Dropshipping is a type of Internet business that is getting more traction than ever due to the lockdown and layoffs. If you are looking to start a business online and are serious about it, you can give Dropshipping a shot.
It is the most straightforward form of making money and can be a great source of passive income. All you need is an Internet connection and a bit of dedication to make it happen.
In India, e-commerce is booming with people buying more products online, and there’s a market share for everyone. Having said that, it essential to choose the right manner as well.
Please note that there is a bit of investment involved, i.e., up to 1000 Rs ($15) to set up and get started. Sometimes it could be risky, but that depends on your business plan for Dropshipping and selecting the dealers.
We have also answered some of the questions like Is Dropshipping profitable in India? Especially in 2020 after the outbreak of Coronavirus (sorry for including this satan).
You’ll also get to know some profitable strategies that will help you make profits right from day one, yes we mean it. In this article, we show you how to start a dropshipping business in India from scratch. So let’s get right into it.
What is DropShipping?
Before we get to the part where you start making money out of your business, it is essential to know what it’s all about. So merely putting your grand business model, Dropshipping, is a way to sell products that you don’t own. It’s a type of reselling, but here you don’t stock up like other retail stores.
In Dropshipping, you get money from customers first, and then you place an order for them from the money they just gave you and keep the profits while doing so, and ask the dealer to send the product directly to your customer. Sounds simple right? That’s the most basic way to put it. Though there are lots of things to take care of, this is the underlying ideology behind the Dropshipping.
Alright, guess you are ready to be a Drop Shipper (It’s a person or a company that does Drop Shipping). Some of you might have done this already without even knowing if you’re one of them; we’ll show you the way to make it online, and if it’s already online this article will help you scale the business, so keep reading!
Getting Started With Dropshipping in India
Since you have made your mind to enter this online business, let’s see how you can start one on your own. To give you a short overview, you need to find a niche as in category and products, then a supplier; after that, you set up your online store. After ding that you market the products and attract some a customer base, that’s how you roll. That sounds easy, right? Let’s see how it’s done; One step at a time.
Step 1: Choosing a Niche and Products
First, it depends on you to select the category or niche that you want to work on. For example, if you have a family business of say shoes, you’ll know a lot about it so it can be a good start. Likewise, you can even conquer the fashion niche. While you select your own, just remember these two things:
One, It needs to be broad, as in it must have a lot of items, like the fashion niche having men’s clothing, women’s clothing, kids wear, shoes, and even other fashion accessories. Keeping a broad spectrum of products may help you switch and focus on something that sells more.
Two, It must be trendy and something that everyone buys often. It must not be seasonal like mangoes. The stuff that comes under the niche needs to be evergreen. As your potential buyer is everyone, there’s never a shortage of consumption or a downside in sales.
Now that you have tapped a niche let’s try to select some products for your online store.
Step 2: Find Winning products
Products that you choose can sort of make or break your online business. There are some basic things that you must look for while you select your products. Now you can say it depends on the niche, it sort of does but again think off it as everyone sells a T-Shirt why they would buy from you. You can either step into a highly competitive range of products or the ones with a little competition.
You can go and grab a problem-solving product, or something that is trendy or a wow product depending upon your niche. Problem-solving can be something that addresses customer pain points and make it go away, for example, protein powders, health, and fitness-related items. Remember the satan? It made Mask or PPE (Personal Protective Equipment) quite mainstream.
Another one is a wow product, something that creates a desire and is bought by everyone. It mostly falls under the lifestyle niche. Examples include clothing, gadgets, etc. These usually have a bit higher competition, but as stated earlier, the market is vast, with billions of consumers for everyone to fit in.
The Strategy to Succeed in DropShipping is to choose the right products.
There are more things involved in a product to be ideal. First and foremost, pricing is critical. You need to look for a proper margin that you can list for any item in your store. An ideal would be 250-300% of the price that you get. Anything below that is also a profit, but it might take a lot of time to generate a lot of revenue.
More Sales with Less Profit per Sale
For a product that you get for 10$, when listed at 11$ or 12$ can generate more sales, but the profit you get is around a dollar per item that gets sold. Statistically speaking, you will need a considerable consumer base for this to boom, we do mention there are a lot of customers out there, but your reach is also limited. Generally, anything that falls under a 100% profit margin won’t help you sustain you for a long time.
Fewer Sales with More Profit Per Sale
When you set a margin of 100% or more, you start to see considerable profits that actually fills your pockets. Selling a 100$ item for 200$ to 100 people can give you a profit of 10K$. That’s a good start. Do remember that you need to stay profitable to scale the business. Or else you won’t get any significant results out of your dropshipping store. Here sales might get reduced as tapping into that consumer base could get tricky.
