Skepticism around any new business venture is typical. People are afraid to take risks—and let’s face it—the cushion of a monthly salary is hard to give up.
And while you may have heard stories about successful dropshippers who are running multi-million dollar eCommerce empires, you might still be asking yourself, Should I take the leap? Is dropshipping worth it?
Starting your own dropshipping business comes with its perks, as you can run your business smoothly even with a full-time job. It’s an order fulfillment method that allows you to sell products without handling inventory and dealing with shipping. Your supplier will be in charge of handling those tasks while you focus on product research, customer service, and marketing.
Sounds easy? Well, dropshipping isn’t a get-rich-quick scheme like some people make it out to be. For any undertaking to be successful, you’ll have to put in the required amount of effort to ensure success. And if you want to scale your business, then you have to double (or triple) your effort.
In this article, we’ll discuss some of the commonly-held fears and preconceptions newbies have about dropshipping. We’ll also share some advice that will help you run a successful enterprise while avoiding the pitfalls suffered by those who’ve made costly mistakes.
Table of Contents
Is Dropshipping Dead?
Short answer: dropshipping is far from dead.
In fact, the latest data indicates that the global market for dropshipping is growing as consumers continue to shift to eCommerce.
Based on data released by Market Data Forecast, dropshipping is projected to grow by a compound annual growth rate (CAGR) of 29% from 2020 to 2025.
The same report also indicates that the fastest growing market for dropshipping is the Asia-Pacific region—a rise that can be attributed to the expansion of Internet connectivity and the growing adoption of smartphones in the region.
If you have the right tools and information (or are willing to acquire them if they currently aren’t within your reach), then you can make your dropshipping business a very profitable venture.
Is Dropshipping Profitable?
Yes, when done right, dropshipping can be profitable. Technological innovation has caused a shift in people’s purchasing habits and more of us are buying products and services from our computers and apps than ever before.
Dropshippers who want to tap into a large and growing market should look to the Far East.
According to market research provider eMarketer, Asia-Pacific (APAC) is leading the global eCommerce growth charge. In 2019, six of the 10 fastest-growing countries for retail eCommerce came from the Asia-Pacific region. India and the Philippines led the pack with more than 30% growth. These were followed by mainland China, Malaysia, Indonesia, and South Korea.
Why Do Some Dropshipping Stores Fail?
1. Niche is too competitive
A niche is a specialized segment of a market for a specific product. There are certain niches that are very competitive, and this kind of environment can prevent newcomers from earning substantial profits. In fact, selecting the wrong niche is one of the main reasons why some dropshipping stores fail.
Take note that you also need to test your niche in other locations. For instance, if your niche store doesn’t get any traction in the United States, you could try marketing it in other countries to see if it clicks with consumers there.
2. Wrong choice of products
Some dropshippers get in trouble with local governments when they’re caught selling products that are restricted or illegal in those areas. Dropshippers might also encounter legal issues because of copyright infringement. In worst-case scenarios, choosing the wrong product could lead to store closure or lawsuits.
If you want to understand the legal challenges that surround dropshipping, check out our comprehensive guide here.
3. Ineffective marketing
First things first: you need to run ads, and you need to do it strategically. If you’re not visible online, then people won’t know that your store exists. Moreover, if your target audience isn’t aware of your presence, that means you’re wasting money showing your ads to people who aren’t qualified to buy your products.
So make sure to hit the sweet spot in marketing: let your store be known to your target audience and entice them to buy your products.
4. Online store is not optimized
Your eCommerce website should be clean, enticing, convenient, and informative.
Too much clutter will confuse your customers, so keep things streamlined. Make sure that call-to-action buttons are displayed prominently, and ensure that the content and design elements are appealing enough to entice visitors to keep on scrolling and adding more items to their carts.
Your website should also be easy to navigate and should be optimized for mobile and desktop browsing. Lastly, it should contain appropriate information about your products, your return policies, and your shipping time.
5. Poor customer service
Any bad customer service experience can lead to low ratings. You’ll most likely lose a customer and even decrease your chances of getting more, since a bad review is always a big turn-off for site visitors. Even worse, a bad review can spill over to social media, leading to more negative publicity for your store.
To prevent this nightmare scenario, you should strive to provide great customer service at all times.
Here’s a pro tip: make customer service one of your top commitments. It’s the bread and butter of any business, so you should always go above and beyond when handling customer concerns.
6. Lack of persistence
Dropshipping is not a get-rich-quick scheme. Just like any other business model, it takes some time (and some degree of trial and error) before you get stellar results.
Don’t fall for anyone who claims that dropshipping is easy or that success is guaranteed overnight.
Yes, this business model will save you a lot of overhead costs. However, you still need to put effective systems in place in order to gain a steady stream of revenue. Do your research, experiment with your processes, and analyze your data. With persistence, you will succeed in due time.
