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Dropshipping Business on a Budget – A Beginner Guide

7 minutes read
Dropshipping Business on a Budget
Ana Gelevska

Looking to get into dropshipping? Here is a beginner’s guide on how to start a dropshipping business on a budget.

Dropshipping is the perfect business opportunity for beginners. Dropshippers can unlock the potential and earn 50% more than those having onsite inventory.

The massive increase in online shopping has resulted in an increase in dropshipping business. It offers benefits no other business offers. Not owning the products or managing logistics means any of us can start it today. It’s even possible to start dropshipping for free, if you are just getting started and still looking for the right products or looking to test some sellers.

If you have a small budget and want to jump into the world of dropshipping, read below for a simple step-by-step guide on how to start a dropshipping business on a budget.

So, What is Dropshipping?

Dropshipping allows us to sell products without having to keep them in stock. Dropshippers play the role of a third party between the supplier and the buyer. When we receive an order online, we send its details to the supplier. The supplier then prepares the order and delivers it to the customer.

How does dropshipping really work?

You may be wondering, how do drop shippers make money? You are at the right place: this guide will help you learn how to start dropshipping with a smaller budget.

Dropshippers charge the customers a retail price, but they pay the wholesale price to the supplier and keep the rest as profit. Dropshippers don’t need to lease warehouse space or keep stock. Given below are the core principles of dropshipping:

  • Finding a niche and the product
  • Selecting the perfect supplier
  • Choosing a reliable platform
  • Setting up the e-commerce store
  • Marketing
  • Managing orders and customer services

The good news is that anyone can start dropshipping if you are starting on a tight budget, but it requires hard work and dedication.

So how to get started with dropshipping if you’re on a budget?

Market Research and Niche Selection

We must figure out a niche that suits us. We can then look for a product that we want to sell. We can make perfect product and price choices when we understand the market dynamics.

Learning how to start a dropshipping business on a budget begins with niche selection. The key is to find a niche with high demand and low competition. Our target audience and our product type depend upon the niche we choose.

Market research enables dropshippers to choose a niche with a loyal customer base. We can build customer loyalty by selling them a high-quality product. Given below are the product research methods you can use for free.

Market Research and Niche Selection

1. Utilize Market Research Tools

We must make use of the free digital tools around us to conduct market research. Other successful dropshippers often highlight their best-selling products. Use tools like Google Trends to locate those “winning products.”

Dropshipping on a budget means using free research tools to find a niche. Tools like the Koala Apps, Amazon Best Seller List and Keyword Planner help us with niche validity. The keyword search volume shows how many times a product is searched in a month.

Research tools we can use for free are:

  • AutoDS Winning Products Hub
  • Google Trends
  • Keyword Planner
  • AliExpress Dropshipping Center
  • Google Lens
  • Amazon Best Seller
  • Social Media

2. Know and Understand the Target Audience

We also need to conduct target audience research. We need to understand their needs, preferences, and behaviors. Social media is the most effective platform for target audience research.

We can choose the perfect product by understanding the target audience. It also means we do not make the same mistakes other dropshippers are making. Business owners can conduct audience research using free online tools.

3. Competitive Market Research

30% of all online stores use dropshipping. We must also know who our competitors are. Here is how to conduct competitive market research:

  • Use Google Search Engine: Simply use the keyword related to our product on Google search engine. It will give us a list of the top competitors selling the same product. We can prepare a list of the top 5 and analyze their strategies.
  • Social Media Browsing: Top dropshippers use Facebook ads to communicate with their audience. Following their pages allows us to analyze their posts regularly. We can seek gaps in their campaigns to build our own social media marketing strategy.
  • Tracking Competitor’s Online Activity: Similarweb and Alexa can provide useful competitor information. They help us locate their social media profiles, top traffic sources, and number of visitors.

Selecting Reliable Dropshipping Suppliers

The next step in learning how to start a dropshipping business on a budget is choosing the supplier. Suppliers are the most important part of a dropshipping business. Without them, there won’t be any products and no business.

Selecting Reliable Dropshipping Suppliers  

Suppliers are our business partners. They ensure the stocking, packaging, and delivery of the products. The success of your dropshipping business is in their hands. We must consider these factors while choosing our dropshipping suppliers:

  •  No Compromise on Product Quality

Dropshipping on a budget means you can select suppliers using free online tools. However, drop shippers need research and tests before selecting. We must choose a supplier with the best product quality.

