Dropshipping has been one of the most favored methods for making money on Shopify recently. Thanks to its native software as well as the enormous ecosystem of integrations, this e-commerce platform has created optimal conditions for dropshipping businesses to flourish. There are so many success stories out there that inspire more and more people to dip their toes in the waters of dropshipping and start their own business ventures.
If dropshipping is the topic that has been tickling your fancy for a while and you’ve wanted to learn more about how to dropship on Shopify, this article may help you. Here, we’ll examine what dropshipping is, how it works, and why Shopify is one of the best environments for running a dropshipping business. On top of this, we’ll talk about some of the most recommended ways to dropship on Shopify. So, without further ado, let’s get to it.
What Is Dropshipping?
Chances are, if you’re here reading about how to dropship on Shopify, you’re already familiar with this concept and way of doing business. Nonetheless, there are many e-commerce enthusiasts for whom dropshipping is still a bit of a confusing notion. Hopefully, the following explanation will unscramble any existing perplexities and help you gain a clearer picture of this e-commerce model.
In essence, dropshipping is just a very specific method of order fulfillment. What does this mean? We’ll try to provide an easy-to-understand explanation.
In very simple terms, dropshipping comes down to selling products that you don’t produce, keep in stock, or ship. Shopify store owners who utilize this e-commerce model usually list and sell products that they find on huge online marketplaces like AliExpress, Alibaba, and eBay. The difference between the original price plus their marketing and selling costs on the one hand, and their own selling price on the other hand, is where Shopify store owners make their profit.
What’s specific about dropshipping is that you pay for a product you sell only after someone has bought it from you. You don’t need to make bulk orders and pay for large quantities of products in advance without even knowing whether you’ll be able to sell them. Dropshipping doesn’t require you to store products in a warehouse either, freeing you from any inventory carrying costs.
In dropshipping, your task as a merchant is to market and sell products as well as to take care of customer support – period. However, this is something that you need to do extremely well. Many entrepreneurs who dropship on Shopify are marketing experts, and some report spending thousands of dollars on marketing. Good customer service and highly-developed marketing skills are often what make the difference between a successful and failed dropshipping business.
Technically, the real dropshippers are the companies that supply, ship, and pack the products that you sell. You, as a Shopify store owner, are an entrepreneur who runs a dropshipping business, not a dropshipping service provider per se. Product suppliers need merchants and marketers to reach more audiences and sell more products. You need product suppliers that store and ship products to cut the costs involved in a traditional retail business.
For a more visual illustration of dropshipping, take a look at the following short but informative explanation offered by Shopify:
So, if you were wondering how it is possible for the dropshipping model to work at all, try to think of it as a significantly more convenient way of running a retail business; you’re just a retailer without the headache and overhead of the classical retail business.
Dropshipping Supply Chain
To understand this e-commerce phenomenon better, we need to learn more about the main actors in dropshipping. The dropshipping supply chain consists of three elements: manufacturers, wholesalers, and retailers – dropshipping store owners belong in this last category. Let’s see what their exact roles are.
Manufacturers, obviously, are companies that produce the goods you sell. The majority do not sell directly to consumers, but rather to wholesalers or directly to retailers. This means that you can communicate and cooperate directly with manufacturers without a middle man if you so choose. This can pay off in higher profits, considering that products are at their cheapest when you buy them directly from the company that makes them, but there’s a drawback. You’ll have to find a place to store your products because the manufacturers usually do not offer this type of service.
In addition to this, a cooperation of this kind usually includes ordering products in bulk. Ordering even the minimum required quantity can still be a lot since manufacturers normally do not sell products in small quantities let alone individually. In fact, this issue – along with the storage problem – is one of the main reasons why Shopify store owners who run dropshipping businesses generally prefer buying products from wholesalers.
Wholesalers play the role of a middle man. They buy large quantities of products from manufacturers and sell them to retailers. As a rule, similar to manufacturers, they don’t sell directly to consumers.
For the bulk of the merchants who dropship on Shopify, their product suppliers are companies who do wholesale. As we already mentioned earlier, they’re the ones that take care of storing and shipping. Even in cases where wholesalers require minimum purchase quantities, these quantities are smaller than what you would have to buy if you were ordering products directly from manufacturers.
Retailers work directly with consumers. As we said, Shopify store owners who run dropshipping businesses belong to this category.
The Pros of Dropshipping
Now that you know what dropshipping is and how it works, let’s see some of the reasons why it has become such a popular e-commerce activity. As you’ll notice yourself, all the characteristics of dropshipping are closely related; so much so that you almost can’t talk about one without mentioning or implying the others.
