How to Start a Dropshipping Business from Scratch in 2022?
Before you get started, you’ll need a few things to be in order. For example, you will need a business license, tax ID number, and potentially corporate or LLC documentation to prove you are a legitimate company that is truly seeking a business relationship rather than an individual looking to buy stuff for their personal needs at wholesale prices.
You will probably want to start building some credit for your company as soon as possible because this will allow you to get NET 30 payment terms, which means you will be able to pay for merchandise 30 days after the initial order.
Dropshipper minimum order requirement
Until then, you might want to front some money into an account with your dropshipper in the event they have minimum orders. For example, if they require a $300 minimum order, and your average order is only $50, you could put $300 into your account in order to meet their minimum and have products shipped as needed. This is often enough for companies that have a minimum order requirement.
You could also wait until you have $300 worth of orders and submit them all at once, but if you’re just getting started and not getting a lot of orders, this could delay shipments to customers so long that they get tired of waiting and ask for a refund.
The domain name and a Shopify account
You’ll also need a domain name and a Shopify account. Your domain name should be as short as possible, catchy, and memorable. Forget having keywords in your domain. That doesn’t work as well as it used to for SEO purposes, and it will make it harder for your customers to remember your website later.
Instead, try to find something your customers will remember. Think of some of the most interesting brand names you can, and use those as examples.
Here are some examples:
- Nike (their company isn’t named Cool Athletic Shoes)
- Chipotle (not known as Fresh Tex-Mex Food)
- Coca-Cola (not called Sugary Carbonated Beverage)
- Dominos (they aren’t called Hot Pizza Delivered)
Your shop needs a great name, so it’s worth the time to think of a really cool brand name and get a nice logo created for it.
Checklist of things you’ll need before you begin:
- Business license
- Business structure (such as LLC or corporation)
- Tax ID number (you can request an EIN online from the IRS)
- Business checking account (not personal)
- Paypal account (to accept payments)
- Business credit card or debit card (for making payments)
- Business telephone number
- Business email (ideally @yourdomain.com)
- Shopify account
- Domain name
When you’re ready to set up your store, you can check out Shopify’s easy instructions to help you get started:
You’ll find all the instructions you need to set up your shop at that link, and you’ll be happy to find out that it’s incredibly easy to set up and manage your shop! Most people can get a simple store set up in a weekend, and even if you plan on offering several hundred products, it should take you more than a few days to add everything to your store.
For domain registration, NameCheap is a great option. They are affordable and have great customer service. Don’t forget to Google their latest coupon! They have a new one each month and it will save you a little money on every domain you buy.
Problems will arise in dropshipping, but that’s true of any business you can think of. Fortunately, dealing with most of these issues is relatively simple.
One of the most common problems that may arise is when your dropshipping company screws up. Maybe they fail to ship your customer’s order quickly, or they send the wrong item.
When this happens, it’s important to accept responsibility, apologize to the customer, and try to make it right. For example, you might offer a discount on their next order, or include some sort of freebie for the customer. You could also offer to refund the shipping fee or offer free expedited shipping on the replacement product.
Yes, this could cause you to make less profit on the order. It might even cause you to lose money on the deal. But remember, this wasn’t the customer’s fault. Ultimately it is your responsibility because you chose that particular dropshipping company.
Dropshipper pays to fix the issue
You should definitely make sure the dropshipper pays to fix the issue, such as sending a new item to the customer if the wrong item was sent, but you’re probably on your own for any upgrades you give the customer.
Be prepared to switch to a different supplier if the one you choose seems to have problems too often. For this reason, it’s a good idea to find several suppliers before you even open your store in case you need to switch quickly. It’s also a good idea to use multiple suppliers in case one runs out of a particular item so another company can seamlessly pick up the slack.
Inventory management is another potential problem. Many suppliers will use companies such as Ordoro or eCommHub to manage their inventory, allowing you to sync your own inventory with theirs, but not every company uses one of these.
If possible, find companies that do use an inventory management program that can easily help you sync your inventory. This won’t completely eliminate inventory issues, but it will help.
You may have to deal with fraudulent orders from time to time, but if you’re accepting PayPal, they will generally handle any type of fraud for you. If you ship an item and have proof of delivery, you’ll be protected by their Seller Protection Policy if the customer tries to get their money back. They also have a system that checks for fraud when a customer uses a credit card to pay.
If you suspect fraud, just give the customer a call or email them. Be friendly and courteous, and just tell them you’re calling to verify their order and their shipping address to make sure you have the right one.
If you cannot get in touch with the customer within a reasonable period of time, you might consider canceling their order and issuing a refund. If the customer contacts you after their order was canceled, just explain you attempted to contact them to verify their order and that their contact information did not work. Apologize, and tell them they can place their order again.
Always be sure to have tracking information for every package so you can prove it was delivered. You don’t want to give anyone a chance to get their money back on legitimate purchases simply because you can’t prove the item was delivered.