How To Start (and Scale) A Drop-shipping Business

Editor’s Note: As a matter of policy, we only publish articles from authors with experience working in a particular gig or managing the small business opportunity described in the article. To reduce the risk of unwanted competition, we keep authors anonymous. Today’s article comes from an author with deep expertise in digital marketing and e-commerce.

Dropshipping Products From AliExpress

If you’re anything like me, you probably buy more products online than you do in actual stores. E-Commerce is absolutely thriving and it is not only giants like Amazon that can benefit from it. You may be surprised to find that people with niche online stores are absolutely crushing it despite the corporate competition.

When I wanted to start an e-commerce store, It was important I was spending as little upfront as I needed to. I’ve heard horror stories in the past about e-commerce startups spending tens of thousands on inventory that they were unable to sell.

After some research, I found the perfect solution: dropshipping. You might have heard this buzzword floating around entrepreneurial circles. Dropshipping is simply the act of selling products on your website and then having the manufacturer ship directly to your customers.

The real beauty of the dropshipping model is that you don’t need to buy any inventory upfront. In fact, you wait until after the customer has paid your listed price, and then you buy the product at a wholesale price afterwards. This model helps to reduce most of the financial risk that comes with an e-commerce store.

You might be asking, “But where do I find manufacturers who will let me do this?” The answer is AliExpress. AliExpress is part of Alibaba, the company that most Chinese manufacturers do business through. With Alibaba, you need to buy in bulk, but with AliExpress you are able to buy products at wholesale prices in small quantities, even single items. There are a few alternatives, but I always recommend starting with AliExpress. They have pretty much any kind of product you can possibly think of.

The trick to dropshipping is to use the proper platform and tools to make this as streamlined as possible. Let’s cover the tools I personally used and some alternatives.

Shopify and Oberlo

When making my online store, I personally found Shopify to be the best possible solution. Sure, there is a monthly subscription fee, but it is incredibly small compared to the amount you can be making. With that subscription fee you’re getting an online store that loads with lightning quick speed. Shopify is really easy to customize. Putting up product pages is also simple. If you can fill out a Facebook profile, you can create a Shopify store as it is fairly intuitive and they have training resources. They also have amazing technical support.

Another reason that I love Shopify is that they have tons of third party plugins with extra functionality. The plugin I found most essential was Oberlo. Oberlo helps connect your AliExpress account directly to your Shopify store. This is where the magic happens. Instead of having to manually order each product after it is bought from my store, Oberlo has each of my orders ready to send the order information directly to the manufacturers along with the shipping address of the customer who bought said items. Every day I simply review the orders to make sure payment went through from my customers, then I click the confirm button to order those products directly from the manufacturer. That’s it. From there the manufacturer processes the order, packages it, and then ships it directly to my customer.

If you find Shopify isn’t your thing, there is a WordPress theme called WooCommerce. With it you can make a store similar to Shopify, but unfortunately you won’t have any of the benefits that Shopify gives you like technical support and built-in hosting. You’ll be reliant on your own hosting plan, and your store loading speed will be dependent on whatever hosting plan you choose.

There aren’t really any good alternatives to Oberlo. Without it, you’ll need to manually order each product from the manufacturers and submit the shipping information. Luckily, if you’re using WooCommerce, Oberlo is compatible with it.

Finding Your Niche

This is probably the million dollar question for most of you: “What will I sell?” It was for me. I probably took a week weighing my options, but in the end I went with one of my passions: outdoor survival supplies. I’ve always loved the outdoors and all of that adventurous kind of stuff. I knew I wouldn’t get bored writing all the product descriptions. Plus, I knew that people in this niche tend to spend a lot of money on gear.

I highly recommend “niching down.” Niching down means finding a specific niche within a specific market. The reason for this is that the broader your store, the bigger your competition will be, and the harder it will be to make sales. If you bothered having an “everything store,” you would be competing with giants like Amazon and you’d get crushed. However, by choosing a specific niche, your ideal customers can begin to see your site as a bit of a trusted authority on that subject. That’s something Amazon can’t compete with.

For me it was outdoor survival, and with some of my marketing I leaned heavier to the “end of the world prepper” crowd. For instance, if you made a dog supplies store, that can do well. If you had a store that was specifically for a breed that owners of this breed go crazy about, that’s even better. It’s always best to start with a smaller niche and then you can broaden your niche as you grow later.

