How to use Shopify for Dropshipping?

Dropshipping has become one of the most popular e-commerce business models, allowing anyone to start an online store without manufacturing products, maintaining inventory, or handling shipments. Shopify, the leading e-platform for ecommerce stores with 2.1 million daily active users on average, has made selling various products through dropshipping easier and more accessible than ever. Store owners worldwide choose Shopify because it's easy to use and requires no technical skills. You can create your own store and start your dropshipping business in less than one hour. In this article, you will learn how to use Shopify for dropshipping effectively.

What Is Dropshipping?

Dropshipping is an order fulfillment business model for e-commerce stores in which the seller neither sells its own products nor keeps the products it sells in stock. Instead, dropshippers sell products from a third party, such as a manufacturer, wholesaler, or another retailer, at a higher margin. That third party handles order manufacturing and logistics on the seller's behalf. It means that dropshipping stores don't need to invest in warehouse space or risk getting stuck with unsold products. As a result, businesses can allocate more resources to other activities, such as marketing.

The dropshipping process typically consists of the following four steps:

1. Customer Purchase: Customers buy products from your store at set retail prices.

2. Order Fulfillment: Orders are sent to the supplier and fulfilled at fixed wholesale prices.

3. Supplier Processing: The supplier processes orders and ships them directly to customers.

4. Profit Collection: The store retains the profit, which is the difference between retail and wholesale costs.

Pros and cons of dropshipping

There are many benefits to using a dropshipping business model for your online store; however, there are also some disadvantages. We'll look at both below.

Pros:

Low Capital Requirement: One of the most attractive aspects of dropshipping is that it doesn't require a significant investment to get started since you don't have to purchase inventory upfront. You pay for the item only after the buyer purchased it and paid to your store.

Low Overhead Costs: Starting a dropshipping business can be very low-cost, as there is no need to purchase inventory upfront. Still, there are some initial expenses associated with choosing a platform for dropshipping, like Shopiffy, and paying for one of its plans, purchasing a custom domain name if desired, costs associated with dedicated dropshipping apps, and potentially investing in marketing. Besides, while dropshipping technically eliminates the need for sellers to deal with products, it is advisable to order product samples to ensure they meet quality standards.

Simple to Manage and Easy to Scale: Setting up, launching, and managing a store becomes very easy without the need to buy, store, or ship inventory.  Suppliers handle all the logistics involved in order fulfillment. It includes manufacturing, storing, packaging, and delivering products directly to customers. It relieves you of these responsibilities and enables you to focus on growing the ecommerce business and marketing your products. In addition to having your own standalone dropshipping store, you can also extend your reach by selling products through popular online marketplaces such as Amazon, eBay, and Etsy.

Variety of Products: You have plenty of products to choose from for your dropshipping store. With no upfront costs, you can offer your customers a wide selection of products. Dropshipping is widely useful for testing customer interest in a new product category.

Cons:

Tough competition leading to low margins. The ease and low cost of setting up a dropshipping store mean the industry has a lot of competition. Retailers typically charge very low prices for products, which can reduce profits. Such a tough competition in dropshipping can be reduced by selecting the right products and choosing a unique niche with less competition. It can increase your chances of standing out and attracting customers.

Complicated and Expensive Shipping: If you work with multiple suppliers, each may charge different shipping rates. Moreover, if a customer orders multiple items from your store, it can complicate order fulfillment, as each item may be shipped from a different supplier, increasing shipping costs. You'll likely have to cover these costs to maintain a good customer experience since customers expect a one-time shipping fee when ordering from a single store. 

Inventory issues. You have no control over inventory or supplier issues. If you don't manage your inventory, always ensuring product availability can be difficult. Suppliers may run out of stock, impacting your ability to fulfill orders. However, dropship automation software can help mitigate these issues by automatically syncing suppliers' inventory with your store. For example, dedicated dropshipping apps we will discuss further in this article give sellers the ability to unpublish a sold-out product or set a "Sold Out" label  when a supplier's inventory reaches zero.

Order fulfillment failures: Occasional mistakes are inevitable, especially if you deal with multiple suppliers and do not manage inventory yourself. Such mishaps may include selling out-of-stock items, missing deliveries, or customers receiving the wrong items. Although you are not directly responsible for these errors, you are responsible for communicating with customers and resolving these issues.

How to start dropshipping on Shopify?

To get started, you'll obviously need to create a Shopify account. You can follow the steps outlined in our previous article, "How to Create an E-Commerce Store on Shopify?" which is available at the following link. When ready, you can start dropshipping via Shopify in two primary ways:

• Dedicated dropshipping apps

• Manually

Dropshipping apps streamline the process by connecting your Shopify store with a network of suppliers and automating order management. When dropshipping via Shopify using dedicated apps, instead of adding your own products, you use a dropshipping app to browse large catalogs of products from different suppliers and import them directly into your online store. 

When you import products from a dropshipping app, your store will automatically add images, descriptions, and product details to your store. However, it is advisable not to use the default descriptions and images provided by your suppliers but to refine product pages to engage shoppers with original and unique product information. You can improve product descriptions with search engine-friendly keywords and enhance product photos with AI-powered image editing. When refining product pages, another essential moment is to set competitive prices on your products while ensuring a profit margin for each sale. 