Quality products bring customer satisfaction and loyalty. We can have sample orders from multiple suppliers to compare their product quality. A top-notch product means no returns.

  •  Best Packaging, Shipping & Payment Policies

We need to make sure our customers are getting their products in top condition. Our supplier needs to provide the best packing and delivery services. Choose a supplier that ensures product safety while delivering in quick time.

Dropshippers have the same payment methods and return policies. So, choose a supplier with reliable online payments and returns policies. We can increase customer satisfaction with an efficient payment return policy.

  • Reliable Customer Service

The customer is always right. But we are not the only ones in control of customer service. Our supplier’s customer service policy is important.

Choose a supplier that caters to the customer’s needs, complaints, and demands. We should respond to customer’s feedback promptly. Our selected supplier should do the same. We can retain customers by having a supplier with excellent customer service.

  •  Legality, Reputation and Reviews

Dropshippers must consider the legal status of suppliers. Suppliers must have legal licenses and related documents. Beware of scammers and go through the necessary legal protocols.

Positive online reviews are a testament to being a reliable supplier. We can go through supplier’s online reviews to get an insight into customer experience. Dropshippers must choose suppliers that have a high frequency of positive reviews and client regularity.

  • Platforms for Finding Reputable Suppliers

Each product niche has its own suppliers that we can find through market research. There are certain common platforms that help us find the best suppliers. Given below is a list:

  1. Alibaba
  2. Aliexpress
  3. Amazon
  4. Made-in-China
  5. Global Sources
  6. JimTrade

Setting Up Your E-Commerce Store

Dropshippers can use online selling platforms to run their dropshipping business. However, establishing our own e-commerce store gives us control over all aspects of our business.

The website is our business home; it is where all the operations are carried out. All the products, payment processes, and anything else we offer are present on our website. The e-commerce store is what our customers see.

Setting up an e-commerce store requires dropshippers to have web development and graphic design skills. We can learn those skills for free using online tools, tutorials, and related material. Here is a guide on building an e-commerce website using budget-friendly options:

Choose A Domain

When dropshipping, we can establish an e-commerce store for free. There are several platforms available that allow users to buy domains for free. Budget-friendly options include .store or .shop options that cost no more than $1 per year.

Choose A Website Builder

Beginner dropshippers usually have zero or very little experience in coding and web development. Hence, a website developer or content management system is the best option. We can choose either one of the two depending on our website needs:

Website Builder: It is used for creating an efficient online store in a quick time with ease. A website builder provides us with AI features and has an easy-to-use e-commerce toolkit.

Shopify: This platform is better for dropshipping businesses that are looking to scale in the future. It offers a large plugin collection, allowing us to add a number of great features to the website, such as performance analytics, cost and profit trackers, and inventory managers.

Tips to Optimize E-commerce Store’s Design and Functionality

  • Mobile-Responsive Website Design
  • Simple and creative design keeping in view user experience
  • Focus on creating a good first impression by designing a flawlessly functional website
  • Reduce the loading time and increase website speed
  • Optimize the checkout page to increase user satisfaction

Product Selection

One of the biggest challenges faced during dropshipping is choosing the right product. Even after niche selection, we find it difficult to nail that one product we should sell. Product selection is more than just looking at trendy selling products.

We need a profitable and in-demand product with preferably low market competition. Choosing the right product to sell is a combination of research and personal choices. Here is a look at how to select products for dropshipping.

dropshipping product selection

Personal Preference: Hobbies, Interests and Passion

Get into the dropshipping business with a product that you are interested in. We will enjoy selling products we truly care about. Make a list of products you are passionate about.

Just because we like a product does not mean others will, too. But it is important to find out whether any of your products have the selling potential. If not, we can carry out further market research.

Find Out Current Trends

Figure out what is trending in the dropshipping domain. Social media platforms like Facebook and TikTok are a perfect way to gauge trendy products. Google Trends, Amazon Best Sellers, and Aliexpress are the platforms to seek what customers want.

Solve A Consumer Problem

If our products solve a pain point, it is likely to generate profit and repeat business. We can research the market to identify what frustrates a customer and makes their experience miserable. Using customer’s pain points, we can select a product that solves their problem.

Market Research Using Keywords

Keyword volume is highly important. It tells us how many times a word has been searched in a month. It can provide us with valuable information regarding the top product searches.

Marketing on a Shoestring Budget

Having products in the e-commerce store is not enough. Just like any other business owner, we have to market our products. Dropshipping with a budget, means we have a significantly lower marketing budget as we need to consider where other costs are going to.

