A drop shipping business requires less capital and work up front than most any other online business model, which may be why more and more people are deciding to jump in. At the same time, if you do not know what you are doing, you can end up burning through assets unnecessarily. Here are the basics on how to start drop shipping business at your home, so that you have a solid model of what you need to plan for before you start spending a lot of time or money on the work you are doing.
A drop shipping business is one where you sell products to customers, but you do not actually buy anything or keep any stock until they order it. So if you have a business that sells sweaters, you will not buy the sweater from the manufacturer until someone orders one from your site. This creates unique advantages and disadvantages to the business model.
The biggest advantage is that you do not need to spend money until you have already made it. In that respect, there is less risk than a traditional business that keeps stock. The biggest disadvantage is that you are the middleman for the customer and manufacturer. If that customer wants a refund, they will contact you. If the manufacturer is out of a product, you may not know until someone orders it. There can be a lot of stress to be in between like this, so you need to be prepared to handle it.
Step One – Finding Your Product
The first thing you should do is find a product that you are interested in selling. For most people, this is something that they have at least a passing interest in. If you enjoy sports, perhaps you will look into sports gear. If you like coffee, then maybe you will find good coffee online and sell it. Whatever you ultimately choose, be ready to spend a significant amount of time researching it, deciding what to sell, how much to sell it for, and how to design the site. Without a real passion for what you are working on, you risk burning yourself out before you even have a chance to get your business off the ground. Do not let that happen.
There are several sites online that consolidate manufacturers that are willing to start drop shipping business with you. These are great places to look if you want to get into the business but do not have a particular product in mind. If you know what you want to sell, another option may be to contact manufacturers directly and ask if they would be interested in partnering with you. They may be more amenable than you think, especially since they will only need to ship you products that have already sold.
Do not be afraid of taking time to decide on the product. If you get involved with a product for a month and then realize that you are losing your passion for it, that is a month of work lost. Consider many potential products and companies before making your decision.
Step Two – Setting Up The Website
Once you have your product chosen and the company has agreed to work with you, it is time to put together the website. There are a large number of directions you can go here. There are services that will put together product websites for you for a monthly fee that are excellent for beginning drop shippers. If you have the technical ability you could also attempt to put the site together yourself, but you may want to think hard before doing this. This site is going to take a lot of work even if you go with a framework that is already in existence. Do you really want to lengthen the time further and try and put something together on your own?
The important thing here is to make sure your site is easy to navigate. You want to get the products in front of the reader’s eyeballs as efficiently as possible, along with the price and the button for them to buy it. Study after study has shown that the more they see, and the easier it is for them to buy, the more often they will actually do it. Any e-commerce company you work with to put a site together will have already done this homework, and will supply you with frameworks that have proven to work in the past. You certainly will be able to customize a little, but always keep products prevalent.
Step Three – Set Up Your Own Business
Before you start to market your site aggressively, make sure your house is in order. You may want to consider applying to the IRS for a tax ID number to use for your business. This is not necessary, as you can just use your social security number, but if you do that then you are by definition forming your business as a sole proprietorship, which has certain advantages and disadvantages. Many long term online businessmen get a separate tax ID to keep their personal finances separate from their business, and you may want to do that too.
You are going to have to provide your customers with some form of support. Expect to get some questions about your site, products, or business. At the very least you need to have an email address they can contact, but if you really want to instill trust in your site as a company then get a toll free number on your site. It is cheap to set one up, and makes people that much more comfortable ordered from you. This means, of course, that you have to be available to take calls. On the other hand, you do not need to post hours, so perhaps you can just call people back if they leave you a message.
Keep in mind that when you decide to start drop shipping business, you are going to have a lot of site setup at the beginning, and then you will be in the customer service industry afterwards. This is a very profitable business to be in, but at the same time, it can be time consuming and takes a lot of discipline to stay at. Good luck in your online endeavors!