How to Start a Dropshipping Business on Shopify

How to Start a Dropshipping Business on Shopify
Ivan Kreimer
Ivan Kreimer Apr 1, 2021 — 11 min read
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Dropshipping is a unique opportunity for ecommerce entrepreneurs to start a business with minimal capital and experience. All you have to do is pick your products, launch your store, and market it successfully.

Well, that’s easy on paper. In reality, there are some questions you need to ask yourself before getting started.

  • How profitable is dropshipping?
  • What ecommerce platform do you work on?
  • How do you actually open your store?
  • How many products do you need to start?
  • How do you promote your store?

In this article, we’ll answer all of these questions for you, so you can learn how to start your first dropshipping store on the largest ecommerce platform in the world, Shopify.


How profitable is dropshipping?

In theory, dropshipping looks like a terrific business model. Think about it:

  • You require little capital to get started.
  • You don’t need to purchase any stock.
  • It doesn’t take much time to launch your store.
  • You don’t need much experience (although it’s always welcomed).

A key point most seem to ignore — especially the “gurus” selling their courses on YouTube and Facebook — is profitability.

Your profitability will depend on three aspects:

  • The number and quality of suppliers you work with: Making four, five, or even six figures in dropshipping requires nothing more than a few quality suppliers that sell unique, and preferably expensive, products.

  • The marketing channels you use: Organic channels like SEO and email marketing will increase your margins, but they will take time to work. Most likely, you will use paid advertising from Facebook and Google to generate your sales; these channels will be your largest profit-draining part of your business.

  • The products you sell: Sell cheap products every other competitor is selling, and your margins will be low; sell expensive products with few competitors, and your margins will be high.

These three points can be grouped in two different approaches to dropshipping:

  1. Low-ticket dropshipping: You resell cheap, generic products from AliExpress. Most dropshippers that fall under this category promote their products through Facebook ads, saturating the offers and the marketing channels.

  2. High-ticket dropshipping: You resell products from established brands that offer special, expensive products. Since the profit margins are higher, dropshippers often use more expensive promotion strategies, like Google Ads and retargeting.

Opening a high-ticket store will require a higher initial time investment for vendor negotiations. You will also need a strong marketing and brand strategy that shows your vendors you are a potential profitable partner for them.

However, you can make four to five figures a month in profits with the high-ticket approach — all you need is to develop your marketing plan and pick your products wisely.

Why Shopify can be a good platform for dropshipping

There are multiple ecommerce platforms you can use to start your dropshipping business. One we’ll recommend in this article is Shopify.

As a SaaS-based cloud-hosted ecommerce platform, you will neither have to get a hosting solution separately nor install any complex software. Shopify takes care of everything for you, so you get to work on growing your business.

What makes Shopify better suited for your dropshipping store than other e-commerce platforms is its App Store, which Shopify reports to have over 4,200 apps by May 2020.

Shopify is a great platform for starting a dropshipping business

Among those 4,200 apps, you can find over 150 dropshipping apps you can plug and play in your store easily, some of which we’ll discuss later on. These apps, which we'll talk about later on, will help you find dropshipping vendors, add their products to your store, and market your products successfully.

You also get an extensive range of payment options — you can even offer cryptocurrency payments! — customer support tools, and more.

Finally, Shopify has partnered with DHL and UPS to offer affordable shipping options for your customers. Since fulfillment is such a critical issue for dropshippers, these partnerships will come in handy once you start making sales.

How many products do I need to start dropshipping?

Although seemingly irrelevant, the number of products you sell will play a large role in your branding and marketing efforts.

One common practice dropshippers use is to sell as many products as possible. The problem with this approach is that, as the saying goes, “if you try to sell to everyone, you sell to no one.”

General dropshipping stores, as they are called, are the dropshippers’s curse. Think about it: if you were trying to buy from a store that sold everything from teacups to phone cases to wristbands, you’d go to Amazon or Walmart.

Worse yet, if that seller told you they’d take 15 to 30 days to ship your product and didn’t give you a good tracking code, you’d be suspicious and avoid buying from them.

These run-of-the-mill AliExpress dropshippers forget to think from a consumer’s perspective, looking to build a relationship with a brand and not buy from a generic store like theirs.

In contrast, niche dropshipping stores cater to specific customer segments, like dog owners or chess aficionados.

Thanks to your product offering’s specificity, a niche dropshipping store lets you connect with your customers.

You can use social media and your email list to develop a long-lasting relationship that will drive them back again and again. As a consequence, you will lower your customer acquisition costs.

The only advantage a general dropshipping store has with a niche one is that you can use the former to test new products and markets and learn the skills required to succeed with the latter. You can also start a generic store by selling generic but somehow related products within a niche and then pick the most profitable products to relaunch your store in the future.

