How to dropship products: A step-by-step guide

Curious about how to dropship products? You’re not alone! Interest in the dropshipping business model has nearly tripled in the past five years, with the search volume for dropshipping suppliers skyrocketing across the United States. Opportunistic business owners and strategic ecommerce entrepreneurs have quickly learned that dropshipping is a great way to earn a profit — but at what price?

Despite its status as a profitable business model, a dropshipping business comes with a unique set of challenges. From minimal control over the supply chain to the mismanagement of customer service concerns, it’s vital to be well-prepared for potential snags in your dropshipping business venture. Fortunately, you’ve come to the right place to learn the ins and outs of how to dropship products profitably!

Learn how to turn your dropshipping business idea into a money-making reality in this step-by-step guide.

• The dropshipping business model enables ecommerce entrepreneurs to launch robust online storefronts without ever purchasing, storing, or tracking inventory. 

• Dropshipping dramatically simplifies the order fulfillment process for online businesses by allocating production, packaging, and delivery to dropshipping suppliers. 

• Discovering how to dropship products profitably will depend on selecting a popular niche market and partnering with a reliable, trustworthy dropshipping supplier.

• Deciding on an appropriate sales channel for your dropshipping business and establishing an attractive storefront will drive customer traffic to your store.

Dropshipping is an order fulfillment alternative in which customer orders are placed through an online store and sent directly to a third-party supplier to be packaged and shipped. In a dropshipping business model, customers pay the retail price the online store owner sets. The store owner pays the supplier’s (cheaper) wholesale price to earn a profit on each customer order. 

Unlike other business models, which often require store owners to invest in inventory and involve multiple suppliers to maintain adequate stock levels, dropshipping demands no inventory or up-front investments. Even better, dropshipping completely alleviates store owners of the entire order fulfillment process, as dropshipping suppliers are responsible for packaging and shipping.

If you’re researching the dropshipping process for your online business, you may also want to consider the print on demand (POD) business model. Like the dropshipping business model, print on demand allows business owners to quickly start their own online store with minimal upfront costs and without holding inventory. Unlike dropshipping, partnering with a POD supplier allows you to create customized products and sell products with your unique branding. Because products are printed on demand, you only pay for products after a customer places their order. Plus, reliable POD providers like Gelato will take care of order fulfillment and delivery.

Dropshipping can be a very profitable business model if you play your cards right. The global dropshipping market size was valued at $225.99 billion in 2022 and is projected to reach $1.25 trillion — yes, trillion! — by 2030. For those who aren’t math savvy, that’s an annual growth rate of nearly 24%! Successful dropshippers are raking in up to $100,000 per year with their online store. 

Why is a dropshipping business so profitable? Well, it’s a low-risk business model with even lower costs. Dropshipping businesses instantly unlock higher profit margins without extravagant expenses like inventory costs. And without a stock of lingering inventory, dropshippers can switch up their product offerings at any given time to gain a competitive advantage over other online stores. 

The ability to inch ahead of competitors is crucial to gain customers in this highly competitive ecommerce landscape. However, achieving that competitive advantage will take a bit of work. Dropshipping businesses must partner with a reliable supplier to access an appropriate supply chain to power their store and guarantee fast shipping and good customer service.

The dropshipping business model allows anyone with an internet connection to start selling online without ever handling inventory or packaging customer orders. But with so much responsibility allocated to dropshipping companies, actual store owners can be confused about what they need to start. That’s where Gelato comes in! We have you covered with how to dropship products in seven simple steps.

Starting a dropshipping business begins with selecting an appropriate dropshipping niche. A niche is a smaller, more specific market segment that belongs to a larger target market. For instance, custom women’s clothing is a niche in the apparel market. Similarly, acrylic prints are a niche within the wall art market that belongs to an even more significant, more general home décor market. 

To choose a niche for your dropshipping business, consider your interests to narrow down a specific market. Then, conduct market research via Google Trends and social media to gauge if there is any consumer demand for your niche. For instance, if you’re interested in gardening and plants, you can search Google for related trending products, like plant-themed phone cases or t-shirts.

Remember, there has to be consumer demand for your desired niche for your business to be profitable. Profitable dropship niches for 2023 include kids and baby apparel and office products like stationery and calendars. Be sure to conduct additional market research into your target audience, including their pain points and interests, to best cater to your dropshipping niche.

It’s no secret that a successful dropshipping business relies on a high-quality supplier. However, there’s a reason why the search volume for ‘dropshipping suppliers’ has more than doubled in the past five years — the market has become increasingly competitive. How can you tell which dropshipping companies will elevate your online business and which will only cause you (and your customers) headaches? 

To select a reliable dropshipping supplier, consider factors like customer service since the dropshipper you choose will be responsible for fulfilling orders and fielding any customer inquiries. Next, review each company’s dropshipping agreement contract to assess their average shipping costs, delivery timeline, and shipment network. Seek global suppliers to fulfill customer purchases worldwide. 

