How to Start a Profitable Dropshipping Business on Shopify?

Shopify dropshipping is one of the most popular eCommerce business models in 2023. According to Statista, the global dropshipping market size is forecasted to reach $243.42 billion this year and is expected to rise by 27.82% by 2026.

If you are looking to start a profitable online business, dropshipping is the best choice. You can start a Shopify dropshipping business and give wings to your entrepreneurial dreams.

In this post, we will share a detailed guide that will educate you on the dropshipping process and provide a step-by-step process for starting a dropshipping business on Shopify.

What Is Shopify Dropshipping?

Shopify dropshipping is a business model where entrepreneurs create online stores on the Shopify platform and sell products without needing to handle inventory or manage fulfillment logistics. In this model, it is suppliers, manufacturers, or wholesalers who handle the inventory, pack, and process orders, and send out the shipments to the customers.

When a customer places an order on the Shopify store, the business owner forwards the order details to the supplier, who then ships the product directly to the customer. The business owner earns a profit on each sale.

Dropshipping on Shopify is advantageous because Shopify provides various features and tools to streamline the dropshipping process, including inventory management, order tracking, payment processing, and integrations with suppliers. It helps entrepreneurs to start their online dropshipping business without the need for substantial upfront investment or the burden of managing inventory and fulfillment operations.

Why Consider Dropshipping on Shopify?

You must consider leveraging Shopify for dropshipping because of the convenience it provides. You can easily create and manage your online store without any help from IT experts. The simple drag-and-drop functionality allows you to build a visually-appealing website in less time.

Dropshipping on Shopify does not require you to maintain an inventory as you pay your suppliers only when customers place their orders. You can start your dropshipping business on Shopify with minimal investment (to be discussed in later sections).

That being said, let us understand the benefit of using Shopify for dropshipping.

What Are the Benefits of Dropshipping on Shopify?

Dropshipping on Shopify offers numerous benefits for entrepreneurs looking to start an eCommerce business. Here are a few of them.

• Shopify is an all-in-one solution - Shopify offers a comprehensive platform that provides website hosting, domain registration, payment processing, and inventory management. It streamlines the entire order management and processing process, allowing you to focus on growing your business.
• Shopify is easy to use for both experts and newbies - Whether you're an experienced e-commerce entrepreneur or a beginner, Shopify's user-friendly interface makes it easy to set up and manage your online store. It offers customizable themes and a wide range of apps to enhance your store's functionality.
• No upfront investment is required - You do not need to invest in inventory upfront. You only pay for the products when a customer places an order, eliminating the need to invest in raw materials, maintain an inventory, or hire a team.
• No worries about inventory - You don't need to handle or manage physical inventory. Your suppliers handle inventory storage, packaging, and shipping, allowing you to focus on marketing and customer acquisition.
• No shipping costs - Since the suppliers ship the products directly to your customers, you do not have to bear the shipping costs or worry about fulfillment logistics.

Dropshipping on Shopify offers a low-risk way to start an eCommerce business.

How to Start Your Dropshipping Business on Shopify?

Starting a Shopify dropshipping business requires a unique business idea, an attractive storefront, reliable supplier partnerships, and an effective marketing plan. Let us explore the various steps in building a successful dropshipping business.

Step #1 - Find Popular Dropship Products on Shopify

Finding a niche market with a high demand for products and low competition is one of the essential aspects of a profitable Shopify dropshipping. Conduct detailed research on different niches by identifying popular market trends, customer interests, and competition. Some of the trending dropshipping niches you can consider are clothing, baby products, car accessories, beauty products, hobbyist products, home office equipment, fitness equipment, tech gadgets, and more.

Based on your findings, pick a viable niche, decide on the products you wish to sell, and define who your target customers are. Knowing your potential customers will help you learn more about their pain points and desires and understand what encourages them to buy. This will help you craft an effective strategy for product marketing.

Besides, it is also crucial to gauge the profitability of the products by calculating the business operations costs, shipping fees, the amount to be paid to the suppliers, marketing costs, and more. You must also analyze the various product metrics, such as sales volume, customer reviews, ratings, and more when researching your products. As the competition in the dropshipping industry is fierce, you must weigh the pros and cons of each product you wish to sell on your Shopify store.