1. Dropshipping Is Economical
Dropshipping saves you a lot of money and time since you don’t need to handle anything but sales, marketing, and customer support. In addition to this, as it doesn’t require you to pay upfront for the products you sell, store them in warehouses, pack them, and ship them to your customers, it allows you to run a business even with a pretty modest budget.
2. Dropshipping Is Low-Risk
As you don’t need to care about every single aspect of running a business or invest a fortune in your e-commerce venture, dropshipping is an extremely low-risk e-commerce activity. Even when you suffer losses, they can’t be nearly as big as if you were running a standard retail business. You can test new products without fear of great losses, even if things go south and nobody buys them.
3. Dropshipping Is Simple
Dropshipping is not a complex e-commerce endeavor, it doesn’t include a steep learning curve, and it doesn’t require tech-savviness, so virtually anyone can do it. This makes it a great choice for complete newbies. Doing our research, we even came across success stories of teenagers who claimed that they had great success with dropshipping.
4. Dropshipping Is Flexible
Dropshipping is so flexible that you can run your business from home. In fact, one Shopify article claims that many flourishing dropshipping businesses are home-based. Also, since it doesn’t include much logistics on your side, it’s a lot easier to scale when running a dropshipping business than a standard retail business.
On top of this, you can choose from millions of products available on AliExpress and Alibaba to sell. It’s not like you can’t do this with the standard retail business model, but dropshipping makes it a lot easier to switch gears, change your products, readjust your business and e-commerce store, and take advantage of all the possibilities today’s online market offers.
How to Dropship on Shopify: Tips and Suggestions
Find a Reliable Product Supplier
Finding a good and reliable product supplier is not as easy as it might seem at glance. It can take some time and trial and error to find the right product supplier or suppliers.
The majority of Shopify store owners who run dropshipping businesses cooperate with more than one product supplier. Chances are, you too will have to find multiple product suppliers, although this will depend a lot on how you view your dropshipping business and store. If you prefer brand-building above everything else and plan to make your Shopify store revolve around your brand, then selling only one product and long-term cooperation with a single product supplier is probably a better idea than selling multiple products and working with multiple product suppliers.
A good and reliable supplier is one of the pillars of a successful dropshipping business. AliExpress and Alibaba both offer a ton of options when it comes to choosing one. Recently, an increasing number of merchants have started recommending Alibaba over AliExpress because, overall, it’s cheaper, offers better conditions, and provides you with more possibilities than AliExpress.
One such possibility is to put your brand on products and packaging. However, keep in mind that suppliers that offer additional perks like this may require you to meet some additional requirements to be able to enjoy those perks.
Find a Specific Niche
Some merchants suggest operating in a niche that has to do with something consumers are emotionally attached to, such as children (for instance, you can sell toys or clothing) or pets (pet beds and accessories).
When choosing a niche, it’s highly recommended to focus on a very specific niche market. Specialize in something – this is the advice of virtually every experienced Shopify entrepreneur. The more specific your product and target audience are, the higher the chances for success.
Do Extensive Marketing
Advertising and marketing are key to success in dropshipping. As long as it’s well-thought-out and organized, anything will do, whether it’s search engine marketing or social media ads.
What kind of ads do you need to attract leads? Ads that sound like they address and solve very specific and practical problems. In addition to this, they need to give an answer to the question: what’s that special value that your business and products bring to your customers?
Unless you already managed to build a strong following somewhere else, there’s a high probability that your Shopify store won’t get any significant traffic from the get-go. You should expect to work long and hard on creating steady traffic to your store. For some Shopify store owners, things change when they start hiring influencers to bring more traffic to their stores. For others, the answer is content marketing.
Luckily, Shopify integrates with tons of apps and you can find everything you need to start creating content, do blogging, and boost your SEO in one place: the Shopify App Store.
As far as blogging is concerned, DropInBlog can help a lot. It’s a modern platform that integrates with Shopify and, for that matter, any other major player in the world of sales and marketing platforms and site builders, such as ActiveCampaign, Kartra, HighLevel, BigCommerce, Webflow, and more.
DropInBlog includes a built-in SEO Analyzer that’s based on current SEO best practices. For more information on DropInBlog and blogging on Shopify, check out this article.
Rome Wasn’t Built in a Day
Building a successful dropshipping business is not easy. Many entrepreneurs who dropship on Shopify went through some hard times until their businesses started to take off. The beginning is especially challenging. So, do not get discouraged if things don't go as you want or expect. Sometimes it takes time for good things to happen. It may take months or more than a year until you start seeing any good results from your efforts.
In the meantime, advertise your store on Facebook and work hard on building your brand. Regardless of whether your products come from AliExpress, Alibaba, eBay, or elsewhere, they need to look good and satisfy some quality requirements. The same applies to packaging as well as to your store: the more professional they look, the more credibility your business will have. We can’t emphasize enough how important design is in the context of professionalism and sending the right message to your audience.
