How to start a dropshipping business in 10 steps

Dropshipping is a low-risk, retail fulfillment method where a store doesn’t keep the products it sells in stock as inventory. Instead, when a store sells a product, it purchases the item from a third party and has it shipped directly to the customer.

The beauty of starting a dropshipping business is that it allows you to run an online store without the hassle of manufacturing, inventory management or distribution. You’re the middleman between the customer and the supplier, taking the orders and handling the customer service while your supplier takes care of the rest. It’s a world of opportunity right at your fingertips.

In this article, we’ll introduce you to the eCommerce dropshipping business model and provide a step-by-step guide on how to start dropshipping from scratch.

Dropshipping is a retail fulfillment method where sellers list products for sale on their website but they don’t keep physical stock or inventory of the products. Instead, when an order is placed, the seller purchases the product from a third-party dropshipping supplier who then ships the product directly to the customer. The seller acts as a middleman between the supplier and the customer (see is dropshipping legal).

Dropshipping is a popular eCommerce business model with minimal startup costs, since there is no need to stock inventory, pay for warehouse space or manage order fulfillment. You also don’t have to worry about manufacturing. This keeps your operating expenses much lower than they would be for a traditional retail business.

• You list a product for sale on your site: Every dropshipping supplier or marketplace offers a catalog of products that you can choose from. For example, Modalyst offers millions of ready-to-ship and print-on-demand products, ranging from decorative mugs to jewelry.
  
  

• A customer completes a purchase on your site: Once you’ve listed and priced your products, customers can purchase them from your online store, just like any other online order.
  
  

• You forward the order to your supplier: With an all-in-one platform like Wix eCommerce, you can automatically route orders to your suppliers for fulfillment.
  
  

• Your supplier handles the rest: Your supplier preps, packages and ships out the product directly to your customer.

If you’ve decided this is the business for you, below you’ll find a full guide for how to start dropshipping.

Dropshipping is a huge corner of the retail sector. Grand View Research estimates that the global dropshipping market will be valued at $225.99 billion in 2022, with an expected compound annual growth rate (CAGR) of 23.5% by 2030 in North America alone.

When you build a dropshipping business, you’ve got thousands—if not millions—of products to choose from. It can be a challenge to decide what to sell in this massive market in order to gain footing for your business idea.

To find your product focus, take the following steps:

• Research your target audience: Investigate their values, preferences, needs and shopping behaviors. Pro tip: avoid using broad statements to describe your niche, such as “outdoor hobbyists,” “music fans” or “young women.”
  
  

• Research trending products: What categories are popular among your target buyers and what products are trending? Use resources like Google Trends, Google Keyword Planner, social media and online marketplaces (like Amazon, AliExpress, Etsy and eBay) to see what shoppers are currently buying.
  
  

• Do some competitor analysis: Make a list of your top competitors. What’s selling well for them? Study their websites to see how they price, describe and market their products. Sign up to their email lists to get insight into their marketing tactics. What can you learn from them, and on the flip side, what can you do differently in order to establish your unique selling proposition (USP)?
  
  

• Establish your business idea: Once you’ve done your research and settled on a niche, determine the breadth of products you want to sell and how they all fit together. For example, if you start an online business in home décor selling big-ticket items like furniture, will you also stock smaller household accessories like lamps, decorative pillows and rugs? The great thing about dropshipping is that you don’t have to worry about overstocking your inventory. If products don’t sell well or a trend passes, you can easily swap out items from your product catalog.

Building a defensible dropshipping business requires having all the right tools at your fingertips to get your online retail venture off of the ground. Ideally, the best eCommerce platforms will set you up for success with easy-to-use features and integrations, backed by a secure and crash-resistant infrastructure.

Wix’s eCommerce solution offers baked-in dropshipping features, along with a suite of professional tools to establish, design, manage and grow your online store. Set your prices, product descriptions, shipping policies and payment options directly from your Wix dashboard. And, you can trust Wix to automatically sync inventory so that you don’t accidentally oversell on any sales channel—whether you choose to sell from your online store, an external eCommerce marketplace (like Amazon) and/or social media platforms.

