Is dropshipping worth it? – The question has caused many mixed opinions in recent years. What is your opinion?

Dropshipping is one of the most popular e-commerce business models of the past decade. It is predicted to continue to boom strongly, but perhaps, facing two scenarios of success and failure, many individuals are still dubious about the viability of this business model.

In today’s article, let’s join with BSS Commerce Shopify in answering the question “Is dropshipping worth it?” by analyzing the characteristics of this business model and the situation of dropshipping businesses!

Brief Overview of The Dropshipping Business Model

Is dropshipping worth it definition

Simply said, dropshipping is an e-commerce platform business strategy that enables businesses to sell goods online without worrying about logistics or storage. In other words, the seller – also known as the dropshipper uses this dropshipping model to purchase inventory and all other logistics will be handled by a 3rd party, instead of taking care of all the processes themselves like other traditional business methods.

When it comes to dropshipping, the vendor bears the responsibility of carrying out marketing campaigns to advertise items on their online store. Following a client’s purchase, the supplier (wholesale, manufacturer, etc.), on your behalf, will receive the order information and prepare the items before shipping them to the customers. Even though you are not in charge of producing products or conducting the delivery, you are responsible for customer service, returns, refunds, etc.

To be more specific, a dropshipping process can happen as follows:

  • The seller signs an agreement with the suppliers
  • Customers place online orders
  • The seller forwards the order to the suppliers
  • The supplier executes the order according to the information received from the seller
  • Customers receive goods and review orders.

Every decision you make in life or business will have pros and cons, and the dropshipping business model is not an exception. Together with us, let’s analyze the advantages and disadvantages of this business model and determine whether the benefits it brings can overcome the drawbacks. This examination might assist you in partially answering the query: “Is dropshipping worth it?”

Advantages of Dropshipping

is dropshipping worth it

Low Start-Up Cost

Dropshipping’s primary advantage is that you can launch a store without spending thousands or hundreds of thousands of dollars on store construction, facilities, order processing resources, or investing in warehouses and management. This eliminates many costs for maintaining warehouses and purchasing inventory.

Dropshipping, which requires minimal start-up capital, is therefore the ideal option for business owners without the huge funds to operate a physical store. You may absolutely successful in the dropshipping industry and make hundreds or even millions of dollars with just a very tiny initial investment.

Simple to Initiate

The dropshipping business model is popular among entrepreneurs because of its low startup costs, but it’s also a popular choice for merchants looking to launch a business since it’s effortless. How come?

Starting a dropshipping business does not require too much time and effort to set up. With just a few clicks you can quickly create an online store by using famous e-commerce platforms like Shopify, WooCommerce, or BigCommerce. Many business owners utilize these platforms due to their user-friendly interface, simplicity of usage (no advanced programming knowledge needed), and flexibility in customizing the shop. It’s amazing to have an expert internet store and draw clients in a matter of hours, right?

Minimal Total Cost

Running an e-commerce dropshipping business is much easier and more cost-effective since you won’t have to pay for things like maintaining storage facilities, packaging and shipping costs, repair costs, infrastructure upgrades, facilities, and depreciation expenses.

In fact, many entrepreneurs have gained huge success with only one laptop and a few ongoing marketing costs. Overhead costs may rise in tandem with store expansion and product sales, depending on the success and size of the enterprise. However, overall, these costs remain significantly lower than what traditional businesses must spend on maintaining operations and business development.

Location Independence and Flexibility

Besides, the dropshipping concept makes it easier and more convenient for you to reach global customers. Eliminate traditional barriers such as building an international distribution system, opening several retail stores, etc, you can cooperate with suppliers from any country in the world and sell to customers everywhere as long as you provide timely support and meet customer expectations.

You can also operate your business from any location, as long as you have an Internet connection. Dropshipping enables vendors to diversify sales channels beyond Amazon, Etsy, Shopify, social network channels, etc. This is a great opportunity to broaden your audience and develop your business potential which other conventional business forms can hardly provide.

Wide Product Selection and Scalability

As mentioned above, dropshipping gives vendors permission to sell goods without a certain amount of inventory in advance. Thus, selling a variety of products to increase your earning potential is completely possible and reasonable when you run a dropshipping business.

With drop shipping, It just takes a few minutes to add new goods to your online business, allowing you to increase the size of your product catalog. Additionally, picking business items doesn’t have to abide by anyone’s beliefs. You can search for popular products, trending products that many people are interested in in many different fields such as fashion, electronics, household appliances, cosmetics, and toys.

Products that are currently in stock or in boom times demand (pine trees on Christmas, chocolate on Valentine’s Day, mooncakes on Mid-Autumn Festival,…) are also great ideas. This helps you quickly adapt to the market, optimize your product portfolio, and increase business opportunities with a diverse customer group.