When it comes to picking the number of products to sell, it’s not a matter of hitting a threshold but defining a broader marketing strategy first and selecting the products accordingly.

A generic store can hold from a few dozen to hundreds and thousands of products simultaneously; there’s no limit.

On the other hand, a niche store can have as little as one product and as many as needed to fulfill its needs. For example, you could have one product — say, a protein powder — and multiple accessories that you use for upselling and cross-selling — say, pre and post-workout powders, shakers, and ebooks on nutrition and training.

Whatever your choice, it’s best to get started with a handful of products and learn the ropes before trying too many things at the same time. Think about it this way: if you can’t sell one product, what makes you think you will be able to sell 10?

How to set a Shopify store for dropshipping: 9 steps to get started

To open your Shopify dropshipping store, here’s what you have to do.

Note: The page’s design may change by the time you read this guide. In any case, Shopify will most likely continue to show a similar account setup flow in the future, so you will find that everything will look similarly to the images below suggest.

Start by visiting Shopify.com. Add your email address and click the “Start free trial” button on the homepage to start setting up your account.

How to sign up on Shopify and open your dropshipping store

Add your password and store name. (If you haven’t picked a name yet, make sure to think about it before setting up your account. Here’s a handy guide that will help you.)

The first steps when registering a new Shopify store

Shopify will ask you to answer a set of questions to help you with the onboarding. Answer the form accordingly. You can also skip them, but I’d recommend you do it anyway.

Shopify onboarding questionnaire

Add your address information, and you will be done. Then, you will be taken to your dashboard. Start by clicking on “Settings” on the lower left-hand corner of your Shopify dashboard.

How to access your Shopify settings when starting the account

There’s a whole lot of information here. You should check every page and customize your options as you desire, but for now, we’ll click on “Payments” to set up your payment gateway (i.e., the payment options you will accept).

How to set up a payment gateway when starting a Shopify store

Complete your account set up so you can accept payments. To start, Shopify Payments is a great option. Eventually, you can add more gateways such as PayPal and other third-party options.

To get you started with your dropshipping store, click on “Sales Channels,” which is in the bottom center row.

To second step to set up a dropshipping store is to add a sales channel

Next, select “Add sales channel.”

How to add sales channels on Shopify

The options you will see represent integrations with the most significant social networks and search engine platforms.

Shopify sales channels include Facebook, Pinterest, Messengers and the Buy button

Since we want to install special dropshipping apps, scroll to the bottom and click on “Visit Shopify App Store.”

Find proven dropshipping apps in the Shopify App store

Three apps we’ll recommend you use are:

  • Oberlo: Owned by Shopify, it’s the most popular app for dropshipping. They offer a large number of products, which are sourced both from the Oberlo marketplace and AliExpress. The company lets you rename the products, select the photos you want, and present a custom-made copy.
  • Spocket: Focused on US and EU-based suppliers. If you sell in either market, shipping times will be faster and more reliable. However, the higher supplier quality increases the costs of their products.
  • Modalyst: The company offers a US-based list of suppliers with relatively fast shipping times. You can find low-cost, trendy products from small, independent brands.

Some other important options you should setup are the “Shipping and delivery,” “Taxes,” “Legal,” “Checkout,” and “Billing.”

Along with the sales channel, you should set taxes, billing, and shipping parameters right away

From here, you will need to add your theme, products, and copy. For those tasks, check out the following articles:

5 tools to help with competitor and product research

By now, it’s clear that picking the right products — and their right amount — is crucial to managing a successful dropshipping store.

The following five tools will help you research what your competitors are selling to find new products to sell in the same category (or you can take the easy road and sell the same products as theirs). You will also find tools that will help you uncover new product opportunities.

Ecomhunt is a curation platform that highlights the hottest products daily from AliExpress

Ecomhunt is a curation platform that highlights the hottest products daily from AliExpress and Oberlo. Their analysis includes the products’ costs and average selling price, giving you an average profit margin to work on.

They also analyze the number of companies selling the product at hand, helping you decide what products are oversaturated with competitors and what aren’t.

Niche Scraper provides the latest data on the highest-selling products on AliExpress and Shopify

Niche Scraper uses a research bot that provides the latest data on the highest-selling products on AliExpress and Shopify. They also offer a hand-picked list of products, including the suppliers’ names, ad examples, and more. Their data includes:

  • Sales trend from the last 7 days
  • Sales difficulty level
  • Product sales growth trends

The company also lets you analyze your competitors to reveal their best-selling products, traffic data, and sales estimates.

