As a new entrepreneur, you’re likely short on two precious resources: time and money. Startups don’t make a profit right away, and without funds to pay yourself or employees, the race is on to make a sale.
That’s why so many first-time businesses choose dropshipping. By outsourcing manufacturing, warehousing, and shipping to a third-party seller, you can keep costs low and focus on actionable tasks like marketing and creating a great online shopping experience.
Just because dropshipping is an accessible business model, however, doesn’t mean you necessarily know where to get started.
No worries! Follow this step-by-step guide on how to dropship. Find your dropshipping niche, select your target audience, source reliable suppliers, build your ecommerce store, and market your dropshipping business. Let’s get into it.
Table of contents
What is dropshipping?
Dropshipping is a business model where a retailer or ecommerce store sell products that are manufactured, warehoused, and shipped by a third-party supplier. The store only pays for products after they’ve made a sale.
Dropshipping is a great option for first-time entrepreneurs. It provides a low-risk way for small businesses to create a storefront, and allows established businesses to test out new product lines without paying for inventory.
Learn more about dropshipping:
How to dropship with Shopify
Below are the five big steps you’ll need to complete to get your dropshipping business off the ground using Shopify. Follow this workflow to find your products and supplier, set up your store, and begin the process of finding customers.
As you dive into each step, you’ll encounter questions and issues that are unique to your business. Remember, it's how you overcome these obstacles that will define your dropshipping journey and shape your success.
- Find a dropshipping niche
- Understand a target audience
- Select a product and a dropshipping supplier
- Build an ecommerce store
- Market your dropshipping store
1. Find a dropshipping niche
Some dropshippers sell unique private-label or print-on-demand products. But most dropshipping catalogs consist of items also available in other stores. So, how do you beat the competition and differentiate your business in a crowded marketplace?
The easiest way to avoid the threat of more established dropshipping stores is to find an under-served niche.
A niche is a segment of a larger market that’s defined by unique customer needs, preferences, or interests. Through niching, smaller businesses are able to reduce competition and identify a customer base.
If you’re dropshipping coffee, for example, you’re going to face a ton of competition from other dropshippers and traditional retail businesses. But, if you sell vegan coffee, you can expect fewer competitors. Niche-down another level to vegandecaf coffee or vegan coffee subscription boxes, and you may find yourself with a unique value proposition.
How do you find a lucrative dropshipping niche?
Most dropshipping niches are found through keyword research. By analyzing the popularity of search queries entered into search engines and social media platforms, as well as the competitiveness of search results, you can identify areas of underserved demand.
Popular audience demand research tools include:
- Facebook Audience Insights. Facebook has roughly three billion monthly active users. Audience Insights provide a well of information about their interests, demographics, and online activity.
- Google Keyword Planner. Google processes billions of searches each day. With its keyword planner tool, you can parse those searches for patterns and opportunities.
- Google Trends. Like keyword planner, Google Trends has a deep well of information about what products people are searching for, and how interest fluctuates over time.
- Ahrefs. Keyword research tool Ahrefs is a favorite among SEO marketing professionals. Use this tool to evaluate whether you can compete for traffic with established websites.
A niche audience is only valuable to your business if you can source relevant products to serve it. As you are learning how to dropship, you may find you’re limited in the variety of products you can offer a specialist audience.
Product availability is one of the main reasons why some niches remain underserved by dropshipping stores. So, working with a supplier or manufacturer to set up dropshipping for a new product line is another way to differentiate your business.
Finding a dropshipping supplier for your niche:
2. Understand a target audience
Once you’ve found a niche audience that would benefit from a dropshipping store, you’ll want to learn more about them.
Understanding your target audience will help you speak to customers in a way that resonates. You’ll have a better idea of which marketing channels you can use to reach people, what product features your prospects are looking for, and what types of content will effectively transport people toward your online store.
Test your understanding of your target market by checking whether you can give detailed answers to these questions:
- Where does your target audience spend time online?
- What types of marketing content does your target audience respond to positively?
- What products are your target audience interested in?
- What product features do they care about most?
- What existing brands do your target audience like?
- What existing businesses successfully serve your target audience?
Researching your target market doesn’t need to be complex. But by the end of this step, you should have a good idea of the type of person you’re selling to.