Finding great suppliers is key to your success: industry research suggests that 84% of dropshipping merchants consider the process of finding a good supplier the most significant obstacle when starting a dropshipping business.

You not only need a supplier who can fulfill a small scale of orders but one who can also scale with your business as it grows.

Fortunately, there are various sources for finding the right supplier:

• Independent suppliers: You can search for suppliers (like dropshipping app, Importify) directly on Google. You’ll want to research reviews, talk to other sellers (if possible) and vet suppliers carefully. For this reason, manually finding suppliers can be time- and research-intensive.
  
  

• Dropshipping marketplaces: Alternatively, you can find suppliers through a dropshipping marketplace that can connect you with a wide range of pre-vetted partners. Make sure to choose a marketplace that integrates well with your eCommerce platform. With Wix eCommerce, you can browse and install a wide range of dropshipping platforms via the Wix App Market.
  
  

• Print on demand (POD): For a more bespoke offering, it’s best to integrate with print-on-demand companies, like Modalyst, Printful, Printify. Print on demand is a form of dropshipping that allows you to sell customized products with your own design or logo on them. Just like with traditional dropshipping, you can select from hundreds of products and outsource printing and fulfillment to your supplier.

As you consider which suppliers to work with, check that your suppliers provide realistic and transparent shipping estimates. Make sure to order samples of your products and use reviews from other merchants to help gauge your supplier’s reliability.

A thoughtfully built online store will enhance your credibility, compel shoppers to stick around and make them feel secure when hitting “buy.” It’s the cornerstone of learning how to start a dropshipping business.

• Pick a template: Choose from hundreds of designer-made eCommerce website templates to get your website design in the right direction from the start. Select one that fits your brand, style and target market, then customize the content to make the site your own.
  
  

• Develop a brand identity: Create a cohesive branding strategy, starting with a concept statement that highlights your core values and ending with your visual identity. Decide on a store name that reflects your brand story, mission and/or personality (you can use Wix’s free Business Name Generator for inspiration or check out this list of dropshipping business name ideas). Then, register a matching domain name and create a logo using the Wix logo maker.
  
  

• Connect to a dropshipping platform: Install your chosen dropshipping or POD app by going to the Wix App Market, searching for a dropshipping platform and clicking the “Add to site” button. Create an account with your platform of choice and start your hunt for great products.
  
  

• Add products and descriptions: Once you’ve chosen and imported products to your store, fight the urge to simply copy and paste product descriptions from your supplier. Instead, take the time to write unique descriptions that fit your company’s tone and are optimized for search engines. Short on time? Use Wix’s AI text creator to automatically generate product descriptions for you in a few simple clicks.
  
  

• Set your pricing and shipping rules: When setting your pricing rules, take wholesale and shipping costs into account as well as any additional business expenses. Consider your competition, differentiators and perks that you can offer (e.g., free shipping or white-glove service). Then, establish a dropshipping pricing strategy that keeps your products competitive yet affordable. As a general rule of thumb, avoid competing on price alone. This is a losing strategy for most businesses, and will inevitably throw you into many price wars.
  
  

• Be transparent: Learn about your suppliers’ shipping and return policies so that you can write clear store policies. Let customers know what to expect when purchasing from your store. Wix merchant The Boho Birdy sells a broad range of dropshipped goods—from clothing to home décor—with a touch of bohemian style. Within its site, the company clearly states that it sources from multiple, international suppliers. It additionally anticipates customer questions about shipping and delivery with a detailed FAQ page. This strategy allows the company to manage expectations and prepares customers for the trade-off that comes with purchasing from its store.

• Optimize the checkout flow: Keep customers happy by offering multiple payment options on your site. Connect your store to Wix Payments, which allows you to accept debit/credit cards, Apple Pay, Pay Now by Klarna and other popular online payment systems.
  
  

• Go live: Click that “publish” button and make your store visible to the world. Congratulations. Your hard work has paid off and you’re now in business.