After deciding on the products you want to sell, leverage the suppliers' database on Shopify to shortlist a few suppliers who can fulfill your customer orders. Just like product research, invest time in evaluating the suppliers and building connections with them. Convey to them your business goals and explain to them the support you expect from them to build a successful dropshipping business.

Step #2 - Create a Shopify Dropshipping Store

Now that you have decided on the products you want to sell and chosen your suppliers, focus on building an intuitive dropshipping store on Shopify. Here is a short step-by-step guide on creating a Shopify store for your business from scratch.

• Sign up for an account on the Shopify website by choosing a pricing plan that suits your business needs.
• Give your store a professional look by choosing a theme from the ones available on Shopify. Customize the theme to match your brand's color theme and aesthetics.
• Configure your Shopify store settings by adding your store name, domain name, payment gateways, tax settings, currencies, and shipping settings.
• Add or import the products you want to sell in your store. Customize the product titles, descriptions, pricing, images, and other details to create informative product pages. You can also upload high-quality product videos to allow customers to get a detailed look at the product before placing their orders.
• Set up easily-navigable menus to allow customers to browse and find products without any hassles. Create various product categories and subcategories to create a smooth shopping experience for customers.
• Design and create other essential pages, such as the About Us page, Contact page, Privacy Policy, Shipping Terms, Returns Policy, and more to provide customers with relevant business-related information.
• Enhance your store's functionality by installing third-party apps from the Shopify store and deliver seamless customer experiences. For example, Sparq Search and Product Filter app to improve product discoverability, Keeper to recover abandoned shopping carts, Loox to highlight product reviews, Joy to set up rewards programs for customers, and more.

Do not forget to test your online store before its official launch. Ensure that your website works as expected by checking the buttons, testing forms, verifying the checkout process, and assessing the payment gateways. Gather customer feedback upon launch and optimize your store based on the same to enhance the overall shopping experience.

Step #3 - Online Marketing for Product Promotion

Once you have successfully built a professional Shopify website, you must focus on promoting it with the help of an effective marketing strategy. The main goal of your marketing efforts must be to drive more traffic to your website and convert those visitors into customers.

Devise a comprehensive marketing plan by identifying the desired target audience, setting clear goals, outlining the best marketing strategies, choosing the best channels for promotions, and setting your marketing budget. Here are a few marketing strategies you can implement to promote your dropshipping business.

• Content marketing - Focus on providing value to your audience by creating engaging content related to your products. Write informative blog posts and articles, create entertaining video content, design educational infographics, and more to attract your customers and establish yourself as an expert in your niche.
• Email marketing - Build engaging email marketing campaigns to nurture relationships with your existing customers and prospects. Send out regular product updates, exclusive offers, newsletters, personalized recommendations, and more to drive repeat purchases and increase product sales.
• Social media marketing - Leverage popular social media marketing platforms like Facebook, Instagram, TikTok, Pinterest, and Twitter to promote your products. Create visually-appealing graphics and content to captivate your audience and increase brand awareness.
• Influencer marketing - Collaborate with industry influencers to promote your products through sponsored posts, reviews, or giveaway contests.
• Affiliate marketing - Implement an affiliate marketing program to encourage influencers, content creators, and bloggers to promote your products while earning a small commission for each sale.
• Referral program - Set up a referral program where your existing customers can drive sales to your business and get rewarded with loyalty points, product samples, or freebies on their subsequent orders.

If you have a huge marketing budget, you can consider investing in pay-per-click advertising or remarketing ads to improve your website traffic, generate leads, and thus, increase sales.

Step #4 - Shopify Customer Order Fulfillment

Shopify notifies you every time a customer places an order via email or within your dashboard. This notification contains all the necessary details about your order, such as the purchased products, shipping details, customer information, and the total cost.

Before forwarding the details to your supplier, you must verify the order details and reach out to customers in case some information is missing. Once you have the required information, you can send them to your supplier. This can be done by manually sending the order details to the supplier or using an automated tool in Shopify. The supplier will begin with order processing as soon as you release the payment (This could vary depending on your arrangement with the suppliers).

The supplier will pack and prepare the products for shipping. After the order is shipped, the supplier might provide you with tracking information that you can further share with your customers to build trust and foster strong relationships with them.

At this point, you must handle customer inquiries promptly and address their queries. Keep monitoring the order delivery progress and ensure it reaches your customers on time. Do not hesitate to contact your supplier if you notice any issues during transit or uncommunicated delays. This will help you evaluate the performance of your suppliers and ensure you provide the best experience to your customers.

