How To Start A Successful Online Dropshipping Business in Nigeria
Starting a dropshipping business is a great first step into entrepreneurship. Many people are scared of starting an online business because of the startup costs and the hassles of running a small business, however, Dropshipping is a very lucrative and profitable online business.
You’ll be able to sell products to customers, set your own product prices, and market your very own brand. In fact, in Dropshipping, you don’t need to pay for inventory until the goods or services are sold to the customer.
What is Dropshipping?
Dropshipping is a retail fulfillment method where a store doesn’t keep the products it sells in stock. Instead, when a store sells a product, it purchases the item from a third party, and has it shipped directly to the customer.
Dropshipping is a type of business model which enables a business to operate without maintaining inventory, owning a warehouse to store their products, or even having to ship their products to their customers themselves.
Dropshipping Vs Classic Retail Model.
The biggest difference between dropshipping and the Classic retail model is that the selling merchant doesn’t stock or own inventory. Instead, the merchant purchases the inventory it needs from a third party usually a wholesaler or manufacturer.
Dropshipping has an advantage over the Classic Retail Model because it requires smaller cash investment to setup. With the standard retail or e-commerce model, you need to invest more cash up front. However, Your reward is higher profits.
How To Start A Dropshipping Business.
Step 1: Find a niche.
The first step to starting an online dropshipping business is finding a niche.
Picking a niche you fully understand will give you some additional advantages over your competitors. Without any knowledge about the niche you choose, you won’t have the ability to pick up on anything fishy about the quality of the products, the process, the pricing, or anything related.
The niche you select needs to be laser-focused and something you are genuinely interested in. A product range that isn’t focused will be difficult to market. If you aren’t passionate about the niche you select, you will be more apt to become discouraged, because it takes a lot of work to successfully scale a drop shipping business.
Step 2. Perform competition research.
Remember, you will be competing with other dropshipping operations as well as retail giants such as Walmart and Amazon. This is where a lot of potential drop shippers go wrong, because they look for a product that has little to no competition which is a sign there isn’t demand for that particular product.
There are many reasons why a product might not have a lot of competition, including high shipping costs, supplier and manufacturing issues, or low profit margins. Look for products that have competition, as it’s a sign that there is a high demand and the business model is sustainable.
Step 3: Find a supplier.
Choosing the wrong supplier can ruin your business, so it is important that you don’t rush this step. Conduct proper due diligence. Most drop shipping suppliers are located overseas which makes communication extremely important, both in terms of response speed and the ability to understand each other.
Alibaba has become one of the largest online resources to identify and communicate with potential manufacturers and suppliers. Make sure to ask a lot of questions and learn what their production capabilities are in the event that your online business grows exponentially.
Step 4: Build an ecommerce website.
The fastest way to launch a website that supports a dropshipping business model is to use a simple e-commerce platform such as Shopify. Shopify is a Canadian multinational e-commerce company headquartered in Ontario. It offers online retailers a suite of services including payments, marketing, shipping, and customer engagement tools.
With Shopify, You don’t need a tech background to get up and running, and it has plenty of apps that can help you increase sales. Even if you have a sizable budget that would allow you to hire a web design and development company to create a custom solution, it’s a much wiser move to use one of the plug-and-play options, especially in the beginning.
Step 5: Promote your business.
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 potential customers, but the most effective option is to start a Facebook ad campaign.
Promoting your business allows you to generate sales and revenue right from the start. Facebook allows you to place your offer directly in front of a highly targeted audience which gives you the ability to compete with the largest brands and retailers in the world.
There is this popular quote in business that says “Nothing happens until someone sells something”. The major purpose of venturing into a drop shipping business is to sell something and this can only be achieved by constantly looking for innovative and less cost-effective ways to promote your business.
Step 6. Analyze and optimize.
You need to track all of the data and metrics available to grow your 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 and know where the customer originated from and what brought them to your website, you will be able you to scale down what works and eliminate what doesn’t.
Step 7: Get your finances in order.
One common mistake entrepreneurs make when starting a business is not taking financial management seriously. Every money-making business needs to always look out for financial loopholes that can ruin the business and prevent such from happening.
Financial activities such as small business accounting, tax remittance, payroll management, and invoicing, should be taken seriously from day one. You should also learn to keep your business and personal finances separate as much as possible.
Pros & Cons of Starting a Dropshipping Business.
Just like starting a new business, there are also some pros and cons to starting a drop shipping business. Some of the Pros of drop shipping include low investment, it is easy to start, location flexibility, and easier expansion.
While the biggest disadvantage of operating in a highly competitive dropshipping business is lower margins. Because it’s so easy to get started with low costs, many merchants will start their store with super low prices in an attempt to quickly grow revenue. Some other disadvantage of starting a dropshipping business include shipping returns and a Lack of visibility.
Drop shipping is an extremely popular business model for new entrepreneurs to make money. However, since you don’t need to stock or handle the items you are selling, it’s very easy for new competitions to popup. This is why you need to constantly innovate and study the market.