Dropshipping for Dummies: A Practical Guide to Starting in 2024

Dropshipping: Ever heard of it? It’s this little business model where you sell stuff you don’t actually own. Why should you consider it? Oh, maybe because you enjoy making money without cluttering your garage with inventory.

Today, I’m going to spill all the secrets of the dropshipping business model, because, after years in the game, who better to learn from than me, right?

In this article, you’ll discover:

• What dropshipping actually is
• How to not just survive but thrive in dropshipping
• Where to find suppliers who won’t ghost you
• Deciding if dropshipping is your true calling

Key Takeaways:

• Dropshipping means selling stuff without the hassle of a warehouse
• Here are 5 crucial steps to setting up a dropshipping empire
• Starting a dropshipping business costs less than last night’s pizza

Ready to dive in? Let’s get to it!

Best approach to Kick-Off Dropshipping for Newbies

For the past seven years, we at ali2woo.com have been launching dropshipping stores by the thousands for our clients. We’ve also amassed a treasure trove of successful dropshipping tales that we strongly suggest you dive into. Why? Because it’s the ultimate way to uncover the secret ingredients that boost your odds of launching a successful dropshipping business, especially if you’re a newbie. Don’t let this learning opportunity slip through your fingers!

What is dropshipping? 

Dropshipping is a business process where you sell products without buying inventory. Although dropshipping has been around for decades, the internet only made it easier, and it is the internet that has given it a massive boom in recent years. In a nutshell, dropshipping means you sell someone else’s goods. Once a customer purchases from your online store, you notify the seller, and the seller ships the item to your customer.

How does dropshipping work?

Dropshipping, that magical business model that lets you sell stuff you don’t actually have!

Here’s the oh-so-complicated process: 

• First, you set up an online store.
• Next, you attract some customers and convince them to buy something.
• When they do, you take their money, then turn around and order the product from your supplier, handing over some of that money.
• Finally, your supplier sends the product directly to the customer. Voila! You’re basically a middleman with a website.

Here we have a few essential terms and key players in the dropshipping world.

Let’s break them down:

• Dropshipper. This refers to you — the dropshipper is the seller who operates without holding any inventory.
• Supplier. The supplier is the manufacturer or retailer that has agreed to provide you with products, which they will then ship directly to your customer.
• AliExpress. This is a China-based online retail platform that boasts a global reach. It has gained immense popularity among dropshippers as a go-to source for finding reliable suppliers.

You can also involve additional participants, like the web host and dropship supplier tools, among others. These elements need to integrate seamlessly to establish an efficient dropshipping store and workflow.

Despite dropshipping encompassing only four main steps, each step has its own subtleties, which I will explore in the upcoming section.

Main Steps to Dropship

Step 1: Select a Niche/Product

A niche is a specific area of focus or a category of products. The initial step in successful dropshipping is determining a niche, as this choice will ultimately define your target market.

For instance, if you choose women’s shoes as a niche, you’ll focus solely on selling footwear for women. You can further narrow down your niche by specializing in high-heeled shoes. Similarly, while toys can be a niche, you might decide to concentrate on educational toys specifically.

There’s no absolute right or wrong when it comes to selecting a niche; the success of your venture largely depends on how well you navigate the complexities of your chosen field.

Here are some tips for choosing a niche:

• Opt for a niche that you have a good understanding of and are passionate about.
• Select a niche with a proven market demand, ensuring that there are people willing to spend money on these products.
• If you’re just starting out, choose a niche that isn’t overly competitive.

Tackling a large niche can be overwhelming. For example, targeting women’s clothing means managing a vast array of products. Instead, consider starting with something specific, like blouses, and gradually expand your store’s categories over time.

Step 2: Find a Supplier

Before setting up your store, it’s crucial to test a supplier. One of the biggest pitfalls in dropshipping is selling a product that hasn’t been tested. When selecting a supplier, consider several important factors, such as:

• Product Quality
• Reliability
• Refund Policy

Make sure to place an order with the supplier to evaluate both the product and the shipping times. This step will provide valuable insights into the supplier’s service and help you identify the most suitable partner for your business.

Step 3: Set Up Your Online Store

The next step involves creating your dropshipping store, where you’ll upload the products you’ve chosen in earlier stages.

Recommended Approach: Create a store using WooCommerce.

When building your store, keep the following in mind:

• Website Design
• Legal Compliance, such as GDPR and cookie policies
• Payment Processors
• Marketing Tools
• Dropship Supplier Integration

While there are other platforms to consider, such as Wix, BigCommerce, Shift4Shop, Squarespace, and Shopify, WooCommerce stands out as a major player in the e-commerce space due to its reliability and ease of use.

