“The best time to plant a tree was 20 years ago. The second best time is now.”
Let’s get to the chase.
Heres how to start dropshipping:-
Look for wholesaler offering drop shipping services.
Look out for:
- Deep niches such as low beam lights for a specific car
- Low-volume but with high profit margins – meaning you won’t sell a million units per week but you will make a good profit on them when they do sell
- Low competition. This is important when you are drop shipping as you have to take those drop shipping fees into consideration, which makes keeping up in a competitive market really tough on sellers who are drop shipping.
- Get a supplier
You have a few choices, the easiest method being a serviced directory like SaleHoo which is full of reputable sellers stocking a wide range of products from cosmetics to farming equipment, all sourced for you.
For local suppliers, try flicking through your Yellow Pages in the Wholesale or Suppliers sections. Look for ones who have plenty of experience in drop shipping and who understand the importance of sending out your items in a timely manner.
Before negotiating a deal with them, ask:
- How long it will take for an order to be shipped once you have placed the order with them?
- What shipping methods do they offer? E.g. overnight courier, or for international suppliers, which company they use and what their tracking systems are like.
- What are their quality control systems? You don’t want to be dealing with sub-standard products, it will mean lots of hassles with returns, which wastes valuable time you could spend on making money.
- Do they offer warranties?
- Can you use their product photos? Large wholesalers often have professional product photos taken which will make your listings all the more professional looking
Step 2: Select products and find the best selling ones
This step could also be Step 1 those who know exactly what they want to sell. Start by trawling through your suppliers product range and pick out a few items which interest you and do some market research. Find the best selling items by:
- Taking a close look through eBay’s completed listings. If you haven’t used this method before, follow these simple steps:
- Go to eBay.com (or your local eBay site)
- Click ‘advanced search’ (located right next to eBay’s search bar)
- Check the ‘completed listings’ box
- Enter your keywords and category and hit the search button
- Now scroll through around 5 pages of listings and count the number of successful listings (listed in green), compared to the unsuccessful ones (listed in red).
- When you find an item which sells 60% (or more) of the time you can be pretty certain that you will be successful in selling it. The easiest way to find out whether a product sells 60% (or more) is to scroll right down to the bottom of the page and make sure you’re viewing 50 items per page. Then go through and count the number of green listings. When you get to the bottom and have counted at least 30 (60%) green listings out of the 50 listed… that’s a good sign! You might be onto something so keep looking through a few more pages to make sure.
If none of your products match up, go back and find something else to research or try searching the same product under different key words and categories.
Something to consider when finding the perfect dropshipping product:
- Price range between $150–250 – this will give you enough margin so that you won’t need to sell thousands on items just to make the minimum profit to get by. Don’t sell low cost items for $10 since their margin will be too low.
- Lightweight – Shipping cost can become a huge factor for heavy products sales, especially if you offer express shipping options. An express courier will charge $70–100 for a 10kg package to be delivered from China to United States. When you sell a product that costs $150, paying an extra $70 on shipping is a conversion killer.
- Finding your Niche – One thing you don’t want to do is try to compete in a hyper competitive category where your margin is 2% and the prices drop constantly because of price wars between sellers trying to win over customers by reducing the prices to bear minimum. You can find plenty of which will be more profitable and less competitive.
- Simple to use – this is very important in terms of returns, when a customer receives a product and is not able to figure out how to use it then he is likely to return it and you will have to pay for return shipping cost. These costs can pile up and lower your bottom line profit significantly.
Step 3: Choose a selling platform
The obvious selling platform is eBay but there are plenty of other online auction sites out there which are growing rapidly and getting a lot of traffic (and some are even fee-free or much cheaper to use than eBay!)
Check out sites like Bonanza.com or Amazon.com and see if there is a market there for your product range. It’s a good idea to diversify when it comes to selling on online auction sites as each site has its own unique visitors (not everyone checks eBay first!) and with most sites being free to join, there is no reason not to give others a try.
Platforms like Amazon don’t really give you your own personal website that’s truly yours so it’s still recommended to create your own brand and store name. You will need a domain name, try Bluehost for a good and cheap host.
For sellers who are looking to diversify, consider setting up your own eCommerce site such as a SaleHoo Store which is the fastest and easiest way to open your own store. You can get a free 30 day trial of SaleHoo Stores right now and try it for yourself.
Step 4: Manage your listings
When drop shipping, you will list your items in the same way you would if you had the stock on hand, but when selling on eBay (and some other sites, you must check individual policies), you must disclose in your listing to all potential buyers the location of your item.
For example, if your supplier is based in Hong Kong, you must display this in your listing so that buyers are aware that there may be longer than expected shipping times.
Drop shipping orders work a little differently than regular wholesale orders. Here’s what a typical drop ship order will look like:
- After you have chosen your items from your supplier, you will list them on eBay or on your eCommerce site
- Once the item is sold, you will collect the money from the buyer and pay your supplier (keeping the profit you make, of course!) by ordering the item you have just sold from their website
- The supplier will then send out the item you have sold directly to your buyer. You will soon work out which products have a great sell-through rate and which don’t and can begin adjusting which products you list accordingly.