First off, let’s start with a few statistics;
Dropshipping business was worth $149 Billion in 2020 and is estimated to hit a staggering $557 Billion by 2025
According to Oberlo, global digital buyers stand at 2.05 billion. E-commerce sales accounted for 16.1% of worldwide retail sales.
23% of worldwide retail sales($85 billion) were fulfilled through the drop shipping model.
More than 27% of online retailers have adopted dropshipping and have increased their profits by 18.33% as compared to making their sales.
Still wondering whether dropshipping is still profitable? The above statistics give pointers to a business model that’s not only profitable but here to stay in the long run. There’s more than enough wiggling space for both new and established players. Don’t get me wrong. Dropshipping isn’t a get-rich-quick scheme as viewed by many. If such are your intentions, then I’m afraid it won’t be your favorite cup of tea.
People ask this question year in year out. Yes, dropshipping was a profitable venture in 2020, 2021, and still will be in consecutive years to come, but only if you’ve got the right mindset (building a real business and not an overnight get-rich-quick scheme).
Sounds good to you? Then, let’s hit it off with the basics.
What’s Dropshipping and Why Do it
Let’s break it down really simply.
You have or decide to open an online store. However, you don’t have the stock or products with you or in your house.
When an order is placed on a certain product in your dropshipping store, you place the same order with your dropshipping supplier. A lot of apps such as Oberlo, Nihao Dropshipping exist to help you automate this.
From here onwards, your supplier will handle the rest- preparation, packaging, and dispatching the order. You are never involved in any of the processes or as an in-between.
You only get the profits above the wholesale price once the goods are sold. It’s that simple.
The question then arises. Won’t the customer recognize that the goods ordered didn’t come from you?
In most cases, they will. However, the onus is on you to liaise with your reputable supplier to accept drop shipping, and specifically blind dropshipping. You can read more on blind dropshipping here.
Most people looking to dip their hands into drop shipping or are already into it do it for simple reasons such as;
Increased earnings– If you exercise patience and do it right, one could end up reaping maximally. You could do it part-time or full-time for reasons best known to you. Either way, it remains to be among the perfect ways to create a source of income.
Being your own boss. Some just don’t like the normal 9-5 routine and hate it when others call the shots.
Freedom and independence– You can work absolutely anywhere as long as you have an internet connection. Communicate with your customers and suppliers at the click of a button and manage your business anywhere.
Dropshipping is saturated… it’s a dying business model… the timelines on its returns are just plain frustrating, etcetera.
Well, this is partly true. Dropshipping is quite saturated. What would you expect with an easier business model?
According to Google trends, a lot of people know about dropshipping and how to open their online stores. However, what happens if about 70% of the new businesses don’t apply the required efforts in their stores?.
A recipe for disaster.
Just because people open dropshipping stores doesn’t mean the market is bursting at the seams. Many dropshipping online stores are equally bad since they enter the market with the wrong motives.
What happens when owners find out that their dropshipping isn’t an overnight get-rich-quick scheme? They quit without batting an eyelid. Maybe they got scammed on the pretense that it’s the easiest thing to do through those fake dropshipping guru YouTube videos.
As with everything, there are upsides and downsides to dropshipping.
There’s no need for pre-purchasing and storing products. As a drop shipper, you don’t tie your money in depreciating assets waiting for potential buyers to purchase them. They only pay for products once they are sold
Further, the handling, packaging, and dispatch are handled by the seller. At no point do you get your hands dirty since the supplier handles all the back-end operations.
There have to be reasons why everyone isn’t into dropshipping.
The major put-off is due to the lack of control. You are at the mercy of suppliers. The probability exists that your customer may get the wrong order, the supplier may change their pricing, discontinue your favorite product, or simply just close down their business. Basically, you are at their mercy for the most part if not entirely.
Liability issues tend to crop up once in a while. Sometimes, suppliers are not honest in their undertaking and since you are their vendor, you end up being complicit.
It’s quite difficult to build a brand. Like ghostwriters, all the credit goes to someone else. Customers tend to focus mostly if not entirely on successful brands compared to their shopping experience.
What’s the Future of Dropshipping?
The drop shipping industry is a growing behemoth. With projected growth slated to hit the $550 Billion mark by 2025, it only means that there will be enough slices of the pie for everyone and dropshipping players will get enough room to wiggle around. The future’s arms are wide open for dropshippers with no signs of even a slight industry decline in sight.
The single most challenging aspect remains to find a legitimate and suitable supplier. Further, establish a profitable niche separate from the market to boost your chances of success.
You may also like:
6 Tips to Promote Your Dropshipping Business
As we wrap it up…
Maybe you are wondering whether dropshipping is worth it and what the future holds for it. Maybe you are having doubts about whether you are heading down the right path. We can authoritatively claim that you are on the right track. You just need to steer clear of the scams plaguing the market, have a shift in mindset, and conduct due diligence before venturing in. As for those already in the business, don’t fret. All you need is to tweak a few things such as your SEO strategy and you’ll be right on your way. It may prove hard to bag your first client, but hey, it’s not for the faint-hearted. Keep at it and you’ll definitely enjoy the fruits in the long run.