Drop Shipping Explained

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What is Drop Shipping?

Drop Shipping is a highly profitable e-commerce business model which allows the retailer (shop owner) to operate a location independent business without having to worry about managing their own inventory at all as all the shipping and handling of the physical products are taken care of by the wholesaler. 

If you want to learn more about drop shipping then just scroll down. 

This is how drop shipping works

Drop shipping involves 3 parties: The Supplier (Wholesaler), The Drop shipper (You) and the customer. And here is a scenario of how the whole process could look like if you were to start drop shipping:

1. Find Products and add them to your online store.

Once you find a product that you would like to drop ship from AliExpress or another wholesaler of your choice you add the product along with pictures and information of the product into your online store.

There are some tools and plugins which can automate this process and help you to save tons of time. If you have an online drop shipping store with My Drop Shop then you can easily use our AliExpress Importer to Import products from AliExpress.

Video: How to Import products from AliExpress

2. Promote your Online Drop Shipping Store

Promoting your Online Store is by far the most important step in the whole process. What good is a online business that makes no sales? Well you guessed it. Luckily there are plenty of ways to promote your online drop shipping store, for example paid ads on facebook, google and other social media platforms.

If you don’t want to spend money on ads in the beginning thats totally fine you can also SEO optimize your online store to rank your store at the top of search engine results.

At My Drop Shop all Shops come with an integrated SEO Plugin that helps you to rank your page at the top of search engines.

Video: Optimize SEO for pages, products and posts

3. Your First Sale & Order Fulfillment

The most ecstatic moment in your drop shipping career is your first sale, besides that it gives a motivational boost to increase your efforts and generate more sales it also shows that you are doing your marketing right.

Once you get your first order you need to order the product from the wholesaler who is selling the product. If you imported the product from AliExpress then make sure to tell the wholesaler that you are drop shipping and make sure he does not include any promotional material.

If everything goes as expected the wholesaler ships the product now directly to your customer. 

That’s how drop shipping works in general, of course there are a lot of other things which you need to put in consideration like Customer Support, Legal Issues, Refunds and other factors.

We post regularly useful and interesting blog posts on our eCommerce Blog make sure to check it out.

What you need to start drop shipping

So now that we explained how drop shipping works you need some things in place in order to start a drop shipping business.

1. Online Store

If you are planning on selling on eBay or Amazon then you might not need an online store to get started. But be aware that many drop shippers complain about getting banned from these platforms for being drop shippers and also the competition on the mentioned platforms is huge.

An online store gives you many positive features that you won’t have if you only rely on third party platforms like eBay or Amazon, for example: Build Email lists by collecting your customer emails and sending them daily newsletters about your store or products.

Video: How to connect your store to Mailchimp

The risk of going out of business because your online store gets shutdown for some reason is almost Zero if you don’t do anything that is considered illegal by law like copyright infringements.

Starting an Online Store for your drop shipping business these days is very easy. My Drop Shop offers a convenient starter plan for $28 per month that covers all the functions you need to start your own drop shipping store.

2. A legal entity / Company registration

While you might think you don’t need to incorporate a company you might be mistaken. As you are going to collect payments from customers you need to open a business account with a payment provider like Stripe or PayPal and 99% of payment providers will request legal papers for your company or else they wont cash you out or even worse not open your business account at all.

Incorporating a company these days is not that complicated and not really expensive given the fact the amount of money you can make with drop shipping these days. 

Besides the payment providers you might also need to pay taxes depending on the country where you live in. You can also incorporate a company in a country where you don’t have to be physically present like Estonia. Estonia is the first country to introduce an amazing opportunity for all Digital Nomads that want to open a location independent company. 

You can incorporate a Limited company for less than $200 and run it from anywhere in the world. Learn more about the Estonian e-Residency program.

3. Equip yourself with some Marketing Skills

For every thing in the Internet there is at least 1 Free Tutorial available, so if you want to make money on the Internet then you have to equip yourself with some skills like How to setup the Perfect Facebook Ad or how to rock the top search results in search engines.

YouTube is full of free video tutorials for all kinds of marketing related topics. Spend some time educating yourself on how to market your products. We have a YouTube Channel where we post regular interesting tutorials and latest news on marketing, drop shipping and eCommerce.

Subscribe to our YouTube Channel >

Fabriqué en Estonie - Copyright 2019 My Drop Shop OU

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