How to Start a Dropshipping Business in 2022
10 minute read
If you always find yourself wondering whether it’s really that difficult to start a business from scratch, then maybe it’s time to legitimately consider your options. Did you know that you could market your very own brand and sell products to customers online with only a small amount of money and modest technical skills? The dropshipping model allows you to sell online from the comfort of your home without holding any inventory. As a dropshipper, you are simply the link between the retailer and the customers.
Singapore’s eCommerce market is projected to reach S$4.3 million in revenue in 2021, and with an annual growth of 10.6%, that can soar to S$6.5 million by 2025. If you want in on the booming eCommerce industry, dropshipping in Singapore offers one of the best entrances. There’s no better time than now to start an online business. We can guide you in the right direction – but it’s up to you whether you’re ready to take the leap.
What is dropshipping, and is it different from eCommerce?
Dropshipping is a method of fulfilling eCommerce orders without holding inventory. In the dropship business model, products are merely displayed on your online store. When someone buys a product on your website, the item is bought from a third-party supplier who packages and ships the item directly to the customer. That means you don’t need to hold products or even deal with the logistics of shipping them! All you need to focus on is how to consistently sell products and build a customer base for your brand.
You can tell the difference between dropshipping and the traditional eCommerce model by who holds the inventory and how orders are fulfilled. Under the eCommerce model, you purchase inventory in wholesale quantities, sell it online, pick and pack boxes, and ship them, all in-house. The cost associated with this model comes from having to outrightly purchase, store and ship all products. An eCommerce business could easily experience heavy losses due to bad product quality or low awareness.
With a dropshipping business, on the other hand, this risk doesn’t exist. You may want to purchase product samples to take your own marketing photos, but even that is not strictly necessary. Most of your costs would come from setting up a website and running ads; other than that, all you need to do is make sure orders are fulfilled diligently and with excellent customer support.
Ready to start a dropshipping business in Singapore?
After all your research, you might be ready to start your very own dropshipping business in Singapore. How do you begin? What are the steps involved in registering your dropshipping business? Are you reading this guide but don’t live in Singapore? Don’t worry, we’ll prepare you to go into this business venture confidently and with the right tools. Let’s get started.
1. Consider the business model’s pros and cons
As tempting as it might be to jump on the dropshipping business model immediately, there are many other factors to consider. Running your own dropshipping business takes hard work and grit. You need to understand how to incorporate your business, build a store on an online platform, and manage costs. As long as you’re willing to do your research thoroughly and understand the processes and finer details involved, you’ve got a lucrative business idea in your hands.
2. Do your market research and competitor analysis
What you sell matters. You should take time to hone in on the best dropship product that has high growth prospects and a ready market. Avoid trending products that sell for a short time. Think about the pricing, as healthy margins are important in ensuring your business can be profitable. As you continue your research, be sure to steer clear of these items that you might not know are illegal.
Stay one step ahead by learning about your competitors. Look at how they are providing customer service and whether their methods work. Find out what successful businesses are doing differently from others, how they drive traffic to their business, and if they run offers to provide incentives to potential customers. Analyzing competitors will help you come up with an effective pricing strategy that can compete in this saturated market.
3. Identify your suppliers
Your suppliers are integral to success in the dropshipping business model. It’s important to select trustworthy suppliers after careful consideration, and always have alternatives in case one fails you. Any comparative advantage you can get from your supplier will play a crucial role in your business. When evaluating potential suppliers, check that their products are high quality, and explore the available shipping options and how long it takes them to process and ship orders. Some well known supplier platforms are Alibaba, AliExpress, TaoBao and Shopee.
4. Incorporate your dropshipping business
Once you have settled on your business model and suppliers, the next thing to do is register your business. This includes naming your company, solidifying your directors and shareholders, and declaring the official business address, among other tasks. It’s a bit trickier if you are not a permanent resident, citizen, or EntrePass Visa holder, but foreigners can still make use of Singapore’s attractive tax framework and free trade agreements via nominee directors, virtual mailrooms, and local corporate secretaries. Although it may seem like an overwhelming task, Sleek has been there, done that, and lived to share the resources. Let us know if you need help incorporating your business.
5. Appoint a company secretary
Why should your small business have a corporate secretary/company secretary? Simply put, the Singapore Companies Act requires each business to have one. They are expected to help with regulatory compliance, making sure your business upholds each government-mandated duty. They assist the directors in the preparation and filing of all required documents. Annual filings like financial statements, annual returns, corporate taxes, and annual general meetings will be handled by the corporate secretary. You can learn more about the integral role of company secretary here.
6. Acquire relevant trading licenses
Once your business has been registered, you can apply for relevant trading licences and permits. The licenses will also vary, depending on the sector your business falls under. Failure to comply with permit and licensing regulations can make you liable to heavy fines and jeopardize your business’s chance of thriving. Here’s a guide to permits and licenses in Singapore if you’re not sure which ones you need.
7. Build, launch, and market your online store
Once you’ve named your company, you can purchase a matching domain name to build your website with brand credibility and awareness in mind. You can find numerous high quality domain names online for sale (e.g. on domain.com). Next would be to develop a brand identity to go with your business name. This would include brand collaterals such as your logo, brand color and fonts.
As soon as you’ve solidified your brand identity, start marketing and building hype around your products. You can do this even before your store is launched by interacting on forums like Reddit and Quora, and putting up advertisements on Google Ads, Facebook, and Instagram. Use web analysis tools such as clickmeter, similarweb and Google Analytics to examine how well your web site is doing and test new methods to bring in sales.
8. Manage your finances
Proper finance management is the key to thriving businesses, no matter the scale of operation. If this is your first business, then it is of utmost importance to get your business finance basics right. You can get started with our 10 tips for excellent financial management. You need to understand your income stream, your sales volume and what the two figures mean so you can make business adjustments when and where necessary. Only by understanding the direction of your cash will you be able to determine the profitability of your business. We recommend using accounting services that integrate with your eCommerce software. Why not try Sleek’s accounting platform, which can link to Shopify and Amazon, among others? Our all-in-one digital platform comes with easy bookkeeping, free business account setup, and an all-star accounting team to help you, too.
9. Keep growing
Once you’ve sold some items and gotten comfortable with your dropshipping routine, you can start focusing on scaling up. How can you scale your business? Find ways to consistently increase your customer base and expand your product offering. Advertise your products to various customer segments and on different platforms. Monitor which products are working and which demographics are buying. You can then get more market share by targeting those segments with content that interests them. Review your supplier’s delivery time and carrier options to increase business while keeping costs down. Better anticipation of trends will guide your future decisions and this is key for scaling your business.
Dropshipping is a great business opportunity if you’re looking to build income from the comfort of your home. Even though this is a viable high-growth business model, you still need to be determined and consistent in your efforts to succeed. If you are ready to turn your business idea into a reality, our expert team is available to incorporate your business and field any questions you may have on how to start and manage your dropshipping business.