[UPDATED] Is dropshipping dead?! One of the biggest ecommerce business models that made people millions by just sitting in their homes and arbitraging products can’t die so soon… Is it the case? Let’s find out, is dropshipping still profitable!
Digital entrepreneurs are often haunted by the uncertainty of the profitability of their business model. With the pace at which technology is evolving, we now have both a ray of hope and a grim understanding that new digital business models are short lived.
The Reason?
Technology is a double-edged sword: on one side, it benefits the users and brings new ways of conducting businesses; on the other, it obliviates old methods as fast it creates new ones. For example, Search Engine Optimization (SEO) was fairly easy around 10 years ago. But now, as Google has released hundreds of updates over time, the methods of ranking websites has completely changed.
Similarly, cost per click (CPC) methods such as Google AdSense, Chitika, and BidVertiser, etc., are all outdated. They’ve now been replaced with native advertisements and content discovery platforms.
In short, most business models will be outdated by the time you decide to adopt them.
Coming back to dropshipping, we’ll have to analyze various viable dropshipping methods, look for stores that are still prospering under the dropshipping banner, and search for marketing platforms that make dropshipping easy for the users.
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Is Dropshipping Still Alive? Google’s Proof
People often ask if AliExpress dropshipping is dead. One way to determine if it’s dead or not is by searching its trend on Google.
You can see that while it did get a dip last year, it is still going strong. And, if you check the Google trends for US, you will notice that more people within the US are searching for dropshipping terms. It is a shocking surprise.
The trend highlights five-year data and shows how popular it has become in the last few years alone. This also presents one more notion that dropshipping was a business before AliExpress became popular. Let’s see if AliExpress was popular five years ago or not.
It is totally the opposite. AliExpress was more famous in the US a few years ago. Now its popularity is going through a downward spiral.
Is Dropshipping Worth it?
The debate on the viability of Dropshipping in 2019 via the Fastlane forum
If you want to earn a decent income by starting your side business, then dropshipping is definitely worth it. However, if you want to make lots of money in a short amount of time, then dropshipping is definitely not worth it.
For dropshipping to work successfully, you will have to invest time, money, and effort.
Here are a few things that are slowing down the pace with which dropshipping businesses were growing:
- High shipping duration
- High cost of goods
- Lack of customer support
- Refunds take a lot of time
- Product quality is too low
- Unprofessionalism of sellers
A proper ecommerce business needs to satisfy the customer. But when it comes to dropshipping business, we see that customers are often neglected for profit. In fact, most dropshippers are using Shopify stores for their products. They don’t focus on maintaining high standards of their stores as they are selling the items through social media advertisements.
They only tend to sell a product to a customer only once. This leads to poor customer experience and often decreases their trust in the business model as a whole.
What is the remedy for such a situation?
The remedy is simple. Treat customers with respect. We have many stores that are selling dropshipping items at a high margin and are still thriving. These include Bluecrate.com, wish.com, and a few others.
Download List of 150+ Best Dropshipping Companies and Suppliers for Free
Is Dropshipping Dead in 2020?
Every year there is a new discussion about dropshipping becoming dead. However, that is not the case because dropshippers usually don’t die but change the way they work. A few years ago, AliExpress alone was the sole king in dropshipping. With time things changed and dropshippers now directly engage with wholesalers for their products.
Similarly, there are many different forums available where people are trying to convince the buyers and clients that dropshipping isn’t dead.
An example of that is:
There are many individuals who tend to post this question on Quora, Reddit, and even other Q&A websites. Here is what dropshippers had to say when the question ‘is dropshipping dead’ was asked on Reddit.
Now, you can understand that dropshipping is still going strong in 2019! In fact, this is the right time to start your dropshipping business. Here is why:
- The world has embraced ecommerce
- More people are buying online than ever before
- Merchants understand the concept of dropshipping and are willing to work with them
- Sending online payments is easy
- Can help with online paid marketing campaigns
- The upfront cost is almost zero
Why Are Some Dropshipping Stores Thriving?
The reason some dropshipping stores are thriving while others aren’t is that these dropshipping businesses keep customers first. They give priority to their buyers and try to solve all their needs. Yes, they sell dropshipping products by keeping a little margin, but they compensate that to the customer by allowing him to get refunds faster or to help them with all the questions they have.
So, if dropshipping businesses want to stay sustainable in 2020, they need to give their customers a priority.
Source: Quora
Is Dropshipping Still Profitable?
Yes. Dropshipping is still profitable in 2020 because of the number of ecommerce activities taking place around the world. It is not only profitable but thriving! Ecommerce and dropshipping profits have reached over $4 billion, which is a 7 percent year on year increase for the last 10 years.
Moreover, small retailers are seeing an almost 30% increase in conversion rates through smartphones.
