7 Step Guide to Start Dropshipping in Australia (2024)

Ecommerce is everywhere, whether you’re shopping for new outfits, electronic gadgets, household essentials, or ordering food. Shopping online isn’t just a trend, it’s here to stay, as 22.6% of total retail sales will be conducted online in 2027.

Despite challenges arising from inflation in 2023,Australia’s ecommerce industry is exploding, with revenue projected to reach over 64 billion U.S. dollars by 2027. With the number of ecommerce users expected to reach 3.6 billion by 2029, now is the perfect time to start an online business.

Breaking into the ecommerce industry takes time and effort. As a retailer, you’ll need to manage inventory, figure out shipping and delivery, and have a well-trained customer support team. Suppliers may face issues with setting up streamlined order processing processes, expanding their reach and market presence, and executing comprehensive marketing strategies to enhance their visibility and attract potential retailers. 

Dropshipping can solve problems for both retailers and suppliers by allowing retailers to sell products without holding inventory or managing shipping logistics, while suppliers can expand their reach and market presence by partnering with multiple retailers without the need for extensive marketing efforts. If you’re interested in starting a dropshipping business, we’ve put together a comprehensive guide that will enable you to set up an online store and run a successful ecommerce business.

What is dropshipping?

Dropshipping is an online fulfilment method that enables entrepreneurs to start a product-based business without manufacturing products, holding inventory, or delivering goods to customers. The supplier manages inventory on behalf of the retailer. This means retailers don’t need to invest in warehouse space or risk getting stuck with unsold inventory. When retailers receive customer orders, they pass them directly to the supplier. The supplier ships products on retailer’s behalf. By outsourcing these activities, retailers can rest assured knowing that everything is being managed expertly and efficiently.

Dropshipping can be a win-win for all the parties involved. Retailers can focus on curating and promoting products as opposed to managing inventory and warehouses, and suppliers can focus on sourcing quality products and delivering them to customers without needing a retail operation.

 How does dropshipping work?

In a dropshipping business model, retailers outsource inventory management and shipping and delivery of products to a third party. There are three parties involved in dropshipping - manufacturers, suppliers, and retailers. 

Manufacturers create products and sell in bulk to suppliers. They don’t sell directly to the public. Suppliers buy products from manufacturers and mark them up before selling them to retailers. They usually stock products from multiple manufacturers. Retailers buy products from suppliers and sell products directly to the public, at a markup. 

The retailer acts as a middleman between their customers and suppliers, displaying supplier products on their own website for customers to shop. When a customer orders on a retailer’s website, the retailer processes the order and forwards it to the supplier. The supplier then ships the product directly to the customer. 

Dropshipping allows retailers to set their own product prices, considering their profit margin and other business expenses. This business model is a win-win for both retailers and suppliers. Suppliers get access to a brand-new customer base, and retailers don’t have to deal with physical products, manage or pay for a warehouse, pack and ship orders, track inventory, manage stock levels, or handle returns. This gives retailers the flexibility to invest their time and energy into marketing and building their brands. Dropshipping also helps mitigate supply chain issues likeseasonality and is a low-risk ecommerce strategy that is set to reach $301.11 billion in 2024.

Just like any other venture, starting a dropshipping business isn’teasy. Whether you're a beginner entrepreneur doing business online for the first time, or a seasoned entrepreneur ready for a new opportunity, we’ve put together a guide to help you run a successful dropshipping business - but beyond that, a fully-fledged ecommerce business.

Step 1: Choose a dropshipping product niche

What to sell is one of the first questions retailers ask themselves when they're setting up online stores. The kinds of products you sell could be the difference between making six figures and ending up with next to zero sales.

Finding the rightdropshipping niche is crucial to the success of your business. Niche products have huge profit potential, especially if you find products that are trending or likely to be popular in the near future.

