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“Is dropshipping profitable in India?” is a fundamental query that often arises in the minds of prospective dropshippers contemplating the initiation of a dropshipping enterprise within India.
In the following article, we shall delve deep into the potential of dropshipping within the Indian context in 2023. Our aim is to ascertain whether it presents a lucrative business opportunity for individuals considering this path so that you can proceed accordingly.
Table of Contents
Is dropshipping profitable in India?
Certainly, dropshipping has the potential for significant profitability. After establishing your online store, your primary focus will be on continually adding new products and ensuring seamless order fulfillment.
This query carries significant weight and should be posed as a preliminary step before embarking on your dropshipping endeavor.
To achieve profitability, akin to any business venture, it’s crucial to secure a reliable supplier. Engage in negotiations with them to determine the product and delivery costs, and subsequently, apply a profit margin (markup) to these costs to generate income.
If you seek a concise response, I would say “Yes,” provided that specific conditions are fulfilled and diligent efforts are invested to ensure its profitability and success.
Are you interested in delving into the intricacies of how to achieve profitability? Let’s begin the journey!
What is dropshipping?
Dropshipping is basically an eCommerce business model where a seller does not hold the products it sells. When the item gets sold, it is directly shipped from the supplier/manufacturer to the customer.
Over the past few years, the Dropshipping business model has been increasingly capturing the interest of sellers in India. An increasing number of individuals are gravitating towards dropshipping due to its cost-effectiveness and relatively straightforward nature as a business startup method.
In this retail sales approach, you finalize the sale, and the manufacturer or supplier handles the direct shipment of products to the customers. You don’t need to maintain inventory, resulting in minimal overhead expenses.
Additionally, there are other absolute benefits of the dropshipping business model as under:
- No upfront investment
- Low-risk business model
- Work from anywhere
- Part-time or full-time
- No loss if item gets lost/damaged in transit
According to a report by Research and Markets, there is a significant surge in the demand for Dropshipping business models not only in India but also across various countries in the Asia-Pacific (APAC) region. The report forecasts a remarkable annual growth rate of at least 51% in eCommerce sales. This presents a substantial opportunity for aspiring dropshippers in India and stands as the most prominent prospect for online retailers.
Future of dropshipping
Another report, as published by Market Data Forecast, highlights insights from the Ministry of Commerce and Industry of the Government of India. It reveals that India’s e-commerce market was valued at $38.5 billion in 2017 and is poised to surge to a staggering $200.0 billion by 2026, exhibiting a remarkable Compound Annual Growth Rate (CAGR) exceeding 51.0%.
The proliferation of smartphones has revolutionized online shopping, with the increased penetration of these devices and rising disposable income among consumers contributing significantly to the online market’s expansion.
This report underscores the immense potential of the eCommerce market, presenting an ample opportunity for aspiring dropshippers to venture into this sector.
This comprehensive guide provides valuable insights on how to initiate a dropshipping business in India, enabling entrepreneurs not only to establish an online enterprise but also to manage it from any location of their choice. If you’re seeking guidance on how to kickstart your dropshipping journey and make it profitable, continue reading for more information.
How to start dropshipping in India?
The very first step is finding a dropshipping product idea that’ll work in India. Brainstorm product ideas even before you decide on a supplier to make sure you have the right product to thwart competition and maximize profit margin. The majority of the drops shippers first find a dropshipping supplier and then sell the products they have. This is not a good strategy.
To identify a profitable product, you may list some used items (if any) on sites like OLX to test how these products sell, and based on the performance you can always choose the products and make a product strategy around them.
Remember, every drop shipper supplier is looking for opportunities to sell their products. For this reason, if you ask dropshipping suppliers to ship products to your buyers, they will readily agree to your dropshipping idea and dropship for you. However, you need not go with those products unless that is the niche you want.
1. Identify a Winning Product (Brainstorming)
The very first step is to find your niche products. The niche products are more successful. To give you a better idea, let me share that “Men’s Grooming” is a Niche. A niche product example is Beard Oil.
Niche-specific dropshipping stores have a higher conversion rate than Multi-category Dropshipping Stores
In addition, remember, products are always evolving and new varieties are coming so you need to keep on doing your research from time to time and make the changes as needed in terms of design, the technology used in the product. You can also try White label drop shipping to build your own brand.
Points to remember while picking a Niche:
- Discard seasonal niches
- Avoid low-cost items.
- Avoid items with high-return rates like clothing
- Avoid products that have brand loyalty like a Mobile phone or a laptop
- Avoid too heavy machinery
If you are unable to decide on a Niche and want to find product ideas, you could check dropshipping companies in India to find some Niche ideas.
2. Build Your Store (Shopify or WooCommerce)
Once you have made up your mind about which items to sell, the next step is building your eCommerce store and integrating a reliable payment gateway to receive payment from the customers on a secure server. A good store should be user-friendly with easy navigation that delivers a smooth buying experience to the buyers. There should be a search box that displays the results in an organized way.