One of the key benefits of using WooCommerce is its simplicity. You can set up a store in as little as 30 minutes, and unlike Shopify, you don’t need to pay a subscription for the WooCommerce platform.

To build your website with WooCommerce, you’ll need a hosting service provider and a theme, many of which are available on online marketplaces like ThemeForest.

I recommend starting with WooCommerce, as it allows you to create a highly customized store that can differentiate you from competitors. It also supports numerous payment processors, enabling you to accept payments from virtually anywhere in the world.

Step 4: Promote Your Product

Promoting your products is one of the most challenging aspects of dropshipping. With your dropshipping store set up, how will potential customers discover it? More importantly, how will you persuade them to make a purchase? There are numerous strategies to market your products, and I will explore these methods in greater detail later on.

Step 5: Process and Fulfill Orders

The final step is processing and fulfilling customer orders. Once an order is placed on your website, you need to communicate with your supplier and initiate payment so that they can ship the product directly to your customer.

The AliNext plugin for WordPress simplifies this process significantly. With just a few clicks to manage the order, the plugin automatically places it on AliExpress, allowing the supplier to handle the rest.

This dropshipping plugin effectively automates the entire process. It ensures that orders are placed on your behalf, even while you sleep, eliminating the need to manually log into your AliExpress account and place orders yourself.

Tools for Finding Dropshipping Suppliers

There are various methods and tools to locate dropshipping suppliers. We’ve even dedicated an article specifically addressing how to choose a dropshipping supplier. In brief, a popular starting point is AliExpress.

AliExpress is the world’s largest online retail platform, primarily featuring manufacturers from China as sellers. It is a common first stop for many dropshippers.

While similar to platforms like Amazon, AliExpress stands out due to its competitive pricing. Since the products are listed directly by manufacturers, you can often find them at incredibly affordable prices.

Here’s an example:

Selecting the Right Suppliers

As a dropshipper, ensuring supplier reliability is one of the paramount challenges you’ll encounter. Initially, many suppliers may appear trustworthy, but over time, you might discover that they don’t prioritize your business interests.

Here’s a guide on key factors to consider when choosing a supplier:

• Product Quality: Opt for suppliers who maintain consistent quality standards. Whether the products are high-end or economical, they should meet expectations and be consistent across batches.
• Shipping Standards: Your supplier should offer fast and cost-effective shipping options.
• Warehouse Location: Ideally, select a supplier with a warehouse situated in your target market. This arrangement can significantly cut down on handling and shipping times, as well as reduce shipping expenses.
• Technology and Efficiency: Look for suppliers with systems that seamlessly integrate with yours. It’s advantageous to find these suppliers using AliExpress Dropshipping Center or AliNext plugin built-in supplier search.
• Return Policies: Avoid suppliers who do not accept returns. A superior supplier acknowledges errors and is accountable, ensuring they rectify any issues that arise.

The Cost of Dropshipping

Determining the cost of dropshipping isn’t straightforward, as your chosen tools significantly impact your monthly expenses. In this section, we’ll explore the expenses involved in creating a basic dropshipping store using WordPress.

Here’s a breakdown of essential costs:

• Domain for your store: $12.99 per year
• WordPress hosting: $1.95 per month (using A2 Hosting’s promotional price for the first 36 months)
• WordPress engine: Free
• Premium WooCommerce theme: $40-$60 one-time (or opt for a free theme)
• WooCommerce plugin: Free
• AliNext dropshipping plugin: $12/month (promotional Base package price if billed annually)

With this setup, you can establish a dropshipping store for approximately $30 monthly. When compared to a Shopify store, you’ll find that a WordPress-based dropshipping store is much more economical. Shopify’s basic monthly cost starts at $64.99, and additional Shopify apps come with extra monthly fees, making it a pricier option for launching a dropshipping business.

However, it’s worth noting that this basic setup doesn’t include all the features needed to make your store fully competitive. Additionally, it doesn’t cover expenses like blogging, advertising, or creating a logo.

One advantage of dropshipping on the WordPress platform is the availability of numerous free plugins. You can also leverage social media to market your products without incurring significant costs.

In addition to monthly expenses, you’ll need to account for some initial investments, such as purchasing product samples. Using spy tools for a few months can also help you identify successful products for dropshipping.

If you want a faster start and have a more flexible budget, consider our professional store development service, which includes a sales guarantee with our Pro & Sales packages.

