A woman with a gray cat on her lap sits at a desk and looks at a laptop.
Dropshipping involves storing and shipping your products through a third-party supplier, so you can sell without having to manage inventory. — Getty Images/RgStudio

In a dropshipping business, you fulfill orders by purchasing products from a third party and having them ship the items to your customers. If you’re interested in getting started, here are five things you should know about dropshipping.

It’s very inexpensive to get started

One of the advantages of dropshipping is that it doesn’t take much money to get started. These cost savings exist because you don’t have to purchase products, store inventory or pay operational costs.

However, there will be some startup costs. For instance, you’ll need a self-hosted website or dropshipping platform to sell your products. If you run your own store, you’ll have to pay for hosting as well as any extras, like paid themes or website design.

If you choose to use a dropshipping platform, you’ll need to factor in the monthly or annual fee to use the service. And once you start making sales, you’ll pay listing fees and sales fees.

You’ll also need to invest in marketing. Many people market their dropshipping business through blogging, social media and SEO. But unless you’re paying for advertising, these expenses will still be relatively small.

[Read more: 9 Low-Cost Business Ideas You Can Start Tomorrow]

Dropshipping works best with niche products

When you’re starting a business, it can be tempting to try to be everywhere at once. But your store has the greatest chance of success if you choose a niche.

The key is to choose a profitable niche with a committed group of buyers. A profitable niche is a product with a lot of different styles or variations, and you want something unique enough that customers are willing to wait for it.

A good example of this would be jewelry or furniture. Both of these items have a lot of different styles and they can be customized. An unprofitable niche would be products that are too personalized or products that have a high return rate.

It’s also a good idea to look for a niche that provides opportunities for multiple sales. Home gym equipment is a good example of this.

You can run your dropshipping business on a self-hosted website but in the beginning, it may be easier to use a dropshipping platform.

Choose your suppliers carefully

Once you’ve chosen a niche and know what products you’ll offer, you need to pick your supplier. You can either use a wholesale supplier or work with a dropshipping service.

The right supplier will make it easier for you to sell your products and run your business more smoothly. Here are the characteristics you want in a supplier:

  • Offers high-quality products and a wide variety of inventory.
  • Provides high-resolution product photos.
  • Will accept new orders via email—this will save you a lot of time.
  • Centrally located and can ship products quickly.
  • Has an organized and efficient fulfillment process.

A good way to find a supplier is to place a few small orders from your competitors. Once you receive your order, you can Google the return address and find out who the supplier is.

Research dropshipping platforms

You can run your dropshipping business on a self-hosted website but in the beginning, it may be easier to use a dropshipping platform. It’s easy to quickly create your account, add products and begin making sales.

If you use a platform like Shopify or WooCommerce, it will already have a substantial amount of traffic. This means you won’t have to work as hard to find those initial customers.

Research the different options that are available and look for a platform that is compatible with your current supplier. You’ll also want a platform that is fully optimized for search engines.

[Read more: How E-Commerce Marketplaces Help Brands Get Discovered]

Keep an eye on your competition

The dropshipping business is always changing and evolving. New trends may emerge within your niche that require you to pivot to continue making sales. That’s why you want to keep an eye on what your competitors are doing. Follow your competitors on social media and watch what they’re doing on their websites.

Pay attention to their ads and what products seem to get the most traction, and take note of the types of content being shared. Doing competitor research will help you stay on top of industry trends and market your own store.

[Read more: The Complete Guide to Selling Online]

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