How to Start Dropshipping Business in India

Dropshipping is a great business idea for those who want to eCommerce business but don’t have enough resources like a warehouse for the products, shipping, and billing mechanism, etc.

However, the concept of dropshipping is not new for the western world but in India in its infant stage.

Recent surveys showed us that eCommerce businesses penetrated 74% market in the festive season of October 2020.

SO, there is a huge growth opportunity in the eCommerce business aspected in the upcoming years in India.

The future of dropshipping is bright in India if you do it genuinely and smartly. Along with the benefits of dropshipping business, there are flaws in it, if you don’t do it smartly.

spocket ad

One wrong step takes you to a bad reputation and capital loss so read this guide carefully before heading over to dropshipping business.

I will show you how to do dropshipping in India smartly and make it a long career for you.

Keep reading…


Disclosure: This post may contain affiliate links, which means we may receive a commission if you click a link and purchase something that we recommended. Read more about Affiliate disclosure here.


 

What is dropshipping?

what is dropshipping

First off…

What is dropshipping?

If you have just encountered the word “dropshipping” then I would like to share with you its definition. Those who already know the concept of dropshipping can skip this section.

Dropshipping is a form of retail eCommerce business model where the store doesn’t keep the products in the inventory it sells on their website. 

Instead, after every sale, the online shop purchases the same product from the third party who then processes and ships the product to the customer on the behalf of the online shop. 

Sounds complicated?

Let me make it easy for you…

How Does This Business Model Work?

Suppose, you have a physical shop where a customer came to buy something but you don’t have that product right now. Instead, you have the catalog of the product that you showed to the customer.

He impresses with the product and made a purchase order to you and pay you in advance.

You contacted the wholesaler and they send you the product at the wholesale rate. After receiving the product you delivered it to the customer.

I know, it’s not so common in a physical way. However, it’s already in work in the field of construction material such as plyboards, bricks, sand, etc.

It’s not common in a physical way because the customer visits your shop and demands the actual product the right way.

BUT, in the online world where the showcase of a physical product is not possible, you can do it easily.

If you have a good genuine supplier and a website to sell your products.

This illustration will show you the whole process of dropshipping from ordering the product by the customer to ship the product to him.

how dropshipping works

Is Dropshipping Profitable?

When you try a business like that you haven’t backtested before or seen your friends doing it, it’s normal to be uncertain regarding the profits.

However, people are indeed making millions by dropshipping. It’s also true that 95% of people drain their money in dropshipping hoping for a quick success and don’t get the profit they expected.

The chance of success in dropshipping always depends on two things.

  • Strong management
  • Vision
is dropshipping profitable

If you don’t have a clear vision regarding your business and your management is not good then there is a big chance you would not be successful in any business.

SO, dropshipping is profitable…HUGELY PROFITABLE, if you take it as a serious business.

Let’s have some statistics about dropshipping. These statistics will clear your mind about the profitability of this online business.

  • The first stat is from the year 2017. Back in 2017 23% of online sales ie; $85 billion were fulfilled by dropshipping model.
  • About 27% of online retailers adopted drop shipping models by 2020.
  • Dropshippers earn 50% more profit than traditional online retailers who own their inventory.

I think the above stats would have clear your mind about the profit in dropshipping.

BUT, you can count me, these are global stats…what about INDIA?

Why Should You Start Dropshipping Business in India?

Here comes the question, why should you start dropshipping in India?

Before, discussing this, let’s have some more stats.

According to the Government of India’s Ministry of Commerce & Industry, the Indian e-commerce market was over USD 38.5 billion in 2017 and is expected to reach USD 200.0 billion by 2026, at a CAGR of 51%.

If you don’t know about CAGR then I would tell you it’s the compound annual growth rate. And a 51% CAGR is great for a sector.

eCommerce is an emerging sector in India and dropshipping is just introduced in India within the last 2 years, so if you start it today you will get the benefit of early starters.

With the early start benefit, other benefits are also there to start dropshipping in India. Such as you don’t need a warehouse for your inventory that would be costly for entrepreneurs just starting. You also do it with little capital.

SO, my recommendation is to start with a dropshipping model and slowly transform your business into traditional eCommerce.

NOW you know why should you start a dropshipping business in India, it’s time to show you the process to start dropshipping in India.