Google Trends is a great tool that analyses the popularity of top search queries in Google, considering the total searches by location across different time ranges. It helps you understand if the search volume for a certain product category is increasing or declining and can identify if a product niche is seasonal. You can even monitor your competitors’ positions and use this data to your advantage. Start by entering a search term or products you’re interested in selling. You’ll want to make sure you change the time horizon from the past 12 months to a longer time frame, either five years or 2004-present, and adjust to the country you will be selling in. For example, an upward trend has been observed for knitwear products from 2004 to the present, having slight dips in the summer months due to the seasonality of the product.

Social media platforms can provide valuable insights into product demand and recent trends. Supervising social media conversations with the help of social listening tools can help you keep tabs on what customers and prospects are saying about a particular product. You can monitor customer feedback, industry trends, any direct mentions of the product, and conversations with relevant keywords. Social listening tools can help you monitor and manage several social media platforms in one place.   

Consumer marketplaces are another rich source for generating ideas. They should be your go-to source for finding dropshipping business niche ideas for two reasons - popular and trending products and many buyers. You may begin your search by looking into the top-selling categories and then diving into other categories that interest you. Online marketplaces like Amazon, eBay, Wish, AliExpress, and Etsy have best-seller lists for you to search through to find popular and trending product niches. 

Remember, when selecting products to dropship, your key considerations should be finding products that will sell and have the ability to generate profit. For example, if you’re sourcing a summer hat for $5, you should be able to sell it for an amount that covers the cost of sourcing the products, delivery, and marketing and still leave you with a good profit gain at the end of each transaction. Depending on your business, a suitable price for this particular product might be $10, $15 or $50. Do enough research before deciding on the price range for your selected products. These are some things you should keep in mind when choosing products for the success of your dropshipping business. According to our experts at Dropshipzone, the following are some things you must be careful about when deciding what to sell.

• Setting unrealistic expectations, especially when it comes to anticipating unrealistic profits. This can lead to disappointment and annoyance and may demotivate you. Therefore, we advise you to set your expectations right. 

• Spending too much time selecting a product could also be detrimental to your business. It’s essential that you not only make well-informed decisions but also in a timely manner. Doing ample research is crucial, but you should also know when to stop and take action. 

• Avoid niching down too much when selecting dropshipping products. If, at any point, you feel your business is doing well, you might want to expand your product range. Select a dropshipping niche that leaves you with a scope of adding more products to your store. 

• Selling a variety of products is also not recommended in the initial phase. We advise you to start dropshipping with one product category first, and then as your business begins to scale, you could add more product categories to your online store.

• Don’t consider underpricing as a way to see through the competition. Lower prices may create doubt and uncertainty about your product’s credibility.  

• Most importantly, don’t rely on your personal preference or gut feeling when you're thinking of what to sell. Guesswork won’t help you to cut through the rising competition. Select the products considering the demand and supply, thorough research, existing sales data, and understanding of your target audience.

• Consider choosing products that can solve the everyday problems of consumers. Remember, the world doesn’t need more products but better solutions.

Once you’ve chosen your product niche and determined its profitability, you can start conducting market research to understand who your consumers are likely to be and the kinds of products they are looking for.

Step 2: Conduct market research on your niche

Market research is a great way to learn more about your niche and gather information about your consumer’s needs and preferences. Using social media to conduct market research is one of the simplest ways to understand what makes your customers tick. Search product-related hashtags on Instagram, Facebook, Pinterest, LinkedIn and TikTok to know which customer group is interested in your niche. You can also see which product niche has the most engagement by looking at likes, comments and shares.

Competitor analysis

A big part of conducting market research is analysing what your competitors are doing. It can help  you to stay one step ahead. You’ll want to research competitors in your product niche, as this will give you the best idea of what to do and what not to do when it comes to anything to do with your business. By conducting competitor analysis, you can identify your competitors’  marketing strategies, understand what customers best respond to, and know how often they post on social media. You'll also understand how much engagement they get on social media, their email marketing strategies and if they offer any perks, such as free shipping, subscription options and discounts. You can also compare key product features to identify any gaps in the market and analyse their customer service to gain valuable insights on how to offer excellent customer service and develop an easy return policy. Competitor analysis can also help you improve your business efficiency, contributing to overall customer satisfaction and business growth.

