486: Easy 5 Step Guide To Starting A Dropshipping Business (The Legitimate Way) – Family First Friday

What's up everyone? You are listening to the MyWifeCutor.com podcast, where I teach you how to make money online by exploring different tools, strategies, and understand how to leverage human psychology to grow your sales. Welcome to a special segment of the show, called Family First Fridays, where I'm going solo to give you my thoughts on how to make money without sacrificing your lifestyle. Now, if you haven't picked up my book, the Family First Entrepreneur yet, head on over to MyWifeCutor.com slash book, fill out the form, and get over $690 in free bonuses. Now I got to admit, it's been a pretty rough week for me. Now when you run your online store on a heavily customized shopping cart that's no longer being supported by anyone, you have to manage the upgrades yourself and it's always a major pain in the butt. Not only that, but the upgrade that I spent a lot of work doing on this week literally provides no lift to revenue or anything whatsoever. Now, the only saving grace is that my shopping cart is 100% free and I only have to perform major surgery on the code about every five years or so. Now, you guys probably noticed that there was no Family First Friday episode last week? Well, it's because I spent a full 16 hours upgrading bumblebee linens.com to the latest and greatest PHP version and it was a major pain. And then when the site went live this week halfway through, MyWife found a major bug, which took me about three hours to fix, which I then had to apply while the site was hot and customers ordering at the same time. Anyway, everything's all good now and hopefully I won't have to do this again for another five years. But I'm not here to complain. In this episode, I'm going to show you guys the right way to start a dropshipping business step-by-step that can eventually lead to a long-term business. And to be clear, I'm not going to show you how to start the scammy kind of dropshipping businesses that you see all over YouTube and Facebook. You'll learn how to create a legit dropshipping business that you can later transition to a private label online store as your business matures. Now, if you've been following me for any like the time, you probably know that I don't like dropshipping as a long-term business model. Not only are the margins low at between 10 and 30 percent, but because you're selling other people's products, there's going to be a lot of other sellers selling the exact same product as you, which always leads to price erosion. However, I do understand that many of you don't have a lot of money to start an e-commerce business, and dropshipping just happens to be one of the cheapest ways to get started selling online on a major budget. But before we begin, I just want to quickly highlight the types of dropshipping businesses that you should avoid at all costs. Now, if you ever see someone advertising a dropshipping business that involves dropshipping from alley express or dropshipping directly from China, just run away as far as you can. Shipping is going to be long, and the quality control will not be that great, which will lead to all sorts of customer service problems later on. And if you ever see someone advertising dropshipping from Amazon to eBay or from any marketplace to a different marketplace, do not do it. Almost every marketplace, including Amazon and eBay, only allowed dropshipping from real wholesale distributors. So with that in mind, let's get started. Now, just in case you are brand new to dropshipping, dropshipping is an e-commerce business model where an online store does not carry inventory for the products that it sells. And when an order comes in, the online store purchases the products from the wholesale supplier who then ships the order directly to the end customer. There are no upfront costs to start, and you don't ever have to touch any inventory. Now, when it comes to figuring out what to sell online, I would just stick to what you know and love. For example, if you love fishing, then I'd consider dropshipping fishing supplies. If you run a beauty salon, then dropship beauty products. Now, in terms of choosing the actual products to sell in your store, your product selection will be limited by the suppliers that you can find who are willing to dropship on your behalf. After all, you can't find any random product online and have a company dropship before you. And in general, you'll be constrained by the product portfolio of the companies who are willing to dropship at all. Also, because dropshipping carries lower margins compared to other e-commerce business models, you probably want to sell goods that carry a higher price tag. Think barbecue grills and fire pits as opposed to cheap trinkets or gadgets. So, basically, you want your average order value to be at least 50 bucks minimum and preferably a hundred bucks or more. This is the only way that you can make significant money with dropshipping. Meanwhile, here are some other product guidelines that you should try to follow. Choosing niche with a lot of related products. Now, the key to running a successful online business is to cross sell your goods. If a customer buys a barbecue grill, sell them cooking utensils and an outdoor thermometer. Repay business and upsells is going to be a key factor to your success. You also want to sell products that are timeless. Avoid anything that goes obsolete within a short period of time. After all, the more often a product turns over, the more work it will be for you to update your product listings and maintain your website. This is yet another reason to avoid electronic related products like iPhone cases because they change so often. Also, do you know where your target market hangs out? If you can sell a product that has a dedicated blog or Facebook group, it's much easier to find and market to your customers. And can you easily create content for your products? For a dropship store, search engine optimization and social media is crucial for generating free traffic. And in general, the more content you can produce, the more visitors you will attract. Now, once you've figured out a general niche, the hardest part about getting started with dropshipping is finding a supplier willing to dropship on your behalf. Now, there are a ton of directories that can help you find a dropship supplier, such as worldwide brands or sale who. But in general, you want to only use a dropshipping directory as a last resort. And why is that? Well, it's because if the dropshipping company isn't a directory, then chances are there are a ton of other sellers selling similar products already. And the best dropship relationships are established in person. So before looking for a dropship supplier, you should ideally have a great looking website up and running with a mock portfolio of products. Because every single legit supplier will try to assess whether you are the real deal and whether you can actually move product. After all, it's actually a burden for a supplier to take on a new dropshipping client. And in general, it's not worth their time or the setup costs to take you on as a dropship client unless you can actually make sales. Now, in the show notes below, I particularly a tutorial that you can watch to put up a great looking WooCommerce store for only three bucks, along with a free template that I designed myself, and bare minimum, register a domain and put up a website because you're going to get asked