How to start a dropshipping business in India (2025)

(Last Updated On: December 4, 2024)

Contrary to popular belief, starting a dropshipping business is not a shortcut to making money. However, if done correctly, it can be a profitable and sustainable long-term business opportunity. The dropshipping model eliminates the need for significant upfront investment, making it an attractive choice for aspiring entrepreneurs.

In essence, dropshipping is a method where you sell products online without holding any inventory. Instead, the manufacturer or supplier ships the product directly to your customers.

India’s dropshipping market is rapidly expanding, with a current market size of around $1 billion. It is projected to grow at a CAGR of 25%, potentially reaching $5 billion by 2028. The rise of social media and increased internet access has made online shopping more popular than ever, presenting immense opportunities for dropshipping businesses.

In this article, we will dive deep into the details of starting a dropshipping business in India.

What is dropshipping?

Dropshipping is a straightforward business model where you partner with a supplier who fulfils orders on your behalf. Here’s how it works:

• You create an online store and market products

• Customers place orders in your store

• The supplier ships the product directly to the customer

As the store owner, your primary responsibilities are managing the website, marketing, and customer service. While the concept may sound simple, running a successful dropshipping business requires effort, strategy, and planning.

How does the dropshipping business model work?

The dropshipping business model is pretty efficient and involves three key players:

The customer: This is the person buying the product. They visit your online store, choose what they like, and pay the retail price you’ve set.

You, the drop-shipper: Your job is to market the product and list it in your store at a higher price than what you pay the supplier. This is where your profit comes from.

The supplier: The supplier handles everything behind the scenes—like storing the product, packaging it, and shipping it directly to your customer.

Here’s a simple profit example to make it clearer:

• Suppose the supplier charges you ₹1,000 for a product.
• You list the same product on your store for ₹1,200.
• When a customer buys it, you keep ₹200 as your profit while the supplier fulfils the order.

It’s as simple as that! You focus on running the store and growing your business, while the supplier takes care of the logistics.

Is dropshipping legal in India?

Yes, dropshipping is completely legal in India, provided you comply with all legal requirements. Unless you are not selling outright illegal products, dropshipping is completely legal in India.

Key legal requirements:

• GST registration: Businesses with a turnover of more than ₹20 lakhs must register for GST. Failure to do so may result in penalties in the future.
• Other licenses: Depending on your business structure, additional registrations or licenses may be required.

Advantages of dropshipping

Starting a dropshipping business offers numerous benefits, making it an appealing option for budding entrepreneurs. Here are the key advantages:

Low investment

Unlike traditional e-commerce businesses, dropshipping doesn’t require purchasing or storing inventory upfront. You only pay for products after making a sale, which minimises financial risks and upfront costs.

Flexibility

You can operate your business from anywhere with an internet connection. And manage your store, orders & marketing campaigns remotely, making it ideal for digital nomads or those looking for a flexible work model.

Wide product range

You can partner with multiple suppliers, giving you access to a vast array of products to sell in your store. You can also experiment with different niches and quickly add or remove products without financial constraints.

Scalability

Your primary focus is on marketing and growing sales, while suppliers handle inventory, packaging, and shipping. This allows you to scale your business faster compared to e-commerce business models where logistical challenges grow with demand.

Disadvantages of dropshipping

While dropshipping has many advantages, it also comes with some notable challenges:

Quality assurance

As a drop-shipper, you don’t have direct control over the quality of the products being shipped to your customers. Poor-quality products can lead to negative reviews and dissatisfied customers.

Shipment delays

Since you rely on suppliers for order fulfilment, shipment delays may occur due to factors outside your control. Late deliveries can impact customer satisfaction and hurt your store’s reputation.

Stock shortages

Suppliers may run out of stock without notifying you in advance, potentially causing order cancellations or delays. This can lead to missed sales opportunities and unhappy customers.

Thin profit margins

Intense competition in the dropshipping space often leads to aggressive pricing, which can limit your profit margins.

How to Combat the Disadvantages

Work with trusted suppliers

Choose suppliers with a proven track record of reliability, quality, and prompt communication. Test products yourself before listing them in your store to ensure quality.

