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Blog / Beginner's handbook / What Is Dropshipping? The Ultimate Dropshipping Guide 2024

Beginner's handbook

What Is Dropshipping? The Ultimate Guide to Selling Without Inventory in 2024

What Is Dropshipping? The Ultimate Guide to Selling Without Inventory in 2024
Una Berzina-Pudule

By Una Berzina-Pudule

13 min read

Your New Year’s resolution reads: become an entrepreneur. And if you’re considering starting a dropshipping business, you’re on the right track.

Dropshipping’s become huge in the ecommerce world. The global dropshipping market reached $243.43B in 2023 and is set to hit $301.11B in 2024. But where there’s money, there’s also competition.

To ensure you embark on your dropshipping journey successfully, we’ve put together this guide on how to start a dropshipping business. Read it to discover:

  • What is dropshipping

  • How does dropshipping work

  • Main benefits of dropshipping

  • Main disadvantages of dropshipping

  • Is dropshipping profitable

  • Is dropshipping legal

  • Tips for dropshipping with Printful

Continue reading or if you’re curious about a specific part of dropshipping, head to the section you want to know most about.

What is dropshipping?

Dropshipping is a business model in which a third-party supplier manufactures, packs, and ships orders for businesses.

The dropshipping business model allows you to offer a wide range of products without the overhead costs associated with traditional retail, such as warehousing and large inventory investments. 

Most dropshipping suppliers offer on-demand order fulfillment, meaning that you only pay for products that are ordered. This business model is popular in ecommerce for its low entry barriers and flexibility in product offerings.

What is a dropshipper?

A dropshipper is an individual that sells dropshipping products without holding inventory. 

Dropshippers focus on marketing and customer service, while their dropshipping suppliers manage the logistics of order fulfillment. As a dropshipping business owner, you can run a successful online store without worrying about:

  • Inventory management

  • Product manufacturing

  • Finding and keeping up a storage space

  • Production equipment

  • Shipping

Instead, you can focus on planning your product catalog, running marketing campaigns, and growing a customer base. 

Learn More: How to Start a Dropshipping Business

How does dropshipping work

If the dropshipping business model intrigues you, here are the steps you need to take to get started.

preview play-button

1. Find a dropshipping niche

To successfully start a dropshipping business, it’s important to first identify your niche. A niche is a specific area of the market that you can specialize in and advertise to a targeted audience. Your niche should be based on market research, identifying customer interests, and potential profitability.

Think about how you can create products that align with your niche, such as items with designs that resonate with your audience or products that are directly related to your niche. This will ensure you’re offering products your audience will be excited to buy.

2. Name and register your business

Now that you’ve identified your niche, it’s time to name your dropshipping business. Choose a memorable name that resonates with your business idea.

Depending on your location, the typical dropshipping business structures include sole proprietorship, partnership, and limited liability company (LLC). Find out what they are and their pros and cons in our dropshipping business guide.

3. Find a supplier

Finding an excellent dropshipping supplier will make or break your business.

There isn’t one dropshipping supplier to rule them all—each has perks tailored to different customers. That’s why we’ve listed the main criteria you should look at to find a supplier most suitable for your needs.

  • Fast fulfillment times: Prioritize suppliers with quick fulfillment from order receipt to shipping readiness. This doesn’t include shipping time, but faster fulfillment leads to happier customers.

  • Efficient shipping: Look for suppliers with swift average shipping times and partnerships with multiple couriers. Multiple fulfillment centers worldwide shorten the distance to customers and facilitate global business expansion.

  • Positive customer reviews: Assess the supplier’s reliability through customer reviews on their website, social media, and third-party sites like Reddit or Yelp. An honest supplier will show all reviews, both positive and negative.

  • Product samples: Order samples to personally evaluate delivery speed, unboxing experience, and product quality. Suppliers offering sample discounts are preferable, though not essential.

a map of the world with different countries/regions

Printful’s fulfillment centers

4. Set up shop

To sell your dropshipping goods, you need an online store. The choices are:

A storefront on an ecommerce marketplace

  • Pros: an already established large audience and low costs (listing costs are mostly under $1)
  • Cons: constantly competing with other sellers who sell similar goods

A standalone store website

  • Pros: highly customizable, visually better-looking than a marketplace, you’ve got the whole place to yourself
  • Cons: high monthly costs, you have to gather an audience from scratch

Before deciding, check if your dropshipping supplier supports your chosen platform. 

5. Connect the store to the dropshipping supplier

Fulfillment processes can only be automated if your store can be integrated with your supplier. Otherwise, you’ll have to spend a lot of time manually forwarding orders from your store to your supplier. With 10 orders a week, that’s nothing. But imagine if you ever reach 500+.

