Looking for an ultimate (but, easy to execute) dropshipping checklist? Prepare to “copy” our methodology.
It is no secret that each entrepreneur in the world makes mistakes. Just ask any entrepreneur you know, and they will be able to list many blunders they have committed in their career.
The truth is, certain business mistakes are simply unavoidable when doing business. However, you can keep yourself from doing costly mistakes and wasting your precious time and money. You simply need to do a few things before you start dropshipping.
In fact, understanding the work involved in opening a dropshipping business is the key to a successful launch.
This means that the more you know about what to do before starting your dropshipping business, the better prepared and more successful you will be as an entrepreneur.
Dropshipping Checklist 101:
To help you get off to the best possible start, we have made a list of 9 simple dropshipping step-by-step instructions:
– Refine your business idea
– Understand your own strengths and weaknesses
– Pick a name for your dropshipping store
– Learn more about the legal forms of business organization and choose the right type for your business
– Get familiar with the legal requirements to set up and run a dropshipping business
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Dropshipping checklist: 9 things to do before starting your dropshipping business
Here is our dropshipping step-by-step guide for beginners:
Refine your business idea
The first thing in our dropshipping step-by-step guide is refining your business idea.
But what does “refining your business idea” mean? It means that you must get so specific on your idea that you can explain it in only one sentence. You may think we are crazy — your business idea is so much more than that. Yes, we know that! Let us explain what we mean.
In short, you must organize and visualize all your thoughts before starting your dropshipping business. And once you have done that, get to the very core of your business idea and try to sum it up in a few words.
As you are thinking about setting up a dropshipping business, chances are you already know what you want to sell over the internet or at least the industry you want to work in.
Once you have refined and redefined your great business idea, you should figure out if it is financially workable. To put it another way, you need to find out if people are willing and want to buy your products.
You can do so by carrying out market research and fully understanding the market. You can learn more about it in the next paragraph. So, keep reading!
👉 Check out the 10 General Dropshipping Store Examples To Inspire Yours.
Do market research and fully understand your market and competition
Why is market research the second thing on our dropshipping checklist? Before you start dropshipping, you must understand one thing.
The thing is, before starting your business, you must ensure there is enough demand for the products you are about to sell. Otherwise, you will not be able to make sales. Luckily, there is a free tool such as Google Trends to do market research and measure product demand.
But this is not all you need to do here. You should also fully understand your market and identify and evaluate your competitors.
👉 Check out the 12 Best Shopify Spy Tools To Do Competitor Research.
You have to go wide to fully understand these things. To do that, you should collect and analyze information about your market, including your competitors and customers. This involves doing your own online research and conducting surveys.
To better understand your customers, you can use tools like Google Trends and SurveyMonkey. For competitive monitoring, you can use the following competitor analysis tools: Alexa, SimilarWeb, and Quick Search.
Understand your own strengths and weaknesses
As a first-time dropshipping entrepreneur, you may be blind to your own weak spots. For this reason, understanding your own strengths and weaknesses is the third thing on our dropshipping checklist.
You must understand your own strengths and weaknesses prior to entering the dropshipping market. To be more specific, simply ask yourself where you want to go as well as how you can get there.
Firstly, make a list of every business skill you think you have, including communication and negotiation, problem-solving, leadership, marketing, financial management, etc.
Secondly, try to be as objective and realistic as possible.
Ultimately, identify whether you are able to do everything yourself or you need to engage a web page designer, lawyer, accountant, or digital marketing specialist.
Create a business plan as an essential part of this dropshipping checklist
Creating a business plan is the first real step you need to take before you start dropshipping. A business plan is a key to success. Plus, it can give real and tangible answers to important or even challenging questions.
Let us give an example. You cannot build a house by simply walking over to an empty lot and nailing boards together. And the same goes for your startup. You cannot start a dropshipping business without a dropshipping business plan.
If you want to learn how to create a business plan for dropshipping, read our previous article.
💡 Tip: Read about Can You Use Upwork for Dropshipping? – Build With Freelancers.
5. Pick a name for your dropshipping store
Sure, this is the most alluring section of our dropshipping checklist because it enables you to be creative. Yeah, you can be creative while picking a name for your dropshipping store!
The name of your business is actually the first piece of your brand people will experience. Therefore, it is essential to find the right name for your dropshipping store to help it stand out from the crowd and establish a unique identity.
You should also ensure that the domain name you choose is available for purchase. Plus, the domain name should be identical to or at least closely match the name of your dropshipping store.
But what is a domain name? It is the address of your website that people type into Google to access your website. You can check the availability of your domain name by using tools, like Name and Instant Domain Search, to name a few.
Let’s get back to the name of your business. As we have already mentioned, you need to find the right name before starting your dropshipping business. When choosing the name, there are a few things you need to consider:
- Be original and do not copy your competitors.
- Avoid a hard-to-spell name.
- Keep it short and simple.
- Be creative and imaginative.
- Be descriptive but not too vague.
