Almost everyone has seen dropshipping ads on YouTube or other social media platforms. There are many stories of individuals becoming rich overnight just through dropshipping alone. While we are not here to judge their claims’ veracity, we find multiple benefits of the dropshipping business, including it can be financially lucrative. All it requires is the right approach and effort. Despite its popularity, people are still unsure about dropshipping. Therefore, we have come up with a comprehensive article on how to start a dropshipping business in Canada. Before we list the steps, let’s first talk about dropshipping.
What is Dropshipping?
An example is the best way to explain any concept. Suppose you wish to start your own online store. You have the resources to hire an expert eCommerce development company to design a quality online store, but not for the products you wish to sell. This is where drop shipping comes into play. It involves selling products manufactured, stocked, and shipped by a third party from their store.
In other words, you are selling a product you don’t own. In most cases, you’ll only pay for the product when the customer has received it. Therefore, it is quite safe and involves no upfront investment. Dropshipping is a great way to start your online business, even with little financial resources. Of course, you must set up an online store, but that’s the only upfront cost.
Now, let’s focus on starting a dropshipping business.
How to Start a Dropshipping Business?
Select Your Niche
The first step is to select your niche. The niche refers to the product(s) you wish to sell online. Don’t select a product based on whim alone. Instead, conduct comprehensive market research to understand what products customers are willing to buy at good prices. Customers may desire a product, but it may not prove profitable to sell. Therefore, don’t just look for products that are in high demand.
Electronics, fitness, and fashion are the three most popular categories. So, you may want to look into them for your dropshipping idea. We recommend narrowing down the product to a niche market. Why? A niche market has passionate customers, making it easier to sell the products. For example, hand-painted phone cases for iPhones or fitness apparel for outdoor enthusiasts.
Several tools can aid your research. One such tool is Google Trends. It shows how popular a search term is over a specified period. The below image shows the trend for ‘iPhone cases’ in Canada.
While the image confirms that iPhone cases are a popular search term in Canada, it does not elaborate on the search volume. The search volume gives a better estimate of the demand. Hence, we recommend that you follow up by using keyword planner tools. They give you a precise idea about the volume for each search word. The problem with popular products is that they have high competition.
For example, if you Google iPhone phone cases in Canada, you will see numerous stores offering customized cases. Therefore, turn your focus to competitor research after finalizing your business niche. If you proceed to the next step without conducting competitor research, the chances of failure are considerably high. You may be selling a product that is inferior to your competitors.
Conduct Competitor Research
There are several benefits of competitor research. First, knowing your competitors gives you insight into what makes them successful. It could be their product quality, marketing strategy, or other factors. Without the research, you would not know what makes the competitors so popular among the target audience. Secondly, the research can help you identify weaknesses that you can exploit to your benefit.
Another notable benefit of conducting competitor research is it can provide information about customer preferences. For example, the iPhone case market has two main competitors. One of them sells printed cases, while the second one sells hand-painted cases. Competitor research can reveal what the customers like or dislike about each product.
Furthermore, it can help you identify the most effective marketing strategies. Instead of wasting precious resources on experimenting with different strategies, you’ll know what works for the audience. We are not asking you to replicate their strategies but to improve on them for better results. Lastly, competitor research can help you proactively identify threats and revamp your strategies accordingly.
Select Dropshipping Suppliers
After completing the previous steps, it is time to select the top dropshipping suppliers in Canada. A Google search can help you identify dropshipping suppliers in your area. All you need to do is go to Google and search for top dropshipping suppliers, followed by the product name and area. Google or any other search engine will give you countless search results. Not every drop shipper will be waiting for you with open arms. You may reject some, while others may reject you. Therefore, be patient and finalize at least five dropshipping companies. We recommend sticking to top-rated sellers and only selling their top-rated products.
Create an Online Store
Start building your online store once you finalize your niche and dropshipping suppliers. The reason you shouldn’t start building your store before completing the first three steps is the business niche. If you sell fashion items, the store’s design should reflect fashion products. Likewise, if you plan to sell electronics, you cannot rely on a store designed for fashion products.
There are several platforms that you can use to design an online store. The three most popular platforms are Shopify, Magento, and WooCommerce. All three have unique benefits and drawbacks. For example, Shopify is perfect for store owners lacking technical knowledge. As it is entirely cloud-hosted, the user does not need to worry about technical aspects.
However, the problem with Shopify is the limitations on customizations. Shopify restricts users from customizing certain aspects of the store. On the other hand, Magento and WooCommerce allow you to create fully customized stores. However, using these platforms is not so easy. One can only navigate the two platforms if they have technical knowledge. Ultimately, it is your decision which platform to select.
Decide the Business Structure
If you wish to succeed in the dropshipping business, approach it professionally. You need to register your store as a business. We are not legal experts, meaning we cannot provide concrete advice on structuring your business. However, the two most popular ways to set up a business are as a sole proprietorship or a limited liability company (LLC).
A sole proprietorship is associated with the least taxes and is the easiest way to structure a business. There is very little paperwork involved. The downside is that you are personally liable for your business. If things go wrong, your personal assets are not protected. An LLC secures your personal assets and is considered more professional. The downside is that it is subject to more taxes and scrutiny.
We recommend consulting a lawyer or a firm specializing in this area prior to establishing your dropshipping business. They can guide you better in deciding your business structure. Do not ignore this recommendation, as the right structure can prove beneficial in the long term. If you wish to sell in multiple markets, consider registering your business in the other markets.
Market the Store
Once your business is set up, start marketing it. There are several ways to market your store. We recommend search engine optimization (SEO), live selling, and social media marketing. These three can increase your reach and improve your online visibility. If money is not an issue, you must consider hiring a marketing agency. They know which strategies to implement and how.
We do recommend keeping an eye on which marketing channels are effective. There is no need to waste time and money on strategies that don’t achieve their objectives. Over time, you may need to rethink your marketing strategies. Otherwise, a competitor will race ahead and grab your market share. Irrespective of the marketing strategy, ensure each content is personalized for better results.
Reinvest in the Business
When you start making money through your dropshipping business, reinvest in the business. It will help with the expansion. You can hire experienced professionals to manage the store on your behalf or take it to the next level. Remember, your business will never grow to its full potential without reinvesting the profit. Once your business is stable, you can start rewarding yourself by buying things you love.
Lastly, don’t forget the importance of continuously analyzing your performance and finding areas for improvement. It will help you stay ahead of the competition, and you’ll be the first one to incorporate the latest trends or technologies. You can analyze your performance using various tools, including Google Analytics. Surveys are another important tool that lets you gain first-hand knowledge from the target audience.
This concludes our detailed article on how to start a dropshipping business in Canada. Hopefully, this guide will inspire you to start your own dropshipping business. Contact us if you require any help with developing your online store. We are a leading eCommerce website development service in Toronto, Canada, and can help you develop a store that meets your needs effectively.