How to Start Dropshipping in India?

How to Start Dropshipping From Scratch

In this section, I will share with you the 8 processes to start a dropshipping business and get success in that.

If you follow these processes exactly, I bet you’ll get huge success in dropshipping. These processes will also show you why most of the newbies become unsuccessful in online business.

Well, without wasting any more time, let me explain these 8 processes to start dropshipping in India.

The very first one is

1. Choose a niche

adopt existing niche

Niche or topic or field of operation whatever you say, it’s the most important ingredient to make a successful business.

If you choose the wrong niche, you will lose your money, time, and energy to water a tree that will not be going to give you the fruits you expected.

So, what do I mean by niche?

I have already written 2 comprehensive articles on choosing a niche for your business. You should read those articles to get the idea of how to choose a winning niche that will make you money online.

Here are the articles,

If you don’t want to read these comprehensive guides then I would explain in short choosing a winning niche here.

A niche is a field of operation under which a business is established. It could be anything from shoes to aeroplane. 

A niche can be a broad niche like shoe under which all type of shoes comes, or it can be a micro niche like men’s shoe or men’s canvas shoe.

Choosing a good niche will make your business while a bad one will break?

So, how do you evaluate a niche if it’s good or bad?

There are 2 criteria you should see in a niche,

  1. Audience size (buyers)
  2. Competition

To understand these 2 criteria let me give you an example.

If you choose a broad niche like “Shoes” which is a big niche but there is already a huge competition in this niche then it will fulfill the first criteria but fails in the second one ie; Competition.

Now, if you choose “men’s shoes” then the competition is lower as compared to “Shoes” yet the audience size is huge as it covers half of the world.

Now, what about “Men’s Shoes in India”?

This will trim down the other country audience yet has a very big audience size and low competition compared to the other two niches.

Now, let’s think about “Men’s canvas shoes in India”. This niche has maybe very low competition but not a bigger audience size to generate sales. You have to be limited under “canvas shoes” by choosing this niche. So, this niche will limit your business to only canvas shoes.

So, for me “Men’s shoes in India” is the best niche which has a good audience size as well as low competition.

That’s how you should think when deciding on a niche for your business. If you choose a broad niche with a big competition or a smaller one but a very low audience then you will fail in your business.

All these facts about niche are equally applicable for all types of business including dropshipping

2. Product research

research amazon affiliate niche

It’s equally important for any business to research and choose the right products you want to sell.

If there are not enough products in your chosen niche, what would you sell to your customers? So, it’s important to choose a niche that has a good variety of products.

The other thing in product research is to consider the quality of the product. If your product quality sucks then you would never make a profitable dropshipping business.

You will be just draining your money on marketing but won’t get enough sales.

The success of any business depends on the quality of the product.

If you don’t choose a quality product, however, you can sell the first piece of the product but the customer will never buy from you in the future.

That’s why I always suggest choosing a quality product to sell.

In dropshipping, you don’t have the product in your hand. All you have to depend on your supplier. So, I suggest, first, use the product yourself then sell that to your customer.

That way, you will get to know the quality of the product. If the product satisfies you, there are more chances your customers will be satisfied too.

Also, the variety of products in your niche is important to target your customer in the future. If you don’t have products to cross-sell or upsell then you are leaving money on the table.

Dropshiping and other eCommerce businesses use strategies like upselling, down-sell, and cross-sell to get more revenue. Once you buy something from you, they start nurturing you through email or mobile number and offer more products in the category.

Maybe you’ve already get sponsored emails from Amazon, Flipkart, Myntra, etc. they all use the above strategy to increase their revenue.

You can also do this, provided, you have a wide variety of products to sell to your customers. A “men’s shoe in India” is a good example of a product-rich niche, in which you can offer hundreds of products to your customers.

Chosen a profitable niche and done your product research?

Now, come to the next step

3. Deciding the business capital

dropshipping business capital.png

Well, after choosing your niche and doing your product research the third step in the process of building a great dropshipping business in India is to decide the CAPITAL you are going to use in running your business.

As it’s a physical product selling business, you need a good amount of money to start.

However, it depends on the niche, your marketing needs, and some other factors.

Well, the most beneficial thing in dropshipping is you pay your supplier only when the customer pays.