How Profitable is Dropshipping?

A common question many people have is: how profitable is dropshipping? Can it truly be lucrative? The answer is yes, dropshipping can be profitable if approached correctly.

Your profitability hinges on your profit margins and expenses. Some dropshippers mistakenly believe, “I’ll sell this product with a $1 profit to make it affordable for customers.” This is not a sustainable business strategy. With a gross profit of $1 per item, you’d need to sell 1,000 units just to earn $1,000 a month, which is hardly sufficient to sustain a business. Furthermore, selling 1,000 units in a month is not an easy feat.

Ideally, aim for products that offer a 100% profit margin. Why? Because you need to cover your operational expenses.

Here are some examples of operational costs for dropshippers:

• Store Maintenance
• Domain Name
• Advertising/Marketing
• Dropship Tools

Store maintenance includes your hosting fees. With Shopify, these fees are paid monthly, whereas with WooCommerce, you typically pay your hosting provider annually. Domain names also come with annual renewal fees. Dropshipping tools often have options for monthly or yearly payments.

Marketing your products comes with various costs, whether it’s the time spent, ad creation, impressions, clicks, or other strategies. If you choose to incorporate blogging, you’ll need to budget for content creation, whether it means hiring writers or compensating yourself for the time spent.

Dropshipping can be highly profitable, especially when you create a store or offer products that stand out in the market.

Analyzing Competitors in Dropshipping

Navigating the dropshipping landscape can be challenging, and staying informed about your competitors’ strategies is crucial for success.

One effective way to achieve this is by utilizing a spy dropshipping tool. However, it’s important to note that a spy tool isn’t essential for starting a dropshipping business. At the core, all you need is an AliExpress product importer and an online store to get started. That said, bypassing the use of a spy tool means you may miss numerous opportunities to strengthen your competitive edge and maximize success.

Marketing Your Products

As promised, here are the most effective strategies for promoting your dropshipping products:

• Advertising
• Blogging
• Affiliate Marketing
• Social Media

1. Advertising

You can run ads on platforms like Google, Meta (Facebook and Instagram), Pinterest, TikTok, and more. While effective, advertising can be expensive and requires a solid understanding of marketing strategies to yield results.

2. Blogging

Writing blog posts on your website while focusing on search engine optimization can significantly boost your visibility. It’s advisable to create content that educates and assists your readers, positioning you as an authority in your niche. For instance, if you’re selling high-heeled shoes, consider blogging about ways to manage foot pain. If your business involves drones, write about the best batteries or cameras for drones. The aim of blogging is to attract free traffic and establish your expertise. Within your blog posts, subtly mention that you offer products that can help solve readers’ concerns.

Additionally, we have a detailed guide on free traffic sources for your dropshipping store, which can be incredibly beneficial for your business startup.

3. Affiliate Marketing

Affiliate marketing involves others promoting your products or making referrals, for which you pay them a commission upon successful sales. To implement this, you need an affiliate marketing program, which includes both software and a commission structure. You have the flexibility to decide the commission rates. WordPress stores often support affiliate programs that can be set up through your payment provider. If you choose our dropshipping store creation service, we can assist in integrating the best affiliate system into your WordPress store.

4. Social Media

The final method I suggest is leveraging social media for marketing. Reviewing dropshipping success stories, you’ll notice that many store owners are now turning to TikTok, as it can produce significant amounts of organic traffic.

You can engage actively on TikTok by creating engaging content. For example, you might interview random people and pose fun questions. For instance, ask them to name two countries that start with the letter X, and reward successful participants with a free item from your store.

This approach can generate considerable interest in your TikTok account, helping you to gather followers, increase likes, and ultimately drive sales.

Advantages of Dropshipping

1. Easy to Start for Anyone

Starting a dropshipping store doesn’t require expertise. The concept is straightforward, and building a website is manageable. You don’t need to be a computer programmer or engineer to set up a site. With WordPress, everything you need is readily available. Simply choose a theme, add your images and products, and start selling. Moreover, creating a dropshipping store is affordable. For instance, you can set up a store for as little as $30 by selecting a free theme and following the setup guide yourself.

2. No Need to Purchase Inventory

One of the key benefits of dropshipping is the lack of inventory management. Your suppliers handle this aspect, unlike Amazon FBA, where you’re required to purchase hundreds or even thousands of items to launch a retail endeavor. Traditional retail demands upfront purchases, but if sales don’t materialize, you’re left with unsold stock that can lead to losses. With dropshipping, however, you’re free from such risks. You can easily switch products and niches without incurring additional expenses.