7. Wrong foundation
The accessibility of dropshipping articles and business tips online has its pros and cons. Yes, these resources can tell you what you should do and how to do them. But try reading a bunch of tips from different sources, and you’ll instantly get lost.
Worse, there are many fake gurus out there. So be careful that you don’t learn from the wrong people. No matter how many hours you spend studying and taking action, if you’re listening to the wrong people, you’ll still end up doing the wrong things.
You’d be moving backward instead of forward—and you’ll lose time and energy you could’ve spent on strategies and tactics that really work.
Do a background check before you trust a source. It would be best if you build your dropshipping foundation with the help of a practitioner with a proven track record in the business.
How Can I Ensure the Success of My Dropshipping Store?
1. Choose good-quality products
While there are many things you can’t control as a dropshipper, the choice of which products to sell and where to source them from is still up to you.
Will you take the easy route and order products from whoever you see first in a supplier directory? Or will you practice due diligence and carefully filter your prospects?
Even without ordering samples, you can still find good-quality products by reading reviews (about the products and suppliers) and comparing different suppliers of the same items.
Additionally, choosing good-quality products also means selecting marketable and profitable goods. Don’t go for products just because they look nice to you. Consider your target market and what sorts of items would appeal to them.
Also, you should be careful not to fall for the trap of very cheap products. Cheapest rarely means best, particularly because a cheap selling price pushes suppliers to cut corners on the raw materials and final product quality. If you have the resources, it’s best to order samples from a few suppliers before deciding which products to sell.
2. Ensure quick delivery turnout
Speed is the game-changer in eCommerce. Consumers choose to shop online for convenience and it’s your duty to meet their expectations.
In the time of Amazon Prime same-day delivery, can dropshippers compete? Yes, definitely!
Not every customer has access to Amazon Prime, and there are measures you can take to keep your customers happy despite longer delivery times:
Take note of processing times
Processing time refers to the period when your supplier receives the order and prepares it for shipping. This should be added on top of the actual shipping time so you can provide a more accurate estimated date of delivery to your customers.
Choose Chinese suppliers that offer ePacket shipping
Have a supplier located in Greater China but your target market is overseas? The ePacket shipping option allows products from mainland China and Hong Kong to be delivered to customers abroad faster and at more affordable rates.
Give topnotch customer service
Update your customers regularly on the status of their deliveries. If you have access to real-time updates on their deliveries, you can send them screenshots or give them appropriate links to track their orders.
3. Invest in knowledge
When your business is in the digital space, you have to constantly update your knowledge. Digital marketers have to be on the lookout for updated info because algorithms for marketing platforms such as Facebook Ads and Instagram change frequently.
So go ahead and be proactive! Set aside time in a day or week to study new trends in eCommerce and digital marketing. You can also join communities that share similar concerns.
If you are looking for a community where you can meet other like-minded individuals, you can join the eCommerce Elites Mastermind group on Facebook. The group has over 100,000 members currently. Plus, joining is (and always will be) free.
4. Increase your social proof
Social proof in the form of reviews and ratings are powerful marketing assets. New visitors on your website are more likely to place their trust in your store if you have positive reviews.
If you have a Shopify store, you can install social proof apps. These feature customer reviews on individual product pages, retrieve reviews that have photos, and post real-time updates of purchases. Encourage customers to leave a review by incentivizing their efforts through discounts, cashbacks, etc.
5. Pay attention to profit margins
The main purpose of every business is to earn a profit.
Here’s a scenario: you’re getting a steady flow of sales from certain products on your website. But after deducting shipping costs and discounts, you’re left with little to no profit. This is unsustainable and will lead to your business closing shop in no time. Make sure that all expenses and operational costs are well accounted for before you price your products.
In eCommerce, it’s common to see business owners posting screenshots of their sales. These posts could be inspiring to look at, but keep in mind that what those photos show is revenue, not profit. So don’t just imitate other people’s pricing. Consider all your operational costs, including transaction fees, chargeback fees, refunds, funds held back by payment gateways, and ad spend, among others.
6. Add value to your business
In eCommerce, time is of the essence. Aside from wanting quick delivery turn-out, consumers also want their buying journey to be as smooth as possible. As a dropshipper, customer service is your vehicle towards providing that value to your customers.
So if you can’t give prompt (and polite!) responses to their concerns, then they have a solid reason to jump ship to your competitors. It’s as simple as that. But if you’re committed to your dropship business, make it a point to follow these golden rules of customer service:
☑️ Guarantee that responses are polite, friendly, and quick
☑️ Solve any problems in the first contact
☑️ Listen to your customers’ feedback
With the Right Ingredients, Your Dropshipping Business Can Be Successful
Dropshipping is a legitimate business model that is poised to grow even more in the coming years. With the rising demand for online shopping in different parts of the world, anyone who is determined to do the work can scale high and earn substantial profits.
We hope this article has helped dispel your doubts about dropshipping and has inspired you to take actionable steps in launching your own eCommerce business.
What are you waiting for?
Take action and get ready to become the next dropshipping success story!