Is Dropshipping Worth It in 2021?: An Ultimate Guide
Dropshipping has been around for quite some time now. It is a low-risk eCommerce business model where you do not keep an inventory and all your orders are fulfilled directly by the supplier.
But by any means, launching a successful dropshipping store isn’t a walk in the park.
The competition is growing with each passing day, so it’s only natural to ask yourself, is dropshipping worth it nowadays? or is the market too saturated to break through?
To clear your confusion, in our Ultimate Guide we’re going to shed some light on whether dropshipping is worth your time and money.
Is Dropshipping Worth It in 2021?
Dropshipping is worth it if you want a decent monthly income by starting a business on a low budget. But it cannot make you a ton of money in a short period of time.
Also, launching a successful dropshipping business requires patience, hard work, and resilience. Contrary to what most people believe, it isn’t an easy “money-making scheme”.
What Makes Dropshipping Worth It?
Around 33% of online stores use the dropshipping fulfillment model, and here are a couple of reasons why:
Low Investment to Start
In comparison to other eCommerce business models, dropshipping requires the lowest capital. That’s because a dropshipping store does not have an inventory. Every aspect of order fulfillment is handled by the supplier.
Most of your money will go towards website design and marketing. But platforms like Shopify also have plenty of custom themes, so this is another option that’s worth exploring, especially if you’re on a low budget.
Easy to Manage
Dropshipping stores are easy to manage mainly because there’s no physical storefront and most of the work is handled by the supplier.
In fact, if you automate your dropshipping business, then your orders can even be fulfilled while you’re asleep.
Create Passive Income
Order fulfillment is one of the most time consuming aspects of an eCommerce store. But with dropshipping, this burden is not yours to carry.
That is the reason many entrepreneurs feel compelled to start a dropshipping store as a side hustle. If done right, it can help you earn a stable passive income.
Improved Cash Flow
Dropshipping allows you more control over your funds. Traditional eCommerce stores always have to use a part of their profit for purchasing new inventory.
However, with a dropshipping store, you only pay for one unit at a time and don’t have to worry about any bulk investments.
For most eCommerce businesses, a huge chunk of investment goes towards purchasing the products. If you’re supplying from overseas, then it’s ideally recommended to stock 3 months-worth of units in advance.
With so much inventory, if your store gets suspended or for some reason, the product loses its popularity, all your investment will be wasted. However, with dropshipping, you don’t have to worry about that either.
What are the Drawbacks of Dropshipping?
Like any other business, dropshipping has its flaws and risks. So let’s walk you through some of its biggest drawbacks:
The fact that dropshipping can be started with a low investment also contributes to one of its biggest drawbacks, which is competition.
Unless you’re doing private label dropshipping, there’s a high chance that someone else will copy your listings, product descriptions, and image to start their own store.
To add, only 10% of dropshipping stores succeed in their first year of operations.
Quality issues are quite common in a dropshipping business, especially if you don’t pick your supplier carefully. Ultimately, you don’t know what’s being shipped to your customers.
This is why product sampling is considered to be an essential part of starting a dropshipping store. Some stores offer free sampling, while others charge a certain fee.
But whether it’s free or not, it should always be your top priority.
The supplier you choose can make or break your dropshipping business. Even the slightest of negligence can lead to refunds and negative reviews.
And since you’re relying on your supplier’s stock, you don’t get the opportunity to double-check the product. So in case, there’s a delay or quality issue from the suppliers’ side, you’ll be the one bearing the losses.
The dropshipping business model works by keeping a specific percentage of profit on each sale. Depending on the popularity of the product, that percentage can range anywhere from 10% to 40%,
This is why, unless you’re dropshipping high ticket products, or in other words, expensive products, you won’t make too much profit on each sale.
Even if you’re keeping a 20% profit, a low ticket product priced at $20 will only make you a $4 profit. However, high ticket products start at $200, so at the very least, you’ll make $40 on each sale, which isn’t too bad.
Poor Customer Support
As we mentioned, in dropshipping, your supplier handles every aspect of order fulfillment. So in case something goes wrong, it would be difficult for you to offer competent customer support.
First, you would have to get in touch with the supplier and wait for their response. Only then, can you offer a helpful resolution. And by then, the damage is usually done.
What Does Google Trends Say About Dropshipping?
Many people think that dropshipping is dying, but that’s hardly the case.
In fact, numbers don’t lie and as you can see in the graph below, dropshipping has reached the peak of its popularity in terms of search queries only recently, and it’s still going strong:
These are the results of searches from all over the world. If you have any doubts about whether launching a dropshipping store is worth it in your target country, then filter it out through Google Trends to see the answer.
Here’s another example after filtering out the United States that how many people are searching for the term:
If you were concerned about whether dropshipping is dying, then there’s nothing to worry about. In reality, it’s actually the opposite.
With the growing number of searches, it isn’t surprising why dropshipping has become a highly competitive business model.
Is Shopify Dropshipping Worth It?
Aside from that, Shopify also offers a variety of free theme customization options. So you cannot go wrong with Shopify dropshipping, especially if you’re starting on a low budget.
In addition, if we look at the graph below, then the term “Shopify dropshipping” is still frequently searched worldwide:
Is Dropshipping Saturated in 2021?
More people than ever know about dropshipping nowadays, so to say that it isn’t saturated would be a lie.
But saturation isn’t necessarily a bad thing. With the mainstream use of the internet, other eCommerce business models like Amazon FBA have also seen a surge in terms of popularity – but that’s not stopping entrepreneurs.