3. Minimal Business Risk

Dropshipping involves low business risk. By setting up WordPress with hosting and a domain for a year, your cost is as low as $5 per month. This small investment pales in comparison to the potential earnings, as you can make hundreds of thousands of dollars annually.

4. Remote Business Management

A great advantage of dropshipping is the ability to operate your store from anywhere, as long as you have an internet connection. For instance, if you’re based in the United States and decide to take a vacation in the Bahamas, you can still manage and process orders seamlessly from your hotel. There’s no need for phone calls or printing shipping labels—order processing is just a few mouse clicks away.

Even better, utilize a WordPress dropshipping plugin like AliNext to automate the ordering process. This system will handle order placements for you, requiring no additional effort on your part.

5. Global Reach with Dropshipping Wordwide

One of the greatest advantages of dropshipping is the ability to reach a worldwide audience. Since your store is online, you have the freedom to decide which countries can access it.

What does this mean for your business? It means you aren’t restricted to just one market. You can target and advertise to customers in the US even if you’re based in Asia, and conversely, you can market to an Asian audience even if you’re in the United States.

Disadvantages of Dropshipping

There are two main drawbacks to dropshipping: high competition and limited control.

1. Intense Competition

An article by Printful highlights that 30% of all online stores use dropshipping for order fulfillment. While this doesn’t provide the exact number of dropshipping businesses, it does indicate fierce competition. The ease of entry into dropshipping, with startup costs as low as $30, means that numerous stores often look similar and sell the same products.

This high level of competition can lead to reduced profits, as you’ll often need to lower prices to attract buyers, which is not an ideal situation.

To distinguish yourself from the crowd, focus on creating something unique and targeting a specific niche. Develop designs that are exclusive to your website.

Although there’s a risk of others copying your designs, especially since spy tools can monitor your store and others can see what you sell, your advantage lies not just in unique designs but in your ability to cultivate an audience. Building a loyal audience is a distinct advantage that can’t be easily replicated by others.

2. Limited Control

In dropshipping, you have minimal control over the quality of products since they arrive as-is from suppliers. To mitigate this, you should evaluate the seller on AliExpress, place a test order, and discuss details such as their refund policy.

Moreover, you lack control over:

• Handling speed
• Pricing
• Shipping costs
• Shipping couriers and delivery times

Essentially, you rely heavily on your supplier, and if they fail to meet your standards, you have little recourse. However, when purchasing from AliExpress, you do have some leverage, as they consider you a customer covered by their buyer protection program.

The best strategy is to select your suppliers carefully. Take your time to identify the most reliable supplier for your products, even if it requires months of research. Patience and diligence in choosing the right supplier are crucial.

Frequent Dropshipping Challenges

1. Competition and Pricing Challenges

Competition stands out as one of the most significant obstacles you’ll encounter. Let’s examine this particular dropshipping item.

discovered this product on AliExpress and conducted a reverse image search in google. Here’s what I uncovered:

The majority of images on the right originate from dropshippers. If you examine them individually, you’ll notice a significant range in pricing.

As a result, it’s crucial to adjust your prices accordingly to remain competitive. Offering a lower price often equates to reduced profits.

To circumvent this issue, I’ll reiterate my previous advice: strive for uniqueness. The less competition you face, the better your prospects.

2. Shipping Costs and Delivery Speed

Shipping costs and delivery speed can pose challenges, particularly when shipping from China. Firstly, you cannot dictate which courier a supplier should use. Secondly, e-packets are no longer available.

Let’s be realistic: for a product purchased at $3, it’s unlikely that suppliers will prioritize packing and shipping it the very next day.

Instead, they will likely wait until they have accumulated enough orders to justify the effort, fuel, and time, and then dispatch all orders simultaneously.

There are strategies to navigate this issue. First, opt for a dropship supplier with excellent reviews and a substantial number of orders. Additionally, in 2024, the AliExpress team addressed shipping concerns by introducing a new Fast Delivery service and expanding warehouses in various countries to expedite shipping.

Another important step is to set accurate expectations. Inform customers if shipping will take up to 60 days, ensuring they are aware of the timeline upfront.

3. Product Quality

We’ve touched on product quality before, and I can’t emphasize this enough: always test your products before offering them for sale.

You might wonder, “Isn’t this too costly?”

In fact, it’s not. You have control over the products you list on your dropshipping store, allowing you to budget for product testing as needed. In my view, investing in testing upfront is preferable to handling customer complaints later on.

