If you’ve decided to start a dropshipping business, then it’s time to draw up your business plan. It may sound too serious or too stressful, but a business plan is your first step to successful online business. It is what guides you towards actualizing 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. There’s no big deal about it. But first, let’s get you clear on some things.
Why Should You Write a Dropshipping Business Plan?
You may argue that some dropshipping businesses you know don’t have a business plan and that will be okay. However, it doesn’t change the fact that such dropshipping businesses have placed themselves at a great disadvantage.
Here are the advantages of having a dropshipping business plan that they are missing.
With a dropshipping business plan:
- You are better able to set priorities and the direction that your business should go as the plan serves as a roadmap to the success of your dropshipping business.
- You can identify potential pitfalls that many eCommerce entrepreneurs have fallen into and circumvent them.
- You can save resources and energy as you’ll be able to ignore things that wouldn’t add to your business development.
Types of Dropshipping Business Plan?
In dropshipping business, there are two kinds of business plans you can write. One is the traditional business plan and the other is the lean startup plan.
The traditional business plan for a dropshipping business is comprehensive and detailed. It takes time to write and the length is between 30 to 40 pages. The advantage of this kind of plan is that it describes every minute detail of your business that will lead to success. This kind of dropshipping business plan is a must-have if you hope to get investors to your business or get credit from financial institutions.
The lean startup plan, on the other hand, is not as comprehensive as the traditional one. This one includes only the key elements of a business plan. Therefore, it takes lesser time to complete and has a lesser number of pages in the end. We recommend this kind of dropshipping business plan to self-employed entrepreneurs who have decided to start an e-commerce store. The major advantage of this kind of business plan is that it allows you to make changes and adapt easily.
Step by Step Guide on How to Write a Dropshipping Plan
You can start and complete a dropshipping businesses plan in six simple steps. Here’s how:
Step 1: Decide on Your Product
You must start your business with choosing products to sell because that is the premise upon which you’re able to run a dropshipping business. However, contrary to popular opinion that says do what you’re passionate about, in dropshipping, you don’t select a product that you are passionate about unless it has passed through the test of:
- Profitability: which is that the product will yield you high profits at the end of the day.
- Cost of Shipping: This implies that the cost of shipping the products your customer adds to their cart is bearable.
- Value Addition: This entails that the product is solving problems and it has a reasonable number of competitors selling it.
- Market Potential: This requires you to select products that will meet your marketing strength and yield returns for the marketing efforts.
Step 2: Conduct Market research
You may not necessarily be conducting market research after you’ve selected a product, no. Instead, you may be doing both concurrently. This is because, to select a product, you must be sure that there’s a market for it. Some of the important tools to conduct market research with include:
- Google Keyword Planner. This tool allows you to discover the monthly search volume of products; view the difference in the search volume locally and globally; garner keyword ideas you can use to write great SEO content, and; evaluate how much competition keywords have to avoid generating content that you will never rank for on search engines.
- Google Trends. This tool will show you what is trending at the moment as well as weekly, monthly, and yearly trends. It will also guide you to generate content that is relevant at every given time for different regions.
- Big eCommerce websites. You need big websites like Amazon and Aliexpress to get an idea of bestselling products by the week, by niche, by trend, and by product type. You can also conduct a regular search on Quora to see what people are saying about the product you’ve selected. This will enable you to add more value through your product offering as you will be able to see the challenges people encounter using your product.
Step 3: Analyze Your Competitors
Because you want to make a profit, you need to know the caliber of brands that are already doing what you wish to venture into. Ask yourself the following questions when you’re performing competitor analysis:
- How big are your competitors?
- Do they have a unique selling point, and what is it?
- Can you beat them and add value?
You’ll need tools like Similarweb to not only discover who your competitors are but the number of traffic that comes into their website and the regions they’re coming from. You’ll also need tools like Moz and Ahrefs to know how strong your competitors are on the web. If their websites have a domain authority (DA) that is above 50, it’s going to be hard for you to beat them. Also, you should assess the social media handles of your competitors to learn about their marketing strategies and the reviews they get from their customers.
Step 4: Locate Dropshipping Suppliers
Because in dropshipping business you don’t keep inventories, you’ll need credible suppliers to ship goods to your customers. Ensure that the supplier you end up with doesn’t overcharge, is reliable, offers several options for shipping time, has enough years of experience in the business, and doesn’t work with so many merchants at the same time.
Step 5: Build an eCommerce Website
You’ll need a website to display the products you’re selling, so if you don’t have one yet, it’s time to get one. You’ll need a platform to develop an eCommerce website. It’s best to research the best platforms online for setting up an eCommerce website and select the best based on the review you read.
Step 6: Market Your Product
All reasonable businesses market their products. You’ll need to market yours too. To do this, you’ll first have to identify who your target audience is, their location, and how much they need your product. After this, you can then go ahead to discover where your target audience spends most of their time so you can reach them there. You should also still spy on your competitors to know how they market too and the channels they use. At the end of the day, be creative with your marketing so that you can win your audience’s attention more.
Rounding Up
Writing a dropshipping business plan is easy when you understand all it involves. However, it doesn’t end there. You need to start writing one anyway. The best way to go about it is by using templates. You’ll find that after writing your business plan, you better understand what your dropshipping business is up to.