Separating your personal banking from your business can help you simplify accounting and make better decisions about pricing. Learn how to set up your finances for your dropshipping business:

1. Create a budget: Outline your expected expenses and projected revenue. Include costs for website hosting, marketing, inventory management software and transaction fees.

2. Open a business bank account: Keep personal and business finances separate to simplify accounting and tax filing.

3. Use accounting software: Monitor cash flow, track sales and manage expenses efficiently.

4. Set up a payment gateway: Ensure you can accept payments securely and easily from customers.

5. Consult a financial advisor: Work with an expert familiar with eCommerce to ensure compliance with local tax laws and position your business for financial stability and growth. Make sure to consider taxes and fees when deciding on pricing.

Once you sell a product, you need a process for forwarding those orders to your suppliers. The best processes are automated, saving you time and reducing the potential for any errors.

Having an automated fulfillment process is especially important as your business grows and your order volume multiplies. While evaluating different platforms to use, you should make note of the differences in their fulfillment solutions and ultimately select the one that best suits your business.

Pro tip: White-labeling, or private label dropshipping, is an increasingly popular add-on service you can consider when you start learning how to get into dropshipping. With white labeling, your supplier adds your branding and/or labeling to the product packaging during the fulfillment process. You pay a little bit extra to make a product look uniquely your own. Although this can cut into your profit margin, branded packaging builds trust, looks professional and helps customers remember your business.

Branding your dropshipping business means creating a unique identity that resonates with your target audience. It often begins by going back to your niche and understanding your ideal customer. Combine that with your business values to develop a compelling brand story that highlights your values and mission. A large part of branding your business involves creating a logo and choosing a consistent color palette plus typography, that reflects your brand’s personality.

You’ll also need to apply your branding to your website design. When it comes to a dropshipping website you’ll want to use high-quality images and detailed product descriptions to build trust with potential customers.

Consistency is key to branding a business—making sure your branding is uniform across all platforms, from your website to your social media and email marketing. Always back your brand up with excellent customer service.

Next, decide on a legal structure (sole proprietorship, LLC, as examples.) and register with the appropriate state authority.

Obtain an Employer Identification Number (EIN) from the IRS if required. Then apply for any necessary local business licenses or permits. Always research and register for state and local taxes, ensuring compliance with sales tax regulations in your state.

Open a business bank account to separate personal and business finances. Finally, consider consulting with a legal professional to ensure all regulatory requirements are met and your business is properly registered.

As a dropshipper, the bulk of your time will be spent drawing attention to your store. Your primary responsibility is to develop a strong brand that earns your customers’ trust. Start spreading the word with a well-rounded marketing plan that includes these elements:

• SEO (search engine optimization): SEO is foundational for increasing your visibility online and making it easier for shoppers to find your products on search engines like Google. Boost your product pages with unique descriptions and content that take on-page SEO factors into consideration (think: short-tail and long-tail keywords, meta descriptions and more). You may even want to start a blog that lets you publish fresh content regularly and reach buyers at various stages of the customer journey.
  
  

• Email marketing: Keep your brand top of mind with a thoughtful business email strategy. You can incentivize site visitors to subscribe to your email list by offering a special discount or gift for their subscription. Use email to engage customers at various stages of their journey (e.g., send abandoned cart emails reminding them to complete a purchase or request feedback on a recently purchased product). Promotional emails can keep customers coming back as well, plus provide insight on the types of products and seasonal campaigns that appeal to your target audience.
  
  

• Social media: These days, one viral TikTok video or Instagram Reel could get your product in front of millions of potential customers. When building a social media strategy, be selective of the channels that you invest your time and money into. It’s better to start with one or two strategic channels than to blindly test every channel possible; each channel has its own quirks and algorithms that you’ll need to get used to. Test various types of content like videos, hashtag contests and posts featuring user-generated content. If it’s within budget, teaming up with influencers who align with your brand is an effective marketing method for dropshipping.
  
  

• Paid ads: Reach new customers with targeted ad campaigns on Facebook, Instagram, YouTube and search engines like Google. Experiment with various ad types until you find what works for your business. Wix users can take advantage of integrated Facebook and Instagram Ads and Google Ads right from their website dashboard.

