If you’ve stumbled upon this article, you might be interested in dropshipping, and before you invest your time & money into this exciting & big business model – you are wondering if dropshipping is something that still works or is dead.
Worry not, dropshipping is going nowhere for the next 5-10 years & is still profitable – the dropshipping industry is expected to touch $557.9 B by 2025.
However, the pace at which things are changing & technology is evolving, brings uncertainty for many business models – including dropshipping.
But it is very true that people are still making good figures from dropshipping & in this blog – I would share my views around why I feel dropshipping is worth it & why every digital marketing newbie or experienced one – who is a bit interested in eCommerce – should try it.
Dropshipping: Saturated, Dead or Still Works?
Dropshipping is not dead & there are online marketers who are generating good business from it. Successful dropshipping entrepreneurs move out of dropshipping to grab more profits by either turning their e-commerce venture from dropshipping model to a typical eCommerce business model – manufacturing, white labeling, etc.
Dropshipping, being a business model, would evolve over time – new tools & dropshipping models may arise.
New products will always get added to the marketplaces & there are tons of profitable micro niches that you might not be aware of.
Only things are changing like a double-edged sword – comes with both up & downsides:
- Strategies that worked 5 years ago does not work now
- More competition is making it harder to crack the successful ad campaign strategy
- New tools are being introduced & quality drop shipping suppliers are now found at premium platforms – like BrandsGateway – that charges at least $29 or more to view products catalog & supplier list. Earlier, AliExpress was the only go-to platform – which is free to use.
There are many other changes happening now & then – dropshipping was fairly easy to work out a few years ago.
The best time to plant a tree was 20 years ago, the second-best time is now.
Things Are Changing: More Competition is driving Advertisment Costs Up
Technology evolution is a double-edged sword: on one hand, it benefits us but on the other hand, new inventions & methods eliminate the old ones.
TO make dropshipping work out successfully, it is important to keep an eye on current market trends & implement the right strategies that are working well.
Competition is increasing & Clicks Are Getting Expensive: Omni Channel Marketing Might Be the Solution
The rise in advertisement costs brings a concern for most marketers – and especially drop shippers. One study reported that the average CPC in Facebook has increased from $0.31 in 2018 to $0.45 in 2019.
Other popular advertisement channels like Search Engine PPC advertising are also witnessing an increase in cost for advertisement.
The rising costs of advertisements can be because of many factors, including
- Changes in consumer behaviour
- Ad networks are consolidating
- Increase in irrelevant traffic & spamming
- Improved advertisement positions
- Improved targeting
However, competition is the main aspect contributing to this increase.
According to Facebook, there were 7 million active advertisers in 2019 on their platform & this number has increased to 10 million in 2020.
These 10 Million advertisers are fighting for the available ad inventory – which is driving the FB ads cost up.
Similarly, most of the advertisement platforms work like an auction environment – the cost is primarily determined by the supply & demand – which means, an increase in competition will drive the rates up
Does this mean dropshipping marketers will be priced out of advertising?
There will always be a way to get more of your budget. What’s important to keep in mind is to not rely only on one platform for your dropshipping business.
This is also known as Omni Channel Marketing – If you focus on more than one advertisement channel for making sales – you’re much better set off for the future.
Below are some marketing types & channels that work well for dropshipping:
- Google (Search Engine Optimization)
- Search Engine Marketing – PPC on Bing, Yahoo, Google
- Email Marketing
- Display Advertismenet
- Native Advertisment
- Facebook & Instagram Ads
- Influencer Marketing
In the end, what matters is the ROI (Return on Investment) – A campaign that made $2000 out of $700 is good.
There Are Many Types of Dropshipping Opportunities
There are a few types of dropshipping that you should be aware of – and each type of dropshipping would require different eCommerce skills to get you started.
Below is an overview of the types of dropshipping:
- Print on Demand: Print on Demand is one of the most popular forms of dropshipping. Print on Demand is basically selling merchandise with a print on it – such as printed Tees, mugs, cushions, etc. In print on demand, you create a design first & based on that design, the product images are created – which then you can market & the real product is printed when any sales occurs – that is, on demand basis
- Niche-Store Dropshipping: Niche store dropshipping is selling products around a certain niche. For example – a store selling products for pets is a niche store, similarly, a store selling products for dogs only is also a niche store.
- General-Store Dropshipping: General store dropshipping is selling any type of products on your store. A general store is basically non-niche focused & is like a typical store that sells products around many categories. Example: A store selling products around categories like Fashion, Home Decor, Kitchen Essentials, Electronics, Pets etc
- High-Ticket Dropshipping: High-Ticket dropshipping is selling highly priced products so that the profit margins & earning potentials can be huge. Example: A store selling massage chairs starting from $500.
- Private Labelling or White Labelling: Private Labelling or white labelling is when you source products from a supplier/manufacturer & sell it with your branding on the product – to appear as if you are the owner of that product.
Dropshipping Model Can Be Tweaked
Dropshipping, being a big business model, does not come with some set of rules or regulations.
Dropshipping is also as working with suppliers who drop ship products.
You could also partner up with a local store that offers delivery & ask them if they are willing to work on a drop-ship model – where you just sell their product & forward the order details to them.
Or you could tweak the business model with the help of suppliers collaboration & come up with offers like “Buy one get one free”
The only concern is that you need to be perfect with marketing mathematics in order to create a win-win situation for all the three parties – supplier, you & the consumer
Or simply, you tweak the pricing & offer a discount when someone do three purchases.
Like Buy 1 for $29 & three for only $79
Another thing you could do is to offer a website membership plan, similar to Amazon Prime wherein consumers will get an extra discount if they are a pro member
All I need to say is that you can tweak your eCommerce strategy.