Build your online store
According to our dropshipping step-by-step guide, the next thing you need to do is to build your online store.
But before you start dropshipping and building your own website, we just want to point out that there are different sales channels out there. As a newcomer to the dropshipping industry, you need to know that the main online sales channels for dropshipping include: social media channels, online marketplaces (AliExpress, eBay, Amazon, etc.), and your own website.
You have probably heard of some online marketplaces so far. Also, you probably know that there are numerous online retailers who sell the same products on these marketplaces. This means that there is a high level of competition there. And this may stop you from standing out from the crowd and establishing your brand.
If you still want to sell on these online marketplaces, then good luck! But now, we will focus on how to build your own e-commerce website and establish your brand.
How to build your own e-commerce website:
There are three main ways to build your own e-commerce website – engaging a web developer; using WordPress, or using an e-commerce website builder/platform.
- WordPress. If you choose to use WordPress to create your website, you should have certain technical skills and knowledge. Also, you must install extra e-commerce plugins to turn your website into an e-commerce store. However, it offers unlimited customization, making it perfect for creating a totally bespoke e-commerce store.
- E-commerce website builders or platforms. On the other hand, e-commerce website builders or platforms are suitable for tech beginners who want to build an e-commerce store fast. Using an e-commerce website builder or platform, like Shopify, BigCommerce, Volusion, WooCommerce, Magento, and Wix, to name a few, is an easy way to create your online store.
Prior to choosing one of these platforms, keep in mind that some of them are hosted, whereas others are self-hosted. For instance, Shopify, BigCommerce, Volusion, and Wix have hosted platforms, whereas Magento and WooCommerce are self-hosted ones.
But what is the difference between these platforms? The main difference between self-hosted and hosted e-commerce platforms is that the hosted ones are more suitable for non-tech people. But if you are a tech-savvy person, then one of the self-hosted platforms will be the right choice for you because it will give you more freedom.
- Web developers. If you have never built a website and you really need some professional help with your website and graphics, then hiring a web developer is a good idea. A web developer can build a well-performing e-commerce website from scratch. Just remember that this is definitely the priciest option out there.
Learn more about the legal forms of business organization and choose the right type for your business
Are you interested in setting up a sole proprietorship, a partnership, a limited liability company, etc.? Before launching your dropshipping business, you should learn more about the legal forms of business organization.
Therefore, we will give you a brief overview of the two most common forms of the business organization when it comes to dropshipping – sole proprietorships and limited liability companies.
- A sole proprietorship. A sole proprietorship is easy to set up. But it fails to offer personal liability protection. The reason for this is that in a sole proprietorship, there is not any separation between you and your business. Thus, you are personally liable for all debts of your company.
- A limited liability company. A limited liability company is a bit harder to set up and run. But it offers liability protection since there is a separation between you and your business.
As a new drop shipper, the simplest and cheapest option is to start a sole proprietorship. However, a limited liability company is the best option if you want to protect your personal assets.
Take your time and make a wise decision because it will affect your personal liability, tax responsibilities, paperwork requirements, startup costs, etc.
Now, you probably know why this section is found on our dropshipping checklist.
Get familiar with the legal requirements to set up and run a dropshipping business
The legal requirements to run a dropshipping business depend on the geographic location of both the customers and the business owner.
So, you need to understand the legal requirements on business registration and taxation in the country where you are about to do business. If you are planning on selling online in another country, your customers’ country of residence might have specific regulations on the kinds of products that can be imported safely.
Before you start dropshipping, find out if there are any legal requirements you must consider. Failing to comply with the laws, regulations, and guidelines relevant to dropshipping may result in legal punishment like fines.
To avoid any kind of legal punishment and start your online venture the right way, consider the following legal issues:
- Register your business.
- Contact the occupational regulatory agency in your state to find out if your dropshipping business is regulated and you need a business license or permit.
- Contact your state’s taxation office and register for the right taxes (e.g., sales and income tax.)
- Open a business bank account. This prevents you from mixing your business and personal funds together.
This may be a complex issue. Therefore, it is advisable to consult an accountant or a tax lawyer unless you are a legal professional yourself.
Promote your dropshipping store
Now that you have sorted everything out, you need to promote your store before you start dropshipping. The way you market your dropshipping business determines if it will be successful or not.
When it comes to dropshipping, marketing is more important than ever. So, make sure you create an effective marketing strategy to attract your target audience and boost sales.
Fortunately, there are dozens of ways you can market your online store. Depending on your budget, you can combine some of the following marketing tactics: content marketing, SEO for dropshipping stores, social media marketing, Google Ads, SMS marketing for dropshipping, industry-specific forums, influencer marketing, and more.
The bottom line
Follow our simple dropshipping step-by-step guide before starting your dropshipping business. We hope that this easy-to-follow dropshipping checklist can help you create an online business that you can be proud of.
Also, in one of our previous articles, we have provided answers to the question about how to start a dropshipping business. So, as a new dropshipping entrepreneur, please feel free to read the article.