According to Lilach Goldis, social media manager at Wix:

When it comes to starting a business, there’s always room for improvement. That’s why from the get-go you’ll want to set clear and measurable goals for optimizing your site that help to guide your growth as a dropshipping business.

Use performance-measuring tools like Wix Analytics, Google Analytics and Google Search Console to gain valuable insights into what’s working and what’s not. There are a number of key performance indicators (KPIs) that you can and should measure. To name a few:

• Traffic growth: How is your website traffic growing over time? Which sources are people entering your site from, and which pages do they tend to engage with?

• Conversion rate: How many site visitors end up buying from your site? Conversion rates will vary by niche and industry, but several estimates note that 3% is a good benchmark.

• Monthly sales and profit margin: How much return on investment (ROI) are you seeing from your marketing and advertising efforts? Again, profit margin can vary depending on what you’re selling, but estimates place a good range somewhere between 10% and 30%.

• Purchasing trends: What products are selling best and why? Is demand for those consistent year-round, seasonal, etc.?

• Average order value (AOV): Do you see any opportunities to upsell and cross-sell customers, and thereby influence larger cart sizes?

• Customer retention: How many customers are new versus returning in a given period of time? Is there a way that you can encourage repeat buyers and reward their loyalty?

• Cart abandonment rate: Over 70% of shoppers abandon their carts without finishing their purchase. How many people are leaving your site before they complete their order? Is there an issue with your eCommerce checkout flow or payment options?

While you’ll want to build a strong online store for your dropshipping business, it pays to offer your products on other channels that have large, established audiences. You may find that certain products sell better on your website, while others sell like hotcakes on Amazon. In fact, 87% of consumers are more likely to buy something via Amazon than any other online site.

Fortunately, when using a tool like Wix’s multichannel campaigns, you can automate and better manage certain processes. For example, you can easily import your store products to Amazon or eBay, while retaining the ability to customize your offer to each channel. You can additionally avoid complexities that come with managing a multichannel strategy, such as keeping inventory synced and routing orders to the right fulfillment partner.

Whichever channels you choose to sell on, make sure you’re keeping a close watch over their performance. Test various offers, messaging and/or product assortments to find what resonates best with each unique audience.

You’ve learned everything you need to know about how to start dropshipping, and it’s time to get your business off of the ground. Here are some additional tips for creating a dropshipping business:

• Set realistic expectations: Don’t expect to get rich quickly with dropshipping. It takes time and effort to build a successful business. Some estimates say you can be profitable in around three months, but this timeframe can vary depending on multiple factors, including how much time and energy you have available to invest in your business.
  
  

• Stay up-to-date on trends: The dropshipping market is constantly changing, so it’s important to stay up-to-date on the latest trends. This will help you find products that are in demand and that will sell well.
  
  

• Offer competitive prices: One of the best ways to attract customers is to offer competitive prices. However, you need to make sure that you still make a profit after you factor in the cost of the product, shipping and other expenses.
  
  

• Run effective marketing campaigns: You need to let people know about your dropshipping business if you want to generate sales. There are many ways to market your business, from social media to email marketing to advertising.
  
  

• Build a strong brand: Your brand is what will set you apart from your competitors. Make sure your brand is consistent across all of your marketing materials and your website.
  
  

• Track your results: It’s important to track your results so you can see what’s working and what’s not. This will help you make necessary adjustments to your business to improve your chances of success.

Starting a profitable business depends a great deal on the research you do before even getting it off the ground. With this in mind we’ve put together this list of dropshipping stats to help you make the right choices with what you choose to sell and how.

1. The dropshipping business market is growing: With its value expected to climb from $243.42 billion in 2023, to $301.11 billion in 2024.

2. And still growing: It’s expected to keep growing at a compound annual growth rate (CAGR) of 22.28% between 2023-2032.

3. Dropshipping business profit margins are good: Typically between 10-20%. These are not a guarantee and depend on what you sell and how well you promote your business.