Let’s say you want to know how to start a dropshipping store and aim to earn $100,000 per year from it. How many products should you sell?
Here Are the Calculations:
You get a product of $15 from AliExpress and you sell it for $30. After cutting the shipping costs and the cost of advertisements, your actual profit over the product is $10.
So, in order to make $100,000 per year you need to sell at least 1000 product per month.
$10 profit x 1000 orders = $10,000 per month
$10,000 per month x 12 = $120,000 per year
So, if your idea of a successful dropshipping store is to earn $100,000 per year, then you need to sell at least 34 orders per day.
Dropshipping vs Affiliate Marketing: Which One Is More Profitable?
It would be wrong if I don’t compare dropshipping with affiliate marketing. So, let’s say we want to make $100,000 from affiliate marketing as well.
In affiliate marketing, we get a commission for products we sell. Let’s say the commission percentage is 5%. You need to make $10,000 per month or $340 per day based on the above calculations.
To achieve that one customer should buy a product worth $100 so you get $5 commission. And, to make $340 per day, your customers should buy products worth $7000 per day.
So, which one do you think is more complex?
I think this answers the question very well about how profitable dropshipping business can be. And, what you should do to make it more lucrative for yourself.
Is Dropshipping via Alibaba Still Worth It?
Dropshippers are retailers. They don’t sell in bulk. Therefore, they tend to focus on selling items through these retail ecommerce stores.
- AliExpress
- DHGate
- Lightinthebox
- Gearbest
- Salehoo
- Doba
- And various others.
Alibaba sells products in bulk, so it may cost more to sell products directly from Alibaba.
Alibaba vs AliExpress – Learn Which One is Best for Dropshipping
What Are the Biggest Problems That Dropshippers Face in 2020?
- Shipping delays can reduce the number of online customers visiting to your stores
- Quality of the product can differ from what was actually marketed by the merchant
- Your customers may get something else than what they ordered
- More refunds and returns can damage your credibility against payment gateways
- If your suppliers use a trademarked logo on the products, you will be held liable for it
- Difficult to turn your dropshipping store into a brand.
So, what are the solutions to these dropshipping problems?
- Build a relationship with suppliers, and only work with those who are reliable and provide quality products
- Research your target market and buy trending products that sell well. This will reduce the shipping costs, and allow you to make more profits
Focus on high ticket items to get more profits from your products. Read our case study on dropshipping of high ticket items.
Is Dropshipping Allowed on eBay and Amazon?
One more gray area where most dropshippers become confused is whether they can do it with eBay or Amazon. To explain it, dropshipping is a business model and not specific to any brand. Even if you are using phone calls to dropship a product, it will be called dropshipping.
So, whether it is Amazon, eBay, or any other online platform, you can still start dropshipping on them. Obviously, all these have a few restrictions.
eBay doesn’t allow products from China and users need to reside in the USA. Amazon says that products shouldn’t take more than a week to deliver. So, if you can abide by these policies than you can start dropshipping on Amazon and eBay as well.
In fact, many people are still doing dropshipping business on both these websites. They sell products of Amazon on eBay and vice versa while keeping a good amount of commission. The only way they succeed is by understanding both the systems.
How is Dropshipping Legal?
Dropshipping is a retail business model that allows you to sell a product through the merchant to the customer without actually handling the product. You just act as an intermediary.
There aren’t any laws that bar anyone from starting a dropshipping store, but they can vary from country to country. And, one thing that is common in all these laws is:
Product Should be Reliable
It is illegal to deceive someone by showing them something else and selling them something else. This is a punishable crime, therefore, you must ensure that whatever you are dropshipping, is actually shipped to the customer.
Otherwise, they have the right to lodge a complaint against your online store. Even if the supplier is at fault, still you, the store owner, will be held responsible.
Be Aware of the Laws of the Country Where You Market
Every country has its own laws. Do ensure that you are aware of the country’s laws before you start marketing. Some countries have a policy that certain products cannot be imported.
For example, you can not import or export products from Muslim countries that are questionable in the pertaining culture. Similarly, India bans most products made of cow skin.
It is always better to have knowledge about business governing laws of different countries before you market to them.
Final Words!
Dropshipping is not dead. It is still a lucrative business model and anyone with the right insights can reap huge profits by using it wisely.
Starting dropshipping? Do you know which platform is best for Dropshipping? Read our post on ‘Best Ecommerce Platforms for Dropshipping.’ and start your Dropshipping store today.
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Sharjeel Ashraf
Sharjeel loves to write about startups and ecommerce. In his free time, he is on the road or working on some cool project in his den.
Keep reading the article at The Official Cloudways Blog. The article was originally written by Sharjeel Ashraf on 2020-01-09 03:02:39.
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