A Product Mix
Always remember, you need profits from all possible angles. You need to keep a mixed set of products to sustain. You don’t want to lose anyone that visits your store. The trick is to get multiple products of different ticket size.
A friendly tip for selecting products to Drop Ship: Try to keep something that is more than 30$. Here you can apply a 250-300% margin and list it at about 90-99$. It did work previously with low ticket sales to gain massive profits, but the competition is too much with increasing products. Getting some low-mid range products will do the trick to get you started. One problem that comes with high ticket products is of building trust. You need to level up your game with the high converting landing page, right creatives, and decent customer support.
Moreover, an initial set-up for high ticket products will require more budget. So start with mid-range. Say between 30-150$ (with margins of 150-300%).
Where to find winning products?
You can straight away head to amazon, Aliexpress, and search for something that you have on mind. There are some tools such as Ecomhunt, Sell the trend, etc. that can help you get a product idea. Ideally, you need to check something that fits the rules of getting a product to dropship that we discussed earlier. A 30$ or 2000 INR + product.
One more condition that you must follow is get something that has good reviews on Amazon or Flipkart. It is to ensure that customer returns to your store and not talk negatively about it. If in case your product has some negative reviews, then taking a look at what they actually tell and figure out a way around those negative reviews.
Inspect and vet the product yourself before making it to your online dropshipping store. Order a sample from the seller and see if it gives you good vibes. It is to make sure that customers will be satisfied when they order. At all points, customer satisfaction needs to be your number one priority.
Step 3: Choose your Dealer or Supplier wisely.
After you have found your winning product, its time to get them. Start looking for wholesalers by directly contacting the manufacturer and asking them for their products wholesale suppliers. Now approach the suppliers to see if they dropship.
You can even hunt for dealers on Justdial. It’s a good and free platform. You would probably encounter a bunch of retail and wholesalers. Explain to them your business plan of Dropshipping. There are many sellers out there who ship products nationally, and end of the day, you will be providing them with more customers, so its a win-win situation.
This is how your Ideal supplier or the dealer looks like
Now, you need to find the wholesalers or get in touch with the manufacturer directly for better deals. The ones you find must not use some third party, be sure of that before taking the deal ahead. Tell you what, we have compiled some points that will guide you on getting the best deal.
Before finalizing the dealer for your product that you will dropship, there are specific questions that you must raise before the dealer. The first thing is to check who manufactures the product if it’s not the supplier that you are talking to get contacts of the manufactures as there are high chances that you hit your dream supplier with a vast range of inventory. Also, it’s easy to keep track of shipments when no third-party is involved.
Customize for your store
Customization is equally essential. Products that you order need to have a custom label of our brand identity that is a logo or something else that you see fit. Maybe if not on the packaging, then a personal note inside of the package can do the trick. This is basically termed as white label products. White label means to have your own brand image in the packaging and even on bills.
Check the delivery turn around. At what time does your supplier send the shipment, is he/she doing it twice a day? Or just once. Can you set a particular time for your orders? If not, then you need to check your schedule of placing orders ad place it beforehand, like if they send out items at 2 pm, maybe placing all the orders by 12 pm could be a great option.
Spotting fake suppliers before its too late
Even if this process consumes a lot of time, please stick to it and try to get it done. Find someone who is trustworthy and experienced as you are not going to meet each other every day, the supplier is responsible for handling your core business.
Traditionally in India, all good wholesalers are weak at marketing, and you won’t spot them quickly. There are high chances of you stumbling with middle man or third-parties, and that’s where you have to be cautious. You need to do a lot of research in finalizing the supplier as it turns out you will encounter many fake ones who are actually retailers posing as wholesalers, you need to avoid those type of dealers. So how do you spot a fake one?
Selling items to the Public is a sign of the retailer.
So with wholesalers, they generally don’t open their business to typical consumers. You need to get a wholesale account from them before placing any of your orders. If they are selling items directly to the public, it merely means they are either inflating the prices by selling something at a discounted price or just have an outlet open for small scale retailing. Either way, the pricing they give to daily consumers must not match the deals you are getting your products at, it always has to be cheap.
Stay away from Monthly Charges or Ongoing fees.
