Are you in doubt about starting an online store because you’re worried that the typical dropshipping success rate isn’t so high?
We hear contradicting opinions daily from dropshippers who succeeded and those who did not. So, we’ve decided to compare their work processes and see the lessons learned.
Our guide will teach you what to be careful of, how to increase your dropshipping success rate, strategies to succeed at marketing and sales, and more.
Let’s dive straight into it!
What Is The Average Dropshipping Success Rate?
Although there are no official statistics, it’s widely estimated that only around 10% of dropshipping businesses succeed in the long run.
This number was based on data from a few years ago, but the actual success rate today might be even lower.
In our research on platforms like Reddit, we found that many dropshippers report a much higher rate of failure—some estimate that up to 95% of new dropshippers close down within the first month.
Keep in mind these are all public opinions and not hard facts.
The main reason behind this increase in failure is that more people are entering into it unprepared.
Just look at this Google Trends graph for “how to start dropshipping” showing a clear surge in interest over the past few years.
With more people jumping in without fully understanding the business model, it’s natural that the failure rate has risen.
But don’t let these numbers discourage you. Dropshipping can still be a highly viable model with the right planning and approach, and we’ll cover the strategies that make a difference in the sections ahead.
Why Dropshipping Stores Fail: Key Challenges and Solutions
We dug deep and researched to see what are the most common reasons for dropshipping fails:
Unreliable Product Suppliers
An unreliable supplier is one of the biggest causes of dropshipping failures. Successful stores depend on suppliers who communicate effectively, accept orders consistently, and maintain quality and timely shipping.
Tips:
- Order Samples: Test the product quality and delivery speed before committing.
- Keep Backup Suppliers: Have alternative suppliers ready to ensure uninterrupted service if issues arise.
Wrong Niche or Product
Even with strong marketing, a poor niche or product choice can prevent your store from gaining traction. Many dropshippers fall into the trap of selecting trendy but oversaturated niches, leading to high competition and costly ad spend.
Tips:
- Find Low-Competition Niches: Look for profitable niches with steady demand but fewer competitors.
- Balance Demand and Saturation: Choose products with solid monthly search volume, but avoid markets flooded with similar stores.
Weak Profit Margins
Misjudging profit margins is a common pitfall in dropshipping. To understand your true profit, factor in all costs, including supplier pricing, overhead, storage, and shipping. Only after deducting these from your sale price will you see your actual profit.
Tips:
- Aim for Strong Margins: The average dropshipping profit margin is around 15-20%, but targeting at least 20% helps maintain a sustainable business.
- Factor in All Costs: Include every expense in your calculations to avoid unexpected losses.
Wrong Audience or Channel
We already spoke about having the right product, but even a winning product won’t sell if you choose the wrong social media account and target audience.
All dropshippers use different channels to promote their products – Instagram and Facebook Ads, Google search ads, Pinterest, Snapchat, Twitter, TikTok, etc. But, running ads on each of these social media platforms will yield varying results.
That’s because of the different user demographics that use these platforms. For instance, if your product is appropriate for teenagers, TikTok, Snapchat, or Instagram are where your audience hangs out.
Alternatively, if your target audience is 30+ years old and business-oriented, try Facebook Ads, Twitter, PPC ads, or LinkedIn.
Bad Customer Support
Poor communication and a lack of connection with customers can lead to negative experiences and lower success rates in dropshipping. Your role doesn’t end when a product is sold; maintaining good customer relations is crucial.
Tips:
- Stay Responsive: Be available to address queries and concerns promptly, whether through email or customer support tickets.
- Provide Tracking Information: Ensure customers can track their orders, which builds trust and keeps them informed.
- Maintain Communication: Keep the lines open after a sale to reassure customers and prevent feelings of being scammed.
Inappropriate Product Pricing
While it’s essential to ensure your prices cover expenses and maintain profit margins, overpricing can drive customers away.
Unless you’re offering a unique or private-label product, potential buyers have likely encountered similar items at other retailers.
Tips:
- Research Competitor Pricing: Set prices that are competitive to attract buyers without sacrificing your margins.
- Find the Sweet Spot: Aim for a price that is both appealing to customers and profitable for your business.
