In our regular Transparency Reports, we explore the latest challenges facing WordPress businesses owners; from the rocky roads of losing half our revenue (twice), to the highs of team-building and WordCamps. The theme running through these reports is running a WordPress business today is hard, and we’re in an environment that’s competitive at an unprecedented level.
61.6% of total internet users worldwide will purchase goods online in 2018, and that figure is projected to reach over 65% by 2021. Online spending power is on the rise, and business owners who fail to adapt now will lose out on profitable opportunities in the future.
This is exactly what this post will look at. We’ll look at the what, why, and how to start a dropshipping business.
What is dropshipping?
Dropshipping is done by listing and selling products from an online (eCommerce) store without storing those products yourself.
No warehouse overheads, no garage stuffed with stock; and no dud products destined for clearance sales. You create business partnerships with suppliers, who receive orders from your website, package the products, and then send directly to customers on your behalf.
You primarily add value through product marketing, customer service, and advertising, and you leave the logistics – storage, packaging, and shipping – to the supplier. You’ll have to choose the right supplier (we’ll cover this later), but once that’s done, you don’t have to worry too much about logistics.
Conveniently, if you were thinking about running a WordPress product business, these are exactly the same skills you’d need. And, as we’ve already discussed, the opportunity from eCommerce is huge. WordPress is big, but eCommerce is bigger.
You won’t be spending time coding a product, but you’ll still need to offer a product or products. You’ll also need to undertake market research, develop a WordPress site, set up WooCommerce (or another eCommerce plugin), and then get stuck into marketing channels from SEO to content marketing. These latter steps are identical to running a WordPress product business.
That’s what dropshipping is. It’s a way of doing business which wasn’t even possible a couple of years ago.
Dropshipping is hard in the same way running any business is hard, but it’s a world of really exciting opportunity.
Let’s now explore some of the potential benefits and setbacks of starting a dropshipping company plus how to dropship.
What are the advantages of setting up a dropshipping company?
Beyond the fantasy of seeing revenue roll in as you roll out your beach towel in a remote tropical paradise 🏖, there are countless other benefits to running a remote dropshipping business.
Here are some advantages in convenient list format:
2. Reduce overall expenses: By choosing to dropship, you can reconfigure your supply chain to remove tedious costs (and risks) associated with hefting physical goods across countries and continents. You’ll be saving on the expense of freight services, port operations, storage, warehouse employees, packaging and labeling.
3. Increase cash flow: Because you don’t stock the product, you won’t pay for it until after it’s been sold and you’ve already received payment for it.
4. Infinite inventory: Tap into an online supply chain and gain access to virtually unlimited suppliers worldwide. This could also mean fluid expansion into new territories.
5. Free up your time: Yep, we’ll say it again. You’re selling and ideally branding and marketing the product, but you’re not manufacturing it. In the WordPress world this is the equivalent of packaging up an existing theme or plugin and adding value that way. This lets you focus on strategy, marketing – and of course getting sand out of your laptop.
6. Do market-testing in real-time: If (despite even your savviest marketing efforts) one of your products still won’t sell, having no stock to clear means you can remove it from your product offering immediately! Make a clean break and keep readjusting your products to real-time market demand/different customer personas, freeing up valuable resources.
7. Work anywhere: Remove the ties to any physical location or employees and add the potential to work remotely. Admittedly this is equally a perk of WordPress product businesses, but remote work is still great. Tempted yet?
The disadvantages of a dropshipping business?
Some of these potential setbacks may only apply to certain industries, and others are risks which can be remedied, simply by taking the right steps. Nevertheless, it’s important to keep these pitfalls into account as you learn how to dropship and work on building up your business:
2. Lower profit-margin: You’ll buy products at a discount and sell them on for a profit. When you’re starting, though, you won’t have the volume required to offer significant discounts.
3. Less competitive pricing: Any market with low barriers to entry is at risk of competition entering the market and creating price competition. This is to an extent what we’ve seen with WordPress themes in recent years – which is hardly an “easy” market to crack. Thus, you must choose the right market. Anything that’s too easy will be at serious risk from disruption.
