Is Dropshipping Worth It? 2020 Guide
One of the most popular ways of e-commerce in the last couple of years is dropshipping. Dropshipping is a solid way to start building your online e-commerce store. But is it still as valuable and easy as it seems? Is dropshipping worth it? You will figure out reading this article!
E-commerce is growing and growing and it won’t stop anytime soon! E-commerce is still growing annually and there are many people starting and making money with their business. It is projected that e-commerce revenue will hit $2.5 trillion in 2022
If you are thinking about starting your own dropshipping store, you first need to know a couple of facts before you can start, which can come in handy later when you have started.
Table of content
If you want to skip ahead to a specific topic in this article feel free to use the links below!
What is dropshipping
In order to tell you if dropshipping is still worth it, it is required that you have at least a basic understanding of what dropshipping actually is.
Dropshipping is a business model whereby an online store doesn’t own the inventory it sells. As stated by xsellco. Instead of owning an inventory, when a customer places an order at a dropshipping store, the store will purchase that product from another thirty party, who will ship it directly to the customer.
Here is an infographic by @younghstlrs to give you a better understanding of how it works.
Dropshipping is often seen as a method for the seller to become rich quick. The internet contains many videos, blogs, etc. from people who claim that they have become very rich doing dropshipping.
This all may sound like a dream. No upfront investment, no inventory, and most of the time not even physical interaction with the product you sell. In reality, this is not true at all in it is all a bit more complicated as it seems.
The beginning of dropshipping
You may have heard from dropshipping for the first time just a couple of months ago. But large companies have been using it for a lot longer than that, to scale their business.
Before Amazon began building its own warehouses, it also relied on dropshipping. Wholesalers and distributors shipped the products directly to the customer. Many people don’t know, but this is also a clear example of dropshipping. It is just the fact that dropshipping nowadays is often associated with those ‘get rich quick’ gurus you see all over the internet.
The evolving of dropshipping
While retailers were utilizing dropshipping to offer a broader selection of products in their store, without investing upfront. Many e-commerce entrepreneurs began using this method as a way to make some quick money. Since then, dropshipping is being used more over the internet.
When doing a search on the internet or youtube, you will get many results with people telling you all about dropshipping. The truth is that most of these people are just telling you all the same over and over again.
- Look for the trending products using Google Trends, Amazon and eBay
- decide your niche
- source the cheapest Chinese supplier on AliExpress
- Build an e-commerce shop using Shopify, wooCommerce or via Amazon
- Use either Facebook Ads or Google AdSense to reach a large audience for your website
- Sell that one product with profit
This may sound like a traditional website, but there are a couple of differences. The biggest of them is the starting cost. The starting expenses are smaller when starting with dropshipping than when starting with a traditional webshop.
The basic subscription for a Shopify store, which is the most used platform for an e-commerce website costs around $29 at the time of writing. The wholesaler isn’t going to get paid before a customer placed an order and the average cost of ads depends on how many ads you run and how many people you want to reach. This can vary from as low as $5 a day to $100 a day or even much more.
Dropshipping is getting more and more monthly searches according to Google Trends. While dropshipping is becoming more popular, new technologies and software is being used to make it more efficient and profitable. One of the best new software for dropshipping is Oberlo, which automated the whole dropshipping process for you.
Dropshipping from a customer perspective
Chances are that you have come across a dropshipping store many more times than you even realized. For example, while you were scrolling through Facebook or Instagram, many times you see those ads about products. Most of the time these are dropshippers.
After doing some research on a product, you will probably notice that this exact product is sold on many websites around the world, which all use the same image and description.
To give you a look at how dropshipping looks from a customer perspective I have found this mini air cooler which is found on many sites which are most likely dropshippers.
As you can see on the screenshot above, this mini air cooler is being sold on AliExpress from around $16. Now let’s take a look at the screenshot below where I show you a dropshipping store on Amazon where the same product is being sold for much more.
This is the exact same air cooler you saw on the first screenshot from AliExpress, except this time the price has been doubled. So this is how dropshipping works.
And this is happening with all sorts of products and many customers don’t know about it. So that’s why dropshipping is still working in 2020. People don’t know that most of these products come from AliExpress until recently when some people started to find out. Recently people have become more aware of the term ‘dropshipping’ and how it looks and works. This is why there is more competition in 2020 than there was a few years back.
Another reason why people tend to buy from dropshippers is because of their reputation. They prefer to buy from a store that is located in the same country as they live in.
Should you start dropshipping
It is a fact that 20% of new businesses fail within their first year. The chances are probably even higher for dropshipping stores because the dropshipping market has been much more saturated in the last couple of years.
If you do the simple math. If 20% fail that means that 80% of the businesses don’t fail in their first year. With that being said, it is still possible to achieve success with an e-commerce business like dropshipping. The thing is that the market has saturated a lot more
To lower the chance of failing within the first year, I would recommend you to do very good product research before you start and pick a good supplier for your products. You should also know your audience and how to target them.
Not only with dropshipping but with any store, try to provide excellent customer service. People will love it and will come back to you if treat the customer as the king. Also, try to get as much feedback from customers (hopefully positive), so you will build a reputation online. This is important because many people are skeptical of random brands showing up on their Instagram or Facebook feed.
To answer the question, yes dropshipping is still worth it, but you must focus a lot more on excellent customer service and the best products. Another thing to mention is that you shouldn’t focus on becoming rich quick and easy. In that case, dropshipping might not be for you. You should also focus on building a brand instead of hopping from trend to trend. In my opinion, when using these tips, you should be able to achieve great results with dropshipping.
want to start with dropshipping?
Check out SaleHoo. SaleHoo is a powerful research tool, supplier directory, and online community for dropshippers, wholesalers, and e-commerce stores. SaleHoo helps you to find the best product for your dropshipping business. You will also get access to their research tool and community.
You can always check it out! If you are not satisfied you can get your money back within 60 days!
So now that the question is ‘dropshipping still worth it’ has been answered you probably should start with your dropshipping business, don’t you? I hope these tips and insights on dropshipping gave you a good and detailed view of dropshipping in 2020, if it is still worth it and how it varies from dropshipping a couple of years ago.
If you want to learn more about other different ways to make a passive income online you can always take a look at another blog post of mine here
Please leave a comment if you have any questions or suggestions regarding this blogpost.