What is dropshipping, and how can you get started?

Ready to start making money online without buying stock upfront? Dropshipping is a low-cost way to start selling online without holding any stock. You list products, and – when someone buys – your supplier ships it for you. It’s hands-off, flexible, and easy to scale. 

In this article, we’ll share how dropshipping works and how to get started with your own store.

What is dropshipping?

Dropshipping is a way to run an online store without holding stock or shipping anything yourself. When a customer buys a product, you pass the order to your supplier, and they send it straight to the customer.

The benefit of this is that you don’t need to manage packaging, warehousing, or logistics. Some suppliers also offer on-demand printing or customisation, such as adding your design to a product before it’s shipped.

It’s a low-risk way to test ideas without buying stock upfront, but since you don’t control shipping or quality, it’s worth vetting your suppliers. Dropshipping works best when you focus on branding and customer experience, and let your supplier handle the rest.

Dropshipping vs. affiliate marketing

Affiliate marketing is when you earn commission by promoting someone else’s product. With dropshipping, you run the store and brand, and your supplier handles the stock and shipping.

In affiliate marketing, you’ll receive a unique product link that you can promote through your website, advertisements, or social media posts. When someone clicks on your link, you’ll earn a small commission. Affiliate marketing has an even lower barrier to entry than dropshipping. You don’t need business knowledge, a branding strategy, or a domain name. However, it also has a smaller margin, as you’re only receiving a small portion of the sale.

With dropshipping, you receive the majority of the sale, minus the wholesale cost of the product and shipping.

How dropshipping works

Let’s walk through a typical dropshipping process one step at a time.

Step 1: Work with a dropshipping supplier

First, find a dropshipping supplier that stocks the products you’re looking to market. Once you contact them and reach an agreement, they’ll keep the products in their warehouse, handle packaging, and ship to your customers whenever they make an order. 

Step 2: Build your brand

Once you know the products you’re selling online and have a partner to handle logistics, all that’s left to do is build your brand. Build an online dropshipping store, a business name, a logo, and key brand messaging to differentiate your business from your competitors.

Step 3: Receive orders

Receiving orders works as you’d expect. A customer visits your website and clicks to buy online. They checkout, pay, and receive an order confirmation. As far as they know, the stock comes directly from your online business to them.

Step 4: The supplier handles the rest

Next, forward the order details to your dropshipping supplier. They’ll handle all of the details, package your product with custom branding, and ship the order to your customer’s location. 

Step 5: You gain a happy customer

Lastly, the customer will receive their product. If all goes well, you’ve just gained a happy customer. If it doesn’t, your dropshipping partner will work with you to provide customer service.

The benefits of dropshipping

Given the increased use of digital channels for shopping and the business opportunity it represents, dropshipping can be a way to level the playing field and allow smaller players to act more like a large enterprise. Dropshipping also offers other advantages, including:

• Lower startup costs: You don’t actually buy your own inventory, meaning there’s less of an initial investment. You’ll also keep low overheads, potentially increasing profit margins over time.
• Scalability and flexibility: Dropshipping makes it easy to test new products and grow without the pressure of holding stock. You can start small, add new items as you go, and sell through your own site or marketplaces like Etsy.
• Global reach: One common roadblock for small businesses is getting products overseas. Dropshipping gives businesses a global reach, allowing them to sell worldwide without jumping through logistical hoops.
• Time to focus on other high-value tasks: Best of all, dropshipping may make it easier to focus on areas of the marketing and customer experience that require greater attention and creativity.

The drawbacks of dropshipping

Every retail model has its pros and cons. Despite the benefits, dropshipping does have some notable challenges. Let’s walk through some of the cons of dropshipping.

• Loss of control: If you outsource your manufacturing, custom packaging, and shipping to a dropshipping supplier, you’re putting a lot of trust in that business. If there are supply chain issues, you can’t address them as quickly as if it were your own logistical network. 
• High competition leads to low-profit margins: The beauty of starting a dropshipping business is that it’s so accessible. Anyone can do it, and many people will. Unfortunately, that also means there’s a lot of competition. Many businesses attempt to undercut competitors’ pricing to stand out.
• Building your brand: Carving out a brand identity is essential for customer loyalty. However, this can be harder when you sell third-party products. For instance, it’s more challenging to ensure quality and promise excellent service every time.

Five expert dropshipping tips

The good news is that these drawbacks are avoidable, provided you implement best practices. 

1. Choose the right niche

The dropshipping market is saturated. Do some competitor research and take the time to choose the right niche. You ideally need a market that isn’t overly competitive. There has to be room to get your foot in the door. Equally, you should choose a segment that you’re genuinely passionate about. 