Remember, don’t neglect the power of print on demand as your order fulfillment and delivery method, especially since POD suppliers can create and ship custom products quickly. A POD supplier like Gelato has a robust selection of high-quality products that can be customized with your unique designs at the production facility closest to your customer to accelerate fulfillment.

When you combine the dropshipping business with a POD partner like Gelato, you can leverage the power of local to produce more than 85% of orders in our 130+ production hubs across 32 countries. Because our products are made locally and on demand, we slash transportation distances and carbon emissions on each order. And with our substantial production and delivery network, you never need to worry about running out of inventory!

Once you decide on a dropshipping provider (or a print on demand partner!), you can select products for your online store. Compare your provider’s product catalog to the trending products in your chosen niche to better understand the types of dropshipping products your target audience might prefer. For instance, the baby apparel niche might prefer classic onesies with unique designs.  

To gain a few dropshipping product ideas, take a look at recent best-selling products online. From tote bags and t-shirts to phone cases and photo books, there are endless products to dropship via an online store. With a partner like Gelato, you can even create custom wall art, such as wooden framed posters, to offer your customers one-of-a-kind décor that coordinates with apparel like hoodies.

With your desired products in mind, you can finally create your product designs. Your unique designs will differentiate your dropshipping business from the competition, which is why we recommend partnering with a print on demand provider to customize all your desired products! If you aren’t a skilled designer, consider outsourcing this process to a professional graphic designer. 

Work together with your designer to create high-quality, eye-catching designs that are relevant to your niche. For instance, if your niche revolves around wildlife, create fun designs that feature animal and plant graphics. Remember to consider your product colors when creating your designs to ensure there is proper contrast, and use a complementary color scheme so your designs pop. 

Create mock-ups of your final designs via your Gelato+ subscription or design software like Adobe Illustrator or Canva. Once you’re happy with your mock-ups, order samples from your supplier to gauge the quality of the finished product. If you’ll be branding your dropship products with a custom logo, now would be the time to finalize the design for your custom packaging and labeling.

It’s almost time to sell! But first, you’ll need to decide between ecommerce platforms and ecommerce marketplaces to select a sales channel. An ecommerce platform, like Shopify, allows you to create and customize an online store with a domain name you own. An ecommerce marketplace, like Etsy, allows you to create a storefront on a platform you share with other sellers.

Ecommerce platforms feature expansive levels of customization and pre-designed themes that make creating an attractive online store a breeze. However, platforms also incur steep fees to purchase a custom domain name or theme. Ecommerce marketplaces incur less up-front costs; however, they also feature fewer customization options and force sellers to compete for the shared customer traffic.

Pro Tip: Unsure which channel to sell online? Check out this post about the top platforms!

Now that you’ve settled on a sales channel, you can officially set up your ecommerce business. Create an account on your chosen sales channel and follow the directions to customize your dropshipping store with your store name, logo, and other branding details that reflect your niche. Then, you can configure your payment and shipping options and return and refund policies. 

Next, work on your pricing strategy. Price your products appropriately by comparing the costs of sourcing and designing each item to your desired profit margin. For instance, if it costs $10 to print a custom t-shirt and you want to make $5 on each t-shirt order, you must price your t-shirts at $15. Remember to check what your competitors charge for similar items to maintain a competitive edge. 

With prices decided, add your products to your dropshipping store. Remember to include high-quality product images to capture each item's unique designs or features. Similarly, round out each product listing with a detailed product description of the item’s specifications, like size or material. Optimize your product descriptions with relevant keywords to drive traffic to your store.

Get ready for take-off! Now that products have been added to your dropshipping store, you can finally launch your business. As your first customer orders begin rolling in, remember to provide outstanding customer service to resolve any outstanding issues and encourage ongoing loyalty. You only have one chance to make an excellent first impression, so be sure to follow up on each incoming order!

As you seek ways to grow your ecommerce business, consider offering discounts or freebies to incentivize new customer orders. This would be a great time to use social media marketing to build brand awareness and engage with potential customers. You can allocate a monthly marketing budget to run paid social media ads or even collaborate with relevant influencers in your niche.

Another marketing method to promote your dropshipping business is email marketing. Use your online store and social media platform to grow a dedicated email list. Then, use this list to send out monthly newsletters with upcoming promotions, product updates, or new designs for your best-selling products. Online tools like Mailchimp and Sprout Social can also help ramp up your marketing.

Now is the time to start your online business. Dropshipping is a low-risk, high-reward business model. When done successfully, dropshippers can earn up to $100,000 per year with their online store. However, starting a dropshipping business has challenges, including lower profit margins, limited control over product quality, packaging, and shipping speed, and a highly competitive market.

To set your online store apart from other stores selling the same dropshipping products, partner with a print on demand provider like Gelato. Gelato also enhances the typical dropshipping method to customize your products — and even your packaging — with your unique designs. And with a focus on local production and delivery, Gelato dropships products more sustainably through our expansive global network. 

Create an online business selling custom products without ever holding inventory through Gelato print on demand.