Step #5 - Returns and Refunds Management

Managing returns and refunds effectively is crucial for maintaining customer satisfaction in dropshipping business. Create a webpage for sharing various terms and policies with your customers and display it prominently on your online store. Add the links to this page in your website footer, product pages, and checkout page to inform customers about the same before they make a purchase.

Create a concise returns policy that states the terms and conditions for returns and refunds clearly. Take into consideration your suppliers' policies before documenting yours. Specify the time frame for product returns or exchanges and build a designated returns process workflow. You may ask your customers to send an email about product returns or request them to fill out a form. Remember the returns process must be as straightforward as possible.

If the returned products fit the requirements stated in the returns policy, you can proceed with issuing a refund or providing a replacement to the customer. Communicate the progress on refund or replacement status to your customers at all times.

Step #6 - Give Exceptional Client Service

Providing exceptional customer service is another crucial aspect of running a successful dropshipping business. It sets you apart from your competitors and creates a positive impression of your brand in the minds of your customers. It creates memorable shopping experiences for your customers and encourages them to make repeat purchases with you.

To deliver exceptional customer service, focus on effective communication and quick query resolution. Be proactive in addressing any customer issues and respond promptly to their inquiries. Try to understand their point of view and make them feel heard and valued.

Provide consistent customer support across various channels including your website, social media, live chat, email, phone, and other support channels. Maintain a friendly tone in your communication and show empathy to help your customers approach you without any inhibitions.

Build trust and nurture strong customer relationships to create a positive brand experience for your customers and stand out amidst the competitive dropshipping market.

Step #7 - Increase the Size of Your Shopify Dropshipping Success

To expand the size of your Shopify dropshipping business, it is important to implement strategies that focus on growth and scalability. Firstly, consider expanding your product range. Research and identify trending or popular products within your niche to diversify your offerings and attract a larger customer base. This allows you to cater to different preferences and increase the chances of making sales.

Next, optimize your website's performance to ensure your Shopify store is fast, user-friendly, and mobile-responsive. Improve website navigation, product descriptions, and visuals to enhance the overall shopping experience.

Lastly, streamline your business operations by automating tasks such as supplier partnerships, order fulfillment, customer support, and more to handle higher order volumes and increase your efficiency. Analyze your customer data to gain smart insights into customer behavior, product performance, supplier performance, and more to make informed business-related decisions.

Let us now understand how Shopify dropshipping processes work in real life.

How Does Shopify Dropshipping Work?

Shopify dropshipping works just like how regular eCommerce sales do. The only difference is the order fulfillment process which is taken care of by the supplier. To start dropshipping on the Shopify platform, you can research and find suppliers on your own or tap into the exclusive network of thousands of suppliers on Shopify. Here is a quick overview of how Shopify dropshipping typically works.

Placing an Order on Your Shopify Store

Once you have finalized your suppliers, start building your online store and import the products by adding their respective names, descriptions, prices, and images. Shopify also allows you to upload your products in bulk using a CSV file. Make your website live and sit back to receive the orders.

Contacting Your Supplier

When customers visit your website and place an order for the products they want, you need to inform your supplier about the same as soon as possible. You can do so by placing your order manually on the supplier's website or letting Shopify do it automatically for you using the built-in app.

Shopify's integrations will connect your store directly to your supplier's system thereby helping them ship the ordered products sooner and expedite your delivery times.

Getting Billed

After you inform your suppliers about the received orders, the supplier's system will calculate the total costs for shipping the products. This includes the shipping fees, applicable taxes, and other charges. They will share a bill for the products ordered with you. Depending on your discussions with your suppliers, they might also offer you some additional discounts on your invoice.

Paying for the Services

Send out the payment for your orders to your suppliers on a timely basis. This will help you build trust and establish a strong relationship with them.

You can either pay from your pocket or use your customer's payment. While the former arrangement may seem a bit difficult if you are on a tight budget, you can utilize the customer's payment to pay your suppliers. This means every time an order is placed on your dropshipping store, a part of your customer's payment would be sent directly to your supplier leaving you with the money for other expenses and some profit.