Allfactor aggregates billions of valuable data from the largest ecommerce companies

Allfactor is a competitive analytics platform that aggregates billions of valuable data from the largest ecommerce companies and platforms, including Shopify, Walmart, Amazon, and Etsy.

The company’s data will help you see your competitors’ sales volumes, product offerings, and new trends coming up.

SimilarWeb is one of the largest web traffic intelligence tools in the market

SimilarWeb is one of the largest web traffic intelligence tools in the market. Their free tool provides you with an overview of your competitors’ website traffic volume, marketing channels, keywords, and display ads.

Their premium platform, while costly, gives you a deeper view of your competitors’ engagement metrics — including time on site, page views, and bounce rate — visitor demographic data — including gender, education, and geography — and traffic sources.

Ahrefs is a popular SEO and content marketing tool helpful when you’re starting a dropshipping business

Ahrefs is a popular SEO and content marketing tool that provides you with a detailed look at your competitor’s SEO performance. You can use Ahrefs to find new keyword ideas, uncover the keywords your competitors rank for, and discover link-building opportunities.

You can also compare your site with your competitors to find content gaps — i.e., topics they rank for that you don’t — track keywords and analyze the most popular content in social media.

3 ways to promote a dropshipping store without having to hire a full-time marketer

Add popups to build an email list

On average, 55% of visitors leave a website within the first 15 seconds of their visit. In this short time span, you need to catch your visitors’ attention, so they say on your site and, if possible, get them to sign up for your email list.

With an email list, you can engage, educate, and build a long-lasting relationship with your subscribers, so they become interested in your products.

What’s more, you can drive more conversions from your existing customers than converting people who have never visited your site before.

To do so, add email popups in your store. Keep them valuable and as non-intrusive as possible.

In the first case, you need to offer something of value. For a dropshipping store, that’s a first-purchase discount. The discount can apply to the whole purchase — say, 15% off — or be worth up to a certain amount — say, $50.

In the second case, you want to trigger your popups based on your visitor’s behavior. One way is to use exit-intent popups, which you show when a visitor is about to click away from your website’s tab.

For more examples, check this overview of Shopify popups.

Use automated email marketing campaigns

When it comes to email marketing, automation is often superior to manual work. You can — and should — send manual email campaigns under specific circumstances — e.g., a seasonal discount, important news.

However, automation tends to have a higher revenue generation potential than manual campaigns.

According to a research study done by Omnisend, the conversion rate of an automated campaign is 359% greater than manual campaigns.

The same report shows that 29% of all email orders in 2020 were from automated messages, despite making less than 2% of all email sends.

There are many automation campaigns you can send:

  • Welcome series: Introduce your subscribers to your brand
  • Educational series: Teach valuable information they can use later on with your products
  • Abandoned cart series: Persuade shoppers with products in their carts to come back and finish their purchase
  • Post-purchase series: Get valuable customer feedback and provide excellent customer service

For more information on email marketing automation, check out this guide.

Build a social media following

The difference between a small dropshipping store and a thriving one lies in their customer base’s loyalty. A dropshipping store that has developed a following behind its brand will have a guaranteed customer base ready to buy, and that’s something you can achieve with social media.

To achieve the greatest results, you want to leverage both organic and paid social media strategies.

According to the Sprout Index Above & Beyond, 40% of consumers find brands on social media from their personal network, 35% from influencers they follow, and 32% from word-of-mouth.

For a dropshipper like you, this means you must focus your strategies on promoting your shared content and reaching out to influencers.

Three popular organic social media strategies you can use on your dropshipping store are:

  • Promoting product reviews
  • Adding relevant hashtags
  • Leveraging user-generated content from your customers

On the other hand, three paid social media strategies ideal for your business are:

  • Boosting your posts’ reach
  • Retargeting your existing visitors and customers through the use of custom audiences
  • Increasing your reach by using lookalike audiences from your visitors and buyers

Three popular and effective channels you can promote your brand on are Facebook, Instagram, and Pinterest.

For more information on using social media for ecommerce, check out this guide.

Wrap up

Learning how to start a dropshipping business requires a mix of skill and patience. You need to know how to pick the right products, open your store, and promote it through several digital marketing strategies.

Today you have learned the basics that will help you get started. Now it’s time you take action. Decide what type of dropshipping store you want to have — general or niche — research popular products, open your Shopify store, and start selling your products with the three methods shown here.

Ivan Kreimer is a freelance content writer for hire who creates educational content for SaaS businesses like Leadfeeder and Campaign Monitor. In his pastime, he likes to help people become freelance writers. Besides writing for smart people who read sites like Getsitecontrol, Ivan has also written in sites like Entrepreneur, MarketingProfs, TheNextWeb, and many other influential websites.

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