2.2 Multiple Suppliers equals more problems for your Dropshipping Business

If you have multiple suppliers, it won’t be easy to track items which are in stock and which are not. The best way to overcome inventory issues is to stick with only a few suppliers in which you trust.

They might even send you emails to inform you when a product isn’t in their stock anymore.

2.3 Shipping & Shipping Costs

Same as above, I recommend only a few suppliers. If you have 100 suppliers, your Dropshipping Website will be difficult to manage. I generally would offer free shipping worldwide to keep the shipping costs simple.

It also provides customer trust if your shop offers free shipping.

2.4 Dropshipping Suppliers failures

Yeah, suppliers make mistakes as anyone else. And you have to deal with the customers to keep them satisfied. But if you choose the right suppliers for your Dropshipping Business, this will only occur once in a while, so this is only a small issue.

2.5 Limited Customization of your products & packaging

Usually, your supplier won’t offer you to brand the products you sell. The supplier usually sends the parcel with his own branding. 

But once you got a good relationship with your supplier, you might have a chance to brand the products with your custom Dropshipping Corporate Identity.

You might want to use spocket, they offer branded packaging!

3, General Questions about the Dropshipping Business

So far you learned a lot about the Dropshipping Business Model. Here are some additional questions you might have regarding Dropshipping in general.

3.1 What is a Dropshipping Website?

A Dropshipping website is a website who sells products from one or more retailers. If you want to start a Dropshipping Website you need a Website or Web shop (I recommend WordPress & Woocommerce and Elementor Pro), a Webhosting Company (I recommend Siteground for a start and a good, easy to remember Domain Name.

Then you search for good suppliers (i.e. Aliexpress, Gearbest), there are thousands of suppliers out there!

If you want to take a shortcut and find products that sell and have a short shipping time, I recommend you use spocket. Spocket gives you hand selected products with a perfect shipping time for the US and Europe.

Spocket is not free. You will have to pay 12$/month for 25 products in your shop. But 25 products are enough for a start. 

You can always change to 250 Products and Branded Invoicing (49$/month) when your Dropshipping Website takes off. And if you really start making money you can change to unlimited Products – 99$/month.

So, that basically covers „What is a Dropshipping Website?“

3.2 How much initial investment is needed to start a Dropshipping Business

Well, it’s hard to say how much you’ll need to spend to start a profitable Dropshipping Business. But here I give you a summary of the investments you have to make.

3.3 Online Shop Costs

Est. Cost: starting form 3,95$/month at Siteground

I recommend a WordPress and Woocommerce Dropshipping Website for obvious reasons. 

– You are free to design your website and shop as you would like to have it
– You don’t have to pay for plugins (mostly) not so with shopify
– You have full control over your Dropshipping Website
– You can have people working for you – you just give them different user roles

Cons:
You need to know a little about WordPress, Woocommerce and Design – but with Elementor Pro everyone can do it!

3.4 Domain Name

Est. cost: 20$/year

The best choice for a Dropshipping Website domain is a .com top level domain. Other good choices are .net or .org.

Your customers won’t gain trust if you have a domain in India but selling to the United States.

3.5 Test products

Est. cost: depends

The best thing before you start selling products is to actually buy them yourself. Only this way you can see if the product is of value for your customers.

I ordered a smartwatch one time it wasn’t cheap, but it wasn’t good either. I tried and tried to get it to charge but finally I threw it away. 

 

Sometimes even the shiniest products are crap.

Testing products before you sell them is crucial to your Dropshipping Business.


You want happy customers and outstanding products. Also, if you sell crap, you’ll have to deal with a lot of returns.

3.6 Online Advertising and SEO

Est. cost: varies

It depends on how you want your business to scale. You can try different types of Ads:

Facebook Ads

Work best with Videos – so you have to buy the product and produce a video or hire someone to do it for you. You can also use Animoto, which is a great app to create product videos that convert into sales

 

Instagram Influencers

You can find Instagram Influencers in the niche you choose and write them a message with a proposal. I would recommend that the influencer has at least 30k followers. The price for one post varies but can be negotiated

 

Google Shopping & Google Ads

If you plan on doing google shopping, I recommend you spend at least 500$ a month for your shop. If you have a lot of competitors maybe even more. If you don’t know how google shopping works, there are a lot of agencies out there who will gladly help you – which also increases the total sum of the expenses.

 

SEO (Search Engine Optimization)

This is a the cheapest way to get customers, but it takes time.
You have to give your products the right title, meta-description and product description so google will find them. 

Also, you will need to build backlinks to strengthen your domain authority and page authority. Maybe you have some friends who blog or sell something online. You can ask them for a link to your site and return the favor.

 

There are a lot of tools out there for SEO and Link building. I recommend SEMrush since it’s one of the most trusted and reliable Online Marketing Tool for keyword research, backlink building, google ads & shopping, social media strategy and market research.

SEMrush

Conclusion

Dropshipping a great business model with next to zero risk!

Dropshipping is a great way to make money online. Yes, it has its downsides because there is a lot of competition. But it is still a great business model for entrepreneurs or people who want to travel the world.

It is a location independent Business Model. If you know about Online Marketing, or choose the right Tools (SEMrush, DIBB Answer Engine, WordPress/Woocomerce and Elementor Pro) it will be hard work, but it will be rewarding in the end. 

It’s also fun to start something new, don’t you think? With a Dropshipping business you won’t have to spend a lot of money to get started. Some skills are required but we live to learn. 

What we covered:

  • What is a Dropshipping Business
  • What is Dropshipping about?
  • What is a Dropshipping Website?
  • How does Dropshipping work?
 

If you enjoyed my article about the Dropshipping Business, comment below or share it if you find it useful!

What you need to start a dropshipping business

A good webhosting provider

Web Hosting

A Online Marketing and SEO Tool

SEMrush

Dibb Answer Engine - SEO Tool

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The easiest way to build a WordPress Website

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We, Koehler Global LTD. (Registered business address: Hong Kong), process personal data for the operation of this website only to the extent technically necessary. All details in our privacy policy.