Delivering the Products

Upon receiving the payment, your suppliers will process the orders and ship them directly to the customers at the address they provided during the order checkout process. They will take care of order packaging, labeling, and arranging for the shipment. Once the order is shipped, the suppliers will provide you with shipment information that you can share with your customers for real-time order tracking.

Now that you have learned how Shopify dropshipping works, let us understand the costs associated with setting up an online dropshipping store.

How Much Does It Cost to Dropship on Shopify?

The cost of dropshipping on Shopify can vary depending on several factors, such as product offerings, product pricing structure, supplier costs, shipping fees, and more. The primary expenses include the Shopify subscription fee, which ranges from $29 to $299 per month, depending on the plan you choose. Additionally, there are costs associated with website design and development, which can range from a few hundred to a few thousand dollars.

Other expenses to consider include domain name registration ($10 to $20 per year), apps and plugins for additional functionality (varying prices), marketing and advertising budgets, and other miscellaneous expenses. Overall, the total cost to dropship on Shopify can range from a few hundred to several thousand dollars, depending on your specific requirements and business strategies.

How Profitable Is Dropshipping with Shopify?

A successful dropshipping business can earn between $1000 to $5000 per month on average. However, the success and profitability of Shopify dropshipping depend on various factors, such as the products you offer, your pricing structure, marketing efforts, advertising costs, and other operational expenses.

Considering the tremendous competition in the dropshipping industry, you ought to do thorough research for products, hunt down reliable suppliers, market your business, and deliver excellent customer service to build a profitable dropshipping business. As operating a dropshipping business does not involve manufacturing the products, maintaining an inventory in a warehouse, or logistical costs, you do not have to worry about these expenses. This leaves room for high-profit margins.

How Much Do I Need to Start Shopify Dropshipping?

The amount needed to start Shopify dropshipping business varies depending on your specific store requirements and business goals. You can start your dropshipping store for as low as $150.

Do I Need Money to Start Dropshipping on Shopify?

No, you can get started with dropshipping on Shopify with zero investment by signing up for a free trial. Once the trial is over, you will have to subscribe to a paid plan. Other expenses involved include the costs of additional apps and plugins, website design and development, domain name costs, and hosting charges. For that, you need an initial investment of a minimum of $100 approximately.

What Is the Minimum Amount for Dropshipping?

The minimum amount required to start a dropshipping business depends on several factors. This includes the products you wish to sell, the platform you choose to host your online store, marketing and advertising costs, and other miscellaneous expenses. Besides this, other factors, such as your budget, willingness to take risks, and your location play a crucial role.

Start by signing up for free trials and starter plans to launch your online store. Once the free trials are over, you can start as low as $29 per month using the Shopify platform. However, these charges can range from a few hundred dollars to a few thousand.

Next, you will have to buy a domain name and a hosting server for your website. This will cost you a minimum of $100. So, the total minimum budget that you will need to set aside to start your dropshipping business is $150.

Conclusion

Shopify dropshipping helps you to set up and run your online store without any hassles. From creating your product offerings to fulfilling them, from marketing your dropshipping business to building customer loyalty, Shopify offers numerous tools to convert your small dropshipping business into a lucrative venture.

Frequently Asked Questions

Do you need a business license to dropship on Shopify?
Yes, you do require a business permit to start dropshipping on Shopify based on the country you are situated in. This permit helps you create legal documentation for your dropshipping business. Depending on the type of business, you can opt for a business license or set up an LLC for dropshipping.

Is Shopify dropshipping legal?
Yes, Shopify dropshipping is legal. It is one of the most widely-used business models that is being implemented by retailers all around the world.

How do I dropship on Shopify with no money?
Shopify dropshipping business can be started with no investment by signing up for a free trial of the Shopify platform. However, once the trial is over, you will have to subscribe to a plan.

Is Shopify dropshipping worth it?
Yes, dropshipping is a profitable business as long as you choose the right products and sell them at the right price.

What are Shopify's dropshipping advantages over eBay?
Although Shopify and eBay are widely known platforms in the eCommerce industry, they vary in terms of the features/functionalities they offer. Shopify enables you to create your online store for your dropshipping business while eBay is an online marketplace that has millions of dropshipping businesses selling their products.

Further, eBay displays your products along with other dropshippers that are selling similar products on the product listings page. This increases the competition to attract potential customers and boost engagement. However, with Shopify, you can create a standalone store and focus entirely on marketing your products.