What is dropshipping?
A dropshipping business is an online selling model where you do not need to have stock in hand, instead, you have a supplier who can directly deliver to your customers. The dropshipping business model has become very popular in Australia in recent years.
If you are wondering how to start a dropshipping business in Australia then this guide should help you with the necessary information.
We are an eCommerce website design Melbourne company and we can help you build the best online store possible for your dropshipping business.
Table of contents:
- How do dropshipping business work?
- A step-by-step guide to dropshipping business model
- Advantages and disadvantages – dropshipping Australia
- Shipping delay in dropshipping
- Selling on own site vs using third party site
- Best dropshipping eCommerce platforms
- How to do dropshipping business marketing?
- Dropshipping customer service
How do dropshipping business work?
A dropshipping business in Australia has 3 players, you(the business owner), the supplier(s) and the customers, it works in the following manner:
- You as a business owner sell online & receive payment
- Do all the needed customer service
- The supplier will ship the goods
- You pay the supplier & keep the margin
A step-by-step guide to starting a dropshipping business
Step 1: Find a niche
Find a niche where there is a gap or choose an industry you can expect to do well even in the existing competition.
Step 2: Financial & competition research
Do the financial & competition research and do your math to forecast the possible revenue you can make.
Use a keyword research tool like keywordtool.io to check the search volume of primary and secondary keywords to estimate the monthly marketing cost. You can also get help from a Google Ads consultant if you would have a deep understanding. We have discussed more how to do dropshipping business marketing section.
Step 3: Find a supplier
Find a supplier who can supply the goods directly to your customers. You may find a local or overseas supplier.
You also need to consider the shipping delay and the delivery cost.
Step 4: List products online & do online marketing
You can make your products available online on your own website or a third-party website. We have a dedicated section on selling on your own website vs on a third party.
Step 5: Receive orders & process orders
If you start with good planning, it shouldn’t take you long to start receiving orders and processing them.
Advantages and disadvantages of dropshipping in Australia
There are some clear pros and cons of dropshipping in Australia, it may make it easier to decide whether to start a dropshipping business or not.
Advantages of dropshipping
Lower investment
You don’t need a huge investment to get started with a dropshipping business in Australia especially if you sell on a third-party site.
Lower risk
As you don’t buy stock prior to starting the business, it reduces the risk significantly as you do not need to worry if your business doesn’t get a good start.
Massive learning
You can learn things fast which may give you additional ideas to try different business models.
Disadvantages of dropshipping
Shipping delay
This is an issue. We have discussed this in detail in the dropshipping shipping delay section.
Quality issue
Often it’s very hard to ensure the quality of every product as you may not get your products manufactured based on your own specifications.
Excessive competition
You may find excessive competition in the most industries. But you can overcome it with creativity.
Low profit
You may need to pay a higher rate to your supplier as you will be placing orders as you will receive them. The margin is a lot higher if you buy stock in bulk and dispatch it by yourself.
Shipping delay in a dropshipping business
Often a dropshipping business has an overseas supplier and depending on the location there may be some delay in delivering goods to your customers.
To avoid complaints, some prefer to choose a local supplier whereas others work on streamlining the delivery from an overseas supplier.
Some businesses have a hybrid model where they keep some stock in hand and the rest do dropshipping.
Regardless of the mode you choose, it is worth planning and being ready to deal with delays in the dropshipping business model.
Selling on own eCommerce website vs on third-party sites
Generally selling on your own website has a lot more benefits than selling it on third-party sites but for a beginner, selling on a third-party site can provide a good learning foundation.
Here are some key points about both:
Selling on your own eCommerce website
- You will have to allocate the budget to build an online store. The cost is impacted by the complexity, the platform you choose and more. Learn more about website design costs in Australia.
- You will get tonnes of data and statistics about your customers, products and more using this method.
- You will much much greater control than listing your products on third-party sites.
- You have to do your own online marketing.
- You also need to ensure you have proper security on your website. You may experience Google Ads disapproval due to malicious software if your website will be compromised.
Selling on third-party sites
- It’s fast and easy to get started.
- You have limited control over what you can do.
- You also have to pay a significant cut to your platform provider.
- You generally do not have to spend on marketing.
What is the best eCommerce platform for dropshipping?
You can use Shopify, Woocommerce, Custom eCommerce or any other platform. There is no exact best as such.
Is Shopify the best eCommerce platform for dropshipping?
Generally speaking, Shopify is one of the most used platforms for dropshipping business simply because it has most of the components you may need with the right permissions. Having said that the same may not be suitable for all.
How to avoid a possible ban from Shopify?
You should always play by the rules to ensure your business doesn’t get banned and you start to find alternatives at the last minute.
Refer to Shopify policy and guidelines and talk to their customer service if you are unsure.
How to do dropshipping business marketing?
There are many ways you can do dropshipping business marketing in Australia. The two main and prominent PPC marketing channels are Google Ads and Facebook Ads.
If you have a long-term vision then you may also do SEO marketing as SEO takes time. It is also important to know about good SEO vs bad SEO.
While Facebook & Google Ads are faster to produce results but SEO can be more sustainable in a long term.
How much does online marketing cost for dropshipping business?
There is no exact guide as such in terms of the amount you should spend on your marketing.
But if you are thinking of a serious impact then you should consider allocating $3K to $5K per month minimum.
Here are some links to understand the cost planning:
Should I use Google Ads or Facebook Ads for my dropshipping business?
You can use either or both depending on your target audience. Get in touch with a Facebook Ads consultant to learn more about the ROI possibility of using Facebook Ads.
Calculating the return on investment of Google Ads is even easier for a dropshipping business as you can get an idea of the cost per click (CPC) cost using keyword planner. But it is still recommended to work with a Google Ads consultant to get estimates and forecasts.
Is SEO worth considering for a dropshipping business?
If you have the vision for running your business for a long time then SEO is one of the best marketing channels to use.
You can also use AI tools to help with your content writing planning which will help you with SEO. Learn more about ChatGPT and copywriting impact.
But if you are thinking of getting a quick return and not so focused in the long run you may not consider SEO for your dropshipping business and PPC may be a better option for you.
Dropshipping customer service
If you start small then you can manage customer service enquiries easily but when you grow you may need a dedicated customer service team.
It is also important to think about using the best customer service tool available to monitor and manage customer enquiries easily.
Some businesses prefer to keep customer service locally to ensure there is no geographical or cultural gap whereas others consider overseas, virtual assistant teams.
