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The Ultimate Guide To Dropshipping (2022)

The Ultimate Guide to Dropshipping

When you’re a new entrepreneur, two things in short supply are time and money. Startups don’t usually make a profit right away, and without the funds to pay employees, time is stretched thin for startup entrepreneurs.

That’s what makes dropshipping such a great business model for first-time entrepreneurs. By outsourcing manufacturing, warehousing, and shipping to a third-party seller, entrepreneurs are able to keep costs low and focus their time on marketing their products. 

Still, the model continues to confuse many people. That’s why we wrote this comprehensive, step-by-step guide. If you want to learn more about how dropshipping works, where you can source reliable suppliers, and how to market your dropshipping business⁠—keep reading.

How to start a Shopify dropshipping store

What is dropshipping?

Dropshipping is a business model that allows entrepreneurs to sell products manufactured, warehoused, and shipped by third-party dropshippers from their own online store. Typically, products are only charged to the business owner after a sale, meaning there’s almost no risk of overstocking.

Dropshipping is a great option for first-time entrepreneurs. It frees up time that can be refocused on marketing and provides a low-risk way for small businesses to test out new product ideas (and product lines) without having to own and pay for the product upfront. 

Learn more:

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Starting a dropshipping business on Shopify in 5 steps

  1. Find a lucrative dropshipping niche
  2. Define your target audience
  3. Look for dropshipping suppliers
  4. Build your ecommerce store
  5. Market your dropshipping store

1. Find a lucrative dropshipping niche

Unless you’re dropshipping private-label goods or using a print-on-demand business model, there’s a good chance your products will be available from other merchants. So how do store owners differentiate themselves in a crowded marketplace? They do it by finding a lucrative dropshipping niche. 

A niche market is a segment of a larger market that’s differentiated by its unique needs, preferences, identity, or interests. Widely available commodities tend to have a lot of competition, but through niching, smaller businesses are able to reduce that level of competition.

For example, if you’re selling coffee, you’re going to have a ton of competition. But if you’re selling vegan coffee, suddenly the level of competitors is reduced greatly. Were you to niche further and, say, sell vegan coffee to millennial baseball fans, competition becomes even more scarce. 

That being said, it’s not as easy as coming up with a very narrowly defined audience. If you want to find a lucrative niche, you need to validate your product idea to make sure there’s an audience for it.

Here’s how: 

  • Facebook Audience Insights: Facebook has roughly 2.9 billion monthly active users, and audience insights provide a well of information about their interests, demographics, and online activity⁠. 
  • Google Keyword Planner: Google processes billions of searches each day, and with its keyword planner tool at your disposal, there’s no limit to the number of lucrative niches you could uncover.
  • Google Trends: Like its keyword planner, Google Trends has a deep well of information about what products people are searching for, plus the ability to measure interest over time.

Free Guide: How to Find a Profitable Product to Sell Online

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2. Define your target audience

Once you know there’s a target audience for your dropshipping store, you’ll want to learn more about them. Understanding your target market can help better inform the choices you make about which sales channels to focus on, what new products to sell, how to market your brand, and a lot more. 

When defining your target audience, it helps to ask yourself a few questions:

  • Who benefits the most from my product?
  • What makes my product different from my competitors’ products?
  • Who is discovering my products? How are they discovering them?

Researching your target market doesn’t need to be complex, but you should have a good idea of the type of person you’re selling to. 

Learn more: 

3. Look for dropshipping suppliers

There are a ton of dropshipping suppliers to choose from, but if you want to have complete automation when it comes to the checkout process, you’ll want to use Shopify dropshipping apps.

When you use Shopify for dropshipping products, information about your orders are sent for shipping directly to your third-party supplier, who then marks the order as complete and (if it’s available) can add a tracking number to the order that’s sent directly to your customer. 

Shopify’s dropshipping apps can be found in the Shopify App Store. Here are a few of the more popular options: 

Spocket

Spocket includes products from dropshipping suppliers in the United States, Canada, Europe, Australia, Brazil, and more. The app also syncs with AliExpress, allowing users to import products directly into their Shopify stores. 

Price: Free plan available. Paid plans start at $24.99/month.

DSers

With DSers, merchants can search, import, and edit product data from suppliers on AliExpress. One notable feature is the ability to compare AliExpress dropshippers selling the same products, allowing merchants to find the best price for their products. 

Price: Free plan available. Paid plans start at $19.90/month.

Modalyst

Like the other options, Modalyst also syncs with AliExpress, making it easy for merchants to import products directly into their Shopify store. Modalyst also offers curated lists of independent brands, as well as more high-end brands like Calvin Klein and Dolce & Gabbana.

Price: Paid plans start at $35/month.

Print-on-demand apps

One of the drawbacks of dropshipping is that the products you’re selling are likely available from other brands. While having a unique selling proposition could help you differentiate, you might also consider a print-on-demand business model. 

If this sounds like the direction you want to take, here are a couple of print-on-demand apps to check out: 

With print-on-demand dropshipping, merchants can add their own custom designs to products like t-shirts, tote bags, notebooks, and a whole lot more. Print-on-demand is perfect for differentiating your store, since your products will be one-of-a-kind. 

Learn more:

4. Build your ecommerce store

Once you have a dropshipping supplier selected, you’re ready to start building your ecommerce business. 

