When you think of a business, there are certain things that cross your mind. Huge teams, large offices, heavy investments, and the risk of course.
But dropshipping business seems to disagree with all of these!
Yes. In this article, we’ll be talking about dropshipping business that rejects some of the cliche beliefs of business in general. In this article, we will be talking about what dropshipping business is and how exactly you can start an online dropshipping business for automobile parts. We will also see the entire process of setting up an online store for dropshipping with Shopify.
We have picked the automobile niche for this article because it would be easier for us to explain the entire process with an example. Plus, the automobile can be a great choice of niche if you’re thinking about jumping into the whole dropshipping market.
But, that doesn’t mean readers who are interested in another niche shouldn’t read this article. Dropshipping business model is quite the same for every business. So, sit back and keep reading, there’re plenty of helpful things coming!
So why wait?
Let’s start with the definition, just like old school.
What is a dropshipping?
Dropshipping is a business model where retail stores don’t keep the inventory of the products. Rather they partner with wholesalers/manufacturers and ship the product directly to the customer.
In simple terms, suppose a dropshipping business is offering auto parts online. It will not invest in manufacturing or in keeping up inventories. It will forward the customer order details to the wholesalers/manufacturer and ship directly.
So, to sum up, dropshipping business will mainly focus on the marketing of the platform and generating new leads.
Here’s a very simple diagram that explains the business model of dropshipping:
The profit is generated from the difference between the listed price on the online store and the wholesale price. Of course, the shipping price, gift wrapping, discounts, coupons are included in the actual process. But the dropshipping business model is quite easy to understand compared to others, and if you do it right, there are lots of perks!
Let’s understand some of the advantages and disadvantages involved in dropshipping business, so you can understand this model better.
Advantages of dropshipping business
1. No Big Bucks Needed!
Dropshipping is one of those business models where you need minimal capital investments. You need money for creating an online store, and that’s it. As we discussed, in dropshipping you don’t have to spend money on inventory, storage, and all those high-end costs that most businesses bare. You simply make connections with wholesalers and sell directly.
Less initial investment is one of the biggest advantages of dropshipping business. Maybe that is the reason why it has attracted a vast pool of entrepreneurs.
2. But I’m a Layman!
The second best advantage of dropshipping business is its ease. The business model is extremely easy to understand. People with zero entrepreneurial experience can start a dropshipping business after a few days of research. You just have to invest in creating an eCommerce store, and you’re all set.
Note: One big factor in dropshipping is marketing. You have to promote your online store so people can place orders on your online store.
3. Can I Really Run My Business From Anywhere?
The answer is a big fat YES.
Not all the businesses can be run remotely, but dropshipping has this possibility. Since you don’t have to worry about production or inventory management, you’re a one man army. You can literally run your business from any corner of the world. Of course, you need certain permissions from the government, but the laws differ according to the county. You just have to make sure you communicate well with your customers and suppliers.
So all you need is a laptop and a wifi connection!
4. A Wide Range Of Products
Since you don’t have to store any of the products, you can offer as many products as you want. You just have to connect with more suppliers and wholesalers, and you’re job is done. You can offer a wide range of products, and there are really no limits.
Note: As the product range widens, you have to pay more attention to managing wholesalers & suppliers. You would really have an open eye of inventory status from the suppliers.
5. Easy To Grow
Unlike other businesses, dropshipping is very easy to grow. In traditional businesses, as the business gets double, work also gets double. But, in dropshipping, you just have to increase the number of wholesalers & suppliers. All the inventories and deliveries are managed by wholesalers, so it becomes easier to grow your business than other business models.
Disadvantages of dropshipping business
Even though dropshipping business has an easy-to-implement business model, there are some disadvantages you should know. By disadvantages, we mean some common problems that dropshippers usually face. If you manage to juggle with these issues, you’ll have bright days ahead.
Let’s have a look at some drawbacks of dropshipping business.
1. Competition is Off Limits
Well, it makes a lot of sense why dropshipping has a huge competition. With such an easy business model, there are n number of entrepreneurs trying out dropshipping business. With increasing competition, there are tons of platforms that offer products that you’re thinking about offering.
The results? Lower margin.
To survive in the market, these platforms have lowered their margins. Hence, it becomes so freaking hard for newcomers!
2. Low Margins
As we discussed, the cut-throat competition has led merchants to lower their prices and drop their margins. And we all know, people have the habit of comparing product price before they purchase. To survive in the market, these merchants have touched the bottom to attract more customers. Sure, their offerings and customer services may not be up to the mark, but they do attract new customers!
The best thing to do in this market is to pick a variety of products where you can set different margins. If you’re selling auto parts, offer a wide range of products for a wide range of models. Set low margins for a few products, and try to cover up that margin in another set of products.