Moreover, dropshipping provides you with trial and error. Flexibility in product substitution makes it easier for merchants to get rid of underperforming items that no longer suit market tastes and can be quickly replaced with new, more promising items. You can discover new, unique, and unpopular products in the market from exceptional suppliers. This increases consumer attention, strengthens your store’s competitive edge, and boosts sales.

Lower Risks and Potential for High-Profit Margins

This might be among the most lucid responses to the query “Is dropshipping worth it?”. With the dropshipping approach, instead of having to pay for inventory through pre-purchase and storage of products, you just pay the supplier when a consumer places an order. That means you do not have to face the risk of losing money due to lost, defective goods, too large inventory, or products that are out of trend or out of season. Therefore, financial risks are minimized to maximize the utilization of investment resources.

With its low start-up cost, flexibility in product substitution, and accessibility to vast markets, dropshipping promises to bring great profit potential. You can offer a single product to a wide range of clients in many nations. It’s also easy to evaluate which items are ineffective and which are exceptional. Products that bring strong revenue and profit margins will undoubtedly be a huge source of profit for you if they are pushed through marketing initiatives.

Given the aforementioned benefits, a lot of people would believe that dropshipping is a thriving industry with no drawbacks. You are mistaken, though. This business concept still has a number of shortcomings that will undoubtedly cause you to reflect.

✅ Read more: How to Start Dropshipping for Free: The Complete Guides [2024]

Disadvantages of Dropshipping

Intense Competition and Market Saturation

The whole world is crazy about dropshipping. This is proven by a continuous rise in the number of people starting dropshipping businesses. Thanks to the little capital needed, dropshipping businesses have a low barrier to entry. A situation in which there are many sellers but extremely few customers lead to strong and competitive competition across retailers.

So which seller from that throng would buyers pick? Definitely, big vendors with excellent product quality and service, reasonable pricing, and strong reputation scores would be the customers’ priority. They will undoubtedly compare your goods to those of your rivals in order to decide whether or not to purchase them. The winner is the one who sticks out the most from the throng.

There is also a wide range of strategies to help dropshipping entrepreneurs increase their competitiveness. They may offer the lowest prices, invest significantly in advertising and promotion, or even strike a deal with your supplier to implement a “product exclusivity” strategy. more competitive. Those things absolutely have been, are, and will continue to happen, requiring you to have smart business strategies to help your business survive in this war.

Dependency on Suppliers and Shipping Times

One strength of drop shipping, but also its weakness, is that you are not involved in the production of products and bringing them to consumers. This puts you – the business owner, in a helpless situation and dependent on your supplier, which opens you up to a number of uncontrollable hazards.

First, there’s the chance of an inadequate supply. Basically, you will be informed by the supplier about the quantity of products available in stock so that you can balance and approve purchase requests from customers. It is, nevertheless, completely conceivable that unexpected circumstances such as supplier errors in inventory calculations or other forces.

While the customer’s order has been approved but cannot be fulfilled, you are caught in the middle, unable to do anything but wait for the supplier to offer a solution and express regret to your clients, expecting to receive their tolerance. However, that implies that you can be losing your current and potential customers.

Second, it is impossible for you to control the shipping time. Whether an order is fulfilled on schedule or not completely depends on the time the supplier has the goods, sends the goods to the shipping agency, and the time the shipping unit takes the product to the customer.

If the supplier is slow in processing the order or the shipping unit cannot ensure the shipping schedule, customers will thus have to wait longer. It can cause to loss of buyer’ satisfaction and your store may get negative reviews.

To put it briefly, dependency on suppliers brings a lot of drawbacks for entrepreneurs, giving you unsafety in producing and shipping goods.

Lack of Control over Product Quality and Branding

It is undeniable that product quality is still the top priority factor for customers to decide whether or not to stick with your product and your brand. Dropshipping reduces your involvement in the production and order fulfillment process. It is difficult for you to keep an eye on and guarantee that the goods being supplied to clients are of a high caliber. When you work with foreign suppliers, monitoring and checking the quality of goods is almost impossible, unless you have employees or acquaintances there.

Some of the things that help your brand reach a wider audience are the unique features, brand logo on the product, and product packaging. You are an intermediary seller rather than a direct producer, so it is actually somewhat challenging to add some personal brand elements to the products. If possible, it will certainly cost more and you may also have your ideas plagiarized and impersonated.

What negative effects might low product quality have? Bad reviews, complaints, refund requests, etc. are the scariest things for online businesses. The power spreading in cyberspace is truly enormous. Just a little mistake will make your brand image much worse in the eyes of customers: losing the trust of old customers, dissuading potential customers, and creating fear and proscribing your brand from customers. Revenue declines, and stores struggle, which is the worst development that the problem of poor-quality products causes.