Good customer support is another crucial aspect of a successful dropshipping business that can put you in a solid position from the very beginning. Quick response time, concrete support hours, phone support, and transparency – all these can make the difference between a failed and successful business.
What Products to Sell
You must have noticed that we skipped the topic of finding products in the previous section. Why did we do that when it’s undoubtedly one of the most important aspects of a dropshipping business? It’s exactly because of its importance that we postponed this topic until the next section, which will be dedicated entirely to it.
How to Find the Right Product
AliExpress offers over 100 million products and it’s just one marketplace. Can you imagine the total number of options when you add unique products from other online marketplaces? It’s hard to know where to look and what to do when there’s so much choice out there. Luckily, a little research and recommendations by people in the know can help a lot.
If you plan to focus on the local market, one of the things you can try is to do some local market research and see the current trending products in your area. Another good idea would be to sell something that’s hard to find in your area, but you know for sure that people want or need it. In case you can’t find online resources, ask around and see what recommendations people who’ve been in dropshipping for a while have.
Generally speaking, whether you intend to work in a global or local market, there are some types of products that could work in most scenarios. For instance, products related to hobbies can be a good idea. People take their hobbies very seriously and are willing to invest a small fortune in their passion. Sports, gaming, and music, for instance, can all be highly profitable areas. You can almost always find buyers for sports and music equipment or gaming accessories.
Alternatively, selling disposable products that are part of our daily lives and people need to buy on a regular basis, such as cosmetics and personal care products, is another good idea. These can be a continuous source of profit.
Product Recommendations Based on Trends in 2021
Speaking about products more specifically, the following list of some trending categories and subcategories of products in 2021 can be of great help to someone who’s starting out:
- Health and care: children’s face masks, sleeping masks, and yoga mats.
- Clothes and accessories: silk pajamas, slides, and backpacks.
- Kitchen: portable blenders, electric kettles, and oat milk.
- Home and bedroom: air purifier, blankets, and orthopedic pillows.
- Office: blue light glasses, mechanical pencils, and pencil cases.
- Home improvement: smart locks, smart plugs, and automatic soap dispenser.
- Camera and cellphone: mobile skins, iPhone tripods, and portable green screens.
- Gaming: gaming monitors, gaming mouse pads, and gaming headsets.
- Car: digital tire-pressure gauge, ceramic coating, and socket wrenches.
These recommendations are based on market research and Google Trends stats. If you want to find out more on this topic, check out this Shopify blog post.
Product Recommendations for 2022
If you dig a little deeper into the Shopify official blog, you’ll find some extremely helpful information relevant to dropshipping. One such blog post deals with what are expected to be popular products to sell next year. Here, we’ll provide only a high-level overview of the article. But if you want to go more in-depth, check out this Shopify post.
The following list contains the top ten products based on the global order year-on-year growth that can be a good idea to sell online in 2022:
- Toys: 1,239% growth, most popular in Canada.
- Shoes: 1,086%, most popular in Canada.
- Pens and pencils: 540%, most popular in the United States.
- Decorative bottles: 438%, most popular in Great Britain.
- Drills: 371%, most popular in the United States.
- Cutters: 341%, most popular in the United States.
- Car parts: 326%, most popular in France.
- GPS navigation systems: 323%, most popular in Brazil.
- Bras: 306%, most popular in the Philippines.
- Office chairs: 304%, most popular in the United States.
Pricing your product the right way can sometimes be as important as choosing the right product. Even the best product won’t help you if your price is a bit off. Since more and more merchants are doing dropshipping and there’s so much competition nowadays, steep prices can put you in an unfavorable position. No one wants to buy overpriced products. On the other hand, believe it or not, too low a price can make people suspicious regarding the quality of your product. Maneuvering in between these extremes can be difficult, but not impossible.
As a general rule, when pricing your product, you need to take into account the entire cost of product marketing, from attracting consumers to converting them. In order for you to make a profit, your price has to cover the original price, the additional costs like the ones we mentioned, and at least a minimal profit you plan to make per sale. It goes without saying that you also need to take into account the average current pricing for the type of product you’re selling. We’re aware that this may sound too generic, but if you follow these general rules, you’re pretty much on the safe side.
Product Size and Material
Another thing that you need to consider when choosing a product is its size. The fact that you’re not directly responsible for shipping your product doesn’t mean that it’s all the same whatever size of product you sell. In this case, the golden rule is to go for smaller rather than large and cumbersome products that can be damaged more easily during transport.
As far as the material is concerned, fragile and brittle products, as you can imagine, are not recommended.
Oberlo and Other Helpful Tools
Oberlo is a dropshipping app that was built by Shopify itself. It’s not a part of the out-of-the-box feature set, but you can easily install it from the Shopify App Store.
