How Dropshipping Works: From Products to Profits 

Summary 

1. Dropshipping is a business model where you sell products without holding inventory – your supplier handles packing and shipping. 
2. Success in dropshipping depends on choosing high-demand products, optimizing advertising, and managing supplier relationships. 
3. Focusing on reducing advertising cost and improving average order value to boost your profitability. 

What is Dropshipping? 

Dropshipping is a business model where you sell products online without managing inventory, packing, or shipping. Instead, your supplier does all of this for you. You simply forward customer orders to the supplier, who ships the product directly to your buyer.  For example: 

• Supplier cost: ₹200 
• Selling price: ₹500 
• Profit per order: ₹300 (before expenses). 

It’s a low-risk, low-investment way to start an online store, which is why it’s so popular among new entrepreneurs. 

How Dropshipping Works: Step-by-Step

1. Pick a Niche and Products – Focus on products with high demand but low competition. Popular categories include toys, gifts, and home essentials. Finding trending items can make a huge difference, but remember: market trends can change fast. Do thorough research before committing. 
2. Set Up Your Online Store – Use platforms like Shopify or WooCommerce. A basic store setup costs ₹5,000–₹10,000, covering hosting, domain, and design. Ensure your site is mobile-friendly and optimized for conversions with clear product images and engaging descriptions. Business incorporation and GST registration fees are extra.  
3. Partner with Reliable Suppliers – Reliable suppliers are crucial for your dropshipping success. Choose those with fast shipping and good reviews. A platform like DropMojo helps you source products from 100s of manufacturers, since DropMojo is powered by Sellet – a tech enabled distributor for toys, gifts, etc.
4. Market Your Products – Digital advertising drives most sales in dropshipping. Platforms like Facebook and Instagram are ideal for reaching your target audience. For example, the cost of acquiring a customer can range between ₹100–₹150, depending on your niche and targeting. 
5. Manage Orders and Deliveries – Once a customer places an order, forward it to your supplier. They handle everything from packing to delivery. Your role is to provide great customer support and ensure smooth operations. 

How to Make Profits in Dropshipping? 

Here’s a simple profit calculation per order: 

• Product cost (supplier): ₹200 
• Selling price: ₹500 
• Shipping cost: ₹50 
• Advertising cost (per sale): ₹100 
• Margins per order: ₹150 

While margins typically range from 10–30%, increasing the average order value (AOV) and optimizing ads can significantly boost profitability. 

Tips to Maximize Profits 

1. Reduce Advertising Costs – Use retargeting ads to bring back customers who didn’t purchase the first time. Retargeting can lower ad costs by 20–30%. 
2. Increase AOV – Offer bundles or upsells. For example, pairing a ₹500 toy with a ₹200 accessory can increase revenue without additional ad spend. 
3. Negotiate with Suppliers – Build strong relationships to secure discounts. Even a 5% reduction in product costs can make a big impact on your bottom line.

Challenges in Dropshipping 

1. Shipping Delays: Partner with local suppliers to minimize delays. 
2. Thin Margins: Optimize costs to ensure profitability. 
3. Market Changes: Trends and costs can change rapidly, so keep adapting your strategy. 

How DropMojo Can Help

DropMojo simplifies dropshipping for Indian entrepreneurs by providing: 

• A Wide Catalog of Products: Access a variety of categories like toys and gifts at competitive prices. 
• Reliable Service: Fast shipping and video-proof packaging ensure trust and transparency. 
• Hassle-Free Operations: Automated order management saves you time so you can focus on scaling your business. 

If you’re looking for a trusted partner, DropMojo is here to help you succeed.