If you can connect your store with your supplier, your orders will be automatically transferred to your dropshipping supplier. This system allows suppliers to promptly begin fulfillment and ship directly to customers without your assistance. 

a forklift in a warehouse

Source: Unsplash

6. Add products to your store and choose a pricing strategy

Select products from your supplier’s catalog and add them to your store. There are multiple ways to price your products, but this one’s the easiest to start with:

product costs + desired profit margin = your retail price

Consider all costs, including the product price, ecommerce platform fees, and any outsourcing expenses like design or accounting services. Include a margin for potential future discounts in your pricing strategy.

a screenshot of a computer

Source: Printful

Learn more: Beginner’s Guide to Product Pricing

7. Prepare product photos and descriptions

Your product descriptions and visuals should give your brand a personality. To create compelling product descriptions, focus on niche-specific language, including slang and humor, that resonates with your audience. 

Be thorough and transparent about product features, sizing, and quality, and include SEO keywords to improve discoverability.

Read more: What Is SEO and How It Works

For effective product photos:

  • Showcase close-ups to highlight details like embroidery and zippers.

  • Include people in photos to add personality and relatability.

  • Photograph products in their intended environment to help customers visualize their use.

  • Use mockups if resources for actual product shoots are limited. Suppliers often provide mockup generators, or you can use stock image sites for blank product templates.

8. Market your business

Marketing is key to attracting customers and driving sales. Focus on creating a strong brand presence online through social media, SEO, email marketing, and paid advertising. 

Tailor your marketing strategies to target your specific audience, highlighting the unique aspects of your products and store. Engaging content and promotions can also boost visibility and encourage customer loyalty. Efficient marketing increases traffic to your store and establishes your brand presence in the competitive ecommerce landscape.

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Pros and cons of dropshipping

Let’s look at the positives and negatives of dropshipping to determine if this business model suits you.

Dropshipping pros

Easy setup process

One of the most alluring factors for new business owners is that dropshipping doesn’t require an ecommerce experience

You only need to create an online store and choose which products to sell. After connecting your supplier to your store, the rest of the operations are taken care of.

Low financial risk

Starting a business is scary since you must usually go all in. Traditionally, the most significant commitments include:

  • Investing money in equipment (without a guarantee of earning back)

  • Hiring staff

  • Buying and storing inventory

Dropshipping businesses are often successful, but if yours isn’t, you won’t be losing a crucial part of your investment like you would with a traditional business.

Flexibility

Dropshipping is quick to adapt if you decide to take your business in a completely new direction. With a few clicks and no extra financial investment, you can completely change your product catalog or entire business niche.

Fast speed to market

Since the order fulfillment is done on-demand, you don’t need to wait on large pre-orders. You can go from an idea to a market within the same day. And a fast speed to market increases your chances of turning a profit from emerging trends.

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Create and sell custom products online
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Dropshipping cons

Of course, such a lucrative business model comes at a cost. Let’s see what that is.

Low profit margins

While dropshipping can make you money, you’ll have to work at it to get there. 

Since it’s such a simple business model, many dropshipping businesses compete with you and sell similar products. You might have to lower your prices to win over the customer, which means less profit.

When you fulfill your orders on demand, you only pay for the products you sell. However, paying for each product individually creates higher product costs as you can’t get the usual wholesale price.

With comparatively higher base prices and competitors already trying to undersell you, there’s little room left for good profit margins. However, with careful marketing and strategy, you can still succeed in the dropshipping business.

Limited product choices

Dropshipping allows you to switch between different niches, products, and designs easily, but there’s a small catch: you’re dependent on your supplier’s product selection.

For instance, if you sell necklaces and bracelets but want to add earrings that your current supplier doesn’t offer, you face a dilemma. Your options are to skip selling earrings, wait for your supplier to stock them, or add another supplier who offers the desired earrings. 

While the third option meets customer demands, managing multiple suppliers can be challenging due to different shipping times, pricing, billing, and return policies. This complexity increases with each additional supplier, potentially leading to inventory issues and negative reviews.

Lack of control over production

Most people don’t like putting their business’ fate in others’ hands. But that’s exactly what you’ll have to do when running a store with dropshipping.

Your business depends heavily on your dropshipping supplier’s integrity and quality of work. If their shipping times get longer, their products become faulty, or their customer support starts slacking off, it’ll directly reflect on your business.

Plus, you can’t micromanage the supplier to ensure they get everything right. What you can do is perform thorough supplier research before starting a business to make sure you won’t have problems in the future. Once you start working with a supplier, check product quality by regularly ordering product samples and following your customers’ reviews.

A lot of responsibility

Even though you’re not in control of what goes on in the manufacturing process, your customers still hold you accountable if something goes wrong. In the end, it’s going to be your reputation that’ll take the hit and not the supplier’s.

Your customers put their trust in you, not your manufacturer. So when a dropshipping supplier sends your clients a damaged product or delays shipping, your customers will blame you. Take ownership of your products and reply to customer concerns and reviews. If the feedback gets too negative, consider switching to another supplier.