Delay in Shipping and Delivery
Shipping delays, unsuitable methods, and high costs can severely impact your dropshipping success. Many dropshippers source products from China, which often leads to longer delivery times.
Tips:
- Offer ePacket Shipping: This option is faster and includes tracking, which can enhance customer trust and satisfaction.
- Partner with Fulfillment Centers: Work with a dropshipping agent or fulfillment center that has warehouses closer to your customers to reduce shipping times and improve overall efficiency.
Lack Of Marketing
Insufficient or ineffective marketing efforts can lead to low conversion rates in dropshipping. While setting up an eCommerce store and importing product listings may be straightforward, driving sales is often the most challenging part.
Tips:
- Utilize Organic Growth Strategies: Engage in SEO blogging, social media interaction, and community building through platforms like Facebook groups for long-term visibility.
- Invest in Paid Advertising: To generate immediate sales, consider running targeted ads on platforms like Facebook, Instagram, or Google PPC. This can help bring traffic to your store quickly.
No matter how appealing your products or website may be, without effective marketing, potential customers will not discover your store. Therefore, prioritizing marketing efforts is essential for achieving dropshipping success.
Unattractive Product Page
An effective product page is crucial for converting visitors into buyers. Great product images and a well-structured layout can significantly increase your chances of success, while a poorly designed page can deter potential customers.
A well-designed product page should consist of:
- High-quality product images;
- Clear product and shipping price;
- Good call-to-actions (CTAs) positioned properly;
- Clear and SEO titles and product descriptions;
- Social proof or testimonials;
- Instructions of use or product recommendations;
- Product benefits listed in bullets;
What It Shouldn’t Be: A product page shouldn’t be an article or a blog post with large blocks of text. It should only highlight the most important points and be convincing and easily skimmable.
No Persistence and Patience
A lack of persistence is a significant reason many dropshipping businesses fail. Success in dropshipping often comes from trial and error, requiring continuous testing of strategies, products, and platforms.
Tips:
- Adopt an Analytical Mindset: Regularly analyze your data to identify what works and what doesn’t. This helps you make informed decisions and adjustments.
- Stay Committed: Understand that success may not come overnight. Persistence in testing and iterating your approach is crucial.
- Learn from Failures: Treat setbacks as learning opportunities. Each failure can provide valuable insights that guide your future strategies.
Proven Strategies to Boost Your Dropshipping Success Rate
What do all successful dropshippers have in common? What are they doing right? Here are some strategies we could gather to help you skyrocket your dropshipping success rate:
Choose a Narrowly Targeted Niche
First and foremost, decide on the niche – pet products, beauty, skincare, clothing, sunglasses, etc.
We recommend finding a niche that’s a bit more narrow-targeted to an audience you can reach. Targeting everyone isn’t a great way to do marketing – you’ll just spend money since you’ll likely have a low conversion rate.
Find Profitable Products
Next, it’s time to do some product research and find profitable products that are in demand. Opt for evergreen dropshipping products instead of passing trends.
Ensure it’s possible to set a good profit margin on the product of a minimum of 20% over the supplier price.
Low Competition
Find a product and niche that aren’t overly saturated yet still popular.
You can use different tools like Google Trends, Keyword Planner, Sell The Trend, etc., to catch hot products before they skyrocket in popularity. With the help of those tools, you can be the first to sell the product on the market and increase your success rate.
Some dropshipping businesses swear by being present omnichannel, while others prefer focusing on just one or two platforms.
No matter your choice, ensure your target audience is present on the platform that you choose. Consider the ages of your buyer personas, their gender, demographic, interests, etc.
Reliable Product Suppliers
Finding reliable product suppliers is possibly the most crucial factor that can affect the success of your dropshipping business.
You need to find trustworthy suppliers who communicate and fulfill the orders on time.
Work with a Dropshipping Agent
Another proven way of increasing your dropshipping success rate is by collaborating with a dropshipping agent who can help you in different areas of leading your business.
A good agent will offer everything from product sourcing to inventory storage, white and private labeling, and worldwide fulfillment.
Improve Your Customer Service
It’s much easier to have a high dropshipping success rate if you have repeat customers to upsell and cross-sell. But, for repeat sales, you’ll need customer loyalty, and you can’t get that without a solid customer support system.