This is something that 90% of the drop shippers face. The supplier will ask you to pay some fees for doing business with them. They also claim that they need to maintain or manage the inventory, and hence they need a regular monthly installment. First thing, suppliers are supposed to maintain the inventories, and there’s no rule that states on charging a monthly or recurring amount. If not such type of charges then they may ask you for something else
Placing a Minimum order
Most of the suppliers will demand you to place a minimum order on a certain product. That is the least number of products that you need to purchase before getting your first order shipped. This is usually done to tackle the mentality of window shoppers and to set the real drop shippers apart from the crowd that the suppliers deal with on a daily basis.
This approach is right, but it’s not for everyone. Say for a product of ticket size $100, if they ask you to place a minimum 10 orders upfront, it will just raise your investments with more chances of risk. Instead of this, you can set up a credit account of $500 with your supplier to start the dropshipping process. Usually, this is a safe and sound approach as it is not limited to only one product, and you can change switch the items as per the market demands.
While some of the suppliers will demand per-order fees. This is usually to cover shipping and packaging charges for individual orders. Depending on the order quantity, they may charge around 2$ to 5$, which are pretty standard. It also includes any of the commission they charge you per order. This practice can be costly for you in the longer run. Try getting a packaging and delivery inclusive charge for bulk order and negotiate with that rather than getting something per order.
Get a Dropshipping supplier quickly.
Consider this as a bonus section where you’ll get some proven and working methods to get in touch with the right seller almost instantly. So the most basic way is to use the platforms that list dropshipping suppliers. One famous one, especially for India, is Oberlo. It contains a vast inventory that you can import in your store, and rest everything is automated. Do note that it is just for the Shopify store. More on that is discussed in technical aspects.
Google with different keywords, for example, product + wholesaler, might get you some impressive results. Also don’t think it’s a scam if you stumble upon any ugly looking website, chances are you are in the right place. Use some keyword variations such as Bulk, Resseler, Supplier, etc. One more trick is to find the warehouse of that product and then contact them to get a hold on wholesalers.
Still, looking for a supplier? Order the product from your competitor. Find your rival dropshipper and order a small amount. Now, check the return address, 90% of the time, it will help you locate his supplier, and you can connect with them directly and enquire about the products and business in detail. This method works great for almost any product do consider this as a last resort when you are unable to find anything.
Also, keep in mind that once you connect with any supplier, they will ask for your company’s registration and other legal details. You can tell them that it will be done shortly, and then only you will place an order so that they don’t need to worry about you not being a legit dropshipping guy.
We don’t encourage you to register a company first and contact suppliers as there are chances that you will end up getting no profitable supplier for the products that you choose in step 1 and if you have kept a name resonating with the products that you sell, then it could be waste of resources and time.
If you are choosing something more generic and not a niche-specific name, you can start the registration procedures maybe before connecting with sellers. Ideally, once you are confident that you have some leads, then you can begin the proceedings in parallel.
Step 4: Going Legal as a Dropshipping company in India
Speaking of getting the company registered and start operations legally, we have compiled the procedure concerning Indian law and regulations. You can start off with an individual for dropshipping business in India. If you have a registered company, then it is also excellent. Do note that working as an individual comes with sole proprietorship under your PAN card.
Register Your Business for Dropshipping in India
Here, you don’t directly deal with the inventory, but the billing will have export labelled on it, and hence it is mandatory for you to get a good and service tax number (GST Number). If you already have one, then you can use it on bills and let your supplier know that you are a registered individual or a company. Your business needs to be registered, which you can do online or offline, whatever suits you best. To do it online, visit the Ministry of Corporate Affairs portal to get it done.
Get GST Number for Dropshipping
Please skip to the technical aspects if you have the GST number. So for the folks who don’t know how to get one need to skim through this. Now, if you are selling to Indian customers as within the boundaries of India, then only you need a GST Number, else if your business model relies on selling items via foreign suppliers to any customers outside of Indian borders, then you can start your business right away.
To get your GST registered, it is advisable to contact a good lawyer or a CA. Minimal charges are applicable here, and the procedure must not take longer than 15 working days. After you get your GST, do contact the supplier and let him know about the GST number and your sole proprietorship of the business. It is essential to clarify the details beforehand so that you don’t get in any trouble with Indian law and order.
Opening a current account
You will need a current account that can instantly cashout and make payments to the suppliers. Do invest a bit of time in selecting the bank that you are comfortable with. What you are looking for is something that complaints with payment gateways, which you will choose while designing the website. Most of the banks do support it but do a double check before opening the account.
Step 5: Technical Aspects | How to set up an online store (website) for Dropshipping?
Now setting up an online store can be a bit tricky for average users or the ones who are not much into tech. But you don’t need to worry about that as we cover this part you’ll be capable enough to do it on your own.