If you set up your online store with fewer products, you have a lesser chance to cover up the profit margin gap.
3. Inventory Issues
When you have your own inventory, you know exactly how many units are in stock. Based on your inventory, you can make changes on your online store. But, sadly that’s not the case with dropshipping business because you are making connections with multiple warehouses. You’re definitely saving a lot of cost from not storing inventory, but these warehouses will not update you all the time when they run out of inventories.
As you have no idea of the inventory, you will keep showing the products “Available” on your store. When a customer makes a purchase, either you have to cancel the order or it will take an insanely long time to finish the order. Both of these will create a very bad impression!
Here, the warehouse doesn’t lose anything, but you surely lose a valuable customer.
So, Is Dropshipping Business Still Worth A Try?
Now that we know the exact positives and negatives of dropshipping, is it really worth a shot?
The answer is still YES.
Just like every business, dropshipping has a mix of advantages and disadvantages. With the least investment, you can set up your own business. Sure, there are some serious issues involved, but that’s the nature of every business.
You just have to find solutions!
How To Start An Online Dropshipping Business For Auto Parts?
We will discuss the process of starting a dropshipping business, covering major points like finding suppliers & wholesalers, how to use Shopify for dropshipping, what tools you should use, and much more.
To understand the process, we’re choosing the niche of auto parts, so we can make you understand it better. But the process is quite similar so don’t worry if you’ve picked a different product.
1. Find the right wholesalers
As we learned, a wholesaler is one of the most important elements in the dropshipping model. So, finding the right wholesaler becomes important without saying. To find the right wholesalers, we should know how to eliminate the “fake” ones. We have to spot the difference between actual wholesalers and retail stores posting as wholesalers.
Unfortunately, genuine wholesalers are not pretty good with marketing, so retail stores took this opportunity and jumped right in. Genuine wholesalers are the ones that deal with the manufacturer directly. As they directly purchase from manufacturers, there are fewer people involves taking a share. Hence, you’ll end up getting a better price than those “fake” wholesalers.
Here are some keys to identify genuine wholesalers:
- They don’t usually charge monthly fees.
- They don’t sell to general people.
- They’ll ask for a wholesale account.
- They may ask for minimum order size or amount.
2. Find the right suppliers
As the wholesalers, there are many fake wholesalers involved in this game, you would want to be more careful when it comes to choosing suppliers as well. There are 6 ways you can find the right supplier for your eCommerce dropshipping business.
- By contacting the manufacturers
- Contact Oberlo
- Make a Google search
- Use your competitor
- Go to trade shows
Let’s understand each of these methods in detail.
1. By contacting the manufacturers
If you already know your products, this is one of the best ways to enter the game. You have to contact the manufacturers and ask for all the authorized wholesale suppliers. There’s no question in authenticity because the list came directly from the manufacturers.
Talking about auto parts, you can easily find manufacturers from search engines or directories. All you have to do is make some calls and ask for auto parts suppliers. A cherry on the top is, wholesale suppliers deal with multiple manufacturers. So, you cover multiple products from the same wholesale supplier as well.
2. Use Oberlo
We highly recommend Shopify when it comes to dropshipping and Oberlo is a great fit with Shopify. Oberlo is a platform developed by Shopify where you can find all kinds of products and add directly update them to your Shopify store. Here are some important features from Oberlo:
- Import multiple products directly from suppliers.
- Automates order fulfillment.
- Auto update Inventory & price.
- Customize the products.
3. Make a Google search
There are certain things to keep in mind while finding wholesale suppliers using Google.
The first rule is to Never Give Up! (great advice for life as well!)
The thing is, wholesale suppliers are not very good with SEO & marketing, so finding the real gems are little tough. You may have to dig a little deeper into the 5-6th page of Google result.
The second thing is about using a lot of modifiers in your search. Like,
Car parts wholesale suppliers
Auto parts suppliers
Auto part distributors
Car parts resellers
Auto parts in bulk
Find auto parts warehouses
Automobile parts in bulk
And so on…
You have to use as many modifiers as you can and prepare a list of suppliers. These wholesale suppliers are not very good with internet marketing, so there’s no surprise if you find a good supplier at 67th search result!
The third thing to keep in mind is – Never Fear (again, a great advice for life!)
Don’t get all itchy and doubtful when you see a poorly constructed website. Now we all have the habit of seeing beautiful websites, those old designs make us feel a little uncomfortable. As we talked, these suppliers are not pretty great with technology so there are higher chances of facing grandpa websites in this journey.
4. Use your competitor
This is one rebellious method you can use when you’re facing a hard time spotting a good supplier. Here’s how it works:
Order a small item from a competitor, you think is the best in this niche. When you receive the order, find out the return address using Google. This way, you find and connect with the exact supplier your competitor is using.
