Are you a student looking for a side hustle, a stay-at-home parent looking to generate more income to help with the home expenses, an entrepreneur who wants to start a low-risk business or a freelancer who needs an extra income on the side? As long as you have access to the internet and free working hours, dropshipping is the best choice for you.
This article gives you an overview of what the drop shipping business is all about, how profitable it is, and a guide on how to launch it.
Key Insights
- Drop shipping is a low-risk business model suitable for anyone with internet access and free time.
- Success in drop shipping depends on choosing the right niche, sourcing quality products, and using effective marketing strategies.
- Establishing a strong brand identity is essential for standing out in the competitive drop shipping market.
- Registering your business and optimizing your online store for SEO are crucial for building credibility and attracting customers.
What is Drop Shipping?
Drop shipping refers to a type of entrepreneurship that allows you to set up an online store and make sales without going through the hassle of delivery and store inventory. All you need to do is to play the middleman between the supplier and the customer.
In a drop shipping business, there are 3 key players:
- The supplier: This is the owner of the product that is being purchased. When an order comes in from the drop shipper, the supplier processes it and delivers it directly to the customer.
- Drop shipper: This is where you come in. A drop shipper is the owner of the online store, he/she takes the order from the customer and delivers it to the supplier.
- Customer: The customer is at the beginning of the entire transaction. The customer sees a product in the drop shipper’s online store, takes an interest in it and then makes a purchase.
How Profitable is Drop Shipping?
As an individual leaping into the online business world, drop shipping is a fantastic start. This is how you can make money from drop shipping;
Let’s say the wholesale price of a product is ₦20,000( the price the supplier is selling the product), the drop shipper can sell the product for ₦25,000, the drop shipper gives the supplier ₦20,000 and ₦5,000 is his profit. Now imagine if you sell 10 of this particular product, you get ₦50,000, if you sell 20 of this specific product, you get to keep ₦100,000.
According to Oberlo, the global drop shipping market is valued at $351.8 billion as of 2024, which is a 23.6% increase from the previous years. The above statistics have caused an increase in online stores, making the market a hot ground.
How to Start a Drop Shipping Business.
1. Choose a drop shipping business niche
Since many drop shipping shops sell the same products at different prices and different brand names, standing out as a brand is crucial.
One way to stand out is to choose your drop shipping business niche, this means choosing the product you want to sell and the people you want to sell to. It is advisable to select a product you are familiar with, a product you have used, to avoid running into any difficulty when marketing the product.
Another tip is to pick a product that is in high demand for a specific audience demographic, for example, skincare and cosmetic products are currently in high demand by the Gen Z population because of their need to have glowing skin.
2. Find a drop shipping supplier
As cliche as this might sound, your drop shipping supplier can make or break your drop shipping business. This is because they handle up to 60% of the buying process. Hence your supplier must have a good reputation.
A good reputation can be how effective their customer service channel is, the quality of their products when compared to other suppliers, and how long it takes for an order to get processed. So look out for reviews, getting all these facts checked will make the process easy for you and your customer. In a situation where the supplier turns out to be fraudulent, your brand will get affected and you wouldn’t want that.
Also, if along the line you notice your supplier is no longer meeting demands, you can always find a new one. Here’s a list of dropshipping suppliers in Nigeria- Jumia Nigeria, Alibaba, AliExpress, Konga and many others.
3. Build your brand identity
The next step is to craft your brand identity. Brand identity refers to how you want your drop shipping business to be seen. It can be likened to dressing it up in the most appealing attire so it will be entrenched in the hearts of your customers and enable you to stand out in the saturated market.
You can build a memorable brand identity with the following steps;
- Find your unique selling point. A unique selling point refers to the value you are offering that makes you different from every drop shipping business out there. It could be a fast reply to customer orders, a user-friendly website, affordable prices etc.
- Choose a memorable business name. A name that is easy to spell and easy to remember.
- Design a logo with a nice colour combination. Your logo should easily give out what your drop shipping business is about. Your business name should also be on your logo, written in a clear font.
4. Set up your E-commerce store
The next step after building your brand identity is to set up your E-commerce store. An E-commerce store is an online store that allows you to sell products or services over the Internet to customers. Just like a physical store, an E-commerce store is where customers can find your available products and make a purchase.
To create an e-commerce store finding an e-commerce platform that will aid you in creating your website is important. An E-commerce platform is a platform that contains software for building and running your online store. A great example is Shopify. Shopify is a popular E-commerce platform that is self-hosted. From customisable templates, an AI product description generator, an easy-to-use mobile app and a free trial, Shopify comes highly recommended.
Other platforms you can use to sell your products as a drop shipper include Jumia and Konga.
5. Register your business as a legal entity
To start a drop shipping business in Nigeria, you are required to register your business with the Corporate Affairs Commission( CAC), the body in charge of registering and regulating businesses in Nigeria. Registering your business will help boost your credibility, this is because people tend to trust registered brands and see them as legit.
READ – How to register your business with the CAC
6. Optimise your store
You need to make your store visible to enable people searching for the products you sell to easily find you.
Here’s a guide on how to get your store optimised;
- Make sure your website is user-friendly and easy to navigate. It should be responsive to mobile devices and visually appealing.
- Optimise your website for SEO by researching the words people use on search engines to search for the product you sell. You can also make use of AnswerThePublic searches to discover questions people are asking about the product.
- Your product descriptions should be enticing, highlighting the benefits alongside the product’s content.
- Make use of high-quality product images.
7. Craft a marketing strategy
Every business both online and offline needs a marketing strategy. The term “strategy” might look grand but it’s not, the whole idea behind it is developing a marketing plan that will drive traffic to your website and in turn generate sales.
You can do this by showcasing your products on the social media platforms where your target audience is most active. Find the right platform your target audience is on and then carry out research on the type of content they consume and how they consume it. Get this and then tailor your content following the data you have gathered.
Showcasing your product can be done in different formats, through graphic images, videos, polls, and reels, to entertain, educate and engage your audience.
8. Analysis and optimisation
For every marketing strategy you implement, always monitor the feedback. Did you make sales? Did you get any website views? How did your audience interact with the content?
Use the insights you have gotten to improve your strategy to enable you to keep up and be ahead of your competitors.
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Conclusion
Drop shipping is an accessible and low-risk way to venture into e-commerce, offering flexibility and scalability without the need for significant upfront investment. By choosing a profitable niche, partnering with reliable suppliers, and building a strong brand identity, you can create a successful online business. Remember, continuous optimization and strategic marketing are key to staying competitive in the ever-evolving digital marketplace.
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