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What to Consider When Starting an Ecommerce Business

By David Oakes | Updated on August 3, 2025

Things to Consider When Starting an E-Commerce Dropshipping Business

So, you are thinking about opening an e-commerce store to sell products. Take a few minutes to consider whether you have the patience and capabilities to be a retailer, how you are going to do it and why.

There are a lot of companies with online e-commerce platforms that say: No experience required, let us set up a website for you, and it’s easy. Be advised: It’s not easy, setting up a website takes time, planning and experience; and it takes a particular type of detail-oriented and thoughtful person to be a business owner, particularly an online retailer.

Do you have a mind that is detail-oriented, and do you enjoy working with numbers and spreadsheets? If you do, then you may be suited to be a business owner. Operating an dropshipping business is complex, and involves marketing, communications, finances, customer service and other skills. You may not have some of the skills now and, sometimes, experience can be a good teacher. But, understanding basic retail concepts and operations should be a first step before launching an online store. Research other people’s experiences to understand why they were successful or failed. Read a book or in-depth articles about online retailing to get a sense of the landscape. Why? Thoughtful preparation gives you knowledge. It tells you what you do not know, and diminishes assumptions and clarifies your expectations.

Understanding the True Cost Structure of an Ecommerce Dropshipping Business

Before launching an ecommerce business, it is critical to understand the full cost structure beyond surface-level platform fees. Many first-time retailers underestimate ongoing expenses such as paid advertising, transaction fees, software subscriptions, returns, chargebacks, and customer service tools. While dropshipping removes inventory risk, it does not eliminate operating costs, and thin margins can disappear quickly without proper planning.

Successful ecommerce businesses model their costs in advance and track performance continuously. This includes calculating break-even points, understanding customer acquisition costs, and monitoring how shipping expenses impact conversion rates. Retailers who fail to plan for these realities often confuse revenue with profitability. Understanding profit margins in dropshipping is essential to avoid cash-flow problems that stall or shut down new ecommerce businesses.

What Type Of Products to Sell

If you have decided to forge ahead and become an online retailer, consider what you want to sell. There are millions of dropship products that can be sold through an online store. Think about products that you know, or are at least familiar with, and whether you have enough knowledge to understand the products.

Do you like equestrian and ranch equipment, were raised on a ranch, and know how they are used? Are you in to the latest fashion trends and what celebrities are wearing? People like pets, and maybe you do too, and pet products could be something that interests you. Whatever the product category, you should have a connection to it, either from experience or interest. This will help you be an expert in this product category. But, more importantly, it should engage you.

Why is this important? Because when you are engaged with a product you are selling, you have enthusiasm, which helps you focus and pay attention to your business.

Choosing Reliable Suppliers and Managing Risk Early

Supplier selection is one of the most important decisions when starting an ecommerce business, especially in dropshipping. Reliable suppliers provide accurate inventory data, consistent fulfillment times, and clear communication when issues arise. Working with U.S.-based dropshipping suppliers reduces delays, disputes, and customer dissatisfaction early in your business.

Working with vetted supplier networks or platforms such as TopDawg reduces this risk by standardizing product data and fulfillment processes. New ecommerce businesses benefit from starting with suppliers that are operationally proven rather than experimenting through trial and error. Supplier reliability is not just a logistics issue—it is a core part of customer trust and long-term success.

Operating An Online Business

Although e-commerce promoters hype the ease at which it is to operate an online dropshipping business, paying attention to and focusing on the business is essential to its success. Having good, sellable products; tracking orders to make sure they are delivered; and providing customer support and dealing with suppliers when an order is not properly fulfilled are just some of the details that will demand your attention and thoughtful solutions.

Finally, when you have decided that you have the ability and knowledge to be an online retailer, thoroughly research and compare online dropshipping platforms. Open a spreadsheet to enter data from each of the e-commerce service providers to effectively compare costs and services. Some e-commerce platforms offer products that you can sell, whereas others do not and go through third-party providers that connect you with suppliers and manufacturers, such as TopDawg. Know before you buy.

When you decide on an dropshipping platform, test drive it. But be prepared to spend several days configuring, designing color schemes and the look and feel, stocking inventory, setting prices and configuring the search engine optimization.