Customer service doesn’t stop when someone purchases the product but continues until the product gets delivered.
Adjust Your Offer
Your product pricing and the profit margins you set will also play a significant role in your dropshipping business success rate.
If they’re too high, your product will be expensive, and you risk having no sales. If they’re too low, you risk having no profits or working at a loss.
A/B Split Testing
Split testing is the process of testing an ad on two or more different audiences to see which one performs better.
You could also test different elements of an ad – copy, visuals, headline, etc.
When A/B testing, ensure you’re changing one parameter at a time. Otherwise, it’s challenging to figure out why an ad started performing better or worse.
Video Marketing
Today, video marketing is on a constant rise. People are too busy to read descriptions and prefer to see the actual product in action.
So, regardless of the social media platform, videos can increase engagement with your audience.
Although video ads can seem more expensive at first, their ROI is much higher, making them more worth your time and effort.
Well-designed Website
When it comes to eCommerce stores, the appearance of your website can make or break your business.
Beautifully designed websites that attract customers and present the products in their best light can seriously skyrocket your dropshipping business success rate.
Well-structured Product Page
Your product page is one of the most critical elements of your online store. This is the page where you do the final nudge to close the sale.
With all of that in mind, it becomes crystal clear that your product page should act as a funnel, piquing the interest of the visitor and leading them to make the right decision and click that buy button.
Learn Marketing and Advertising
Getting better at digital marketing, SEO, and social media advertising can give you an edge and increase your chances of success.
Learning how to run paid ads is perhaps the most important skill as a dropshipper. There are tons of free courses out there to teach you about Facebook Ads, PPC, and anything else you feel would be suitable.
SEO and Organic Traffic
Although it’s a long-term strategy, search engine optimization can be a great passive and free source of traffic and sales.
In eCommerce stores, it’s important to include search terms and keywords in the product title and descriptions to ensure they rank on search engines.
If you have a bit of a creative side, try your luck at blogging and start posting SEO content that brings value to your customers.
Consistency and Creativity
Our final tip on improving your dropshipping success rate is to think outside the box and keep engaging and interacting with your audience.
Stay consistent in your efforts, and don’t give up if you don’t see short-term success right away. Instead, always test and compare data and products to find what works best.
Case Studies: Real Dropshipping Success Stories
There are many successful dropshippers out there to learn from, and we’ve covered some of them in our article on the richest dropshippers.
However, a couple of standout individuals show how smart planning and hard work can lead to amazing success in the dropshipping business.
1. Andreas and Alexander
Andreas and Alexander Kahn are known for building a thriving dropshipping empire by leveraging niche products and targeted marketing.
They started with a focus on fitness-related items, a passion they shared, which helped them connect with their audience authentically.
By creating high-quality content around their products and utilizing social media marketing effectively, they managed to build a loyal customer base.
Their success shows just how powerful it can be to choose a niche that resonates with your interests.
Today, their store rakes in millions, proving that dedication and a clear vision can truly pay off.
2. Cole Turner
Another quick story about Cole Turner, one of the youngest dropshipping successes. Starting at just 18, Cole earned an impressive $2 million in sales between March 2019 and May 2020.
He began with a general store, trying out various products, but a standout piece of jewelry caught his customers’ attention.
This success led him to pivot to a one-product store, where he effectively used Facebook ads, generating over $75,000 in sales before passing the store to another entrepreneur.
Cole didn’t stop there; he launched a third store that raked in $2.1 million in just over a year.
His journey shows how the right product and marketing strategy can lead to incredible dropshipping success!
Final Thoughts
Dropshipping can be a great way to start a business, but it comes with challenges. The success rate is estimated to be around 10% to 20%, so it’s crucial to prepare and plan well.
Many dropshippers fail due to issues like unreliable suppliers, low profit margins, and poor marketing.
However, you can improve your chances of success by focusing on a specific niche, researching profitable products, and targeting less crowded markets.
From what we’ve seen, the biggest factor for dropshipping success is building a brand.
If you’re ready to take that step, we offer private label services to help you get started. Contact us for a free quote and let’s work together to boost your dropshipping success!