In dropshipping, when someone buys a product on your website, she pays directly to your business bank account, from there you can transfer the product costing to your supplier and instruct them to ship the product to your customer.

SO, ideally, there is no upfront costing in product purchasing like a traditional eCommerce business. Even you need some extra money in your bank account to manage returns, and replacements.

The above costing is not a big amount and can be managed by anyone.

BUT, in an eCommerce/dropshipping business the big chunk of the capital goes into marketing. Well, we all know that marketing is an important thing in any business. If your marketing is good then you can “sell your pen to anyone”.

So, if you are going to start a dropshipping business then be ready to spend a big money on marketing.

Experts say eCommerce businesses should spend 7-10% of their total revenue on marketing. However, it depends on your goals. If you want more reach then you have to spend more at least in the 1st year of the business.

This costing covers all the marketing tactics including, PPC, social media marketing, chatbots, etc.

Now let’s jump into the next step to start dropshipping in India

4. Find a reputable drop shipping supplier

Business all depends on supply and demand.

And in dropshipping, you are dependable on your supplier. If they do not have a good product then your return percentage will increase that eventually, you will face a loss.

On the other hand, if your supplier has a good product but cannot fulfill the demand then you will have to cancel that increases your cost and decrease your goodwill.

That way, a supplier is the lifeline of any dropshipping business. SO, where do you find good suppliers for dropshipping?

There are 2 ways you can approach the suppliers.

  • Local suppliers
  • International suppliers

How to Find Local Suppliers

You can find the local suppliers in your city’s local markets or you can find out the famous products of other city’s online and approach the suppliers/manufacturers directly. But, before agreeing with them, always do market research if they are reliable or not.

For that, you can ask their neighborhood if they are genuine or not.

How to find International Suppliers

Finding international suppliers is easier than local suppliers. many websites provide a big database of suppliers and manufacturers from all over the world.

Websites like Indiamart.com, Alibaba.com, etc are the big player in this business.

You can search and talk with the suppliers or manufacturers through these websites if they provide dropshipping facility?

You can also ask them to provide sample products as well as about their reliability. The one thing I like about these mediator websites is you can easily recognize good suppliers by looking at customer’s reviews about them.

Whatever method you go to search suppliers always remember few things.

  • Try to sign an agreement with them about the supply.
  • Ask them not to do self-promotion in the product.
  • Ask them for demo products before starting a business with them.
  • Ask the minimum processing and shipping time and cost.
  • Compare their product cost with other suppliers.

5. Paperwork

Before starting any business we need to do some paperwork otherwise it will be illegal in the eyes of your government. So, here is the list of documents you need to start an online or offline business.

For Proprietorship business

  • Your PAN card
  • Company PAN Card
  • Current Bank Account
  • GST number
  • IEC code or import-export code (It’s needed if you sell or purchase abroad)
  • Trade license from the local municipality

For Private Limited/LLC or any other form of business

  • Company PAN Card
  • Company Current Bank Account
  • GST number
  • IEC code or import-export code (It’s needed if you sell or purchase abroad)
  • Trade license from the local municipality

I know you are thinking arranging these papers is hard and costly. Well, any tax professional can arrange these papers for you at minimum costing.

GST and IEC codes are free for individuals, PAN cards can be obtained with 200 Rupees and a current account can be started with just 10,000 Rupees.

You can get these all papers below 20,000 through any tax professional.

However, you can start dropshipping without any papers but I always suggest becoming professional. Professional businesses run over the documents so you should obtain these papers before starting your dropshipping business.

In this way, you will avoid unwanted circumstances from your government.

6. Building an online store for dropshipping

ecommerce-online

Every business needs a place where you showcase your products to your customers. In traditional offline business, it’s a brick and mortar shop, but it’s a website in online business.

In the eCommerce business, the website is the backbone. Without a website, we can’t even think of any online business. Some people are making money however by selling on social media platforms but that’s not the right way to build a successful dropshipping or eCommerce business.

Social media accounts and pages are not your property so you can’t rely on them for a long-term prospect. You must have a website to run your dropshipping business smoothly.

SO, how can you start your dropshipping website?

Well, there are several options out there.

Let’s look into some of them.

Web hosting and WordPress way

You can purchase web hosting and install WordPress and Woocommerce to build your eCommerce platform.