3. Select a product and a dropshipping supplier
Use your keyword research and target audience analysis to find a product category that’s relevant to your niche.
When you have a type of product in mind, the next step is to identify a supplier who manufactures or stocks it.
There are a ton of dropshipping suppliers to choose from. Some have online platforms where you can create a seller account and search their catalog for products. Others negotiate bespoke deals with retail partners.
If you want a completely automated solution for sending orders to a supplier, use a Shopify dropshipping app from the App Store.
When you use Shopify for dropshipping, information about your orders is sent directly to your third-party supplier, who marks the order as complete and (if available) sends a tracking number directly to your customer.
Here are a few popular dropshipping supplier apps:
With Spocket, you can sell products from US, European, and international dropshippers through your Shopify store. Spocket features dependable suppliers and automatically updates inventory counts. It’s also an official partner of AliExpress and Alibaba.
Reviewers say that Spocket’s customer service is prompt and shipping from US and EU suppliers is relatively fast. You can even order product samples to check the quality before adding items to your store.
With DSers, merchants can search, import, and edit product data from suppliers on AliExpress. One notable feature is the ability to compare different AliExpress dropshippers selling the same products, so you can find the most competitive prices.
Like the other dropshipping apps, Modalyst syncs with AliExpress, making it easy for merchants to import products directly into their Shopify store. Modalyst also offers curated lists of independent manufacturers, as well as high-end brands like Calvin Klein and Dolce & Gabbana.
One drawback of dropshipping is that your products will likely be available from other online stores.
With print-on-demand dropshipping, merchants can add custom designs to products like t-shirts, tote bags, notebooks, and household items. That makes print-on-demand a good model for differentiating your store, while retaining a no-inventory approach to ecommerce.
If print on demand sounds interesting, check out these print-on-demand companies and apps.
4. Build an ecommerce store
With a catalog of products in mind, and a dropshipping supplier selected, you’re ready to start building your online store.
Log in to your Shopify account
First, log in to your Shopify account. If you don’t have a Shopify account, use the free trial to get started.
Choose a domain name
- A second-level domain is unique to your website. For example, “google” is the second-level domain in “google.com.”
- A TLD is used by multiple websites and follows the second-level domain. “.com” is the top-level domain in “google.com.”
Registering a domain name is the next step in creating your dropshipping store. If you don’t have an existing domain, choose one that fits your niche and clearly signals your product catalog. Land on a good online store name by following these tips:
- 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.
- Keep it short. Short domain names are easier to remember and pronounce—and harder to misspell.
- Match search terms. Many SEO experts recommend choosing a domain name that matches a popular search engine query used by your potential customers. For example, if you plan to dropship hockey sticks, you might select the domain name “besthockeysticks.com.”
- Be different. If a popular phrase isn’t available, try a domain name that reflects your wider niche or brand.
- Use a unique TLD. If your second-level domain is taken with a .com TLD, consider using a unique extension like .shop or .store.
Design your ecommerce website and import products
Use one of Shopify’s professionally designed themes to quickly build your store. Brand your website with a color scheme, set up your checkout, and populate your most important pages with copy and images—but don’t invest too much time in the look of your store at this stage.
When your business is up and running, you can analyze successful store examples to improve your website design.
Once your store is live, start importing products from your dropshipping app. With Shopify, you can directly import products, including product images and descriptions, then edit them in your dashboard.
Price your products
Setting the right product prices is a delicate balancing act. You need to ensure your prices are competitive enough to attract customers and encourage them to browse your store, but you also need to maintain healthy profit margins.
It's important not to engage in a price war with other dropshipping stores, as this can erode your profits until business becomes non-viable. Remember, it's not always necessary to have the lowest price. When pricing among competitors is similar, customers also value factors like brand ethics, customer service, and shopping experience.
Don't forget to account for additional costs such as shipping when calculating your profit margin.
5. Market your dropshipping store
Developing a marketing strategy for your dropshipping store is perhaps the most crucial step in generating sales. You’ll likely be competing against stores that sell the same products as you, so reaching potential customers first—or providing the most satisfying customer experience—is paramount.
The most basic aspect of dropshipping marketing is differentiation. By building a brand and carefully curating your product catalog, you can create the impression of a unique and relevant online store.