Many suppliers offer inexpensive goods, and surprisingly, customers often accept this given the adage, “You get what you pay for.”

The crucial factor is ensuring your supplier doesn’t send broken items. While the product may not be of premium quality, it must effectively serve its intended purpose.

4. Refunds and Returns

You’ll encounter these issues if:

• You make false claims in your advertisements.
• You don’t select a dependable supplier.

Customers will readily request a refund if a product doesn’t meet their expectations. Ignoring such requests isn’t an option—you should think twice about this approach.

Consumers have the option to file a chargeback through their credit card companies or banks. If this happens frequently, be aware that your payment processors might freeze your account.

PayPal is particularly known for this. To safeguard their users, they may put your account on hold if:

• You process numerous refunds.
• Several customers initiate chargebacks.

PayPal prefers not to engage with dishonest merchants, and while this situation may not be entirely your fault, as the supplier plays a role, it’s still crucial to address the issue.

SOLUTION: Choose a trustworthy supplier and communicate clear, realistic expectations to customers regarding shipping and product quality.

How to Expand Your Dropshipping Business

While this topic merits a detailed article, I’ll share a few quick tips to get you started:

• Select a Winning Product: Focus on products with proven demand, rather than just items you personally like.
• Create a Professional Store: Invest time in analyzing successful, high-revenue stores. Pay attention to their strategies and learn from their approaches.
• Market Your Products Effectively: Master the art of writing compelling advertising copy. Consistently promote your products and ensure they reach the appropriate audience.

Is Dropshipping the Right Fit for You?

Are you wondering if dropshipping is the right venture for you, or if you should explore something else? Consider these three factors to help you decide:

1. Willingness to Work Hard

Dropshipping demands significant effort. While it’s true that anyone can start a dropshipping business, success hinges on dedication and hard work.

Here’s what you’ll need to manage:

• Uploading products
• Researching and identifying winning products
• Handling customer orders, complaints, and requests
• Resolving website issues
• Ensuring website security
• Managing business finances, including accounting, taxes, and profitability analysis

Beyond these tasks, you’ll also need to create advertisements, write blog posts, design graphics for your storefront, and much more. While dropshipping doesn’t require a significant financial investment, it certainly requires a considerable amount of work.

2. You Have a Low Financial Risk Appetite

Dropshipping is a great option if you’re looking to minimize financial risk. In reality, $500 to cover one year of basic expenses is quite manageable.

This means you won’t be stressing over losing your life savings. There’s no need to dip into your 401K, insurance, or seek out investors.

3. You Are Open to Learning

Dropshipping is ideal for those who are eager to learn. This business requires you to evolve through your own efforts rather than relying on others. It’s important to recognize that there are many facets of dropshipping you may not yet be familiar with.

Consider these areas:

• Website Design: You’ll need to understand user experience (UX) and user interface (UI) principles to craft a professional website.
• Ad Copy and Design: Not every advertisement will be successful. You’ll have to learn how to create compelling visual and written content that captures attention and motivates viewers to act.
• Advertising: Each platform presents unique challenges. Launching ads on Facebook requires different strategies compared to Google Ads.

Additionally, you’ll need to develop skills in areas like website security and integrating marketing apps. As the landscape of the industry evolves, you must also stay updated on new technologies and learn how to use them effectively.

Dropshipping for Dummies: FAQs

Is dropshipping good for beginners?

Absolutely, dropshipping is an excellent business for beginners. Starting a dropshipping store doesn’t require a large financial investment, and it’s relatively easy to set up.

How can a beginner start dropshipping?

A great way to start is by taking a free dropshipping course. However, subscribing to this blog and reading all recommended articles may be even more beneficial, as we regularly update our information, unlike courses that can quickly become outdated.

Is dropshipping competitive?

Yes, it is highly competitive due to its low barrier to entry. People from all over the world can easily create a dropshipping store.

Is dropshipping legal?

Yes, dropshipping is legal. The main points of concern should be business registration and tax compliance, which vary by country. However, there is a helpful tip: use an integrated payment service that calculates and manages taxes for you.

Do I need dropshipping insurance?

Insurance is generally only necessary if your business is large. At the early stages, it’s an additional expense you may want to avoid.

Summary

Your next steps should include selecting a niche, compiling a list of products within that niche, and determining if you’ve identified a winning product. Having a dropshipping plugin for AliExpress, like ours, can greatly facilitate this process. From there, you’ll find it straightforward to build and launch your own dropshipping store!