What Is Dropshipping & How Does It Work ( 2024 Guide)

Our view at Stack - ClickFunnels was founded by an online marketing legend Russell Brunson and it offers several benefits for online businesses and marketers:

• Time and Cost Savings: Efficiently create sales funnels without extensive development efforts.
• Maximized Conversions: Test offers, copy, and images to enhance conversions.
• Specific Landing Pages: Generate highly targeted landing pages.
• Predictable Pipeline: Create consistent, predictable sales paths.
• Increased Sales: On average, it boosts sales of lesser products by 15%

The post What Is Dropshipping & How Does It Work ( 2024 Guide) appeared first on ClickFunnels.

You have heard about dropshipping. But how exactly does it work?

That’s what we are going to discuss in today’s article…

What is Dropshipping?

E-commerce is a business model where you sell physical products online.

Dropshipping is an e-commerce fulfillment method where you don’t hold any inventory yourself.

How Does Dropshipping Work?

So how is it possible to sell physical products online without holding any inventory yourself?

Here’s how it works:

1. Customers place orders on your online store
2. Those orders are then forwarded to your suppliers
3. Your suppliers ship the products to the customers

You only pay your suppliers for the products once the customers buy them. If you don’t make any sales, you don’t owe them anything!

How to Create a Dropshipping Store With ClickFunnels + Zendrop

Step #1: Choose an Industry

Ideally, you want to go into an industry that you have not just familiarity with, but also an active interest in. Why?

Because e-commerce is not a get-rich-quick scheme. If you want to build a sustainable business that you can eventually sell for a life-changing amount of money, it will probably take you 5-10 years to get there.

In theory, it’s possible to succeed in an industry that you have zero interest in, but in practice, that is extremely unlikely.

After all, very few people are capable of staying focused on something that they don’t care about for a long period of time.

That’s why we recommend looking at your current interests, figuring out which one has the most business potential and then going into that industry.

Unless you are into something extremely obscure like collecting 19th-century Norwegian post stamps, you can probably build a successful e-commerce business that revolves around one of your hobbies.

Say, if you are into fitness, there’s a ton of stuff that you could sell that’s related to it: clothes, accessories, equipment, etc. 

Step #2: Niche Down

You also need to niche down to a specific demographic. Why?

Because if you attempt to sell everything to everyone, you will find yourself competing with the largest brands in your industry.

Say, if you decided to launch a general fitness store, you would have to compete with companies like the French giant Decathlon.

That’s not a battle that you can win given that Decathlon has over 1,700 stores around the world. 

However, if you launched an online store that sold workout clothes to women who lift weights, you would have a much better chance at building a successful e-commerce business.

Think about it: with such a clear focus, you would be able to tailor everything – from products to sales copy to marketing – to that particular demographic.

That would help you carve out a market share for yourself. Maybe your store would even become the go-to online store for female weightlifters looking for gym wear.

Generally speaking, the narrower the niche, the better, but you need to make sure it’s large enough to sustain your business.

One of the most reliable ways to determine that is by looking at the competition. Are there any established companies in that niche that appear to be growing consistently?

We understand that the presence of competition may seem intimidating, but it’s actually a good sign: it means that there’s money to be made there!

Ideally, you want to target a demographic that you belong to yourself. That way, you’ll have the best insight into what’s important to your dream customers.

If you are a woman who is into weightlifting, then all else being equal, you’d probably have an advantage over a man who’s into weightlifting if both of you were to launch online stores that sold workout clothes for women who lift. You would understand what aspects of your product speak best to the women you are targeting firsthand.

That being said if you don’t belong to a particular demographic yourself but have access to people who do, then you might still be able to capitalize on the opportunity if you spot a gap in the market.

For example, if you are a male personal trainer who primarily coaches female weightlifters, launching an online store that sells workout clothes to women who lift might make sense. After all, you should have a pretty good understanding of what’s important to your target audience given that you work with that demographic as a coach.

In theory, it’s possible to build an e-commerce business by targeting an audience that you don’t belong to yourself, aren’t familiar with, and don’t have access to through your personal network.

In practice, though, that would be a terrible idea because you’d have to start completely from scratch, do comprehensive market research, and deal with all kinds of unknown unknowns. 

So why would you want to do that when you could make your life easier by capitalizing on all the advantages that you already have?

Step #3: Build Your Online Store

Our software, ClickFunnels, has an e-commerce functionality that you can use to build your online store.

All you need to do is pick a store template from our template library and customize it according to your needs with our drag-and-drop website editor!

Step #4: Add Products to Your Online Store

We decided to collaborate with one of the leading dropshipping apps Zendrop to make it as easy as possible for our users to dropship.

Zendrop gives you access to a network of US-based suppliers which is perfect if you intend to focus on the American market.

Sourcing your products locally ensures the fast shipping speed that your target audience is accustomed to: the products in the Zendrop catalog ship within 3-5 business days.

That’s a huge improvement over AliExpress’ dreaded 15 to 60 business days. Can you imagine ordering something online and then having to wait two months for it?

Anyway, once you have built your online store, you can integrate ClickFunnels with Zendrop and start adding products to it!

Step #5: Build a Cart Funnel for Your Most Promising Product

There’s a UX design principle called Jakob’s Law which states that:

“Users spend most of their time on other sites. This means that users prefer your site to work the same way as all the other sites they already know.”

In other words, you want your online store to look similar to other online stores in your niche because that’s what your target audience expects.