Once you've done this, you can start promoting and selling your products right away. Do not forget to ensure that the dropshipping app you use is set up to automatically process orders and notify suppliers. To track stock levels across multiple suppliers, you can use Shopify's built-in inventory management tools or integrate inventory management software for better synchronization.

Shopify offers a variety of dropshipping apps to choose from. To pick one, evaluate each app's features, supplier networks, and pricing structures. Using one dropshipping app does not mean you are limited to one supplier. Most dropshipping apps connect you to a network of multiple suppliers. To choose a supplier, consider their location, product range, and feedback from other dropshippers. Do thorough research and consider testing a few product samples for quality assurance before making a final decision. Also, you are not limited to installing only one dropshipping app. 

To create custom-designed products such as t-shirts, caps, or mugs, consider opting for print-on-demand (POD) apps rather than standard dropshipping apps. POD is a business model similar to dropshipping but with an added layer of customization. It allows you to create products with custom designs and visual features, while dropshipping is limited to the wholesale manufacturer's products. Dropshipping offers faster order fulfillment and no necessity to be involved in production. At the same time, POD stores require a more hands-on approach, but makes your products more competitive and open unique branding possibilities.

Here are some of the most reputable dropshipping and POD apps on Shopify:

DSers (former Oberlo) is a dropshipping solution for sourcing and selling items from various suppliers on the global marketplace AliExpress. One of the app's prominent features is the Supplier Optimizer, which identifies multiple suppliers for the same product to find cheaper or better suppliers selling the same products or keep stock levels stable if one supplier faces issues.

Sprocket is a dropshipping platform to find and add  fast-shipping and winning products from US, European, and international suppliers. The app features a large product selection and is an official partner of AliExpress and Alibaba. 

Printify is a print-on-demand platform that connects ecommerce store owners with a network of print providers. It automates all processes of order processing, fulfillment, and delivery. With Printify's mockup generator, you can create and preview custom designs for a wide range of products, ensuring your offerings stand out in the market.

Printful is a print-on-demand dropshipping service that handles everything from printing to packaging and shipping your products directly to customers. Its intuitive design tools allow you to create or upload unique designs for apparel, accessories, home decor, and more.

Gooten is a print-on-demand platform that streamlines the entire process from design creation to order fulfillment, enabling you to efficiently manage your custom product offerings. It offers a catalog of 300+ products covering apparel, home goods, accessories, and more. It also provides competitive pricing, volume discounts, and straightforward shipping options. 

Modalyst is a print-on-demand and dropshipping marketplace that offers access to various suppliers, including independent brands, manufacturers, and private label suppliers from China, Europe, India, and the US. 

AutoDS is an all-in-one platform offering AI-powered solutions for both dropshipping and print-on-demand (POD) businesses. With its all-in-one functionality, AutoDS automates various tasks such as product sourcing, imports, order fulfillment, custom branding, and product edits. Users can import products from multiple marketplaces, including Amazon, Alibaba, CJdropshipping, Walmart, and AliExpress, streamlining the entire e-commerce process.

Zendrop is a leading Shopify dropshipping and POD app that gives you access to 1M+ products, auto fulfillment, super-fast shipping, and custom branding. It offers a range of functionalities designed to automate various aspects of the dropshipping process, from product sourcing to order fulfillment. 

The manual method involves building more personal relationships by partnering directly with manufacturers, wholesalers, or suppliers and using Shopify to showcase and sell products. This approach can offer more control than a dropshipping app and even result in better pricing, shipping processes, and return policies. At the same time, direct supplier partnerships require more manual steps and investment of time. You will have to manually add product details and images, regularly check and update inventory levels and product availability with your supplier, manually place the order with your supplier, provide them with the customer's shipping information and the details of the ordered products, and monitor fulfillment. Therefore, you may encounter complex logistics when routing orders and need to source alternative suppliers when one runs out of stock. You can search for providers to partner with directly on AliExpress, or use directories such as SaleHoo or Worldwide Brands that list suppliers offering dropshipping services. 

It is also worth mentioning that almost a year ago, Shopify introduced a new feature called  Shopify Collective. This feature allows existing Shopify merchants from the US who made at least $50,000 USD in the last 12 months to partner with other stores and expand their offerings. By sharing products from connected stores to their own store,  merchants can diversify their product range and offer a wider variety of items, all without inventory or managing fulfillment, sharing similarities with dropshipping. When orders are placed, they flow through to the partner store, and Shopify Collective automatically distributes payments to each store upon fulfillment. Usually, a commission or profit-sharing agreement is set up between the collaborating stores to ensure that both parties benefit financially from this cooperation.

Bottom Line

In summary, Shopify is a popular choice for dropshipping because it's user-friendly and offers a wide range of apps to add products to your store. However, it's wise to start small and work with a few suppliers or products at first.  As you get more comfortable, you can expand your business by adding more products and suppliers. Don't forget to explore different Shopify apps and consider integrating social commerce into your marketing strategy as you grow.