Market segmentation

Market segmentation means dividing your target market or prospective buyers into small groups or segments, such as age, gender or hobbies. Dividing your customer base into smaller groups  makes it more manageable rather than tackling a bigger market. It enables you to create a more personalised marketing strategy and make product experiences feel unique to each customer group, which can increase customer engagement. Additionally, with effective market segmentation, you can create more cost-efficient marketing campaigns because you know what your customers will respond to. It can also help you create a stronger brand image in a highly competitive space and identify niche markets that haven’t been targeted yet, leading to more successful brand ideas in the long term.

Step 3: Choose your dropshipping supplier

When starting out, your primary consideration should befinding a dropshipping supplierthat reflects the brand you want to build while providing high-quality services. With so many dropshipping suppliers in the market, finding a trustworthy and reputable supplier that can offer a wide range of quality products at affordable prices can be difficult. Thorough research is essential to finding reliable dropshipping suppliers to do business with.

When selecting dropshipping suppliers, look out for the things that characterise good dropshipping suppliers. The best dropshipping suppliers will likely have a Google Business or Trustpilot profile where you can read through reviews and experiences of real customers. The best way to know if a dropshipping supplier can meet your needs is by contacting them directly. This enables you to dive deep into their product quality, product sourcing, product packaging, delivery times, and services they offer. Avoid selecting dropshipping companies with a high product return rate. You can also check if the pricing of the products is feasible to work with based on the profit margin you will make, taking into account any pre-order or subscription fees different suppliers may have.

Ensure that the suppliers invest in the latest technology and their websites are updated to guarantee streamlined client operations and efficiency. You’ll also want to know about their customer support team and whether or not they offer 24/7 assistance to their retailers. Consider choosing local suppliers for fast shipping times.

Finding Australian dropshipping suppliers can make running your business easier. Dropshipzone is an Australian-based B2B2C platform, offering over 10,000 products across all your favourite categories. It’s a solution for Suppliers dropshipping in Australia, providing the opportunity to wholesale without the hassle, and it’s also a solution for Retailers wanting to start dropshipping and scale without holding inventory.

Dropshipzone has a dedicated quality control team, ensuring product quality, safety and compliance. Many Dropshipzone Suppliers will source products directly from manufacturers, which means you get products at competitive prices, helping you maximise your profit. Whether you’re looking for competitive pricing, an extensive product range, exceptional customer service, fast order processing times, or integration possibilities, Dropshipzone has got you covered. You canlearn more about our services here.

Step 4: Register your business

Before you start selling products online, you must register your business and address some of the legal requirements of running that business. The majority of Australian dropshipping suppliers will require their customers to hold anAustralian Business Number (ABN).

An ABN is a unique 11-digit number that identifies your business to the Australian Government for tax purposes and allows you to avoid unnecessary tax on customer payments. It also enables you to receive and register for a domain and business name needed to build your online store. If your yearly revenue amounts to $75,000 or more, you’ll need to register for atax file number (TFN) and Goods and Services Tax (GST).

Next comes selecting the right domain name for your dropshipping business. It can make or break your business. It’s one of the things that will compel customers to shop with you. However, finding a suitable domain name for your ecommerce store can be difficult, especially in a saturated market.

To get your domain name right, you should: 

• Stick with the original generic top-level domains (gTLD) or country code top-level domains if possible, including ‘.com’ or ‘.com.au’.According to a survey conducted by GrowthBadger and published bySEMRushin 2021, this can help convey trust and authority.

• Avoid generic names to ensure your domain name stands out.

• Use domain name generators for unique ideas. Squarespaceis a great starting point for domain name search.

• Don’t use hyphens and doubled letters in your domain name.

• Make sure your domain name is a reflection of your brand.  

• Avoid creative names. Your domain name should be easy to remember. 