5. Go to trade shows
Trade shows are among the platforms where you can directly make contacts with manufacturers and wholesalers. But first, you have to be really sure about the product and there’s an investment of time & money in this activity.
The automotive industry is very well known for great trade shows where manufacturers and innovators gather and make connections. If you’ve really narrowed down to this niche, trade shows & auto expo can be a great help to you!
Supplier directories can be useful but especially in the brainstorming sessions. People who know their products can easily find major suppliers by a little bit of a research. Supplier directories can be useful when you’re not quite sure about the offerings. These directories have millions of products listed, so you can be open to other product possibilities as well.
Supplier directories charge a fee annual or lifetime, depending upon the brand. Now, the supplier directory is not very much necessary, but it can an extra push for some people who can’t really decide what to sell.
Here are some good names when it comes to supplier directories:
- Worldwide Brands
- Wholesale Central
How To Start An Online Dropshipping Business With Shopify?
As we have already recommended, Shopify is one of the leaders when it comes to dropshipping. It has so many applications that are perfect for eCommerce dropshipping business. Here we have a small guide that instructs the steps to follow when you start dealing with Shopify. Follow these 10 steps to set up your online dropshipping store. Please keep in mind that we have taken the example of the auto parts industry.
1. Register with Shopify
First and the logical step is to register yourself with Shopify. Now, Shopify offers 14 days free trial and then you have to pick one of its three plans. After using Shopify for 14 days, you’ll pretty much understand everything, hence you can land on a decision to purchase a particular plan.
One small thing to keep in mind is, your store name becomes very important here. If your domain or business name is already taken, Shopify won’t allow you to sign up.
Quick Tip: Make a list of 5 names that goes best with your business. For example, if you’re specializing in Mercedes Benz parts, you can name your store like…
Or something like that!
2. Buy the domain
The next step is to buy the domain that you have decided. Buying a domain costs around $13/year, so compromising in this area is a no-brainer. Plus, if you’ve landed on a great domain name, there’s a risk of other people buying it.
There’s another reason why you should not delay in buying your domain name – Professionalism. If you don’t buy a domain you may be saving $13, but your store URL will look like this:
That’s a bummer!
3. Choose a theme for your Shopify store
Shopify makes creative and minimal themes for every kind of business out there. There are a bunch of free as well as paid themes available. Paid themes are usually around $160-$180.
Although, you can also choose custom made themes from eCommerce development agencies, like ours. PSDCenter is specialized in BigCommerce, Shopify, 3dcart, and Lightspeed development. Check out the collection of Shopify themes, and other themes from our theme store.
You can also take external help in setting up your online store, as well as adding extra features.
4. Add important pages to your dropshipping store
Shopify doesn’t know what kind of business you’re actually setting, so your Shopify theme may have all the basic features. Although adding and editing pages in Shopify is very easy, so you’ll learn it in the blink of an eye. Here are some very essential pages you must have on your eCommerce dropshipping store.
- An attractive ‘Homepage’
- Informative ‘About Us’ page
- In-depth ‘Product Pages’
- ‘Shipping & Return’ information page
- ‘Contact Us’ page
5. Add products on your online store
This is the part where you start adding products to your online store. Shopify will not ruin your excitement here, as it is very easy to add products to your store. Here, there are a couple of things that you should keep in mind, check out:
- Create title of the product that is search engine friendly. Like; Dual Zenith Carburetor For Mercedes Benz 250. You would want to cover all the major keywords that people are searching for.
- Add an informative and search engine friendly product description. By informative we mean, customers can get all the information that they’re seeking. Search engine friendly we mean, it should cover all the major keywords that people are searching.
- Add high-quality images, period.
- Set up pricing.
6. Set up email
This is a very small change, but it can create a disaster. When you start with Shopify, it pins your signup email as your default email ID. That means if a customer contacts you using ‘Contact Us’ page, the inquiry drops in that particular ID which may not be a good option for many stores.
You can change this setting by the following path:
Online Store > Domains > Manage Domains > Select Your Domain > Email Forwarding
Here, you can set up the email of your choice.
7. Check the store & Go live!
Check the entire store to make a crosscheck. If anything needs editing, go ahead and do it before going live.
If everything fits well, Ta-Da!
You have a brand new store ready to rock.
Dropshipping has widened its arms now. There used to be a time where very few people knew about this concept and found a quick success. But today, competition is fierce. What you need is a niche of your interest and passion. Drop shipping business model is very simple and the problems faced are also quite similar. All it takes is a little bit of courage to start the business and a little bit of patience when you face problems.
Share your views and questions in the comment section below and we will be happy to revert with an answer. Make sure to visit PSDCenter if you need any kind of help in setting up your online store.