Issues with Customer Service and Returns

The characteristics of online shopping is serving for visual satisfaction (the aesthetics of the product), marketing effectiveness, customer care service, and previous buyers’ reviews. However, among the above factors, customer services and policies are all difficult problems for dropshipping businesses.

  • You can design beautiful product photos, but is it outstanding and impressive enough for customers?
  • Can you respond to customer inquiries immediately and promptly?
  • How will you handle it if the product received is defective or the customer wants to exchange it for a more suitable product?

It’s true that you can completely improve the two problems above, but the last problem seems to be too difficult. The reason is that you are not directly responsible for the product, nor do you have the product available to compensate or exchange for a better quality product.

Regardless of whether the cause of return is due to the manufacturer’s error or the customer’s, you are essentially still a middleman, and cannot perform a return action to satisfy the customer’s needs. That causes a loss of customer satisfaction and is a big obstacle for customers to make purchases from you in the future.

Profit Margins may be Lower than Expected

Dropshipping is not as profitable as you may believe because of the intense competition. It is simple to launch a dropshipping enterprise and requires little capital, but it is challenging to differentiate items. That’s why dropshipping entrepreneurs need to establish as cheap pricing as possible in order to boost revenue and remain competitive.

Not to mention, the supplier can increase the product import price for you, while the retail price in your store is extremely hard to adjust. In this era of internet buying, customers are really sensitive to price. A small pricing modification may make all the difference in buyers’ behaviors and decisions, turning them from those who want to buy your product to those who don’t. But regardless of your decision, in this case, your profits will still have a negative result.

Is Dropshipping Worth It?

Is dropshipping truly worth it after weighing the advantages and disadvantages of it? Although there are a few disadvantages, the answer is definitely YES.

It will still be worth investing in retail model businesses with small investment capital. But to obtain certain success requires businesses to make great efforts. The appropriate product selection, the reputation of the supplier, and the maintenance of profit margins are critical factors that determine success. Just by answering the above questions, along with a smart marketing campaign, your online business has a high chance of being successful and profitable.

How Much Does a Professional Drop Shipping Make?

Is dropshipping worth it. How much money can earn from sropshipping

Income can be an element that reflects the answer to the question “Is dropshipping worth it to invest?”

Profits in the drop shipping industry will be maximized as there is no need to pay for inventory or warehousing. The average profit margin for dropshipping sellers ranges from 20-30% and total profits can be up to $100,000 in the first year of business. The profitability of a dropshipping business is determined by factors such as marketing power, scale, and competitiveness of the niche market they serve.

According to ZipRecruiter’s research data (as of October 5, 2023), the average income per dropshipping merchant in the United States is $18.89 per hour, with the highest rate reaching up to $24.76 1 hour and the lowest is 10.10 USD 1 hour.

In general, there is no specific number on how much money you or anyone can make from dropshipping. Whether that number is big or small depends on your ability and experience!

🎁 Discover now: Top 10+ Inspiring Shopify Dropshipping Stores That Worth to Learn From

How to Build a Successful Dropshipping Store?

Is dropshipping worth it, or not? – it is based on your decisions and your choices. Here are the factors you should consider to make the right decision for your dropshipping store and generate success.

Pick the Right Niche

Selecting a specialized market and the right product for dropshipping is crucial for company success, even if dropshipping isn’t the only strategy used. It refers to a narrow segment of a large market that you can focus on and serve a specific group of customers.

The most important part of this process is researching and evaluating the potential and feasibility of that market. Please answer the following questions:

  • What is the level of customer interest and demand in that market?
  • Who are your competitors? What products are they selling? what are their product characteristics? SWOT analysis of competitors?
  • What difference can you bring to this niche?

Record all answers to the above questions. That will be the basis for you to determine whether your product has potential or not and deploy the best solutions for your business.

You can conduct surveys and market research using the following tools:

  • Social networks: Facebook, Twitter, and Instagram,… provide a lot of information about customers’ interests, demographics, and online activities⁠.
  • Google Keyword Planner and Google Trends tool to find out what people are searching for and how interested people are in it over time

The trick is to choose a less crowded niche. This limits your market but also frees you from the constraints of a highly competitive selection.

Define Your Target Audience

Who benefits the most from your product? That is your target customer.

Understanding your target market can help you make better choices about which sales channels to focus on, what new products to sell, how to market your brand, and many more. This process includes researching the products, types, and trends that customers are interested in.

It is essential to identify the problems of your customers. What are they facing and How you can help them with your products? Are products and services the solution to those problems? Demographic characteristics also need to be specified such as age, gender, geography, income, and purchasing habits of the target audience.

Once you clearly understand your target audience, it is not difficult for you to establish an effective business plan and marketing strategies. Success is just a step away from you!