The problem is that online stores are designed to serve as digital catalogs that people can browse to find what they want.

That type of website layout works well for existing customers who are already familiar with the inventory but it can be overwhelming to potential customers who look at it and don’t even know where to start.

And that’s why you need a cart funnel if you are serious about growing your e-commerce business. It’s designed to convert people in your target audience into paying customers.

This funnel has four pages:

1. A sales page for your most popular product.
2. An upsell is an upgrade on your most popular product.
3. A cross sell that is complementary to your most popular product.
4. A thank you page where you thank the customer for purchasing and let them know what they should expect next.

Ideally, your thank you page should also feature an “offer wall”, meaning, a display of your other popular products. That way, if the customer wants to shop some more, they can easily do so.

Of course, if you just launched your online store, you probably don’t know what your most popular product will be. At this point, all you can do is give it your best guess.

Realistically speaking, you will probably have to build and test cart funnels for several different products until you find a winning one. 

Fortunately, ClickFunnels includes a cart funnel template that you can customize with our drag-and-drop page editor so building cart funnels with our software is a breeze!

How to Drive Traffic to Your Cart Funnel

Once you have your cart funnel, it’s time to start driving traffic to it. But what is the best way to do that?

It depends on the resources that you have at your disposal. Here’s a quick overview of the three most popular traffic generation options:

Social Media Marketing

Social media marketing is a great option if you want to build a dropshipping side hustle without having to spend money on promoting your products.

You can simply create a profile on the social media platform of your choice and start posting high-quality content that your dream customers might find interesting.

We recommend a publishing frequency of one post per day for the first 365 days. It might seem low but consider that it’s also easy to maintain. You can always increase it later.

You should also make an effort to reply to every single comment that you get in order to encourage discussion under your posts. One exception here is trolls. Ignore and block them.

Finally, you want to network with the social media influencers in your niche, which you can do by leaving thoughtful comments under their posts and sharing their content when they publish something that your followers might find interesting.

If you can keep that up for several years, you will probably build a sizable social media following!

Video Marketing

Video marketing is a great option if you want to build a dropshipping side hustle without having to spend too much money and are willing to invest a ton of time into making video content.

You don’t need fancy equipment to get started: your smartphone, a good quality microphone, and a camera light should be enough. 

There’s an AI tool called Descript that you can use to edit your videos. Basically, it allows you to edit the video by editing the transcript.

You can use another AI tool, Adobe’s Firefly, to create video thumbnails.

We recommend shooting long videos for YouTube and then repurposing them into YouTube and TikTok shorts, which is easy to do with an AI tool called Opus Clip. 

As for the publishing frequency, you want to upload at least once a week on YouTube and at least once a day on TikTok. Just make sure to maintain high content quality.

Your primary focus should probably be YouTube because long-form videos have more staying power, which makes a YouTube channel more valuable than a TikTok channel. 

However, it’s much easier to go viral on TikTok so neglecting that platform would be unwise. 

In fact, there’s a trend of drop shippers driving organic traffic to their stores with TikTok shorts that showcase their products. 

Consider creating several TikTok shorts like that for each of your products. You can use the “Hook, Story, Offer” copywriting framework to script them:

1. Grab the viewer’s attention with a compelling hook.
2. Tell them a captivating story that resonates with them on a deep emotional level.
3. End with a call to action encouraging the viewer to visit your online store and get the product. Direct them to the link in your bio.

While virality is not something that you can predict, one big hit might be enough to get your store off the ground.

Your video marketing strategy shouldn’t depend on lucky breaks, though. It will probably take you several years to build audiences on YouTube and TikTok, so plan accordingly and go into it with realistic expectations.

Paid Advertising

Paid advertising is a great option if you want to grow your e-commerce business as quickly as possible and have money to spend on ads.

The best places to advertise dropshipped products are Facebook, Instagram, and TikTok, so we recommend starting with one of these platforms.

If you don’t know how to run ads on your chosen platform, Udemy has online courses on that.

You can simply pick the course that has the highest number of reviews. If you wait for one of Udemy’s sales, you should be able to buy it for less than $20.

Once you have learned the basics, you want to create an ad campaign designed to promote your most promising product. That’s how you will drive traffic to your cart funnel.

Start running your campaign with a small daily budget. Once the sales start coming in, do the math to see if it’s profitable. If you are making money with it, you can begin gradually increasing your daily budget.

Alternatively, if your campaign is not profitable, you can use A/B testing to optimize it. More on that in the next section.

Also, if you aren’t making any sales at all, then there are three possibilities: your targeting is off, your ads aren’t compelling or there’s no demand for your product.

If it’s the product that’s the problem then you will need to pick a new one, build a cart funnel for it, and start running ads. Repeat this process until you find a winning product!

How to Optimize Your Cart Funnel With A/B Testing

Our software has an A/B testing functionality that you can use to optimize your cart funnel for conversions once you are generating enough traffic. 

The idea behind A/B testing is simple: you create two variants of the same page that are identical except for the element that you are testing, drive the same amount of traffic to both variants, and see which variant converts better.

For example, when it comes to your cart funnel sales page, you might want to A/B test the headline, the subheadline, the product photo, the product description, the price, etc.

You can also A/B test the cart funnel itself by creating two variants of it that are identical except for the upsell or the cross sell. That can help you figure out which offers work best.

You should see the cart funnel that you built as a starting point for the conversion rate optimization process. Keep in mind that A/B testing can help you 2x, 5x, or even 10x your funnel profits!

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