4. Hard to create unique value/USP: You’re also going to really be careful about how you add value to your dropshipping business. If you’re literally just connecting buyers to a wholesale seller then you’re providing relatively little value. If you’re adding a brand, quality guarantee, customer service, convenience, and so on, then you’re in a stronger place. This is hard but not insurmountable.
5. Easy to copy: This also leads on from the previous point: you’ll need to build your own added value over time, but especially during the early stages you’ll be really easy to copy. If or when you do get your store working, it might be best to keep quiet.
There are obvious ways round this which we’ve highlighted and the rest of the post will focus on, but you’ll need to be really careful about this.
Dropshipping for eCommerce: Getting started and how to dropship
Now we’re fully aware of the pros and cons of setting up a dropshipping business, it’s decision time!
- If you have existing WordPress skills and are after a business where you primarily add value through branding and marketing, then go ahead. If you want to spend time making your product, this probably isn’t for you. You could always start a blog if the WordPress product space really doesn’t appeal.
- If you’re okay with the caveats and excited about building a great store, brand, and customer experience, then let’s go!
On the assumption you’re still reading because you’re at the very least curious, let’s move on to the best approach to how to dropship and setting up your dropshipping business: from honing in on your winning business idea to sourcing your supplier and finding your first customers.
1. Market research: Find a niche & choose your product
You need a niche: something your store will focus on. Think “bespoke coffee store” rather than “Amazon competitor”. Ideally, your niche is where you already have expert knowledge. Or perhaps it’s a topic/product which is relatively undiscovered and under-utilized: ideally, a combination of both!
You’ll have a much higher chance of success if you have a comparative advantage over the competition – even if it’s just your expert knowledge. “Expert knowledge” in a topic or type of product that you’re really passionate about. An existing hobby, for example.
Explore lots of possible ideas, choose the best.
Try and find a couple of ideas to explore. The next step is to do some keyword research and look for existing products (high-quality bird prints? Baby golf buggy?). These are the same SEO techniques you’d use for deciding what to blog about and promoting your WordPress product business; we weren’t making it up when we said this requires similar skills 🙂
Happily, we have plenty of help: read our practical SEO guide and check the start a blog guide for general info. You’re looking for a reasonable volume of searches per month across a range of keywords. Ideally you want a niche without too much keyword competition so that you can reach potential customers on the first page of Google.
2. Sourcing the right eCommerce provider and dropshipping supplier
Whether you already have an eCommerce store or learning how to start a dropshipping business from scratch; it’s absolutely essential to find a good match between your eCommerce provider and dropshipping supplier.
These services will be sharing information day in, day out and compatibility issues can cause untold problems. Shopify, for example, has its own dedicated dropshipping app, Oberlo. It’s pretty impressive, but you’re stuck inside the Shopify ecosystem. With your existing WordPress knowledge, you’ve got space to carve out a competitive advantage by using the more customizable WooCommerce.
WooComerce has its own dropshipping integrations: we’ve had success integrating WooCommerce and AliExpress with WordPress. AliExpress is a sister site from Alibaba, the Chinese eCommerce giant. The site has hundreds of thousands of products at wholesale prices, so it’s perfect when first figuring out how to dropship. The post linked above shows how to do the full setup; we’ll thus skip this step here.
Now is the time to read the ThemeIsle post and get your site and store set up! Come back here when you’re ready to look at getting your first customers.
3. Finding your first customers: Getting eyes on the prize
Much like any WordPress product or blog, your dropshipping store needs visitors and customers to thrive – you won’t learn how to dropship without customers! To start with, keep things simple and focus in on marketing channels most likely to attract sales to your website.
You should think about possible marketing channels, and if you have access or skills for an unusual or unorthodox channel, then do that! That’s a great way of getting your first customers. Here, however, we’ll recommend content marketing because it’s scalable and fits closely with WordPress’ roots, so you’re likely able to do a decent job.
The guides above will be a great help. The key things to remember here are:
- Create really good content that answers unanswered questions related to your products, or answers already-answered questions better than is being done currently.
- Have a target keyword in mind for each post.
- Commit to a couple of months of content marketing. It takes time to work.
Try this out, and make sure to strike the right balance between committing for the right amount of time and tweaking strategy when required. This is a fantastic way to build out customers for your store and ultimately learn how to dropship.