Strong brands are visually and conceptually consistent. The colors used in your website theme, your logo, the images you use, and the tone of your copywriting should all convey a cohesive message.
That message should match the content of your marketing materials, the values suggested by the products you choose to sell, and the story you tell about your business.
Pricing is another effective form of differentiation. However, if you choose to reduce your margins to become more competitive, make sure you can still generate a profit after all of your costs have been deducted.
Harness social media
Social media marketing is an exceptionally useful tool for small businesses. Paid social ad campaigns 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 the accounts they follow, making it easy to target users that are most likely to have an interest in your products.
Even without an advertising budget, there’s a lot you can do on social media for free. To sell on Instagram and Facebook and Instagram, you can open a “Shop” and sync your inventory, so followers can purchase your products without leaving the app. Market products on TikTok by putting your spin on popular trends and livestreaming product demonstrations.
Leverage search engine optimization
Search engine optimization (SEO) is the process of using data to make the content on your website more relevant to common questions and queries, with the aim of increasing your site’s ranking in search engine listings.
Google processes more than 100,000 searches every second, making increased visibility valuable to any small business. And with a ton of free SEO tools available to help you research the right keywords and select relevant queries to answer with your content, the cost of SEO marketing can be kept relatively low.
Use email marketing to nurture your existing audience
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 brand loyalty.
Email campaigns produce lots of metrics, such as an email’s open rate and whether readers clicked on a CTA button. Use this information to refine your subject lines and content.
🎧 Listen to the most common dropshipping mistakes.
3 tips for dropshipping
Finished the steps above and started your dropshipping business? Here are three pieces of advice to keep in mind during your first months as a dropshipper.
1. Handle product issues professionally
As you learn how to dropship, you’ll find supplier mistakes are unavoidable. While repeated issues with products and delivery may signal the need to find a new wholesale partner, you should cover for occasional errors from your supplier. When they happen:
- Own the issue. Apologize to the customer and explain the solution.
- Compensate the customer. Offer a refund, exchange, or product upgrade.
- Involve the supplier. A good supplier should cover the cost of any mistakes.
2. Source inventory from multiple suppliers
Dealing with multiple suppliers can make admin more challenging, but selling products from more than one wholesaler reduces the risk of stockouts and supply-chain issues. Try to:
- Diversify your suppliers. This gives you more product options and a safety net for unexpected issues.
- Select common products. Choose items that many suppliers carry.
- Use generic descriptions. If necessary, you may be able to sell similar products under the same description.
3. Have an order fulfillment plan
When it comes to fulfilling orders, dropshippers play a minimal role. But that doesn’t mean you can’t be smart about processing your customer’s orders:
- Route orders based on location. If possible, choose a supplier that’s nearest to the customer's location.
- Use automation to maximize availability. Automation tools can help you route orders to suppliers that have items in stock.
- Leverage high sales. When your store grows and order numbers increase, invite suppliers to outbid each other to increase your profit margin.
💡 Now read the full list of dropshipping tips.
Start a dropshipping store today
Shopify helps dropshippers get up and running quickly—while keeping costs low. With manufacturing, warehousing, and shipping outsourced to a third party, entrepreneurs have extra time to focus on product marketing and building their brand.
Make your dropshipping business a success by using Shopify’s tried and tested selling tools.
How to dropship FAQ
Is Shopify good for dropshipping?
Shopify is the best ecommerce platform for dropshipping entrepreneurs. With Shopify apps, you can connect your store directly to vendors across networks like Amazon and AliExpress to automate order fulfillment and shipping.
How profitable is Shopify dropshipping?
Dropshipping on Shopify can be profitable for individuals and businesses because items are only purchased by retailers after they’re sold to consumers—so it’s nearly impossible to overstock or lose funds on products. The only costs incurred by Shopify dropshippers are those spent on a Shopify plan, website domain, and marketing budget
How do I dropship on Shopify?
- Find an underserved niche market.
- Understand your target audience.
- Identify relevant dropshipping products and suppliers.
- Build your ecommerce store.
- Market your dropshipping store.
Where can I find dropshipping suppliers on Shopify?
Can I dropship on Shopify with no inventory?
You don’t need to buy or store inventory when dropshipping on Shopify. Third-party dropshipping partners will hold your products and fulfill orders as you send them, shipping items directly to customers.