How to start Dropshipping business
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DropShipping

How to Start a Dropshipping Business in India?

Doing eCommerce as a Dropshipping Business. eCommerce in India has come a long way now. A lot of commerce activity is happening online and India is one of the fastest growing market globally.

The India’s e-commerce market is expected to reach US$ 350 billion by 2030. By 2021, total e-commerce sales are expected to reach US$ 67-84 billion from the US$ 52.57 billion recorded in 2020.

This proves starting something online that too an ecommerce store makes a lot of sense and it is a future proof business.

What is Dropshipping Business?

Dropshipping is a retail fulfillment method where a seller doesn’t keep the products in stock but instead transfers the customer orders and shipment details to a supplier or manufacturer, who then ships the products directly to the customer. This means that the seller doesn’t handle the inventory or shipping process.

For example, let’s say that you want to start an online store selling t-shirts, but you don’t want to hold inventory or manage shipping. You find a supplier who offers dropshipping services, and you choose the t-shirts that you want to sell on your website.

Next, you set up an online store and add the t-shirts to your product catalog. When a customer orders a t-shirt from your website, you forward the order and shipping details to the supplier. The supplier then ships the t-shirt directly to the customer.

As a dropshipper, you make a profit on the difference between the price you charge the customer and the price you pay the supplier. This profit margin can vary depending on the product and the supplier.

One advantage of dropshipping is that it allows you to start an online store without investing in inventory or handling the shipping process. This can save you time and money, especially if you’re just starting out. However, it’s important to choose reliable suppliers and maintain good customer service to ensure that your customers receive their orders on time and in good condition.

Is Dropshipping Legal in India?

In the context of GST in India, a dropshipping business involves the transfer of goods from the supplier to the customer, and the GST liability depends on the location of the supplier and the customer. If the supplier and the customer are located in the same state, intra-state GST will apply. If the supplier and the customer are located in different states, inter-state GST will apply.

Here’s how GST works in a dropshipping business:

  1. GST Registration: As per the GST regulations in India, businesses with an annual turnover of over Rs. 40 lakhs (Rs. 10 lakhs for northeastern states) must register for GST. A dropshipping business must obtain a GST number and register for GST if the annual turnover exceeds the threshold.
  2. GST on the Sale Value: In a dropshipping business, the supplier will charge GST on the sale value of the product. The rate of GST varies based on the type of product.
  3. GST on the Margin: As a dropshipper, your revenue is the difference between the price you charge the customer and the price you pay the supplier. The GST liability is applicable only on the margin you make from the sale of the product, not the full sale value.
  4. Invoice Requirements: As per the GST regulations in India, a dropshipper must issue an invoice to the customer and the supplier. The invoice must include details such as the GST number, the name and address of the customer and supplier, the HSN code, the quantity and value of the goods, and the applicable GST rates.

In summary, a dropshipping business in India must register for GST, charge GST on the margin, issue proper invoices, and comply with the GST regulations to avoid any legal consequences.

There are multiple ways to start an ecommerce business and selling merchandise online in India. Most of the businesses requires huge upfront capital in merchandising team, inventory, photoshoot, store setup, printing, logistics, marketing etc.

Dropshipping is a way of doing e-commerce without investing into inventory, printing and logistics setup. Dropshipping is selling a product online by having its manufacturer directly deliver the goods to your customer.

Dropshipping Business: A Step by Step Guide!

1.Dropshipping Process

Dropshipping is a process of fulfilling your orders from a supplier. Setup an online store with the suppliers’ products. The orders generated are passed on to the suppliers. The supplier will do packing and shipping to the customer’s address.

Dropshipping Process Qikink 858 × 744 px

The supplier will also custom print the products with your design, do custom branding before packing and dispatching. Qikink is one of the leading supplier for Print on Demand Products in this space.

2.Identify a Niche or Market Gap for the Dropshipping Business

Business in general are started with niche finding or finding a gap in any existing market to start something new. In drop shipping too, identifying a potential niche in any existing business category is very important.

This is the first place to start your dropshipping business. Check tools like AppSumo and others to analyse and compare various niche areas to start your dropshipping journey.

For any niche to be selected, you must acquire enough product knowledge and market knowledge to keep growing up with the trends. Do not start with too many niche areas or products. Select one or two niche products which has good market potential and venture into other niche areas after establishing a good sales base on the first one.

3. Study the competitors and plan your USP

Competition proves one thing, ie. validation for your product and business. Competition is not bad. Too Much competition with no product innovation and no future growth for the product/market is bad.

Study the competitors in depth. Gather whatever information you could find about their sales, suppliers, overheads, profits etc. Analyse them to find a stronghold which is unique to your business.

Learn more about your competitor’s customers more than they do. Study about what they value the most and list down areas of improvements from the competitor’s services and products.

How to Start Dropshipping Business Images USP

Create a USP based on that which appeals to your customers. USP is unique selling proposition. Every business (however small) should have one. It defines what’s separate your products and services from the competition. It answers the question of why should your customer pay you instead of your competitor. It can be price, value addition, packing, shipping options, product combos, branding, offers, delivery time, extra features etc.

