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Online drop shipping business is an extremely popular business model for new entrepreneurs that want to make money online , due to internet marketing skills far outweighing financial capacity.

Drop shipping business is a business model that you can sell physical goods online without having to pay upfront for physical inventory, to need to own or lease a warehouse to keep your products and without having to deal with the delivery and handling of products.

Starting a dropshipping business does not need a large capital you don’t have to invest large amount of money for inventory. You can start doing business for under $150, thus this business model is an excellent choice for startups and newbie online entrepreneurs.

Because you do not need to stock or keep the items you are selling online, it’s possible to start a drop shipping business with small capital.

An ecommerce store that operates a drop shipping model buys the items it sells from a third-party supplier or manufacturer, who then fulfills the order to the real buyers of the product. This not only cuts operational costs, but it also frees up your time to focus all of your efforts on how to acquire customers to your store.

If you are ready to start a drop shipping business that can compete with big retailers, and do so on a very limited budget, then follow these steps below. While it does not take a lot of money to launch a drop shipping business, it will require a lot of hard work to succeed over time.

1. Choose a niche.

The drop shipping niche you choose needs to be intensely focused and something you are genuinely interested in. A product range that isn’t focused will be hard to market. If you do not love the niche you select, you will be more apt to becoming discouraged in the business, because it takes a lot of work to successfully manage a drop shipping business. Here are some good key points to consider when choosing your niche:

  • Look out for attractive profits. When you are running a drop shipping business model, your focus is on marketing and customer acquisition, so the amount of work required to sell a $20 item is essentially the same as it would be to sell a $3000 item. Choose a niche with higher-priced goods.
  • Lower shipping costs are very crucial. Even though your supplier or manufacturer will be the one to be handling the shipping from start to finish, if the cost is too high, it will repel the customers work to get to your ecommerce store. Find products that are not costly to ship but expensive, as this also gives you the option of giving free shipping to your customers and absorbing that cost as a business expense in order to attract more product sales.
  • You need to make sure your product appeals to buyers with disposable income. When you are focused on getting traffic to your website, you want to get the highest conversion rate possible because most visitors will never come back. So make sure that the products you are about to sell triggers impulse buyers and to those with the financial ability to make a purchase the moment they find it.
  • Make sure people are always searching for your product. The Google’s Keyword Planner and Trends is a very vital tool to check some common search terms related to your potential drop shipping niche. If nobody is searching for what you are planning on selling, should not sell such a product as you will not see buyers’
  • Create your own brand. Your drop shipping business will have more value if you can rebrand whatever it is you are selling and pass it off as your own. Find a good product or a line of products you can white label and sell as your own brand with customized packaging and branding of your own.
  • Deal on products that isn’t readily available locally. Pick something your customers cannot find down the street. This way, you become more attractive to a potential customer.
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2. Perform competition research.

Remember, you will be competing with other drop shipping stores as well as retail giants such as Walmart and Amazon. This is where a lot of potential drop shippers have it wrong, because they look for a product that has little to no competition. That’s a sign there isn’t demand for that particular item.

There are many reasons why a product might not have a lot of competition, including high shipping fees, supplier and manufacturing issues or bad profit margins. Search for products that have high competition, as it’s a sign that there is a high demand and the business model is sustainable.

3. Secure a supplier.

Partnering with the wrong supplier can ruin your online drop shipping business in a short time, so it’s important that you don’t rush this step. Conduct proper research. Most drop shipping suppliers are located overseas, making communication very important, both in terms of response speed and the ability to understand each other. If you are not 100 percent confident in the communication abilities of a potential supplier, move on and continue your search for other persons in the niche.

Aliexpress has become one of the largest online resources to identify and communicate with potential manufacturers and suppliers. Make sure to ask many of questions and learn what their production capabilities are in the event that your business grows exponentially. You want to be certain they have the ability to work with you.

Try to learn from other entrepreneurs who have been in this path in the past. There are plenty of information sources available, from business and tech blogs to reddit about drop shipping. It’s a popular topic that may help you avoid high cost supplier mistakes.

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4. Build your ecommerce website.

The fastest way to launch a website that supports an online drop shipping business model is to use a simple ecommerce platform such as Shopify. You don’t need a tech background to start up, and it has plenty of apps to help increase sales for you.

Even if you have a sizable budget that would allow you to hire a web designer and development company to create a custom website, it’s a much wiser move to use one of the plug-and-play options, especially in the beginning. Once you are established and the revenue is coming in, then you can explore additional website customization that is suitable for you.

5. Create a customer acquisition plan.

Having a great product and a website is great, but without customers looking to buy, you don’t have a business. There are several ways to attract new customers, but the most effective option is to begin a Facebook ad campaign.

This allows you to generate sales and revenue right from the beginning, which can contribute to quick scaling. Facebook allows you to place your offer directly in front of a highly targeted audience. This gives you the ability to compete with the largest brands and retailers immediately you begin.

You also have to think long term, so search engine optimization(SEO) and email marketing should also be something to focus on while looking to gain more customers. Collect emails from the start and set up automated email sequences that offer discounts and special offers. It’s an easy way to leverage your existing customer base and generate revenue without additional advertising and marketing expenditure.

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6. Analyze and optimize.

You have to track all of the data and metrics that is available to grow your online drop shipping business. This includes Google Analytics traffic and Facebook conversion pixel data, if that is your main customer acquisition channel. When you are able to track every single conversion — to know where the customer originated from and what path they took on your website that eventually led to a sale — it enables you to know what works and eliminate what does not work for your store.

You will never have a static advertising or marketing strategy. You will always need to constantly check for new opportunities and test and fine-tune present campaigns, which allows you to know when to optimize or shift campaign costs.

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