If you’ve decided to start a dropshipping business, it’s time to put together your business plan. It may seem too serious or too stressful, but a business plan is the first step to a successful online business. It is what guides you towards updating the ideas you have for your dropshipping business.
Don’t worry, we’ll show you in this article how to write a dropshipping business plan like a pro. It is not a big thing. But first, let’s clear up a few things.
Why should you write a dropshipping business plan?
You can argue that some dropshipping companies you know do not have a business plan and that will be fine. However, it does not change the fact that such dropshipping companies have placed themselves at a great disadvantage.
Here are the advantages of having a dropshipping business plan that they lack.
With a dropshipping business plan:
You can better set the priorities and direction for your business to take as the plan serves as a roadmap to the success of your dropshipping business. You can identify potential traps that many ecommerce entrepreneurs have fallen into and get around them. You can save resources and energy, as you can ignore things that would not contribute to the development of your business.
Types of dropshipping business plans
In the dropshipping business, there are two types of business plans that you can write. One is the traditional business plan and the other is the lean start-up plan.
The traditional business plan for a dropshipping business is comprehensive and detailed. It takes time to write and the length is 30 to 40 pages. The advantage of this type of plan is that it describes every detail of your business that will lead to success. This type of dropshipping business plan is a must if you want to attract investors to your business or obtain credit from financial institutions.
The lean start-up plan, on the other hand, is not as comprehensive as the traditional one. It includes only the key elements of a business plan. Therefore, it takes less time to complete and has fewer pages at the end. We recommend this type of dropshipping business plan to self-employed entrepreneurs who have decided to set up an e-commerce store. The main advantage of this type of business plan is that it allows you to easily make changes and adapt.
Step-by-step guide on how to write a drop shipping plan
You can start and complete a dropshipping business plan in six easy steps. That’s how:
Step 1: Decide on your product
You need to start your business by choosing products to sell because that is the premise on which you can run a drop shipping business. However, contrary to popular opinion that says do what you are passionate about, in dropshipping, you do not select a product that you are passionate about unless it has passed the test of:
Cost effectiveness: which is that the product will give you great benefits at the end of the day.
Shipping Cost: This implies that the cost of shipping the products that your customer adds to their cart is bearable.
Value added: This implies that the product is solving problems and has a reasonable number of competitors selling it.
Market potential: This requires you to select products that are tailored to your marketing force and yield benefits for your marketing efforts.
Step 2: conduct a market research
You may not necessarily be conducting market research after you have selected a product, no. Instead, you can be doing both at the same time. This is because, in order to select a product, you have to make sure that there is a market for it. Some of the important tools for conducting market research include:
Google keyword planner. This tool allows you to know the monthly search volume for products; see the difference in search volume locally and globally; gather keyword ideas that you can use to write great SEO content and; Assess how much competition your keywords have to avoid generating content that will never rank in search engines.
Google Trends. This tool will show you the trends right now, as well as weekly, monthly and yearly trends. It will also guide you to generate content that is relevant at all times for different regions.
Great Ecommerce Websites. You need large websites like Amazon and Aliexpress to get an idea of the best-selling products by week, by niche, by trend, and by product type. You can also do a regular search on Quora to see what people are saying about the product you have selected. This will allow you to add more value through your product offering as you will be able to see the challenges people face when using your product.
Step 3: Analyze Your Competitors
Because you want to make a profit, you need to know the caliber of the brands that are already doing what you want to venture into. Ask yourself the following questions when conducting a competitor analysis:
How big are your competitors? Do you have a unique selling point and what is it? Can you beat them and add value?
You will need tools like Similarweb not only to find out who your competitors are, but also the amount of traffic coming to your website and the regions they are coming from. You will also need tools like Moz and Ahrefs to know how strong your competitors are on the web. If your websites have a Domain Authority (DA) greater than 50, you will find it difficult to beat them. Also, you should evaluate your competitors’ social media handlers to learn about their marketing strategies and the reviews they receive from their customers.
Step 4: locate dropshipping providers
Because you do not keep inventory in the dropshipping business, you will need credible suppliers to ship products to your customers. Make sure the vendor you end up with doesn’t overcharge, is trustworthy, offers multiple shipping time options, has enough years of experience in the business, and doesn’t work with as many merchants at the same time.
Step 5: Create an e-commerce website
You will need a website to display the products you are selling, so if you don’t already have one, it’s time to get one. You will need a platform to develop an e-commerce website. Better to research the best online platforms for setting up an ecommerce website and select the best one based on the review you read.
Step 6: Market your product
All reasonable companies market their products. You will also need to market yours. To do this, you will first have to identify who your target audience is, their location, and how much they need your product. After this, you can move on to find out where your target audience spends most of their time so that you can get there. You should also keep spying on your competitors to find out how they market and the channels they use. At the end of the day, get creative with your marketing so that you can gain more of your audience’s attention.
Writing a dropshipping business plan is easy when you understand everything that goes into it. However, it does not end there. You have to start writing one anyway. The best way to do this is by using templates. You will find that after writing your business plan, you will have a better understanding of what your dropshipping business is doing.