Alternatively, since there’s a separate Oberlo page on Shopify, you can sign up for a free trial from there as well or just go to the Oberlo stand-alone official website and explore the options available there.
With regard to pricing, Oberlo offers a free plan called Explorer and a paid plan called Boss:
What’s so special and important about this app?
The short answer is, Oberlo is so convenient and powerful, it’ll make your life as a Shopify dropshipping store owner so much easier. The longer answer is that Oberlo helps you solve one of the most important parts of the dropshipping puzzle: finding a winning product. It’s connected to AliExpress as well as your Shopify store, so you can search through the myriad of products available on this marketplace and import them in a matter of clicks to your store.
On top of this, when a customer buys a product from you, Oberlo automatically forwards this order to your product supplier and fills in all the necessary information. Your job is just to double-check if all the information is right and place the order. Your product supplier then sends the product to your customer. It’s that easy.
Moreover, Oberlo allows you to track whether a certain product is out of stock. When it’s not available anymore, you can set automatic actions like removing the product from your store or just showing your customers that the product is no longer available by letting Oberlo change the quantity to zero. In short, Oberlo is one of the most convenient ways to dropship on Shopify.
Other Helpful Apps
Besides Oberlo, there are other apps with a similar function that you can integrate into Shopify. Here, we singled out three integrations available in the Shopify App Store.
The following list shows some of the key CJDropshipping features:
- It offers fast shipping to the USA.
- It provides a ton of products whose prices are lower than those on AliExpress.
- It offers millions of different products, but in case you can’t find something, it allows you to request that product, so once it finds it, it will list it and make this product available.
- It allows you to import products from its website.
- It’s free to install and use.
SupplyMeDirect has the following noteworthy features:
- It offers quick shipping.
- It works in three large markets: the USA, the UK, and the EU.
- It offers private labeling as a part of its services.
- It’s free to install and use.
Modalyst is a bit different from the previous two apps because it includes high-end products from famous brands like Calvin Klein and Dolce & Gabbana in its offering. In addition to this, it has the following features:
- A free plan – but for more advanced features, you’ll have to pay $35/month or $90/month, depending on which plan you choose.
- Modalyst Private Label Program that allows you to have your own branded products.
The Cons of Dropshipping
Just like those phishing emails that claim you’ve been awarded millions for no particular reason, if something sounds too good to be true, then chances are it’s not quite as it sounds. If by any chance, you were thinking that dropshipping was a quick and easy way to earn some big money, we hope that by now this article showed that that’s not quite the case.
We need a reality check to get our feet firmly on the ground. There are always some tradeoffs that we need to be aware of when deciding what to buy or do. So, let’s take a look at some cons of dropshipping.
A Lot of Competition
As we already mentioned, dropshipping has become an extremely popular form of e-commerce business recently. Due to its many pros, many e-commerce enthusiasts have started their own dropshipping business for the same reasons you want to start.
Competition can be a good thing, but a lot of competition can adversely affect your business. Since lowering your prices is often the most visible and tangible way to stick out from the crowd, many entrepreneurs resort to this tactic to keep their businesses relevant for consumers and stay afloat.
The truth of the matter is that this works, but the problem is that it can be a slippery slope. When the majority decrease their prices, sooner or later you’ll probably have to do the same to stay in the game, especially if you notice a significant decrease in sales.
In the end, instead of cure, this tactic can harm your business because with the price, your profit drops as well, and profit is the reason why you started a dropshipping business in the first place.
Dropshipping doesn’t leave much room for customization. In certain cases, your product supplier can put your logo on the product you sell, but as we said earlier, this will most probably require you to meet some additional requirements, such as ordering products in larger quantities, which to some extent defeats the purpose of the whole dropshipping e-commerce idea.
Very Little Control
Bad packing, mistaken orders, damaged or missing products, and your product having the branding of the product supplier is sometimes the reality of dropshipping. The worst part is that when these situations happen, you’ll be the one held responsible. It can be very frustrating taking responsibility for things that you essentially have very little or no control over.
However, there’s almost no problem that can’t be solved with good customer support on your side. Alsо, it goes without saying that if errors like these continue to occur, you should start thinking about finding a different product supplier.
Over and Out
Here we are, at the end of our guide on how to dropship on Shopify. Dropshipping is an interesting and extensive topic; an in-depth analysis would take a whole book. Hence, we couldn’t go too deep, but at least we touched upon every or at least most of the significant aspects of this e-commerce model.
Now that you know more about it, what do you think – is dropshipping worth it? Or is it better to stick to the classical retail business model? Or, maybe it’s best to build a fully-branded Shopify store that sells unique products made by someone you already know and trust? Hopefully, now you can answer these questions more confidently.