• Keep your domain name 6-14 characters in length. 

• If your original idea is unavailable for sale, consider getting creative with newer top-level domains released since 2014, such as .xyz and .business, provided it relates back to your business.

Step 5: Build your ecommerce store

Optimising the frontend and backend of a website can be an intimidating process. Therefore, we’ve put together a step-by-step guide to take you through its process and prerequisites.  

Choose an ecommerce platform for your store

Your ecommerce platform will form the backbone of your business and can help you streamline your store to provide a seamless user experience, improve accessibility, and boost your sales. When you’re a newbie, opting for off-the-shelf and easy-to-use ecommerce platforms like Shopify, Magento, and WooCommerce would be the best option. 

The following are some essential things to consider when selecting an ecommerce website builder or a hosting solution. 

• Determine whether you want to go for self-hosted or hosted solutions. Self-hosted solutions require you to host your own website, whereas, with hosted solutions, your ecommerce platform will do it for you. If you lack technical knowledge, you should choose hosted solutions, as everything from platform development to server maintenance is taken care of by the provider.

• To avoid paying more than expected, weigh up the pros and cons of each platform to get the best deal. Check pricing based on the features you’ll require, but don’t sacrifice the essentials for a low price. 

• Check what integrations and plugins each platform provides. Ecommerce platforms, such as Shopify, offer different tools that you will need to run your business efficiently. 

• Verify how reliable the IT support team is. There will be times when servers crash and software outages. In such circumstances, you’ll need strong backing from the support team.

• Make sure you choose a platform with a scalable framework that will support your growing business and handle increasing traffic. 

We recommend choosing between Shopify or WooCommerce to build your online store. If you want to know more about the various features and pricing of each ecommerce platform, check out ourblog. 

Integrate social media ecommerce platforms

One of the best ways to get more customers shopping with your online store is byintegrating various social media platformswith your business. This way, your customers can conveniently buy products through social media without leaving the app.

Merging social commerce has a multitude of benefits. It increases brand awareness and website foot traffic and gives you access to a larger customer base. You can also showcase your products and see how customers respond to different product launches and marketing campaigns.

The most popular social media platforms to integrate with your online store are:

• Facebook

• Instagram

• TikTok

• Pinterest

Social commerce can help you build deeper relationships with your customers because they can instantly message you with any queries or concerns. Customers can also actively engage with your content, making them feel like they know your brand.  Most social media platforms allow businesses to fully integrate their products from their website onto their social media, like Instagram Shop and Facebook Shop, where customers can shop for products directly through the app and through product tags, stories, reels and ads.

Customise the design of your website

Your ecommerce store’s look and feel can impact how your potential customers see your brand. An uninteresting or slow website can drive visitors away in a few seconds. Therefore, you shoulddesign a websitethat captures your customer’s attention. Picking a suitable theme for your ecommerce store is crucial as it can enhance the look and feel of your store and encourage your visitors to make a purchase. 

Here are the steps you should follow when selecting a theme for your website:

• Research your competitors’ stores to understand what elements to include and things to avoid.

• Include features like a simple checkout process, mobile-friendly design, fast loading times, navigation and guided search, cross-selling and up-selling, and compatibility with other apps and plug-ins for a seamless user experience.

• Think about your content strategy and decide what type of content your website will display. 

• Make sure your brand elements work together harmoniously. Your theme’s colour should match your brand guidelines. 

• Ensure your CTA buttons stand out with clear micro-copy so you don’t miss the opportunity to convert your visitors. 

Consider additional integrations for your ecommerce store

Once you're ready, you can start looking for dropshipping apps and plug-ins to add to your store. You could add theDropshipzone app, exclusively developed for Dropshipzone Retailers using Shopify. With the Dropshipzone app, you can access a wide range of products from the Dropshipzone catalogue and import them directly to your Shopify store. You can search for products using keywords and import them to your store. To make life easier, our products come with detailed product descriptions and high-resolution images, and you can manage all your orders directly through the app. You can even add your own watermark.  