Remember, when deciding whether to become a dropshipper and a business owner, understand the responsibilities and time dedication required to research, acquire, stock, launch your site, and grow your business. You will be better prepared and more successful if you do.

The Importance of Automation and Systems When Starting Ecommerce

Many new ecommerce entrepreneurs focus heavily on design and product selection while overlooking the importance of systems and automation. Manual processes such as uploading products, updating inventory, placing orders, and managing tracking information quickly become unmanageable as sales increase. Automation is not about convenience—it is about accuracy, scalability, and protecting your time as a business owner. Building automation from day one prevents operational debt that can limit growth as order volume increases.

Ecommerce platforms and dropshipping solutions that support automation allow retailers to focus on growth instead of repetitive tasks. Automated systems reduce errors, prevent overselling, and improve customer experience through faster fulfillment and reliable communication. Starting with automation in mind helps prevent operational debt that can be difficult to unwind later.

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Interested in Starting a Dropshipping Business?

If you are interested in starting a dropshipping business, please read TopDawg’s “Ultimate Guide to Launching a Successful Dropshipping Business.” This comprehensive guide aims to equip new dropshippers with the knowledge and tools to start and scale their business effectively. By incorporating a range of e-commerce platforms and emphasizing the selection of a dependable dropshipping partner like TopDawg, the guide provides a solid foundation to start a dropshipping business and build a profitable online store.

Frequently Asked Questions

Starting an e-commerce dropshipping business requires time, planning, and consistent effort, not instant results. New retailers must manage product selection, pricing, marketing, customer support, and supplier coordination simultaneously. While dropshipping reduces inventory risk, it does not eliminate operational complexity. Success depends on preparation, systems, and realistic expectations about learning curves.

The upfront cost of a dropshipping business is lower than traditional retail, but it is not free. Expenses typically include ecommerce platform fees, advertising spend, software tools, transaction fees, and returns or chargebacks. Many beginners underestimate ongoing costs, which can strain cash flow. Understanding your cost structure early helps prevent profitability issues.

Profit margins determine whether your business can sustain advertising costs, operational expenses, and growth. Many dropshippers focus on sales volume without understanding how thin margins can erase profits. Shipping costs, payment processing fees, and returns directly affect margins. Monitoring margins consistently is essential for long-term viability.

The best products to sell are ones you understand, care about, and can market effectively. Familiarity with a product category helps you create better listings, answer customer questions, and build trust. Niche focus is often more effective than selling a wide range of unrelated products. Engagement with your product category improves consistency and motivation.

Suppliers directly control inventory accuracy, shipping speed, and order reliability. Unreliable suppliers lead to delays, cancellations, and customer dissatisfaction. Starting with vetted suppliers reduces operational risk and protects your brand reputation. Working with platforms such as TopDawg helps standardize supplier data and fulfillment processes.

U.S.-based dropshipping suppliers generally offer faster shipping, clearer communication, and more predictable fulfillment. Overseas suppliers may offer lower product costs but introduce longer delivery times and higher risk of disputes. For new ecommerce businesses, reliability often matters more than marginal cost savings. Supplier location directly impacts customer experience.

Automation is essential for managing inventory, orders, and tracking as your business grows. Manual processes may work temporarily but quickly break down as order volume increases. Automated systems reduce errors, prevent overselling, and save time. Starting with automation in place prevents operational debt that is difficult to fix later.

The best ecommerce platforms are those that support automation, integrations, and scalability. Platforms should allow easy product management, order routing, and inventory syncing with suppliers. Beginners should compare platform fees, integration options, and long-term flexibility. Testing platforms before committing helps avoid costly migrations later.

Dropshipping still requires active management, including monitoring orders, handling customer inquiries, managing suppliers, and optimizing pricing and marketing. Business owners must also review analytics, track expenses, and adjust strategies regularly. Dropshipping is not passive income; it is an operational business. Consistency is key to long-term success.

Risk is reduced by planning costs carefully, choosing reliable suppliers, and using automation from day one. Testing platforms before committing and starting with a focused product niche also lowers exposure. Clear expectations around time and effort prevent early burnout. Thoughtful preparation increases the likelihood of sustainable growth.