2. Partner with a reliable supplier

Choose your supplier carefully. Don’t just opt for the partner that offers the cheapest rates or the best package deal. Be diligent and shop around carefully. Search for a supplier that is reputable, communicative, transparent, and, above all, committed to creating a quality product. 

3. Differentiate yourself in other ways

Price isn’t the only way to differentiate your product. Incorporate branding so consumers have something tangible to associate with your products. Commit heavily to customer service. 

Create intelligent or humorous marketing campaigns that make your brand memorable. The more you can do to stand out and build a strong brand identity, the better your chances of carving out market share. 

4. Take the blame

Authenticity goes a long way toward promoting customer loyalty. If your customers complain about missing items or poor service, own it and tell them how you will fix it.

5. Track performance and improve

Use data analytics to improve your business strategy regularly. Learn more about your target audience, monitor KPIs, and track the competition. The more you start understanding customer habits through market research, the easier you’ll be able to work your way to the top of your niche.

What success looks like: Faster delivery times and access to a larger product range

The beauty of dropshipping is that businesses of all sizes can use the model to sell directly to Australian customers. 

One successful case study is Temple & Webster, an Australian-based furniture and homewares store. They’ve established successful partnerships with hundreds of reputable suppliers, which allows them to offer more than 200,000 products to customers, without having to stock (large and often bulky) inventory. This not only reduces the risk of holding stock they can’t sell, it also avoids hefty overheads.

In addition, the dropshipping model allows Temple & Webster to send products directly to customers, which enables faster delivery times by removing the ‘middle man’.

What to look for in a dropshipping partner

If you’re seriously considering getting started with dropshipping to launch and scale your eCommerce operation, thoroughly vet your partners. Some of the areas to consider and explore include:

• Flexibility: Many platforms are built for efficiency, which can limit how products are packaged or fulfilled. Look for partners that let you customise where it counts so you can stand out.
• Visibility: You’re still accountable to your customers. Make sure you’ll have access to inventory levels so you don’t sell products that are out of stock.
• Integration: Order data should flow smoothly. Check that your CRM and marketing tools can connect with your partner’s system.
• Promotions: Sales, bundles, and offers can boost conversions. Ask if you can run limited-time free shipping or themed bundles.
• Quality of service: Damaged items hurt your brand. Make sure your partner has strong quality controls across fulfilment.
• Safety: Many shoppers expect contactless delivery. Choose a partner that offers low-friction sign-off options.
• Exchanges and returns: Returns are part of the job. Understand the costs, speed, and how the process integrates with your customer service tools.

Are you ready to start dropshipping?

If you’re looking for a way to make an income from home and have the skills to curate a brand around a product, dropshipping might be a great option for you. Remembering to vet potential suppliers and developing a plan for how your business will stand out will set your new dropshipping venture up for success.

Ready to take control of your online store? Salesforce Commerce Cloud helps you launch faster, personalise every touchpoint, and scale with confidence.

FAQs

Is dropshipping profitable in Australia?

It certainly can be, but there isn’t a guarantee. The great thing about dropshipping is that you don’t need to pay for and store your products in advance, meaning it’s fairly low risk. If you launch a product and there isn’t much interest, you’ll be able to pivot until you find something more profitable.

How does dropshipping compare to other business models?

Dropshipping is a fulfilment method, not a full business model on its own. You’ll still need to figure out things like your supply chain, marketing strategy, and how you’ll reach people on social media. It’s a great way to start selling online without holding stock, but long-term success comes from building a great brand around it.

What’s the difference between dropshipping and selling on Amazon?

With dropshipping, you sell the product on your own ecommerce website and your supplier ships directly to your customers. You keep more control over the supply chain, brand, and customer experience. Selling on Amazon can be easier to scale at first, thanks to its massive audience, but it comes with higher fees, lower profit margins, and less control. Both are viable business models. It just depends on how much you want to dive into the branding and marketing side.

Is dropshipping legal in Australia?

Yes, dropshipping is legal in Australia. You can run a dropshipping business as long as you follow standard business laws, like registering your ABN and ensuring your products meet Australian consumer standards. Make sure you understand your obligations, as even if a third party handles fulfilment, you’re still responsible for things like returns and product quality.

How do I find reliable Australian dropshipping suppliers?

Start by using a trusted supplier directory or an ecommerce platform with vetted Australian suppliers. Working with local partners means faster shipping, better product quality, and fewer customer service issues. Look for clear plans and pricing, good communication, and a product range that actually makes sense for Australian consumers.