Other integrations you might consider include:

Mailchimp

Mailchimp is an email and marketing platform that enables businesses to set up automations that trigger emails based on customer behaviour. With the help of AI and data tools, you can create content, build custom email templates and analyse performance. You can also access stats such as your subscriber count and create targeted ads and personalised emails to gain more customers.

HubSpot

This tool allows you to manage several social media accounts from a single, easy-to-use interface. With HubSpot, you can publish posts, monitor social media conversations, and connect with audiences. 

Sprout Social

Sprout’s social listening tool can help you track product-related discussions, access unfiltered thoughts, opinions, and feedback concerning the product/business, measure the results of the current strategy, and guide future actions. You can integrate this tool effortlessly into your business strategy. 

Hootsuite

Hootsuite is one of the best social listening tools that allows you to monitor conversations, keywords, hashtags, and mentions and respond to conversations from one dashboard without having to log in and out. You can also build relationships with social media creators, monitor competition, manage several social media accounts, and easily plan content for your social media.   

Buffer  

Buffer is an all-in-one social media marketing software that allows you to draft and schedule posts across multiple social media platforms, see how your posts are performing, and monitor conversations about the brand across social media networks.  

BuzzSumo

BuzzSumo is a trusted marketing tool that enables you to explore high-performing content, analyse billions of data points to sharpen your social strategy, identify influencers to power up your brand, and monitor conversation and trends. It also provides you with endless content ideas.   

Set up payment methods

Another important step when building your website is to set up payment methods. While setting up your payment methods, you should ensure that the payment method is not complicated and reliable. Make sure your payment methods are PCI-compliant and secure. This ensures all the details are kept safe. Any discrepancies could cause cart abandonment, loss of trust, and even heavy fines and lawsuits. 

Consider offering multiple online payment options to your customers, especially if you’re a small business. This is a great way to expand your customer base, attract customers from different demographics, and boost conversions. 

Here are a few of the most common and secure payment methods in the Aussie market:

• PayPal

• Google Pay  

• Apple Pay

• Openpay

• Klarna

• Zip Pay

• Credit/Debit Card

• Afterpay

Choose your shipping strategy

Ecommerce shipping includes everything from receiving and processing the order to packing and shipping it to the customer’s address. When setting up your shipping process, you should be mindful of two important things - your shipping fees and your shipping solution. 

The three most common shipping strategies are free shipping, flat-rate shipping, and variable-rate shipping.Free shippingis popular among shoppers because it offers the convenience of purchasing an item online and paying the same amount they would pay in store.

The next step is to select shipping solutions. As a dropshipping business, most suppliers will take care of shipping for you, freeing you up to focus on other important tasks such as marketing your store. For this reason, dropshipping is preferred by many entrepreneurs looking to break into the ecommerce business. Check with your dropshipping suppliers on their shipping solutions and logistics partners. A reliable dropshipping supplier should keep you updated when shipping times change across their partner network, understanding the importance of fast shipping.

Now that you’re all done setting up your website, you should consider previewing it before launching it to the public. Previewing your online store will help you make a strong first impression and enable you to provide a smooth user experience when launched. Have a final look at your brand elements, the home page, product page, and other pages of your website to ensure everything is on-brand and functional. Remember, building a website isn’t a one-time job. It’s a continuous process of improvement where you strive to make your online business better over time.    

Step 6: Market your dropshipping store

It’s an unfortunate truth that many new products fail. According toClayton Christensen’s Milkshake Marketing, products fail because of an ineffective market segmentation that divides the customers into target demographics, such as age, gender, income level, and qualification. This unrealistic segmentation doesn’t work because customers don’t shop by conforming to such segments; instead, they buy a product to do a particular job. Christensen shared a story of a fast-food restaurant chain that wanted to improve its milkshake sales. The company segmented its market by product and demographics, yet the sales didn’t improve. Then, the company sought help from Christensen's fellow researcher, who spent a day in a restaurant understanding customer behaviour and taking notes, followed by interviewing the customers the next day. According to the findings, most customers bought a milkshake to do a particular job, such as keeping their hands busy or making their commute better. Therefore, Christensen suggests that companies should look at products the way customers do: as a way to get a job done. The 'jobs-to-be-done' framework can be broken down into simple terms, as below.