4. Choose your Dropshipping Products

Products selection is most important part of dropshipping business. Select a products after gathering as much information as possible about the same.

Products can also be show cased as combos with its attributes of color and size with a discounted offering. While selecting the product, study and gather information about its packing, branding, returns handling, user guide, product photos, product video aspects.

5. Find a Competitive Supplier

After finalising the dropshipping product, next step is to find the right supplier. It is not same as finding someone who manufacturers and distributes the product. The Supplier should be able to deliver the products individually to your customers. This involves Quality checks, proper packing, arranging shipping, updating tracking numbers, handling returns and takes ownership for the quality of product and service.

Once you find a suitable supplier, your journey towards selling for profits becomes easier. Get all the product information like, photos, videos, user guides, wash care, warranty details, shipping insurance, delivery timelines, handling time, value addition and branding possibilities etc.

6. Plan Prices and Offers

Pricing the products determines your profit and loss aspects of your business. Consider the following facts before finalising the pricing

  1. Cost
  2. Competitor’s Price
  3. Packing and Shipping Cost
  4. Returns % expected and its cost involved
  5. Overheads including software tools etc.
  6. Profit Margin

It is advisable to price at least 3x from the cost of the product and work around the pricing from there as per the competition. Remember price is just one of the factor which determines sales.

Focus more on offers such as combo discount, free shipping, gift packing, Rush delivery, freebies etc.

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7. Plan Return / Refund policies

Returns and refund policies are to be defined on day one. This part of business can spoil your peace of mind. So this has to be defined properly and updated on the product page clearly.

It is important to set right kind of expectations for the customer at the time of purchase. Also check out the supplier’s returns, replacement and refund policies and define yours in-line with the same.

8. Setup your online store

Setting up an online store is an easy process with multiple options available. Shopify is leading the pack with options like WooCommerce, Wix, Dukaan etc.

The following are the points to be considered while setting up online store.

  1. Register Domain Name
  2. Apply for Brand Trademark in respective class
  3. Choose appropriate e-commerce platform
  4. Check for integration from Supplier’s fulfilment system
  5. Opt for cloud hosting with CDN and HTTPS options if separate hosting is required
  6. Keep a check on page loading from development stage
  7. Optimise images in new age formats like AVIF or WebP
  8. Do keyword research and Implement SEO from first page design
  9. Install a secured payment gateway
  10. If opting for Cash on Delivery, have proper check points in place
Dropshipping Business Store Setup Qikink

9. Setup Dropshipping Business on Marketplace Stores

Have a business mindset and explore all possible avenues of sales. The more place you distribute the product, the more sales you are going to get. Online Marketplaces are very relevant for most of the people’s shopping habits. They do not use social media or never click on ads but chose marketplaces for all online purchases.

Chose one or two top marketplaces which resonates well with your future customers. List the products, do small promotions, get reviews and ratings for each and every sale. This will update the algorithm to show your products to larger audience. More sales will follow. Price the products in marketplaces accordingly after factoring in marketplace commissions and listing fee if any.

10. Plan Marketing and Creatives

Dropshipping Business Digital Marketing Qikink

Any online business needs some kind of promotions. Having a physical store will have natural walk-ins. Which is not the case with online stores. Pay per click advertisement(PPC) methods on social media(SMM) and serach engine(SEM) will bring traffic to the online store.

Marketing starts with product photos/videos and store setup. These needs to be planned to visually attract the customer. Have a casual use case video of your product will do wonders in conversion from ads. Order a sample yourself, shoot a video with your phone and use that for ads and on storefront. Creating a good Adv creative can increase your revenue on ad spent (ROAS).

Other than PPC, there are many new ways of getting traffic to your online store as,

  1. Influencer Marketing
  2. Organic Traffic via SEO
  3. Affiliate Marketing
  4. Guest Blogging
  5. Content Marketing
  6. Brand Partnerships with cross promotions on social channels
  7. Giving your products as freebies for other high ticket sale products

11. Start Selling and Setup Fulfillment

You should start selling your product as soon as you setup the store. Do not wait for the marketing campaign to take shape. Call up friends and family and insist them on placing orders. Track the initial orders and get them delivered sooner with a lot of personal attention. Get feedback about the product, service and packing and update the supplier if anything significant.

Promote the store through your personal social media pages to get initial sales. Give coupon codes and send a personalised email for all purchases. Ask the initial customers to post photos and videos with your products and give them coupon codes or freebies.

12. Setup Customer Support

Customer Support is an integral part of any online business. Answering customer calls gives a chance for interaction and to know them better which is not possible otherwise. Any unique demand from the customer is justifiable.

Have a customer support desk with clear operational timelines mentioned on the online store with timezone. Implement ticketing system with TAT. Getting feedback and sincerely assisting customer queries improve customer life time value(CLTV) which reduces the dependency on ads for sale.

13. GST and Accounting for Dropshipping Business

Good accounting practice is essential for the long game. Keeping books and filing taxes on-time will give clear business numbers without any future liability.