1. Log in to your Shopify account

Start by logging in to your Shopify account. If you haven’t created your Shopify store just yet, you can use your 14-day free trial to build your store to your liking.

2. Set up your domain name

If you haven’t already added a domain name, you’ll want to do that before launching your store. Remember that with dropshipping, differentiation from your competitors is key to building awareness of your brand, so it’s important to choose a business name and domain that resonates with your target audience. 

If you’re having trouble deciding on a good store name, here are some quick tips: 

  • Keep it short. Shorter names are easier to remember and pronounce, and harder to misspell in address bars.
  • Be different. A generic store name will be easy to forget. Try to create something that’s reflective of your niche and differentiates your brand. 
  • Check availability. There are few things worse than coming up with the perfect domain name, only to find that it’s taken. Be sure to check for available domains.
  • Consider a unique domain extension. If YourStoreName.com is taken, consider using a unique domain extension like .shop, .store, or something more product specific, like .shoes

Learn more: 4 Steps to Register a Domain Name for Your Website in 2022

3. Import products into your Shopify store

Once you’ve set up your store, you can start importing products from your dropshipping app. Browse your app’s product list. You can directly import products along with the product description and then edit them in your Shopify dashboard. Don’t forget to take shipping costs into account when calculating your profit margin.

Learn more:

For a more detailed breakdown on how to build your store, check out How to Start an Online Store in 9 Simple Steps.

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5. Market your dropshipping store

A good marketing strategy for your dropshipping store will be crucial to getting your first sale. The biggest benefit of dropshipping is that it gives you time back to focus on your marketing efforts, since the processing and shipment of orders is mostly automated. 

When it comes to dropshipping, products tend to be widely available from different online stores, so the key to growth is differentiating your brand through the careful curation of products that resonate with your target audience. 

Learn more: 

Here are a couple of ideas for how to market your dropshipping store: 

Find your target audience on social media

Social media is an exceptionally useful marketing tool for small businesses. Paid ad campaigns tend to have adjustable budgeting limits, so it’s easy to keep costs within your budget. Audiences are segmented by variables like their interests, online behavior, and which accounts they follow, making it easy to target users that are most likely to have an interest in your product. 

But even without an advertising budget, there’s a lot you can do on social media for free. Exploring accounts, threads, and online communities where your target audience tends to reside can give you insights into their primary pain points, the types of content they tend to share, and the language they use to speak to one another⁠—all of which can help inform how you brand your products. 

Learn more: 

Consider a search engine optimization (SEO) campaign

Search engine optimization (SEO) is the process of using search engine data to improve the content on your website with the aim of increasing the amount of traffic to your online business.

Google processes just over 100,000 searches every second. That’s a lot of web traffic. In fact, almost a third of all web traffic comes from search engines, making increased visibility very valuable to small businesses. And since there are a ton of free SEO tools available, the cost of SEO marketing can be kept relatively low. 

Learn more: 

Free Reading List: Conversion Optimization for Beginners

Turn more website visitors into customers by getting a crash course in conversion optimization. Access our free, curated list of high-impact articles below.

Use email marketing to nurture your existing audience

Did you know that email marketing has the highest ROI of any digital marketing channel? It makes sense—when users sign up to receive your newsletter, they’ve already indicated they have an interest in your products. Good email marketing should aim to maintain that interest and help turn it into sales. 

But there’s more to it than that. Email marketing opens up an ongoing stream of communication with your customers. Good email content is a great way to share useful information about your products and help build a more personal connection with your customers. 

Learn more: 

Listen: Common Dropshipping Mistakes (and What to Do Instead)
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Start a lucrative dropshipping store today!

Dropshipping on Shopify can be a great way for entrepreneurs to keep costs low, since products are only paid for and shipped after they’re purchased. With manufacturing, warehousing, and shipping outsourced to a third-party, dropshipping can give entrepreneurs time to focus on marketing their products and building their brand.

Learn more about dropshipping: 

Dropshipping on Shopify FAQ

Is Shopify good for dropshipping?

Shopify is the definitive ecommerce platform for dropshipping entrepreneurs. Shopify apps directly connect to vendors across networks like Amazon and AliExpress that automate the shipping process by manufacturing, stocking, and shipping products on your behalf, with few upfront costs.

How profitable is Shopify dropshipping?

Dropshipping on Shopify can be very profitable because items are only shipped after they’re sold, so it’s nearly impossible to overstock or lose funds on products. The only costs incurred are those of your Shopify plan, your domain, and ads.

How do I dropship on Shopify?

  1. Find a lucrative dropshipping niche.
  2. Define your target audience.
  3. Look for dropshipping suppliers.
  4. Build your ecommerce store.
  5. Market your dropshipping store.

Where can I find dropshipping suppliers on Shopify?

Dropshipping suppliers can be found on vetted directories and dropshipping networks like AliExpress, or by examining suppliers for your favorite brands. Also, be sure to check out The 13 Best Dropshipping Suppliers to use on Shopify and dropshipping integration apps on the Shopify App Store.

Can I dropship on Shopify with no inventory?

Yes! While you need a product to sell, you don’t have to store inventory yourself when using a third-party dropshipping company. This is because with Shopify dropshipping, products are housed by another company and shipped only after the product has been sold.

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