The way you market your online business can have a significant impact on its success. Many large organisations have adopted Christensen’s job-to-be-done strategy, also known as 'purpose branding'. For example, Disney provides warm, safe, and fantasy vacations for families, and IKEA helps its customers to do the job of furnishing their homes and other spaces. For a profitable business, you need to identify what job your business performs, considering your product offerings. 

So, how do you market your online business? Let us count some of the ways.

Utilise email marketing

A study conducted by Statista with current and projected data shows that email is anticipated to remain an integral part of daily online life despite the popularity and prominence of messengers and chat apps. There are currently around 4 billion email users worldwide. And the number is projected to increase to 4.6 billion by 2025. More than 90 per cent of people check their inbox every single day.

The following are some of the best email practices to get the best out of this strategy:

• Start by building your dropshipping email list and set up automated emails. The more people you reach, the more visibility you get. You can improve your email list by encouraging visitors to fill out forms with their names and email addresses via social media. You could offer them attractive deals to get them to take the desired action. 

• Email personalisation is key to improving engagement. It helps you design emails that customers would want to click. Always address customers with their respective names in emails and engage them by offering special discounts and offers. A tip from the Dropshipzone expert team is to send emails with tutorials on how to effectively use the items that your customers have purchased from your store. 

• Make sure your emails have a prime goal to fulfil. Avoid sending emails just because you want to. Design effective email marketing strategies for all customer lifecycle stages- awareness, engagement, consideration, purchase, retention, and advocacy. A marketer should know where the customer is in the journey and send emails that complement the customer’s journey. 

• Avoid writing wordy emails. Emails should be easy to read and understand. Break the copy into paragraphs and add images. The most important tip is to close your email with a Call To Action (CTA) button that leads the customers to your landing page.

Make the best use of social media channels

Social media is a powerful way to spread a message and connect with potential customers. According toStatista, social media users spend approximately 151 minutes each day on social media platforms. With the growing popularity of social media platforms, you should integrate social media into everything you do, even (or especially) before you launch. This tactic can develop curiosity among your followers and attract new visitors. Social media marketinghas a great potential to drive organic traffic to your online dropshipping store and generate sales. It also keeps your audiences hooked, eventually turning them into loyal customers. 

With so many social media platforms, it’s hard to figure out which platforms to prioritise to reach the target audience. According toForbes Business Council, the following are the most popular social media platforms to market your business:

• Facebook

•  Instagram

• TikTok

• Pinterest

• LinkedIn

• YouTube

Each social media platform works differently, so you should create a plan that’s specific to the social media platform you’re planning to use. Think about what goals you want to achieve with the help of social media platforms and have a social media strategy in place for each social media platform.

Start a YouTube channel

We live in the age of video, so why not use it for marketing your business? According toStatista 2024 research, YouTube is the second most-visited social network worldwide and has approximately two billion active users. YouTube has the potential to drive great results, so you should considerstarting a YouTube channel to market your business. There are many ways to  promote your online business effectively using YouTube, so don’t stick to just one. You can try the content marketing approach, partnering with popular influencers in your niche, and using paid ads. In the content marketing approach, you can create content for people in different buyer stages. Focus on creating the ‘how to’ type content. It works best and is more search friendly.

Join online communities

There goes a famous saying: fish where the fish are. An ideal way to reach your potential customers and connect with them is to join online communities. Joining niche-specific online communities will help you find your customers. Some popular places to look are Quora, Reddit, Facebook groups, or even online communities on Instagram and Twitter. These online communities are excellent spaces to answer your audiences' questions, introduce your brand, and build authority within your niche. You can also add a link to your site when you’re answering the questions, but ensure you’re not overly promotional because this can appear spammy. Your main intention should be to build trust and establish authority within your niche in these online communities.  