Branding and Domain
You can get a domain name that resonates with your brand (company) name. Preferably, get a .com domain if available. You can even try .store, .net, or any other domain that you see fit. There is no compulsion to get anything specific. It will take 300-700 Rs for getting a domain, again everything depends on availability.
You can get it from name.com or Godaddy, whichever suits you best. If you are planning to get it from another source, please know beforehand that they provide DNS management or not, recently MailChimp started giving away free domains without any DNS management from their end which would lead customers to host their websites only on MailChimp.
Shopify or WordPress?
The easiest way to get started is by going to the Shopify route. It is explicitly built for dropshipping and eCommerce purposes. You can quickly get started by signing up on their official website. Currently, it is giving a free 90 Days trial, which you can avail and try out building a store.
Please be clear regarding your products and make your store live as soon as possible, else you will just end up using your trial period in building the store and not actually selling. Your goal must be to generate enough profits that help you sustain after your trial ends, that is sort of the basic moto for providing the free trial.
There are many Shopify free and paid themes that can help you set up quickly without much of a hassle. Product listing is simple, and the dashboard is easy to master, even for a non-tech person. It might take a few days to get the hang of everything, but this is the same for every other thing that you try for the first time. It is highly recommended to watch some online tutorials to get a basic idea of how Shopify works before getting started.
Shopify is incredible, but let’s have a look at another open-source and popular CMS i.e., WordPress. It is equally easy to set up, will probably cost you less, and offers a lot of customization. But, here’s a catch, it’s a bit tricky to figure out for first time users. You will need to purchase a hosting space (more on that in the next section). Like Shopify, WordPress, too, has free and paid themes. It generally ranges from 10-100$ depending upon the functionality that you need. You might have to purchase some premium plugins as well.
Basically, in WordPress, it will be a one-time investment, unlike Shopify, you don’t need to keep paying for a monthly subscription. WordPress for Dropshipping store will cost you less in the longer run. But, it will take extra hours from your limited time. Almost everything can be easily configured via different plugins. Again we recommend you go through WordPress tutorials available for free on the internet.
Please take some extra time building your store as it will be the first impression when anyone comes to purchase the products that you offer. Make an eyecatching logo on canva or any other platform, customize your store to reflect your brand image with proper colour schemes. The best way is to check out your competitor’s store and try to take positive ideas and uniquely incorporate them.
Hosting your online Dropshipping store
After getting a domain, its time to start building your online store. For this, you will need hosting, You can go for Bluehost or hosting ground, both are trusted and reliable hosting providers. Even the Digital Ocean is an excellent hosting company. If you are looking for more reliable hosting options that have incredible support, do check out the Indian hosting platform FlexiCloud.
For starters, choose the most basic plan as there won’t be much traffic. You can change the plan as you grow your store. Also, it is crucial to not fall for any free hosting provider, as 99% of them are slow and practically non-functional. You need your hosting to be fast and secure.
Getting Payments via Integrating Payment Gateway
Remember the current account which you just made? Submit those details while you create an account with payment gateways like Razor, PayU, or CCAvenue. Do check the schemes they offer under different plans and select the one that seems fit. Integrating it with WooCommerce is quite simple, all you need to do is add the plugin and configure it. Also, it is not recommended to use Paypal for the Indian audience.
Amazon and other E-Commerce giants for Dropshipping
It is most accessible of all the was to quickly start your dropshipping empire, why you may ask? It’s easy to signup on Amazon. Plus, the dropshipping policy is also flexible and seller-friendly. Hence there’s a surge in the number of sellers that we see on amazon who are in the same niche, and most of them being drop shippers.
According to their policy, you cannot possibly dropship as in asking the seller to directly ship the products to customers, what you can do instead is get a stock of product from the seller and keep it to amazon warehouse that is a fulfillment center. So it’s not an actual drop shipping, but a tweaked version of the same. Here a significant con is to maintain inventory, not as in you need to keep it at your place, but to overlook at the stock and refilling it manually.
Let’s try to have a look at the pros and cons of Dropshipping on Amazon. So starting with the Pros of Amazon Dropshipping:
- Access to a vast customer base from day one: It’s no secret that Amazon has about millions of active customers around the globe, and the sort of exposure that your product can get is absolutely mind-blowing.
- More Advertisements with Less budget: Now, here all you need to do it keeping your prices in check and offering more discounts regularly. By this, amazon itself will push your products to the top.
- Focus on business expansion leaving fulfillment to Amazon: So in traditional drop shipping, you need to keep track of all the orders manually while here amazon will take that burden for you, while all your focus can be on business expansion.