about your experience and how you plan on selling products. Now once you have a website ready to go, the easiest way to find a legit dropship supplier is to simply call the manufacturer for a product you want to sell and ask for a list of wholesale distributors. And then once you have this list, you can contact the distributor directly and ask them if they're willing to dropship for you. Now what's nice about most dropship suppliers is that they carry a wide variety of products from a number of different manufacturers. And as a result, if you can land a big distributor, you'll almost always gain instant access to a large catalog of items to carry in your shop. The establishing a partnership with the distributor can be hit or miss and you need to be prepared. Some distributors will only dropship for you if you have a brick and mortar store. So just be prepared and warned. Now if a supplier is not willing to dropship for you initially, you may have to prove yourself first by buying a couple of units wholesale to establish a track record sales. And then once you've made a bunch of sales, you can then ask if they'd be willing to dropship for you. If you aren't having a luck reaching out to wholesale distributors, the next best way to find a dropship supplier is by attending a trade show. In fact, this is probably the best way to do it, but it requires a little legwork. So first off, go to wholesalecentral.com where you'll find a schedule of every single trade show in the US and some shows overseas as well. There's literally a trade show for practicing any product that you can think of. And by attending a trade show and meeting the brand's face-to-face, you are far more likely to land a dropshipping supplier in person than through email or zoom. Now most trade shows, at least in the United States, are 100% free to attend as long as you have a business license. As a result, you literally have nothing to lose for attending. Most major cities have wholesale trade shows many times per year in a variety of niches. Now once you find a potential supplier, you should evaluate them thoroughly. After all, every successful dropshipping operation is a partnership between you and your distributor and trust is essential. As a result, before you rely on any dropshipping supplier, you should always place a test order to see how the order is handled. And specifically, you should look for how fast the order ships. Shipping time makes it extremely important for an online store, and it's essential that orders are shipped within one to two business days. You also want to look at how the order is packed. Is the product shoved in a crappy box with packing peanuts? Is the box unmarked without the supplier's business name? Will the product arrive safely and undamaged? And then finally, you want to evaluate the quality of their customer service. Do they respond in a timely manner? Do they provide tracking information and an invoice? And do they give refunds for defective merchandise? You also want to ask questions like, what are your pricing terms? And are there quantity discounts? What is your dropship fee because most dropshippers charge a per order fee? How quickly do you ship? What is your return policy? Even though dropshippers ship on your behalf, all returns are actually going to be sent back to you, and as a result, you need to understand the return policy to get your money back. Finally, you want to ask if they offer EDI. EDI stands for electronic data interchange and is an automated way for a dropship supplier to transmit their inventory stock to your website in real time. Basically, EDI keeps your store and your supplier in sync, which makes customer support a lot easier. Now, once you have your suppliers in place, it's time to start selling. And because dropshipping margins are so low, you will not be able to afford to advertise online. And as a result, you have to build traffic to your website the old fashioned way with legwork. And in general, you have two main options to drive traffic to your store, social media, and search engine optimization. Now, social media is probably the best and cheapest way to build traffic to a dropshipping store without requiring a lot of technical knowledge. And the right social media platform for your business will depend on the products that you sell. Any product with a high visual component tends to work well on Instagram. For example, if you're in the fashion or wedding industry, Instagram is the most. Home in interior design products work extremely well on Pinterest. And similar to Instagram, products with a high visual component are perfect for Pinterest. Products that target an older demographic tend to work well on Facebook. And then TikTok allows your brand to have tremendous reach, even for brand new accounts. And what's great about TikTok is that you don't need a lot of subscribers to drive customers to your store and the traffic is free. Finally, business to business brands tend to do well on Twitter. And most brands have a Twitter presence for customer service and loyalty. Now, the secret to succeeding on social media is to research where your target audience hangs out and then build a brand on that platform, but it's going to be a grind. My friends who are successful on Instagram and Facebook post at least one to two times per day and you got to be consistent. You must actively engage with your audience. And McFarron, who started the $100 million iLash company, Glamnetic, got her first sales by DMing her followers on Instagram. By sitting in Angela, who sells jewelry over to zerojewelry.com, post six to seven times per day on Instagram and once per day on TikTok. Now, this is a decent amount of work, but it is effective. And if you don't have the money or the margins to spend on advertising, this is what you got to do. In addition to social media, you can also build traffic through search engine optimization. And by targeting keywords that people are actively searching for, you can attract organic Google traffic for your products. But in order to know what people are searching for, you absolutely need to get a keyword tool like Uber Suggest or Atrefs. These tools will not only tell you what people are searching for, but how hard it is to rank for that keyword as well. And once you know which keywords to target, you must publish a series of blog posts to rank in search. No matter which marketing platform you choose, make sure you focus all of your efforts on one traffic source before moving on to the next. And as you generate sales and leads for your store, make sure you collect both emails and SMS phone numbers. Email marketing and SMS marketing allow you to bring customers back to your online store repeatedly until they are ready to buy. By attracting new customers through social media and retaining your existing customers through email and SMS, you can easily grow a sustainable e-commerce business. And then as you start attracting sales, you'll want to look for patterns on which products sell the best in your store and then private label those exact same products under your own brand. And by private labeling your winners, you can make a 66% margin or more instead of the Paltry 10-30% margin drop shipping has to create a seven-figure business and beyond. Now that you understand how to create a drop shipping business from scratch, you guys should probably listen to my other Family First Friday episode on exactly what I would do if I were to start an e-commerce business from complete scratch today.