Consider SEO & SEM

SEO and SEM strategies can help improve your store visibility and increase sales. Search Engine Marketing (SEM) is a paid marketing strategy that helps optimise your keywords and to bring paid and organic traffic to your website. Search Engine Optimisation (SEO) also helps bring traffic to your online store but is instead a free strategy that evaluates keyword usage in meta descriptions, tags, titles and copy on a website. Both strategies are crucial to ranking your store and products highly on search engines, and tools likeSEMrush andUbersuggest can help you do this. 

Step 7: Test & refine your store

The last but one of the most important steps when starting a dropshipping business is testing and refining your online store and marketing efforts. It helps you to understand what your storefront could be lacking and enables you to create a plan to meet those shortcomings. So how do you do it? The Dropshipzone team shares the new winning formula to test and refine your dropshipping business.  

• Undergo a pilot test before launch. Performing pilot tests will help you identify areas needing improvement, provide preventative solutions, and save you time and money.

• Conduct A/B testing to determine which product is more popular. For A/B testing, you need to have two different products. The steps involve: determining what you’re trying to find out, setting the parameters for the test, and finally, deploying the test. Once you have the outcome, measure the results one against another. This will give you a clear idea of what will work best for your target audience. A pro tip is to measure your product success using different testing channels to identify what works best for each channel. You can prioritise these results when planning for future campaigns. 

• Ensure that your suppliers are meeting the mark. Even if you have a slick website, winning products, and a solid marketing strategy, your business is more likely to fail if your supplier isn’t a good fit for your dropshipping business. You might consider placing a test order to understand how your suppliers operate. 

• Shipping can also impact your business significantly. So make sure you test your shipping process too. Your customers won’t expect your business to operate like Amazon, but they would want their products to be delivered in the estimated timeframe. For this reason, it’s better to have first-hand experience with the delivery services to know what to expect and prevent unnecessary future complaints.

Starting from scratch vs purchasing an existing dropshipping business

Starting a dropshipping business involves a lot of groundwork before you can launch and start making profits. Many new businesses fail within the first few years of operations due to a lack of expertise or funding. If you’re thinking of starting a new dropshipping business but can’t commit your time and efforts to build from scratch, it may be worth looking into purchasing an existing dropshipping business. A word of advice from our experts: This industry is becoming more sophisticated, especially with corporates, such as Thrasio and SellerX, entering the market. As a result, small buyers may find it increasingly harder to compete against these giants as they have more resources to ensure they get the best business for the best value.

Many budding entrepreneurs are torn between the two worlds - building a dropshipping business from scratch and buying an existing dropshipping business. Well, there isn’t a straightforward answer to this question. It totally depends on the uniqueness of the situation. Let’s explore the benefits and drawbacks of both worlds.

Advantages of buying a dropshipping business:

• Saves time and effort: The advantage of buying a dropshipping business is you don’t have to choose a store name, set up a website, or pick your products. All the groundwork has been laid out already. This saves your precious time and efforts, enabling you to focus on more strategic matters, such as scaling the business. 

• Ready-to-go business: You don’t have to wait to make sales and profits. With the processes and systems already in place, you should have a fully operational online store ready. This ultimately saves you the hassle of initial set-up, which can be a challenging part of starting a dropshipping business for those new to ecommerce without technical knowledge.

• Low acquisition costs: When you buy a dropshipping business, it comes already set up with an order system, inventory, dropshipping supplier(s), and marketing strategy in place. You just have to pay a one-time fee for a fully functional online store, which saves you all the additional costs of setting up an online store and developing a customer base. In theory, that means you can spend less on customer acquisition in the early days of running the business, which is at odds with your competition.  