While the cons of dropshipping might seem tough, they’re manageable, so I hope you’re still motivated to start your online store with dropshipping.

If you’re still up for it, let’s get to the rewarding part—making money.

Is dropshipping profitable?

Yes, it is. But it’s not a get-money-quick scheme, so you’ll still need to do the work to succeed. Here’s what you can do to ensure your dropshipping business thrives.

Increase product value

How do you stand out from the competition and become customers’ first choice? Make a better offer. You can do so by:

  • Offering free shipping or adding freebies to orders

  • Including discount codes for future purchases

  • Customizing products using services like Printful for unique offerings

The first two strategies may require increasing product prices but can set you apart from competitors. However, product customization with your designs will let you sell a more niche product at little to no extra cost. 

Learn more: Dropshipping Products With a High Profit Margin

Pick a specific dropshipping niche

Avoid selling everything to everyone. Instead, identify a niche that aligns with your interests and values, like custom pet accessories for dog owners or motivational home decor for remote workers. Focusing on a specific market can make your brand more distinctive and personally fulfilling.

Lay out a strong marketing plan

Success often hinges on a robust marketing strategy. Identify where your target audience spends time, such as Instagram or Pinterest, and establish your presence there. Understand their interests and pain points to tailor your brand’s tone and communication.

Learn More: How to Develop an Effective Marketing Strategy

Don’t skip SEO

Leverage SEO to increase visibility without the high cost of paid advertising. Optimizing your store for search engines can attract free traffic from potential customers.

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Stay relevant

Regularly update your product offerings to align with current trends. Experiment with new product lines and limited-time offers to keep your brand dynamic and engaging, taking advantage of dropshipping’s flexibility.

photo of print on demand products with "Your design here" printed on themSource: Printful

When exploring various business strategies, a common question that arises is, “Is dropshipping legal?” Rest assured, the answer is a definitive yes. Dropshipping stands as a legitimate option, much like other business models. But as with any business, there are legal requirements you must comply with. You need to:

  • Register your business

  • Comply with your state’s laws on dropshipping tax

  • Be honest and transparent about where your products come from

If a customer asks more about the origins of your products, don’t lie. Explain the product supply chain to them in a transparent manner.

As for tax and dropshipping business registration requirements, the rules are vastly different depending on your location. So, before setting everything up, get to know your country’s laws regarding dropshipping, taxes, and business management.

Dropshipping with Printful

Printful is a print-on-demand company that specializes in creating customized dropshipping products and fulfilling orders for brands across the world.

Customization can be a competitive advantage in dropshipping. Here’s how it works: when your customer orders from you, Printful picks the product blank and customizes it according to your desired fulfillment method and design. Then, Printful packs the order and hands it to a shipping courier who delivers the product directly to your customer.

screenshot of Printful's design makerProduct customization process using Printful’s Design Maker.
Source: Printful

Printful’s most significant benefits include:

  • Product customization

  • High-quality product sourcing and fulfillment services

  • A well-thought-out shipping process

  • Free product design tools and graphics

  • Life-like product mockups

Thanks to thorough logistics research and years of successful partnerships with its carriers, Printful offers the best rates among its competitors, which can significantly cut your shipping costs (and make more room for profit margins).

On top of adding custom product designs, you can also elevate your merch with unique branding: custom packaging, labels, pack-ins, packing slips, and a customized order tracking page. 

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Create and sell custom products online
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Is dropshipping worth a shot in 2024?

Many aspiring entrepreneurs wonder: is dropshipping worth it? And the answer is: yes, definitely

Dropshipping makes opening your own ecommerce store more effortless than ever. In just 24 hours, you could own an ecommerce business. All you need is a dropshipping business idea and an internet connection to start selling products. To start, check out our list of profitable dropshipping business ideas.

In fact, dropshipping’s not only alive and well, but it also proves to be more profitable than running your own inventory management.

Currently, businesses supported by dropshipping report earning over 50% more profit than those who keep their own inventory.

And with ecommerce revenue skyrocketing year after year, starting your business with a dropshipping supplier is more than worth the effort. But to ensure your success, remember to invest time into:

  • Market research to find a profitable niche and product 

  • Marketing your business and connecting with an audience

Learn more: 15 Dropshipping Tips You Need to Check Before Starting Your Business

To make sure your dropshipping journey is as smooth as possible, here’s a list of some of the top dropshipping FAQs. Check it out to find answers to your burning questions, or ask away in the comments section!

Dropshipping FAQs

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By Una Berzina-Pudule on Dec 11, 2023

Una Berzina-Pudule

Content Marketing Specialist

Una’s a Senior SEO Content Writer with a knack for SEO-friendly copywriting and building stunning landing pages. In her spare time, she's an avid reader and keeps close tabs on all things social media and mental health.

Una’s a Senior SEO Content Writer with a knack for SEO-friendly copywriting and building stunning landing pages. In her spare time, she's an avid reader and keeps close tabs on all things social media and mental health.