I was always fascinated by the idea of having my own business. Maybe it is because I grew up in the time of revolutionary discoveries like the internet, the iphone or the explosion of computing power. There are many great examples of entrepreneurs who made their visions become a reality. Some of them changed the world entirely. Every success story is of course also accompanied by thousands of failed ones. However, this adds to the challenge of this goal, knowing that not everyone can do it and that it requires hard work and effort to succeed.
Last year, I started evaluating different business models as a side project. One model stand out from the crowd: Dropshipping. Simple to get started, low risk and no inventory that you have to manage. In one way, it sounded too good to be true. On the other side, there were a lot of resources and use cases available to give credibility to this option. So let’s start with finding out what is Dropshipping.
As described in the picture above, a customer would place an order on your store for a product that you sell at $200. You will pay the supplier or manufacturer of that product $150 for product costs. He would be responsible with storing, preparing and shipping the product and you would keep a nice profit margin of $50.
As you might feel, this is an oversimplified process, and there are a lot of details at each phase of this exchange. However, from a birds-eye perspective that’s it. Dropshipping has a low entry barrier, with relatively low risks and no inventory to manage. The main focus is on the marketing side: on finding the right products for the right people.
What I found surprising is the number of tools, resources and specialists are available today. With the level of automation and out of the box strategies, someone can have a store running in less than two weeks and start having sales from day one. From the beginning, the two platforms that I need to mentions are Shopify and Oberlo. These are the pillars and the go-to tools for this business. Let’s find out why.
Shopify is the out of the box solution for e-commerce. Once you registered you get an online shop that is ready to be used. Select one from the free or premium themes, add your domain and logo, add your products and start selling. You don’t need a custom hosting service or to code anything. To extend the basic functionality of your store you can install one of the thousands of apps. The starting costs for this service is $29 + any premium apps that you add to your store. You will not need them to get started, but as your business grows, it will make sense to integrate apps for upselling, crossselling etc.).
Oberlo is the second pillar of any Dropshipping business. It is the platform that connects your store to thousands of suppliers. It started with suppliers from China, mainly Aliexpress. Now it has its own marketplace, with suppliers from US, Europe or China. The app is not only a great way to find products that sell or show great potential, but it is one of the best solutions that take care of order fulfillment. This means, when a customer places an order on your shop, with the press of one button, Oberlo creates a new order on the supplier side. This reduces the amount of time required to fulfill orders and also reduces the chances for human mistakes.
These two apps will take care of your basic operational needs. What we have not discussed yet is about the marketing aspect of the business. How to find the right audience, how to bring as many persons in your store and how to convert a visitor to paying customer. This is in my mind the most tricky part. Therefore, I would dedicate the entire next post on the good and bad experiences that I had, including sharing some of the tips and tricks that I learned along the way. Until then you can check my store at cleverkidsstore.com