Is Dropshipping Business Still Profitable in 2022?
An e-commerce business model that relieves you from all inventory-related hassle – seems too good to be true? Indeed, dropshipping allows merchants to focus on taking orders from customers and letting dropship providers care about everything else. The model has been applied for years and has proven successful by multiple winning cases. However, with the rapid changing of the e-commerce environment and progressive market saturation, an obvious question arises: can you still make money dropshipping?
Although the future of dropshipping may look uncertain today, it would be safe to assume that the model will be fueled by prospering e-commerce. Therefore, the simple answer to the question ‘is dropshipping dead?’ will be definitely ‘no’. However, to run a profitable dropshipping business in the modern realm, yo
This article explores the dropshipping forecasts for 2022 and investigates the pros and cons of the model to answer the question: ‘is dropshipping industry worth investing’?
Table of Contents
Is Dropshipping Still Profitable
The ever-changing technology and e-commerce environment make many players wonder ‘is dropshipping profitable today?’ or ‘will it stay profitable in the future?’ There are several reasons to assert that dropshipping is still alive, and here is the relevant statistics.
The chart shows an increasing interest in the model within the recent 5 years. However, a slight downward tendency in 2021 makes some merchants think that dropshipping is saturated and therefore no longer efficient for the new players.
So, is dropshipping saturated or not? Well, the competition is tough, but this does not mean you have no chance to win.
Want some proof? Check the dropshipping forecasts:
- The estimated value of the dropshipping industry is expected to hit $557.9 billion by 2025.
- About 27% of online retailers are utilizing dropshipping;
- With dropshipping, you can generate about 50% higher profit compared to running your own stock inventory.
Therefore, the answer to the question ‘can dropshipping be profitable?’ is still ‘yes’, but just like any other type of business, it requires a smart approach.
Is Dropshipping Worth it?
Once we have determined the favorable prospects and the profitability opportunities for dropshipping, let’s approach the major question: whether or not is dropshipping worth it? Well, at least five reasonable upsides witness in favor of this retail fulfillment model.
- Minimum startup risks;
- Low product costs;
- Little to no storage and logistics costs;
- A vast inventory;
Can you actually make money from dropshipping? As a retailer, you should consider dropshipping as a low-risk business model that enables you to sell a wide array of products and select the most profitable items to dropship without incurring extensive running costs traditionally faced by wholesalers. The lower expenses and flexible inventory help you to establish a successful dropshipping business easier and faster than with other business models.
How to Ensure that Your Dropshipping Model Brings Fruits?
So, what do you need to create a profitable dropshipping business?
In order to succeed on an oversaturated dropshipping market, be prepared to invest time, effort, and resources. Furthermore:
- Analyze the available dropshipping methods and study the winning cases to choose the most viable approaches;
- Keep up with the innovative marketing methods to cut through the fierce competition;
- Select the right e-commerce platform to make dropshipping convenient for users;
- Continually refine your inventory and make sure you offer the most relevant items.
Besides, you should beware of the potential pitfalls.
The Biggest Problems Dropshippers Face in 2022
Apart from the enticing opportunities, dropshipping has several caveats that you should recognize and be ready to mitigate.
- Lack of control.
Since you are not handling all the activities by yourself, you have to rely on third-party suppliers. This sometimes brings uncertainty into your business because you cannot control your supplier the same way you do with your own store. The lack of control over supplier’s operations can trigger issues, such as:
- Shipping delays;
- Messed up orders;
- Increased returns.
- Complicated stock-tracking.
As you are already aware, in dropshipping, sellers don’t keep the inventory by themselves. Therefore, they may face troubles if the suppliers suddenly run out of products. If the demand for certain items increases, the seller may not know if the stock is insufficient and whether the order processing will take more time. Third-party suppliers usually offer products to numerous merchants, so the out-of-stock notification can be missed. Moreover, some vendors fail to update their sellers’ inventory timely.
How to Mitigate the Existing Challenges?
Once we have outlined the main issues faced by dropshippers, it’s time to advise on how they can remedy those pains.
- Partner exclusively with reliable suppliers that ensure high-quality products.
- Research your market and audience and select your product range wisely. To make your inventory more unique, enrich it with tailored offers. For instance, practically any store can benefit from printed items such as t-shirts, mugs, other marketing merchandise, or even jewelry. It’s enough to find a qualified print on demand supplier, and you are almost done!
- Take care of your clients. Make sure they have a joyful experience with your store and adequate support
Dropshipping Success Stories in 2021
If you are still hesitating about how successful is dropshipping, look at the several amazing success stories to get inspiration and motivation.
Story 1: $178,492 in three months
The entrepreneur Marc Chapon quit his full-time job and started an e-commerce business from scratch. Here are the highlights of his success story.
He invested $1,000 to set up a store and run ads. The dropshipping model seemed most appealing as it didn’t imply funds for obtaining products and holding stock.
Marc proceeded with determining a niche for his business. He selected a niche based on the two main factors: his own interests and the niche’s profitability. Eventually, he focused on dog products.
- Target audience.
Then, Marc identified his target audience and the ways to reach them. His clientele located in the US and Europe, aged 21-65, used to follow dog accounts on Instagram and shop at PetSmart. To segment this audience, Marc kept on testing and studying the emerging insights.
Choosing the right products was the next step. Marc was making the selection among the US- and Europe-based suppliers, with the great product range and low shipping times. He wasn’t chasing the large product volumes; 25-50 excellent items worked perfectly in his case.
- The store.
Marc selected an e-commerce platform that complied with his needs and made his store look professional and trustworthy.
Marc decided to start with building brand awareness first, without focusing merely on sales promos. He selected the most appropriate channels and was continually testing and optimizing his campaigns.
The results were impressive: throughout the three months, Marc gained more than $178,000 in sales.
Story 2: from $0 to $25k a month dropshipping
Another entrepreneur’s story started with a failure: he lost his money because of the poor ad strategy. However, he made lessons and succeeded in the outcome.
- Audience and marketing.
The merchant got a deeper understanding of his audience, which allowed him to work out better offers and align his marketing strategy. He improved his Facebook ads and started to work with SEO. Then, he leveraged an Instagram profile as well.
As a professional programmer, the seller was able to develop a special web crawler to search and find winning products on the internet.
- Upsell technique.
The respective app added by the seller allowed increasing the average order value more than two times.
Continual testing of products and audiences allowed the seller to discover new niches and the most profitable items.
The seller made an amazing revenue of $25,000 in the third month of his dropshipping journey.
Ultimately, if someone asks you whether dropshipping is dead, you are well equipped to give them a confident ‘no’. Furthermore, if they wonder ‘how successful is dropshipping?’ or ‘are dropship websites profitable?’ you are ready to suggest convincing success stories. But most importantly, the information above can urge you to start your own, profitable dropshipping business.
Therefore, carefully plan your endeavor, wisely select your partners, and embark on your exciting journey that can become extremely rewarding.