GST is mandatory for any business operation in India with annual turnover crossing 40L INR per year. If you are planned to cross 40L INR of revenue in current year, apply for GST and start filling monthly. It will give benefits of Input Tax Credit (ITC) and eligible for various bank loans.

14. Conclusion

Dropshipping is a new age model of starting a business or a side hustle. It minimises the loss of capital and covers for your inexperience in running a business. The expertise required in Merchandising, manufacturing, inventory planning, custom printing, logistics are covered and run by experts.

But you are required to gain mastery over market research, digital marketing, managing an online store and customer service. Lets conclude this post with Pros and Cons about Dropshipping business model as

Pros:

  1. Fast and easy to start a business online
  2. No huge upfront capital required
  3. No inventory, logistics hassles
  4. Print on Demand and huge possibilities
  5. Access to the catalog of various supplier’s products
  6. Sell profitably without worrying about dead inventory
  7. Scalable business system
  8. Option to work from anywhere
  9. Business can be stopped and started whenever required without overhead expenses
  10. Easy to quit if it is not generating profits (without any loss)

Cons:

  1. Profit margins will be lower when compared to inventory based model
  2. Supplier may go out of stock or business
  3. Quality control issues
  4. Competition

Pros outweigh the cons. Dropshipping is the best way to start a business first time in the online way of doing business with merchandise sales.

Dropshipping Business FAQs

How to grow a dropshipping business?

Here are some tips on how to grow a dropshipping business:

  1. Choose the Right Niche: Select a niche that you are passionate about and one that has high demand. Research your competition and identify any gaps in the market.
  2. Find Reliable Suppliers: Identify reliable suppliers who can provide quality products and fast shipping. Check their reviews and ratings and order samples before finalizing a supplier.
  3. Optimize Your Website: Ensure that your website is user-friendly, easy to navigate, and has a professional look. Optimize it for search engines to increase organic traffic.
  4. Focus on Customer Service: Provide excellent customer service and promptly address any issues or concerns. This can lead to positive reviews and repeat customers.
  5. Expand Your Product Line: Add new products to your catalog and test their performance. Keep an eye on trends and introduce new products accordingly.
  6. Utilize Social Media: Use social media platforms to promote your products and engage with your audience. Consider influencer marketing to reach a wider audience.
  7. Offer Discounts and Promotions: Offer discounts and promotions to attract new customers and retain existing ones. This can include free shipping, discounts on bulk orders, or limited-time offers.
  8. Optimize Your Pricing Strategy: Optimize your pricing strategy to remain competitive and profitable. Monitor your competitors’ pricing and adjust your prices accordingly.
  9. Monitor Your Metrics: Keep track of your metrics such as website traffic, conversion rate, and customer acquisition cost. Analyze the data to identify areas for improvement and optimize your marketing efforts.

How much does it cost to start dropshipping?

The cost of starting a dropshipping business can vary depending on several factors. Here are some of the common costs associated with starting a dropshipping business:

  1. E-commerce Platform: You’ll need an e-commerce platform to build your online store. Platforms like Shopify, WooCommerce, or BigCommerce offer monthly plans starting from $29 to $299.
  2. Domain Name and Hosting: You’ll need a domain name and hosting to host your online store. The cost can range from Rs.500 to Rs.1000 per year for the domain name.
  3. Website Design and Development: You can choose to design your website yourself or hire a web designer. The cost can range from a few hundred to thousands of dollars.
  4. Product Costs: You’ll need to pay for the products you sell. The cost will depend on the products and the supplier.
  5. Marketing Costs: You’ll need to promote your store through advertising, social media, or influencer marketing. The cost can vary based on the marketing strategy you choose.
  6. Miscellaneous Costs: You may incur other expenses like legal fees, taxes, software, and office supplies.

Overall, the cost of starting a dropshipping business can range from a few thousand to few Lakhs, depending on the products you sell, the supplier you choose, and the marketing strategy you adopt. However, compared to starting a traditional retail business, the cost of starting a dropshipping business is relatively low.

What is shopify dropshipping?

Shopify dropshipping is a type of e-commerce business model in which a retailer (the dropshipper) does not keep physical inventory of the products they sell. Instead, the dropshipper partners with a third-party supplier who handles the storage, packaging, and shipping of the products directly to the customer.

With Shopify dropshipping, the dropshipper uses the Shopify platform to set up an online store, select the products they want to sell, and integrate with a dropshipping supplier. The supplier is responsible for fulfilling the orders, while the dropshipper handles the marketing, customer service, and other aspects of the business.

Shopify offers a range of tools and features to help dropshippers manage their businesses, including product management, order fulfillment, shipping, and payment processing. Additionally, Shopify has a large app marketplace where dropshippers can find apps to help with marketing, customer service, and other aspects of their business.

Shopify dropshipping has become increasingly popular due to its low startup costs, flexibility, and ease of use. However, it is important for dropshippers to carefully choose their suppliers and products to ensure they are offering high-quality products at competitive prices.

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