Dropshipping is a business model with a low barrier to entry and a low-risk way to sell products online. Take these 5 necessary steps to initiate your dropshipping website.

As a dropshipping business, your supplier ships to your customer, so there is no need for you to carry inventory, and overhead costs remain low.

Take these nine steps to launch your dropshipping business. Or, begin dropshipping today with this guide to starting from scratch.

How to Start a Dropshipping Business

1. Decide whether dropshipping is your business model of choice

2. Choose a dropshipping niche

3. Research competitors

4. Choose a supplier

5. Choose your products and pricing

Decide Whether Dropshipping is Your Business Model of Choice

Dropshipping is just one model of running an online store. Before you jump in, though, make sure it’s the right business model for your goals.

Dropshipping would work well for someone who is good at marketing and who wants to open a store with a small initial financial commitment. Because you don’t have to carry product, you start with a laptop and an internet connection.

But with that convenience, there are tradeoffs. Dropshippers have less physical contact with the products in their catalog, making it more difficult to guarantee high quality. Other retailers might sell the same merchandise, she explains, making competition brutal.

If you intend to concentrate on marketing and don’t want to sell one particular flagship product, then dropshipping could be what you’re looking for.

2. Choose a Dropshipping Niche

A niche is any segment of a market. You can focus on the niche if you would like to focus on the market with your store’s branding and products.

When you choose a dropshipping niche, you give yourself an audience to aim for. It’s easier to find products to dropship if you have certain customers in mind.

The selection of a niche can be done in a couple of different ways, namely:

• Choose a niche you’re familiar with or passionate about.
• Choose a niche that is in demand.

The second method’s purpose is to identify pockets of customer enthusiasm that you can target. You can check if there is a market for products by doing some keyword research and product research.

3. Research Competitors

When starting a dropshipping business, competitor analysis can be useful. Make sure you research other stores in the same niche.

You can discover possible products and marketing tactics by seeing what your competition, including other dropshippers, are selling. Scrutinize product pages and social media ads to find out what resonates with customers.

Here are tasks to perform competitor research:

• Run a Google search
• Use competitor analysis tools
• Browse social media
• Check marketplaces

Run a Google search

To begin, input keywords related to your niche and see which businesses come up. For instance, if you intend to start a dropshipping business that sells pet supplies, you could type in “pet toys”, “pet food,” or “pet brushes.”

You simply have to look closer to see which businesses repeatedly show up in the search results. These are your competitors, most likely. For that deeper level of insight, consider an SEO tool.

You may see your competition crafting content around long-tail keywords, or longer, more specific phrases your customer is searching. Long-tail keywords are usually a targeted strategy of smaller dropshipping websites.

To put it in these SEO terms, your keyword research identifies the phrase “dog collars” as highly competitive (presumably with big-box online retailers), but “LED dog collars” is not as competitive, while “LED dog collars for small dogs” provides space for your new business.

Use Competitor Analysis Tools

Another way to gain insights into rivals’ strategies is through the use of competitive analysis tools. Discover information through your tracking of traffic sources, visitor numbers, and social media shares.

For example, if you see that one competitor has a major focus on paid ad campaigns, you may want to explore a competitive campaign or spend more on SEO content. If they’re already active on a social platform you haven’t thought of, maybe a channel makes sense.

Browse Social Media

Monitor the social media of your competitors to see how they are interacting with followers. Look for the content that resonates most in likes, comments, and shares.

For instance, if someone in your pet supplies niche is attracting attention with DIY grooming videos, think about making your own content like this also. Also, look for gaps — maybe there is unmet demand for content on pet wellness tips.

Check Marketplaces

Sellers in your niche on places like eBay, Amazon, and Etsy also provide insights.

Check how many offers appear for your products. If things are looking saturated in the market, perhaps you can think of ways to separate your products from the competition, like lowering your prices or delivering a higher-quality customer experience.

Organize all of your competitor research in a spreadsheet that you can sort and search through for reference.

4. Choose a Supplier

A dropshipping supplier finds products to sell and handles orders from customers. When you make a sale, you’ll send the order to your supplier for packaging and shipping to the customer.

Suppliers being your business’s cogs, it is important to choose them wisely.

Here are a few things to consider as you search for a supplier:

• Shipping time: Look up the shipping time for products that are stored in one location and shipped to various destinations. Find suppliers that have domestic fulfillment centers and a partnership with reliable carriers.
• Reliability of Inventory: Look for suppliers that have strong inventory management systems and processes that help minimize the risk of running out of products for sale. Regular out-of-stock occurrences result in canceled orders and irate customers.
• Returns: Know the supplier’s returns and refund policy. Return procedures that are as painless as possible make it easy for you and your customers.
• Performance history: Check out customer reviews and what other retailers have to say. Look for certifications that apply to your products or industry.

Connect a Supplier App

The number of suppliers you use will vary by industry and the products you offer, but you might use one supplier exclusively, or more through a supplier directory app. Through an app, you will be able to access a network of dropshipping suppliers from your store.

For instance, Shopify Collective is a free supplier app to use to locate and sell products from leading brands. Users who meet requirements can add their shops and view products, contact suppliers, and import product listings.

And the DSers app allows Shopify users to dropship from the global marketplace AliExpress.

5. Choose Your Products and Pricing

Your store products are based on what is in stock for your supplier. Just remember rival dropshipping stores might have access to the same products and suppliers as you, so it’s worth focusing on curating a product selection that appeals to your niche.

A carefully selected product catalog also enables cross-selling, wherein visitors are enticed to buy accessories on each product page.

When selecting items from a dropshipping supplier or marketplace, read reviews from other sellers and the supplier’s performance history. When you have a final list, order product samples to evaluate quality and uniformity.

Provide customers with a good experience when purchasing items from suppliers in your area. If you work with suppliers abroad, look for goods that can be sent via couriers who can deliver quickly, such as ePacket shipping.

Pricing Your Dropshipping Items

Whether it’s electronics, apparel, or toys, you won’t be able to run a profitable dropshipping business without a pricing strategy that allows you to earn money on every sale.

Regardless of the price point, establish a profit margin for each product by doing the math on your costs. That includes the amount we pay the supplier plus the other overhead. Against the selling price of similar products on the market, and make sure your store is competitive.

Begin Your Dropshipping Business in 2025

Starting a dropshipping business has never been easier than with Shopify

Begin your free trial today to create a store and connect a best-selling dropshipping app — or sell products from established developer brands.