To build your website, you need to get a domain name and hosting. My personal choice is Namecheap and BigRock (for Indian websites) but you can use any hosting company. You also need to hire someone to create an attractive and user-friendly website. I generally hire website developers from Fiverr. As for the platform, you should go with Shopify. They offer a free 14-day trial.
Ask your website developer to show you a few sample websites and then place an order with them. Creating a blog on your online shop to guide customers to make better purchase decisions can play a vital role. I recommend giving your customers an option to leave comments on your website which will help you serve them better.
Now, on to listing the products, the online store should be made ready with some dummy items first with the Niche products. Sometimes, suppliers may want to see your website before they approve you. Reputed suppliers do not approve of everyone and anyone.
Points to remember while building a store:
- Go for Shopify dropshipping. If the budget is tight, go for WooCommerce
- Optimize site speed
- Make your store mobile-friendly
- Offer multiple payment options
- Add a search box with accurate results
- Showcase your best-selling products on the homepage.
- Pop-up discount if the buyer has stayed for more than 3-4 minutes
For Shopify Users
If you choose Shopify, first set up a storefront, and then install a dropshipping app on your store to browse through their verified suppliers and import the products you want to sell based on price, location, and other parameters.
If your supplier is unavailable through Shopify App, you can manually list the products.
3. Choosing the Right Supplier
By now, you know what you would sell. Now, you can start searching for a supplier that has those items. We are fortunate to have a host of the best dropshipping websites in India like Baapstore, and IndiaMart to name a few even though the concept is not as popular as in Europe and the US. You can partner up with these drop shipping companies in India; however, you should remember that picking the right supplier is very important and should be a well-researched decision.
The right supplier will always be proactive and ensure customer satisfaction at any cost. Such suppliers will have plenty of stock. Most will have fast shipping services with reasonable shipping costs as well, almost the same day provided you place an order with them by 1 pm. Their standard delivery time will be 3-4 days.
While choosing a supplier, think of a manufacturer that does not force you to buy in large quantities. Look for manufacturers (where possible) or real wholesale suppliers. The real suppliers want to do business with serious online retailers only who are capable of giving them high volume business over time. So, their approval may take longer, but once you are approved, they will deliver the best supplier experience. They may offer you even some credit lines.
There are many dropshipping suppliers in India who approve anyone to sell their products within just 5 minutes without asking you a question. I call them fake suppliers. They may impact your business badly in some or another way, so choose only serious suppliers.
Here are some suggestions to help you get the right supplier:
- Pick only the manufacturers or real wholesalers, willing to offer cost-effective items. You can visit their facility, check product quality and ask how quickly they ship their items once you place an order with them.
- You must enter into an agreement with the Indian dropshipping suppliers to ship the items the same day or maximum next working day.
- The suppliers must NOT force you for a minimum order value. They should have a No Minimum policy.
- Ask your suppliers for item prices (single quantity) and compare the price with similar items being sold elsewhere to ensure you are getting the right price so that you can stay competitive.
- Speak to your suppliers to see if they can provide white-label products. White-label dropshipping in India is very successful.
- Your supplier should be able to tell you whether they partner up with an individual or a company. Some suppliers will do their business only with a registered company. In such a case, you may register a company which can be done easily by contacting any Chartered Accountant (CA) online or in your neighborhood.
Recommended Reading: Free and Paid Dropshipping Suppliers
4. Get your GSTIN
GSTIN stands for Goods and Services Tax Identification Number. It is a replacement for Tax Identification Number (TIN).
It is mandatory for you if you sell online in India. This is a basic requirement when you want to start any business in India. However, if you are selling goods that are exempted, this is not required. It may cost you anywhere between INR 750 to INR 2000 depending on who you hire to get your GSTIN.
The documents to register for GSTIN for individuals and sole proprietors are:
- Your PAN card
- Aadhar card
- Proof of address
- Bank account details
You can use your personal or business (current) account. It is a good idea to hire a CA or you can apply for GSTIN online.
6. Market your products
You can now start marketing your products. Marketing your store is a crucial step to gaining success in dropshipping business. Irrespective of what types of products you have, you need to chalk out a solid digital marketing strategy and work on it. You can go to Google Adword or use Facebook marketing campaigns to reach the right audience.
You can do social media marketing to make people aware of your presence in the market. This can be a good start. Using Instagram and Twitter is also a great business idea to advertise your products. You can also contact Instagram influencers to market your products to their followers. You need to spread the word by becoming a part of online groups and communities where people might be interested in your products.
Additionally, you can make your store SEO-friendly to attract internet users to your store generating free organic traffic. It can give you results for a lifetime for free. To start with, you can hire Virtual Assistants (VAs) to write keyword-specific blog posts for you so that your online store can rank on the first page in Google search when someone is looking for the products you are selling.
On top of all this, do not forget to offer excellent customer service to make your business a great success story.
Points to remember:
- Branding: Add a particular color tone or a logo to represent your store. Keep your website language easy to understand and should trigger emotion in visitors.
- Social Media Platforms: Use social media marketing campaigns with promotional videos, high-quality product photos taken from every angle, and customer testimonials. Such content leaves a lasting impression on customers’ minds. Use influencers for marketing your products. Ensure you keep an active social presence.