- Opportunity to dive into a variety of products: A quick setup of a vast range of products in possible as all you need to do is list the items and deliver it to an Amazon fulfillment center and let them take care of the rest.
Now that you know how awesome it can be to sell on Amazon let’s look at some of the downsides as well. Here we have mentioned few Cons of Amazon Dropshipping:
- More competition and Product saturation: You will find a dozen sellers with the same products, the same pricing, and it is going to be a war on gaining customers. If you select a highly competitive niche, you must never rely on amazon alone to market your products.
- No Buyer-Seller relationship: You possibly cannot contact your buyers and maintain a relationship where they come back and purchase again. Like we said earlier, its Amazon, hence there are multiple other sellers, and if they offer even a small percent of discount, then there are chances of you being out of the game.
So we leave for you to decide if you want to go with the amazon path or set up a custom store for dropshipping.
Step 6: It’s all about how you market the products.
Now that your store is up and functional, it all comes down to customer acquisition for dropshipping. There are multiple ways to go on about that. Some of you may start with friends and family, telling them about your new business and giving away the discount that they think are insane, well that’s an excellent strategy to get helpful reviews.
But it’s not enough, you need to penetrate the market, and you need to do it right, then only you can guarantee survival or else it is just another underground attractive shop that no one knows exists.
In this final step, we give you some tips on marketing dropshipping stores for visibility and gaining customers. Basically, this can be the section that teaches you the foundations of advanced marketing. Also, the best part about this is you don’t need to know anything about how to do marketing in the first place.
Tips to increase your store visibility
Let’s start with your store getting more visits or traffic. This can be done by increasing awareness and visibility. Here’s how:
Setting up Social Media Accounts
Create accounts on all social media. You need to be everywhere for maximum visibility. Its a part of the longer game. By setting up socials, you make yourself credible. People will trust you more when they see your social account. Here you can even give your personal business number for any queries.
It’s not necessary to put too much content out on social, make it weekly one post related to your product. Plus, you will need all of that to do some paid advertising as well. Also, put out the products that you sell on all your social.
When we say all the social media, it is not compulsory to be on LinkedIn and stay active there when you are selling fashion items. So choose the ones that suit the niche that you are working with for your dropshipping business.
What’s working and What’s not working
There are multiple ways to market your products. Here we have focused on the digital means to quickly and effectively spread your product to a vast audience. Now, as you start, it is wise to avoid AdWords and other forms of google AD. Majorly, it doesn’t work for dropshipping stores. If you are planning to go with Amazon or similar e-commerce platforms for dropshipping, then only choose this form of advertisement.
Social vs. Search
You will encounter a lot of blogs asking to invest in SEO. It is always good to have basic SEO done, which you can learn by yourself, but its also equally important to know where profits are for your niche. If you find social media more profitable, then focus on that more rather then going for SEO. Marketing in 2020 is all about knowing where and how to sell.
Effective Means to sell product right away
Getting this process right can make your business reach new heights. There are three basic things that you need to keep in mind while marketing your products.
The first thing is to know who to target. Here the audience is a consumer segment, all products have a different group of audience. Suppose if you are selling a washing machine, then you might want to target females with age group 25-60 on any social channel or community.
The second thing is to know where to target. Knowing where your audience spends their time can give you an unfair advantage. If you are selling animal products, then promoting it over Facebook and Instagram with a segment that follows or is interested in pets can be quite fruitful.
The third thing is to keep promoting your products and maintaining the website. You optimize the customer journey and user experience as much as you can. Keeping your store visually appealing will make it seem more trustworthy in front of your customers.
Finally, run advertisements, an excellent example would be for starters is to run an Instagram advert for a dragon ball Z hoodie (setting audience to automatic, if you have no experience) and let it run for a day or two with a minimum possible budget. You will get some orders, and then you can start with optimization to gain more customers.
Attract users with limited time discount coupons and offers
Another effective way to get more orders is to distribute discount coupons. This will work more effectively for evergreen items or the ones that are in trend. You can list your coupons on multiple websites, distribute it via email campaigns, and even to your social media followers. Chances are at least 10 will order out of the thousands that will possibly see your ongoing offer.
Here also, the key is to optimize the process again and again. You will gain a compelling vision of how this works once you start doing it.
As a fresher in the dropshipping business, it will always be challenging to gain your first 100 customers. The ones who are strangers to you, but once you figure out the customer acquisition game, it will be a piece of cake to sell almost any product you put your hands on. Lastly, all we will say or anyone else will say is to not lose hope when you think that your store is not working out. Everything takes time.
Do let us know if you are facing any problem with starting your dropshipping business in the comments section below, and we will try our best to resolve it for you.