Be careful of narrowing your niche too far. You don’t want it to be hard to actually find customers.

If you’re having trouble figuring out what to sell, start with something you’re interested in and already know about. As long as people who are also interested in that niche are known for spending money on their hobby, you should be fine. If you’re still stuck, check out your YouTube history. Do you watch a lot of videos around one hobby? That could be your niche. What about your Amazon purchase history? If you see a theme in the products you buy, that can also be a niche.

Finding and Testing Products

When searching on AliExpress for products to add to your store, you want to look for high profit margin products. This is something you can buy relatively cheap, but you know you can sell for much higher based on prices at the local store or even other online stores. The higher the profit margin of a product, the more you can spend on advertising to acquire a customer.

If you need ideas for what products will sell well, the easiest thing to do is go to your competitors’ online stores. Find other stores in your niche. They will most likely have a way to sort by bestselling. The bestselling products on their store are ones you will likely have some luck selling yourself. They don’t need to be the same exact product, just a similar one. You can also try Amazon and search for things in your niche and see what other types of products are suggested.

Really good products are ones that a customer might need more than one of, or will certainly need something else to go along with it. One of my bestselling survival items was a durable flashlight. When someone went to buy one, I set my page to prompt them with two upsells. The first upsell was to see if they wanted to buy more than one flashlight for a discount. The second upsell was batteries to go along with the flashlight. Because of these two upsells, I made a much higher return on my advertising spend whenever I had ads directly for my survivalist flashlights.

Fill your store out with at least 50 different products to start and then test them either with advertising or organic methods. Eventually, you’ll start seeing certain products do better than others. These are your proven winners and you’ll want to focus more on them when you start scaling your advertising budget up.

The Almighty Traffic

We have got our niche, we’ve built our store and found the manufacturer products on AliExpress. Now we just need actual customers.

Personally, I found the easiest traffic with Facebook advertising. While I had experience hiring ad experts in the past to run ads for me, this time I wanted to try it myself. Luckily, when you have a good niche and understand your customers, Facebook advertising isn’t as difficult as many people believe. If you think Facebook ads are a little too advanced for you, there are plenty of ad agencies that specialize in running profitable ad campaigns for your store.

You can also go the organic route. If you’re good at growing Instagram pages and having good photos of your products, you can do well this way. If you like making videos, you can grow a YouTube channel around your niche and then send viewers to your online store. If you like writing you can try to get traffic by ranking in the Google search engine for specific key phrases using blog articles. Keep in mind that any of these organic methods definitely require some time and patience to really get off the ground.

I always prefer paid traffic so that I can get quick, measurable results and find out what is working and what isn’t working. Based on those results, I can make corrections until I have a positive return on investment. While I have had success sending cold traffic directly to product pages, I had even better success getting people to sign up for my email list first. My advertisement would offer them some free information in exchange for their email address. In my case, it was the “Top Five Items Every Survival Kit Needs.” Once people were on my email list my autoresponder had a series of pre-written emails that went out at regular intervals to help build trust, position me as an authoritative expert, and pitch products to my subscribers. By doing it this way, customers tended to buy more than once and the average order value was usually higher.

Other than Facebook ads, Google paid advertising can work well too. People searching for “reviews” along with a product are obviously very interested in purchasing. The downside is that for more saturated niches, the competition is high and many of them will have lower prices that is hard to compete with.


There are two main risks with the dropshipping model you should be aware of. Luckily, both of them have some good solutions.

The first risk is that you are selling something that you don’t actually have. This means the product might not be very good quality and you are risking high return requests. The solution is to actually buy one of each of the main items you are selling. If the quality is bad, try a different manufacturer. Now, you also have the product to take better product page photos than the ones the manufacturer provides.

The second risk is long shipping times that leave customers unhappy. The solution to that is…

Scaling Your Winners and Buying In Bulk

Once you have proven winners that sell really well, you can buy in bulk from the manufacturers and have the products shipped to a US fulfillment center. Now, when you get orders, the fulfillment center will ship the products to your customers in a matter of days instead of weeks from China. This is no longer dropshipping, it is graduating to the next level.

To Scale or Not To Scale

At this point, you can scale up, hire some employees, and now you’re running a proper e-commerce company. However, if you want a good payday but don’t want running your store to become your full time job, you can do what I did. Take your successful dropshipping store and sell it to someone who wants to run an already built store. The going rate for a dropshipping store can be 10 times or more of the monthly profit.