Dropshipping has become one of the most popular business models for aspiring entrepreneurs in recent years. The main reason why dropshipping is appealing to many is that it does not require a large upfront investment to get started. You don’t need to buy a ton of inventory and find warehouse space. With dropshipping, you can run your business from anywhere in the world with an internet connection.
However, while dropshipping may seem easy to get into, it is difficult to get right. Many new entrepreneurs struggle with things like finding the right products to sell, setting up a high-converting store, running ads to the right audiences, and scaling the business. In this blog post, I’ll break down the most effective steps you need to take in 2023 to build a profitable dropshipping business.
Set a Realistic Goal
The first step to building a successful dropshipping business is to set a realistic goal. Many aspiring entrepreneurs set unrealistic goals like making $10,000 in their first month. While it’s good to aim high, you need to be realistic, especially when you’re just getting started.
A good initial goal is to make your first sale. Once you make that first sale, it will give you the confidence that the dropshipping model works. It will also allow you to start optimizing your store and ads to make more sales.
So instead of setting a monetary goal, set a goal to make your first sale. Then you can start working backward to figure out the necessary steps to achieve that goal.
Build Trust and Social Proof
To make your first sale, you need to build trust and social proof on your store. This means:
- Having a professionally designed store. Your store should look high quality and trustworthy.
- Having clear policies like shipping, returns, terms and conditions, etc. This shows you’re a legitimate business.
- Adding customer reviews and testimonials. Social proof like reviews builds trust and credibility.
- Being active on your store’s social media profiles. Engage with your audience and build a community.
- Offering competitive prices. Do research to price your products affordably while still making a good profit.
Building trust and social proof will increase the likelihood of your potential customers buying from your store. Remember, every sale comes from a real person, so you need to build confidence in your business to get people to whip out their credit card.
Find Profitable Products to Sell
Finding the right products to sell is one of the most important parts of building a successful dropshipping business. You need to find products that are:
- In high demand with steady search volume. These products will have an existing customer base ready to buy.
- Have high profit margins. Look for products you can sell for 3-5 times the cost price on average.
- Suit the platform you’re using to advertise, e.g. video marketing products for TikTok.
- Have a “wow” factor. Interesting or unique products people have an impulse to buy. These go viral and spread via word-of-mouth.
Some of the best ways to find profitable products are:
- Using tools like Google Trends, Keywords Tool, and Keyword Planner to see high volume keywords and search trends. Then source products related to those keywords.
- Browsing popular ecommerce categories like home decor, tech gadgets, health and fitness products, etc. Look for product gaps or existing products getting a lot of positive reviews.
- Using dropshipping tool suites like Oberlo, Spocket, or Modalyst that have thousands of pre-vetted products from suppliers. They handle sourcing for you.
- Spying on successful dropshipping stores using tools like SaleSource or similarweb to see their winning products, ad campaigns, etc. Then improve on them.
- AliExpress marketplace has thousands of cheap products that dropshippers sell at a markup. Look for products with many customer reviews and orders.
- TikTok ads library tools like TikTok Signal show you video ads that are getting high engagement. You can find trending products to sell through the organic content and ads on TikTok.
Spend time researching and filtering to find those winning products. Once you have some strong contenders, test marketing them to see how they perform before fully committing to any single product.
Target The Right Audience
Finding a profitable product is only the first step. The next step is targeting the right audience with your marketing efforts. This consists of two parts:
Determining your target customer. Figure out the demographic details like age, gender, location, and interests of those most likely to buy your product. Then build your customer avatar or ideal customer profile.
Choosing the right marketing channels. Different products suit different marketing channels:
- Search ads (Google Ads) work well for products people are actively searching for. You can target keywords they’re already looking for.
- Social media ads (Facebook, Instagram, TikTok) are good for impulse products or those needing an eye-catching video. You can target interests and behaviors.
- Influencer marketing is effective for products targeting younger audiences on platforms like Instagram and TikTok. Influencers have an engaged following.
- Email marketing suits most products but requires building an audience with high-quality content and lead magnets like ebooks, checklists, coupons, etc.
For example, if you’re selling a unique kitchen gadget, you may target home cooks and “foodies” in their 30s-50s using Facebook ads and influencer marketing. If you have a productivity tool for students, you may target college students around exam season using Instagram influencers and TikTok video ads.
The more targeted your ads, the higher your conversion rates and sales will be. So spend ample time determining exactly who your potential customers are and the channels they spend time on.
Optimize Your Funnel
Your marketing funnel includes the entire customer journey from becoming aware of your product to making a purchase. Optimizing your funnel means:
Creating attention-grabbing ads. Your ads need to stop scrollers in their tracks and capture interest. This means high-quality, eye-catching creative (videos, images, copy) that highlights key benefits and features.
Driving traffic to a converting landing page. Your landing page should focus on selling the product, not just introducing your brand. Have minimal distractions, clear benefits listings, high-quality images, and a mechanism for people to buy or opt-in (like a “Buy Now” button or lead capture form).
Retargeting abandoning visitors. Many people who visit your site will leave without buying. Retarget them with ads to bring them back to your store. According to studies, 70% of people need to see an ad 7 times before they buy a product. So retargeting works.
Offering incentives and discounts. Give people a reason to buy now rather than later. Things like limited time offers, upcoming price increases, bonus added value, coupons, and loyalty programs can incentivize people to buy.
Optimizing for mobile. Over 50-70% of ecommerce shopping takes place on mobile devices. If your store and checkout aren’t optimized for mobile, you could lose up to half your potential customers.
Providing amazing customer service. Good customer service builds loyalty and word-of-mouth marketing. Happy customers also leave positive reviews which build more trust in your store. So top-notch service is worth the investment.
Optimizing your funnel will turn more of your store visitors into paying customers. Put yourself in the customer’s shoes at each stage of the journey and look for ways to guide them towards a purchase as seamlessly as possible. With regular testing and tweaking, you can improve conversion rates over time.
Scale Your Dropshipping Business
Once you’ve made some initial sales and optimized your funnel, it’s time to scale. This means:
Increasing your ad spend. Spend more on the platforms and campaigns giving you the best ROI. This may mean $5-10 per day to start, increasing as you make more sales.
Expanding into new marketing channels. Don’t rely only on one channel like Facebook Ads. Expand to others like Google Ads, influencer collaborations, and email marketing to diversify your traffic and reach more potential customers.
Improving your product offering. Consider expanding into product bundles, upsells, subscription programs, and higher-ticket products or services. The more products you have, the larger your average order value can become.
Providing faster shipping. Faster shipping means happier customers and fewer returns or chargebacks. Look for ways to get products to your customers within 3-5 business days. This may mean changing suppliers or shipping partners.
Building an email list. An email list lets you market to people who already know and trust your brand. It’s a low-cost way to generate more repeat sales and scale your revenue over time through regular promos and offers.
Outsourcing and automating. Once your business grows, you won’t have time to handle everything yourself. Start outsourcing tasks like customer service, ad creation, social media management, and product research. Use automation for abandoned cart emails, coupon codes, etc.