Look for Dropshipping Suppliers

As was previously said, as a seller, you are heavily dependent on the suppliers. Therefore, you need to choose a reputable and professional supplier to minimize all risks related to product quality and supply chain.

Please discuss carefully with the supplier and be transparent about the following information:

  • Verify reputation: Where is the address? Can I get a business certificate? What vendors have they worked with before? What are customer reviews about the products?
  • How long does it take to complete an order?
  • What is the exchange, return, refund, and compensation policy?
  • Do not forget to make a legal contract

Here are some famous dropshipping suppliers you can refer to:

  • AliExpress: opens to people around the world for free (220 countries around the world, including the US), with more than 100 million products in many categories such as fashion, toys, consumer electronics, skin care products, jewelry, furniture, and even cars and motorcycles.
  • Alibaba: has more than 2.8 million suppliers and more than 5,900 categories. Alibaba is recommended for drop shippers who prefer customized private-label manufacturing and wish to buy bulk goods at the distribution level to sell as consumer items.
  • Spocket: allows users to quickly and easily import products from a bunch of dropshipping suppliers (including AliExpress) into your Shopify store. Processing a user-friendly interface and a seamless purchase experience, Sprocket is a great choice for first-time drop shippers who looking to offer a variety of fashion and beauty products.
  • Other suppliers: Wholesale Central, Worldwide Brands, Doba,…

Build Your eCommerce Store

For an eCommerce company, to draw in and win over new clients, it requires a professional and attractive website. Your website needs to be easy to navigate and help move customers through the sales funnel as seamlessly as possible.

One of the most widely used applications is Shopify, which allows sellers to set up and manage the online store without the need for technical expertise.

Shopify offers a trial package for you to experience the service. When you use Shopify for dropshipping products, the supplier receives information about your order for delivery immediately. Orders that are shipped directly to the customer’s address will be marked as complete, and if a tracking number is available, it may be included. At Shopify, you can also completely track the order fulfillment process and customer reviews of the products.

Generally speaking, the website is the home. You need to take care of making that home beautiful so that every visitor feels satisfied and welcomed, and they certainly won’t regret spending money on your store.

🎁 May you need: Best Ecommerce Platforms For Dropshipping [Top 7]

Add Products to Your Online Store

After choosing your niche and building your website, what you have to do now is add products to your store. Don’t forget to include high-quality images and videos, attractive product descriptions, and carefully calculated prices to attract and convince customers to buy the product!

Work on Marketing

No matter how unique your product is or how exquisite your online store is, it will not bring in money if you do not launch effective marketing activities. Marketing is about bringing your business, and your products closer to your target audience. As a result, when doing business, especially dropshipping business, marketing is a key element that cannot be overlooked.

Here are ways to help you market successfully and bring high revenue to your store:

  • Search engine optimization (SEO): is the process of using search engine data to improve the content on your website with the aim of increasing the amount of traffic to your online business.
  • Email Marketing to Nurture Your Current Audience: Good email marketing will help nurture and maintain customer interest and turn it into sales.
  • Optimize Facebook Paid Ads: Facebook Ads are an extremely useful tool to help you market your online store to people who are actually interested in your products and can become potential customers. power.

How to Make Dropshipping Profitable in 2023 and Beyond?

In 2023, we will still witness the fast and continuous growth of the dropshipping industry. There are entrepreneurs who have failed, but there are also many businesses that have gained remarkable success and changed their lives totally thanks to dropshipping. Regardless of success or failure, the most important thing is still the ability to perceive the market and predict future trends.

To be more successful in 2023 and aim for sustainable development, all the entrepreneurs need to quickly grasp the latest trends in dropshipping, and even take the lead to ensure you don’t stagnate your business. Furthermore, focusing on customer service, and providing them with the best shopping experience. Remember that customer satisfaction is the seller’s greatest success.

Besides, invest heavily in branding. Developing a brand personality that makes it easier for customers to remember your brand, let your brand stick in the customers’ mind. Along with a set of quality products and services, this will certainly increase customer awareness of your brand increase strongly and gain their trust.

Finally, don’t forget to measure and find solutions to minimize risks from suppliers, customers, and yourself. By taking the necessary precautions, you can protect your business and ensure long-term success.

Final Words

Is dropshipping worth it? We believe you have the answer after reading this article.

As demand for online shopping continues to increase, the potential of dropshipping will continue to grow. Businesses that take advantage of dropshipping can increase profits while still providing quality products. In the coming years, businesses should look to capitalize on this trend and use it to their advantage. With the right strategy, businesses can use dropshipping to maximize their profits in 2023 and beyond.

Dropshipping has never died, it’s just that you and others don’t know how to make a lot of money from it. Follow BSS Commerce Shopify to learn more about business and e-commerce!