Disadvantages of buying a dropshipping business

• No control over branding: When you buy an already established dropshipping business, you lose the opportunity to design your own brand and website from scratch. If you intend to undertake a brand refresh or fully fledged rebrand after buying the business, you should weigh up the cost and time investment and factor this into your purchase price.

• Scamming: One of the issues with purchasing an existing business is that you’re ignorant of the background of the online store. The business you’re buying might have a poor reputation behind the scenes, even if it has good reviews online. There’s also a possibility that the sellers might over-exaggerate their profits or overvalue their stores through 'creative' accounting. You may not realise this until you start running this store. So it’s crucial that you purchase a dropshipping business from a reliable source.

Advantages of building a dropshipping business from scratch

• Gain experience setting up a business: When you’re building your dropshipping business from scratch, you’re gaining a great learning experience that is incomparable to any. You will learn about designing your own store, setting up payment methods, conducting product research, and marketing. Whether this is a business for life, or simply represents a chapter in your life, many of these skills are transferable to other fields.    

• More control over store inventory: Product research is crucial to the success of a business. If you're building your own dropshipping business, you’ll have complete control over selecting your products. You can conduct product research to determine which products have the potential to drive sales and profits.  

• Design a distinctive online store: Wireframing, building and designing your website from scratch allows you to carry the same creative vision across the entire business. This gives you the flexibility to think out of the box and build a dropshipping store that’s different from your potential competitors. 

Disadvantages of building a dropshipping business

• Technical challenges: If you’re a new dropshipper with no technical knowledge, you may face challenges when trying to build a professional website on your own. Hiring someone to do this job will also increase your outgoing costs. In this case, buying a dropshipping business may be the better choice to avoid the hassle of setting up a site yourself and the additional fees.  

• Time-consuming: Building a dropshipping business from scratch can be time-consuming, especially if you lack technical knowledge. You are bound to run into some of the most common challenges, and having to solve them personally will rob you of your most valuable time. The initial set-up will also further delay the process of starting to sell. 

• Risk of failure: When building a dropshipping store from scratch, there’s always a risk you won’t make it off the ground floor. Therefore, starting from scratch can be challenging and not always a good idea, especially if you’re new to online retail.           

Dropshipping can be a profitable business model, but like any other venture, it requires careful planning, determination, and hard work to make it a successful business. With this handy guide, you’ll be able to start a dropshipping business - and successfully scale, at that. If you need help dropshipping in Australia, the Dropshipzone team is just one click away. We can help you start a dropshipping business from scratch, and we'll be with you as your business grows.

FAQs

Is dropshipping legal in Australia?

Dropshipping is completely legal in Australia as long as you comply with the relevant laws in your state, such as the Australian Consumer Law and have a registered ABN. To know more about what requirements you may need to meet to dropship in Australia, check out this free business tool.

How profitable is dropshipping?

The dropshipping business model is set to reach $243.42 billion in 2023, so it’s safe to say that it is extremely profitable if you invest your time and effort into staying on top of trends, having an effective supply chain and implementing marketing strategies to promote your business. To find out more about the profitability of dropshipping, check out our blog. 

Is dropshipping a business model for retailers or suppliers? 

 The dropshipping business model requires both retailers and suppliers to function. This business model offers great advantages for both retailers and suppliers.

 Advantages of dropshipping for retailers:

• No investment in physical inventory

• Ability to offer an “endless aisle”

• Ability to scale quickly 

 Advantages of dropshipping for suppliers:

• Ability to introduce a new product

• Improves retailer relationships

• Increases customer loyalty

• Higher profits

Is dropshipping a high maintenance business model?

Dropshipping is considered low maintenance for retailers when it comes to things like holding physical inventory. However, retailers need to put efforts into the other aspects of their business, such as marketing, website building and customer relationships. It’s estimated that dropshippers need to work at least 40 hours a week for a year to replace an average income of $75,000AUD annually. You can find out more about how many hours dropshippers need to workhere. For suppliers, dropshipping requires some more work behind the scenes. However, the results can certainly pay off in the long run.