- Blog Marketing: Showcase your products on Niche-specific blogs.
- Search Engine Optimisation (SEO): Create a separate Blog page on your eCommerce store and write Keyword specific blog posts with key phrases on the web pages to generate free organic traffic to your store and keep it constant.
- Email Marketing: Email automation is still one of the most successful marketing channels. The average open rate across all industries is at 21.80%, and the average click-through rate is 2.78%. Use it effectively but send it only once every 2-3 months.
- Google Ads: Create targeted paid advertising campaigns with Google Ads PPC (Pay-Per-Click) followed by remarketing ad campaigns.
Payment Gateway in India
When building your eCommerce store, you need to integrate a payment gateway to receive online payments from customers.
A payment gateway is an application that makes the online payment process very simple and easy and connects a merchant’s store with the bank.
The payment gateway then verifies the details from the bank and the amount gets transferred from your bank account to the merchant’s bank account.
You can visit their websites to sign up to accept payment using any of these gateways.
- Citrus Pay Payment Gateway
- CCAvenue Payment Gateway
- PayUBiz India Payment Gateway
- Zaakpay Payment Gateway
- Instamojo Payment Gateway
- Bill Desk
- Razorpay Payment Gateway
These gateways accept all payment modes – debit and credit cards, internet banking, Unified Payments Interface (UPI), and even cash on collection (CoD).
Good to Know: All payment gateways perform an initial KYC review to approve merchants to accept payment.
What are the best products to dropship in India?
The taste keeps on changing and so there are no such best products. However, I have compiled a list of the top 10 products in 2023.
- Ring Lights
- Educational products
- Baby Carriers
- Yoga Products
- Face Masks
- Hand Sanitisers
- Artificial Flowers
While picking a product, try to solve a problem and prefer products for which there is no brand loyalty. An example is Rose Seeds.
Why is dropshipping better than wholesale in India?
Dropshippers are able to offer competitive rates to buyers by partnering up with manufacturers directly.
Wholesalers need to work through a distribution channel where they need to first source products from the manufacturers, manage warehouses that cost them. Even after that, they first send the products to retailers who also cut their profit margin and thus the end customer receives the item at a higher price.
On the contrary, drop shippers can sell products to their buyers at a competitive price, increasing their profit margins.
You should always try to use a manufacturer supplier. If you are unable to find one, pick only the profitable in-demand products and use real wholesale suppliers. Some middlemen pretend to be wholesale suppliers. You need to avoid them.
Top Dropshipping Stores in India
There are multiple dropshipping stores in India. I have compiled a list of the 15 best dropshipping sites that you can use to dropship from.
What are dropshipping legal requirements in India?
Let me tell you Dropshipping is completely legal.
However, in order to start a dropshipping business in India, there are certain requirements you need to fulfill.
1. A Registered Business:
To start an online business in India, you need a registered business. If you do not have a registered business, some suppliers will not agree to partner up with you.
2. GST Number:
For an online business in India, GST is mandatory. If you sell products outside India, you need to charge GST from the buyer. It will be an export sale for the buyer.
3. Import Export Code (IEC)
IEC is mandatory to sell outside of India. Additionally, the payment gateway Partners (like Stripe) you integrate with your online store to accept payment from international buyers, may ask for IEC. I had to provide my IEC to get approved for the international payment.
4. Current Account
As dropshipping is also a business, you need to open a Current account too.
Frequently Asked Questions
Is dropshipping still profitable in 2023 India?
Yes, dropshipping is still profitable in India. The Indian e-commerce industry is poised to achieve a market valuation of $200 billion by the year 2023, driven by an impressive Compound Annual Growth Rate (CAGR) of approximately 40% from 2018 to 2023. This growth positions India as not only one of the world’s largest e-commerce markets but also one of the most rapidly expanding ones.
What is the success rate of dropshipping in India?
In this business model, a significant portion of the budget is allocated to advertising expenditures, as dropshippers heavily depend on paid marketing strategies to promote their products. Those who have achieved success in dropshipping estimate that the highest success rate for this business model typically hovers around 10% during the initial year of operations.
Do I need GST for dropshipping?
The rate applicable to a dropshipping business will depend on the category in which the specific product is categorized, as per the current GST rate list for goods. The commission earned by the merchant will be subject to a GST rate of 18%. Since dropshippers generate income in India, they are obligated to pay income tax as per the applicable tax laws.
Is Meesho a dropshipping?
Meesho additionally enables store owners to engage in hassle-free e-commerce by offering dropshipping services to their customers, eliminating the need for any upfront investment.
Is dropshipping legal in India?
Yes, dropshipping is legal. There are no laws around drop shipping that bans it.
In this article, I have tried to cover as much as possible on how to start a dropshipping business in India with a view to if dropshipping is profitable in India. As you progress, you will learn many other tricks along the way like automation where your can sync your inventory with your suppliers in real-time. I recommend using Live chat software as well on your online store for conversion.
Before you do launch your online store, you must speak to your Chartered Accountant for GST which is mandatory for doing your commerce business in India, irrespective of your business turnover.
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