This way is the cheapest one and also the most flexible as you have total control over your website.

BUT, you should be a bit technical to implement things on your WordPress website. However, there are tons of tutorials available online that you can learn to create your awesome WordPress website.

BUT, choosing a web hosting for eCommerce websites is not so easy. But the good news is, I have already written an article on choosing the best web hosting that you must read before choosing your web host.

Also check out my review on Bluehost,

eCommerce Template Platform

There are some eCommerce platforms available that you can use to create your dropshipping website.

Websites such as Shopify and Bigcommerce are the best service providers in this category. Especially, if you are new to websites then with them you can create your eCommerce platform with just a few clicks.

BUT, they are much more costly than their WordPress website.

However, you will get all the features like inventory management, payment gateways, hosting, etc ready-made. SO you can think about them as an option.

White page Dropshipping Website

That’s the one in which you and your dropshipper work together. They provide you white page website that you can promote online and collect payments. When a customer places an order it is automatically processed and shipped by the dropshipper.

This is a great way for dropshipping business however, you cannot promote products from other dropshippers. For products, you have to rely solely on your dropshipper who provides you the white page website.

If you want to start your dropshipping business this way then you must read my article on 12 Best Dropshipping Sites in India.

Now let’s come to the most important step for building a successful dropshipping business.

7. Online Marketing

Every business needs marketing to introduce your products to people.

There are several ways of marketing a business but for dropshipping the most prominent way is online marketing. It’s affordable and the best-converting marketing option tested by many companies and online marketing agencies.

Online marketing itself is a vast field. However, we can divide it into 3 main subcategories ie;

  1. PPC ads
  2. Social media marketing
  3. Influencer marketing

All the online marketing options have their pros and cons. Let us discuss them one by one in short.

First,

PPC ads

PPC ads or pay-per-click ads are the advertisements for which you have to pay whenever someone clicks on your ad. However, there is another variant of this ie; Pay per impression in that the advertiser has to pay per 1000 impressions.

There are many ad networks available on the internet that acts as a mediator between advertiser and publisher. But, the most famous is Google ads.

Google ads give you the option to display your website in their search engine like the below image.

upwork-google ads example

This is a PPC ad that comes above the Google search results when you search for something.

Google ads also provide you the facility to advertise on the same niche individual websites, Youtube channels, and other properties.

According to research, the conversion rate of Google search ads is 4.40% and 0.57% on the display network on other properties.

Social media marketing

Among dropshippers, social media marketing a very popular online marketing option. Believe me, if you do it well and in an organized way, you can generate a good amount of sales from this marketing tactic.

For a detailed guide on social media marketing, you can read my article,

Influencer marketing

In this marketing option, you approach influencers to promote your products on their platforms such as Youtube, social media account, etc. It’s just like hiring a celebrity to promote the product.

If done well you can do it at a very low cost than the above marketing options.

You can use Ninja Outreach to find and approach influencers on different platforms.

8. Analyzing the sales and tweak the process

analyze and tweak dropshipping business in india

The last step is to analyze your sales and tweak where needed.

Let me explain this to you.

Suppose, you start social media marketing and start getting the sales but you want to increase the sales so you have to tweak the audience demographics, size, etc.

Maybe, you have to increase your product quality, decrease shipping time, etc.

The main thing is to see your results and tweak the process where it’s needed.

That’s it.

Conclusion: Is dropshipping a good career option in India?

SO, here were the 8 steps to start a dropshipping business in India. I have tried to describe all the steps in detail so that you can use this information to get success in dropshipping.

Remember, starting a business is not as hard as sustaining it.

BUT, there is a big scope of eCommerce and dropshipping in India so if you can do it well you will be a millionaire shortly.

Well, best of luck with your future

Don’t forget to share this article on your social media channels and do comment below if you have any questions. It will be my pleasure to answer your questions regarding dropshipping business in India.

You may also like,

Gautam Roy is a recording engineer and a blogger from India. He loves music, writing and travelling. He is also an active investor and a successful entrepreneur.  

Leave a Comment

Dropship to US Customers Directly

No Upfront Cost | Reliable Suppliers | Fast Shipping Products | Branded Invoicing
✔️ No credit card required
close-link
Find Products   For US Customers   BEFORE They Go Viral!
close-image