Maintain clear communication

Establish strong communication channels with your suppliers to stay informed about inventory levels and potential delays.

Offer exceptional customer service

Proactively address customer concerns, resolve complaints, and offer refunds or replacements if necessary. Transparency with your customers about delivery times and policies can help manage expectations.

By carefully managing supplier relationships and focusing on customer satisfaction, you can overcome these challenges and build a successful dropshipping business.

How to Start a Dropshipping Business in India

Find a dropshipping niche

Picking the right niche is super important if you want to succeed in dropshipping. Here’s the thing—when you focus on products you’re genuinely interested in, it makes everything easier and more enjoyable. For example, if you’re a fan of stationery, you could sell unique items like charcoal pencils or premium canvases. Sounds fun, right?

So, how do you figure out your niche? Let’s break it down:

• Think about what you’re passionate about or know a lot about.
• Use tools like Google Trends or keyword research to check if there’s demand for those products.
• Take a good look at your competition. Are there gaps you can fill or ways to stand out?

Once you narrow it down, you’re one step closer to building a store that customers will love!

Find reliable suppliers

Suppliers are the heart of your dropshipping business—they can make or break it. That’s why finding the right ones is so important. Here’s what to look for in a supplier:

• High-quality products. You want your customers to be happy with what they receive.
• Reasonable shipping times and costs. No one likes waiting forever or paying too much for delivery.
• Smooth Order Fulfillment. The supplier should handle orders quickly and efficiently.

Take your time to research and pick suppliers you can trust—they’ll be your biggest allies in running a successful business!

Create your online store

Once you’ve decided on your niche, it’s time to set up your online store—your customers need a place to shop! Setting up a store with Instamojo is super easy and customizable. 

Watch this short video for a quick walkthrough on setting up your eCommerce website:

That’s it—your basic Instamojo store is good to go. Start adding products, write compelling descriptions, and get ready to sell!

Customization options:

• With the free version, you can choose from two themes.
• For more templates and advanced features, you can upgrade to the premium plan.

To customise your store further, go to the “Online Store” icon on the left-hand side of your Instamojo dashboard.

Build your brand

As a drop-shipper, building a strong brand is your ultimate weapon. It’s what sets you apart in a sea of competitors and makes your store memorable. If you get your branding right, it can do wonders for your business!

Here’s how you can nail it:

Product Positioning

Think about what makes your products unique. Is it the quality, the style, or perhaps the price? Highlight these USPs (Unique Selling Points) wherever you market. Let your customers know why your products are worth their attention.

Audience Research

Get to know your audience like the back of your hand. What are they looking for? What are their pain points? The better you understand them, the better you can tailor your messaging.

Consistent Messaging

Your tone, style, and voice should feel the same across all platforms—whether it’s your website, social media, or emails. This builds trust and helps people recognise your brand instantly.

Think of your brand as the personality of your store—it’s what keeps people coming back!

Market Your Dropshipping Business

Now that you’ve built your brand, it’s time to shout it from the rooftops (well, digitally). Marketing is how you drive traffic to your store and, ultimately, get those sales rolling in.

Here are some proven strategies to get your products noticed:

Social Media Marketing

Platforms like Instagram and Facebook are goldmines for drop-shippers. Post eye-catching photos, create engaging reels, and even run giveaways. These platforms are also great for connecting with your audience directly through comments and DMs.

Influencer Partnerships

Influencers are trusted voices in their niches. Partnering with them can introduce your products to their audience, giving you a much wider reach. Plus, influencer recommendations often convert into sales faster than ads.

Paid Ads

If you’re ready to invest in marketing, Google Ads and Facebook Ads are your best friends. They allow you to target specific demographics, interests, and even behaviours. This means your ads will reach the people most likely to buy from you.

Wrapping up

Starting a dropshipping business in India can be an exciting and rewarding venture if approached strategically. It’s a model that offers great advantages, like low investment and the flexibility to work from anywhere. However, success requires focus, dedication, and thoughtful planning.

The recipe for success? Choose a niche you’re genuinely interested in, work with reliable suppliers, create an appealing online store, and market your products effectively. With the right approach, you can build a profitable dropshipping business that thrives in 2025 and beyond.