The only difference now is that if you want to penetrate the market, you need elaborate planning and a great idea.
Even if you can’t come up with a unique niche, you shouldn’t leave any stones unturned with your marketing efforts. Although the competition is high, most people don’t know what they’re doing.
So with proper planning and a bit of effort, you can rack up some serious dough as a dropshipper.
How Much Profit Can You Make from Dropshipping?
The profit you make from dropshipping depends on your planning and execution.
Some dropshippers are making $100,000 a year, but reaching this figure requires persistence and dedication.
If you’re starting a dropshipping store as a side-hustle for passive income, then it’s still possible to make $2,000-3,000 per month on average.
Is There a Future for Dropshipping?
The eCommerce industry is growing with each passing day, so it’s safe to say that dropshipping has a bright future. Nowadays, a large number of people prefer online shopping over traditional shopping.
And there’s also a growing number of suppliers as well as platforms that support dropshipping. So in short, unless giant platforms like Amazon and Shopify go against dropshipping (which is highly unlikely) it’s going to stay around.
Can Dropshipping be a Long-Term Business?
Dropshipping can be a long-term business, but like any other venture, there may be some ups and downs along the way. Here are a few things that could potentially get in the way of your dropshipping business:
The key to a thriving dropshipping business is to always search for what’s trending.
We’re not asking you to deviate from your brand, but it’s essential to know what people are searching for nowadays.
Most dropshipping stores often die because the store owners get too comfortable. They forget that trends change and so do the preferences and choices of people.
So you don’t have to sell multiple products in your store. Just make sure that the one product you have on your listings can be upsold.
Inefficient Customer Service
We’ve also mentioned earlier that we don’t see dropshipping as a money-making scheme. Don’t only focus on making a profit on each sale, but also on customer satisfaction.
If you’re consistently getting complaints from your customers then try identifying the reason behind it.
Is it late shipping, or is the quality of the product? Regardless of what the reason is, rectify those problems even if you have to change your supplier.
Inconsistency by Supplier
You can purely call this bad luck, but at the end of the day, as a dropshipper, you’re completely dependent on a third party to keep your business afloat.
If for some reason, your supplier disappears or runs out of stock, then that can completely halt your business operations. The only way around this is to always have a backup supplier to give you a helping hand.
Why Do Most Dropshipping Stores Fail?
We mentioned earlier that 90% of dropshipping stores fail in their first year of operation, and here are the reasons behind it:
Going into any business unprepared is a recipe for disaster, and the same goes for dropshipping. In the past, setting up a copy-pasted dropshipping store may have worked due to lack of competition, but today, this isn’t the case.
If you’re setting up a dropshipping store without gaining any prior knowledge about how it works and how to promote it, then you’re bound to fail.
Product hunting has always been the most essential phase of starting an online store. And with so much competition, picking random products is the last thing you want to do as a dropshipper.
Just because your competitor is getting good results with a particular product, doesn’t mean you would as well.
They probably had a solid strategy and knew how to make it work. So you would have to find your own way with the product you choose.
Lack of Investment
Dropshipping is a “low-investment” business model, not a “no-investment” business model. Unfortunately, most people think of it as the latter and try to save every dime that they can.
You don’t have to spend money on purchasing an inventory. But creating an aesthetic website is still essential – in fact, that’s the bare minimum you could do.
The Recipe to Make Dropshipping Worth It
Making dropshipping worth your time and money primarily depends on the following 3 things:
Analyze and Plan Ahead
Dropshipping stores often see a surge in the number of sales, but soon after, they die down. What’s the reason behind that? Well, they don’t plan.
When you’re running any business, analyzing your competition and planning ahead is an ongoing process. You need to have a solid strategy both before and after your business becomes successful.
So make sure to keep an eye out for your competitors. Check the prices they’re selling their products at along with what’s currently trending so you can stay ahead.
Find a Dependable Supplier
Cheaper isn’t always better when you’re searching for a dropshipping supplier. People often seem to forget that the supplier alone is responsible for keeping your dropshipping business afloat.
Before you finalize a supplier, always check the quality of their products, the shipping time they normally take along how efficient their customer service is.
It isn’t a bad bargain to pay a slightly higher price if they check all the boxes above.
NicheDropshipping can help you source and quality-check products at reasonable prices and fulfill your customers’ orders within the given time frame. Send us a message and a dedicated dropshipping agent will gladly assist you.
Focus on Building a Brand
Your main aim as a dropshipper should be to build your own brand. This is also referred to as private label dropshipping. Promoting yourself as a brand promotes your market credibility and as a result, boosts your sales.
Aside from that, your product photographs cannot be stolen if they’re labeled under your brand name. So this makes your store uniquely stand out in the competition.
Judging by the rate the eCommerce industry is growing, it’s safe to say that dropshipping is here to stay and well worth it.
However, if you’re jumping into dropshipping with the mindset of making easy money, then you’ll most likely end up disappointed.
But if you have a solid plan, then you can make it a full-time or even a side business. Just make sure to try finding a relatively low competition product.
Once you’re done with the product hunting phase, start searching for a reliable supplier. In case you’re short on leads, NicheDropshipping has got you covered.
With services including worldwide fulfillment and private label dropshipping, contact us today to learn more about how we can assist you.
About the Author
Over 10 years experience of foreign trade
Help 2k+ customers improve their dropshipping business