Buyers Are Increasing & so are the Opportunities
Shopping online has become common worldwide & the numbers are increasing day-by-day. With this shift, more and more opportunities lie in the online market.
According to Statista,
In 2021, over 2.14 billion people worldwide are expected to buy goods and services online, up from 1.66 billion global digital buyers in 2016.– Global number of digital buyers 2021 Report
These 2.14 billion digital buyers can be influenced by a number of sources- Facebook ads, pay-per-click advertising, email marketing, or SEO.
These people shop online for a wide range of reasons:
- Solution to a problem
- Offerings & competitive pricing
Dropshipping is a business model inside of eCommerce, you can tweak the strategy, plan & offering
What About Saturated Niches or Products?
Whenever I do product research for my dropshipping campaigns, I come across a lot of good products but further research brings up tons of other stores selling them.
Does that mean the product is saturated? or should you test out that product with your own angle of selling?
The solution is to strengthen your product research skills to find potential & products that are in high demand.
Don’t worry about product saturation too much & spend time digging down the marketplaces finding potential products.
Below are some tips to identify saturated products:
- Product has been around for years and a lot of stores are selling them
- Check order to reviews on AliExpress
- Search for product on Facebook, if you get more than 10-20 product videos posted recently – all with less engagement, that means people are no longer liking the product
Below are some tips to combat saturated niches or products:
- Sell products that have a recurring demand
- Products that wears down over time needs replacement & are always in demand, these products are sometimes designed to combat market saturation
- Trying a saturated product is okay if the market size is huge, such as health related products.
- A product that went on trend 5 years ago, may still have the potential to make money, try digging deep into popular products that went viral years ago – and see if there is any opportunity to remake money with this saturated product
Every individual has his own angle of selling things – and many times, you can easily make profits out of the saturated products.
It seems like a tough job to crack the saturated product or niche – but opportunities are always there for smaller businesses with niche products to tap into the saturated areas.
Market saturation can be troubling if happened due to outdated technology or trend – it results in no longer new demand for the product & new product innovations can’t be done.
Recommended Read: Saturated Dropshipping Products: Myth? or Do They Exist? by Patryk
Successful Dropshippers Moves Out of Dropshipping
Do you know that most of the successful drop shippers move out of dropshipping?
Yes, in order to make more profits in eCommerce – successful dropshipping entrepreneurs either create their own product or go the other way.
They do not stick to drop shipping for a long time & moves out of this business model once they’ve gained practical eCommerce experience & made some good profits.
That means, dropshipping is a perfect eCommerce business model to get started with – in order to understand how online selling works & sharpen your marketing skills.
Or you can say, dropshipping can also be your gateway to successful online selling.
The low barrier to entry means more competition?
No matter how many others are in the run, those who make it are the ones who work really hard. While starting a dropshipping store would require very little money at first, but to implement a successful campaign – you need capital.
Just like every other business, dropshipping also require at least a $500 – $1000 budget to start with (depending on the target market)
The fact is that most of the students who learn dropshipping & start one after seeing others succeed, do not make it to a happy ending.
Probably because they don’t have had enough money to test out the true potential of their store, or they are not mature enough to dedicate enough learning & skills to make it a success.
Remember that drop shipping is almost free only to get started, everything else that comes along the journey is paid.
Test, Don’t QUIT
You can’t become profitable with Dropshipping until you test hard. There are rare chances that you’ll find a winning product on the first attempt.
Testing is an important part of eCommerce strategy & this is where most of the drop shippers fail.
Success in eCommerce requires marketing skills & tactics
There are a number of ways you could strategize your dropshipping plan, but first, you will have to be resourceful & eager enough to learn about eCommerce before seeing money pouring into your account.
Successful drop shippers have worked really hard in improving every aspect of their marketing strategy. From A/B Testing, finding lookalike audience on Facebook, to sending 200 clicks for product testing- they just test, learn & grow.
Dropshipping is definitely worth it & to reap the rewards from this business model, focus on becoming a better marketer with every campaign you execute.
Competition can be considered as healthy & low barrier to entry also mean – poor quality crowd. Most of the people who get into dropshipping quit after losing some money.
Recommended Read: How Much Money Do You Need For Dropshipping?
Is Dropshipping Worth it & Should I Try?
Dropshipping is a gateway to the eCommerce world & if you’re interested in selling things online – dropshipping is definitely worth trying.
The learnings that come along with dropshipping are tremendous. You not only understand how to set up an online store but also how to market it & make profits out of the little margins. Below are some important business skills that you’ll learn while drop shipping:
- Budgeting and Operations
- Research & Development (Market/Product/Niche Research, Trends/Competition Analysis, A/B Testing)
- Planning & Management
- Store Building Skills
- Design Thinking
- Running Ad Campaigns
and much more.
Dropshipping works out for those who do not treat it like a get-quick rich scheme. Whether your first store fails or succeeds, you will for sure take away the learnings with you – that’ll benefit you in the long run.
And finally, since it’s a low-risk business model that doesn’t incur huge capital and you can be profitable with good products, dropshipping is something that every digital entrepreneur must experience.
Beware of anyone saying dropshipping is dead because many are still making good revenue out of their stores.
Just like every other industry & business model, there is money to be made in dropshipping as well.
When in doubt, just look at the reasons why some are recommending it while others aren’t, and then decide for yourself based on your expectations.
If you’d like me to help you with your first dropshipping campaign, shoot me an email at sureshbhatts4n (at) gmail dot com
Finding it lazy to send email? OH boi, a tough journey ahead for you.