There are numerous marketing strategies beginner dropshippers can employ to get significant results. Let’s take a look at the most effective ones:

Content Marketing

Dropshippers need valuable, relevant, and consistent content to attract an audience. Instead of describing the product, we can provide information that the customer is looking for. The goals of content marketing can vary from brand awareness, website traffic, audience engagement, etc.

We first need to identify the target audience for each content we are writing. Then, we can develop effective content topics by researching what your potential customers are currently searching for. Keeping consistent and tracking progress will ensure results in the long term.

Social Media Marketing

Learning how to start a dropshipping business on a budget requires effective social media marketing. We must first figure out the most effective social media platform. For beginners, it’s best to start with no more than 2-to 3 platforms.

We can create short TikTok content, Instagram reels, or other content depending on our products. Moreover, dropshippers can gather user-generated content like customer feedback and online reviews to display. Lastly, brand ambassadors and influencers partnership is another effective social media marketing strategy.

Email Marketing

The simplest form of marketing is done through email. As we launch a new product or offer, we can send an email to the customers. It’s a cost-effective way of communicating with customers effectively.

Managing Orders and Customer Service

We need to learn how to manage online orders. Our job as dropshippers is to take orders and give them to the supplier. Given below are the best order processing practices:

  1. Check Shipping Details
  2. Process the order immediately
  3. Establish order fulfillment settings
  4. Send customer email notifications
  5. Communicate the order to the supplier
  6. Track traffic on your website
  7. Improve the marketing strategy regularly

Effective Customer Service

The second aspect of managing orders is customer service. The success of our dropshipping business depends on it. Given below are the best customer service practices for dropshipping on a budget:

  1. Ensure clear communication and transparency
  2. Respond promptly to customer issues or inquiries
  3. Fulfill orders, ensuring seamless efficiency
  4. Empathetic approach toward returns
  5. Personalize user experience
  6. Build a strong online presence

Scaling Your Dropshipping Business on a budget

As beginners, we often do not plan for the future. Dropshipping can be a massive success in a matter of weeks. When it comes to scaling the business, we should keep a few things in mind:

More Branding

Once the business starts to make a considerable profit, we can invest more in branding. Tell the customers who we are and what makes us unique.

Expanding Product Lines

We should invest the profit into expanding the business. Increase the suppliers or platforms to sell the products. Moreover, product lines can also be increased.

Invest in Customer Service

Investing in customer support agents developing a user-friendly mobile application can enhance user satisfaction.

Common Challenges with dropshipping and How to Overcome Them

Common Challenges with dropshipping and How to Overcome Them

Although dropshipping is easy for beginners, it also poses certain challenges. The key is not only to overcome those challenges but to turn them into opportunities. Given below are the most common dropshipping challenges and how to overcome them:

Difficult to Stand Out

There are a plethora of competitors selling the same product. It can be a challenge to stand out and create a brand in the dropshipping business. A custom website, effective marketing, and prompt customer care help us stand out among the competition.

Finding Trustworthy Suppliers

Suppliers are the most important part of our business. Selecting a reliable supplier is a massive challenge. However, market research using digital tools can help us select good suppliers. While selecting a supplier, consider their business policies, product quality, variety, and customer reviews.

Long Shipping Time and Order Delays

Another challenge is to ensure customers get their orders on time. To reduce shipping time, we can choose suppliers with domestic warehouses. Another way to stop order delays is to have clear communication with the customers.

Sudden Fluctuation in Prices

Suppliers can change prices unexpectedly, affecting your sales and profit. To overcome this challenge, we can use an automated price monitoring tool. We can adjust our pricing to keep a solid profit margin while remaining competitive.

Conclusion

We have learned how to start a budget dropshipping business; let’s recap! Dropshippers are third-party business owners; they do not own the products. When orders come in, they use their suppliers to prepare and deliver them.

The low cost, minimal risk, and no physical presence are the key advantages of dropshipping. There are challenges to having a successful dropshipping business. Choosing the perfect niche and product, having a reliable supplier, and standing out amongst the competitors are the key challenges.

Start today! Dropshipping with a small budget is easy, effective, and reliable. If you are still unsure about it, here is a video that outlines all its key aspects.

 

 

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Ana Gelevska
Ana Gelevska
Ana is a creative and customer-oriented freelance writer with over 5 years of experience working with eCommerce global clients. Ana enjoys breaking down the latest eCommerce trends and diving into the needs of today’s merchants.

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