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How To Start a Drop Ship Business

Updated on May 27, 2009

Why should you start a drop ship business?

Why would you worry about drop shipping instead of just building an affiliate marketing business?

I have a great answer but you may not like it in the beginning:

Because it's harder to start.

Starting an affiliate website doesn't take much - $10 for a domain name, $5 for host, a Wordpress blog or some other CMS and you are all set.

The problem is, being that easy, everyone does it which opens every affiliate marketing business to huge competition. As a result, 99% of the affiliate marketing web sites don't make even enough to cover the hosting expenses - there are of course other reasons for that as well.

Building a drop ship business on the other hand requires more effort, but has at least the following advantages:

  • Less competition. Because it's harder to start, less people are doing it. There is less competition which makes it easier to make money!
  • Bigger profits. The profit margins in drop shipping are usually bigger than the ones in affiliate marketing.
  • Building a real business. With affiliate marketing you are making money by sending people to someone else's site and making them their customers. In drop shipping you sell stuff from your e-store, with your brand and making them your customers.

Drop shipping just works better, provided that you put enough effort in building your business of course.

What Steps You Need To Take

Enough talking about why you should build a drop ship store. That was the easy part :) Now let's see actually how you can do it.

You need basic knowledge about web, writing, seo and design. If you have none of these, you need either to obtain it or hire someone who has it.

Here are the steps you will need to take:

  • Choose a niche. A business without niche is lost before even it has started. You need a thin niche, but one that has enough paying customers. Do some keyword research, check the niches on Ebay, forums etc.
  • Find suppliers. Finding good suppliers is the key in drop shipping - it's the step that most amateurs fail, because they just choose the easiest route. Here's a good guide on finding wholesale drop ship companies - read it and follow.
  • Build a web store. You can develop drop shipping business entirely using eBay or similar places, but I strongly recommend you to build your own store as well. Not only that you shouldn't depend entirely on third party channels, but your own site is also your own business that can work for you and bring you passive income for years ahead.
  • Promote your drop shipping business. Don't expect that the people will just start coming to your store, even if you have great products and amazing prices. You need web marketing, seo, promotion - just like you would need that when building an affiliate based business.

These are just the main steps. There are many tricky moments and details of course - you can read about them in this guide about drop ship business.

Expanding Further

After you build a successful drop ship store I recommend you thinking to expand further. Start taking some wholesale goods - this is where the bigger money is. Find companies that will do productions especially for you - this can give you branded goods. Think about manufacturing as well - only sky is the limit.

A drop ship store can always remain a drop ship store and be successful as is. But it's the door to the real big business as well - if you want that of course.

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