4. Success stories: learn how to start a dropshipping business from the pros
Let’s check out some dropshipping for eCommerce success stories! This is a really exciting field, so we’ll see what we can learn from those already running successful dropshipping companies.
🎯 Simple idea to hundreds of millions of dollars.
One of the best examples in this space is Anker, the seller of phone battery packs and cables. You’ve probably got one – I do! Anker was started in 2011 by a Google engineer who saw space for “a line of reasonably priced accessories that would be better than the ones you could buy from Apple and other big-name brands”. It’s now the most popular brand for battery packs on Amazon.
- The initial setup took a year as Anker wanted to find reliable manufacturing partners. Founder Steven Yang went to China to ensure their supply chain was rock-solid.
- Anker started with laptop batteries – not phone batteries – but found its nirvana of phones by testing lots of products.
- The focus was on building a great product! Their batteries were better than what you got in your phone from the manufacturer. This helped build out their reputation as a reliable brand.
- By selling on Amazon, Anker was able to shortcut some of the marketing requirements you’d have from self-hosting.
- After finding a product that was good enough, they focused on what was working. Anker went from selling 100 to 1,000 products every day in 2012. The rest, it turns out, has been a very good history.
- Read the full interview with Anker’s founder here.
🍵 From passion to profit in three weeks.
Nat Eliason saw a gap in the online market for high-quality, US-based tea sellers that ship online. So, it made sense to transform his personal love of tea into a company and learn how to dropship.
And – impressively – setting up, registering and launching the entire company with MVP took less than three weeks.
- He registered the business on incorporate.com, which took 10-minutes. Within two days he had a fully-licensed LLC.
- To keep costs down, Nat used his own digital SLR and a collapsible light-box (which he bought on Amazon) to do the product photography. He also chose to package his own product which added a bespoke flair to the brand.
- Nat also made sure to implement marketing best practices, such as strategically-placed Calls-To-Action (CTAs) across the website, and interesting, SEO-optimized content on the blog. Integrating a few apps, such as Privy (for pop-ups), FOMO and Shopify’s built-in reviews app (to add social proof). You can replicate all of these with WooCommerce, too.
- Read the full case study here.
🚚 From $0 to $6000 in four months.
AliDropship is a whole site dedicated to people who want to learn how to dropship and build dropshipping stores with AliExpress! The site features plenty of case studies, and here’s one: Alex (not me!) was attracted by the idea of buying and selling goods at a high margin, without the need to pay for storage; the very essence of dropshipping.
Once he had decided on a niche, he set up the store to specialize in imitation-vintage jewelry and accessories. On the Alidropship blog, he said:
Some challenges Alex faced and how he solved them:
- A solid supply chain is important. This is the same point as with Anker, but Alex had a different solution: giving buyers a tracking code to see the parcel’s location. This gives them reassurance whilst not requiring a drastic change.
- Social media was initially “not the best use of one’s time”, Alex says – but he challenged this assumption and realized for his niche it’s a great marketing channel. Do this! Work out what’s best! Paid marketing isn’t the best fit for everybody’s store, especially when starting out, but it can clearly be a good fit sometimes.
- Now with three stores, Alex says the main issue he faces is finding time to deal with orders! A good problem to have. He’s now planning to hire assistants, who will deal with order placements and customer service. What else would a dropshipping store do? 🙂
- Read the full case-study here.
Ready to transform your WordPress business?
Whether you’re already adept at developing WordPress sites, or have a ton of experience with business but limited technical expertise, learning how to dropship offers a huge market opportunity! As an alternative to starting a WordPress product business – with the same skills – this is a sound alternative.
It is possible to start a lean, location-independent business, and gain high profits with dropshipping, but (though it may sound glamorous) it’s important to remember that how to start a dropshipping business comes with the same risks as setting up any other eCommerce company. You have to build a solid marketing operation and add value somewhere in the process.
That said, dropshipping is a relative newcomer to the online eCommerce space. Figuring out how to dropship in an approachable way literally wasn’t possible a couple of years ago! Now is the time to consider this disruptive business model.
Don’t forget to join our crash course on speeding up your WordPress site. With some simple fixes, you can reduce your loading time by even 50-80%: