Is Dropshipping Still a Viable Business Model in 2023? [Fact and Fiction]
Now that you’re reading this blog post, you are probably wondering about starting your dropshipping business but not sure if it benefits you. This is totally normal to be hesitant when starting a new job. So it’s best to know more about the pros and cons of dropshipping and decide if it is really worth it. If you are not familiar enough with dropshipping, I suggest reading this first: How to Start Dropshipping for Free?
When it comes to choosing dropshipping as your occupation, the most important thing to consider is if dropshipping works and how much money you can make out of it. After that, you can think about other aspects and evaluate their pros and cons. So let’s find it out!
Is dropshipping worth it?
The short answer is Yes + But..., dropshipping can still be a viable business model in 2023. Dropshipping involves selling products online without maintaining an inventory. Instead, the retailer partners with a supplier or manufacturer who handles the production, storage, and fulfillment of the products. When an order is placed, the retailer passes along the customer's information and order details to the supplier, who then ships the product directly to the customer.
Dropshipping can be a convenient and low-risk way for businesses to sell products online, as it allows them to offer a wide range of products without the need to invest in inventory upfront. It can also be a good option for businesses that want to test and validate demand for their products before committing to large inventory orders.
But you put lots of effort and time into finding a supplier, buying products, setting up an online store, and attracting customers. In the end, is it really worth it? Does dropshipping make a living? can you lose money with dropshipping?
The answer is neither a “yes” nor a “no” because that all depends on you. There are many challenges in dropshipping business that you should be prepared for. For example, if you don’t know how to deal with unhappy customers, a long duration of shipping, and irresponsible sellers, your business will probably go down in flames!
On the other hand, since nowadays ecommerce and online shopping have become thriving than ever, there are lots of chances for you as a dropshipper to go places in your business. So dropshipping is worth doing if you are familiar with its pros and cons and also how to deal with the challenges.
It's important to keep in mind that dropshipping does come with some challenges and potential drawbacks. For example, you may have less control over the quality and timeliness of the products being shipped to your customers, and your profit margins may be lower compared to traditional e-commerce models. Additionally, you may face more competition in the market since anyone can sell the same products using the dropshipping model.
The real story behind dropshipping and separating fact from fiction
Dropshipping has become a popular business model in recent years, with many influencers and online gurus promoting it as a way to easily start and scale an e-commerce business. These influencers often sell courses and ebooks claiming to teach the secrets to success with dropshipping, and many people are drawn to the idea of being able to make money from home by simply promoting products online.
However, the reality of dropshipping is often quite different from the promises made by these influencers. While it is possible to make money with dropshipping, it requires hard work and dedication, just like any other business. Many people who try dropshipping end up failing due to a lack of knowledge and understanding of the business model, as well as the many challenges and pitfalls that come with it.
One of the biggest issues with dropshipping is the fact that it's a very competitive space. With so many people trying to sell the same products, it can be difficult to stand out and make a profit. Additionally, the profit margins with dropshipping are often quite low, especially when compared to traditional e-commerce models.
Furthermore, many of the influencers promoting dropshipping as a get-rich-quick scheme are actually making their money from selling courses and ebooks, rather than from their own dropshipping businesses. While they may have some success with dropshipping, they often make the majority of their income from ads and selling products to their followers, rather than from the dropshipping business itself. While it can be a viable way to make money online, it's not a guarantee of success and requires a lot of hard work and dedication to succeed. It's also important to be aware of the many influencers and online gurus who may be more interested in making money from selling courses and products than in helping people build successful businesses.
Advantages of dropshipping
Let’s take a look at the advantages of dropshipping and see how it can be profitable:
1. Starting dropshipping is fast and easy
2. You don’t need to store the products
Actually, you never get to see the products! When a customer buys something, their order will be delivered to them straight from the supplier. So no need for you to buy products and store them somewhere. It can also be an issue though. How? Read more about it in the disadvantages part.
3. You make quick profits
As a retailer, first you pay lots of money to buy products in bulk. Then you will make profits by selling the products to others. Not only is this process too long, but also you will lose your money if you can’t sell your products; however, a dropshipper can receive profits a lot sooner. Once the customer orders a product and pays for it, you order the same product from the supplier with less price and you’re done!
4. Testing the products and realizing the customers’ tastes is easy
Imagine you have bought lots of sneakers from a supplier, but are not able to sell them. It turns out that your target customers are not interested in buying sneakers but rather sandals. Now you know the tastes of your customers but what to do with these bunch of sneakers?! This is how dropshipping can make you test different products without you having to buy them.
5. No multitasking!
As a dropshipper all you need to do is to manage the online store and do the marketing. Storing the products, managing the inventory, packing, and delivering the products are others’ responsibilities. That also brings you lots of free time. You can travel around the world while doing your job!
Disadvantages of dropshipping
Remember that no job is a perfect match for you. As you get to enjoy the advantages of a good job, you also have to deal with its challenges. Let’s discover what the downside to dropshipping is.
1. Prepare yourself for a difficult competition!
As mentioned earlier, dropshipping has currently become thriving as people prefer to shop online. So obviously you’ll have lots of competitors which makes this business more challenging.
2. Not everything is under your control
Suppliers pack and send the product to the customers. It means you have no control over the quality of the product and shipping. Low quality of products and services upset the customers and that can harm your business. That is why finding a reliable supplier is vital. Before that I suggest to read my another post: Best and Worst Dropshipping Products Ideas to Sell in 2022.
3. It’s all your fault!
Your job is to connect the customers with suppliers. Therefore, these two groups never get to see each other. Meaning that if the customer, for any reason, is unhappy with the product or late delivery, you’re the first one to blame!
4. Managing multiple products ordered by one customer is an issue
Imagine that you have put shoes and coats each from the different suppliers in your store. What if a customer wants to buy a leather coat and formal shoes at the same time? Even if both products are available in the inventories of suppliers, they won’t probably be delivered to the customer at the same time.
5. No discounts anymore
One good thing about being a retailer is that you get discounts from the suppliers when buying products in bulk; however, as a dropshipper, you are not able to buy products at low prices. Because you’re ordering just one at a time.
Now that you’re familiar with the advantages and disadvantages of dropshipping, you’re more ready for the challenges you’re supposed to deal with; however, if you think with all these pros and cons of dropshipping you’ll not be a good fit for this business, check out this blog to discover what better than dropshipping is.
What are the best dropshipping websites?
Shopify, AliExpress, eBay, Amazon, Walmart, and Oberlo are the most well known and popular dropshipping websites that provide the best service for those who either want to sell or buy products.
Is dropshipping worth the risk?
Yes! Dropshipping is considered a business with low risk. Though losing money does happen for many inexperienced dropshippers, it can be quite profitable.
Is dropshipping legal?
Yes. dropshipping is a legal business as long as you are not cooperating with suppliers whose activities are against the country’s policies.
Q: Who are some popular dropshipping influencers on YouTube?
Some popular dropshipping influencers on YouTube include:
- Franklin Hatchett
- Juan Valdez
- Kev G
- John Crestani
- Tanner J Fox
Who are some popular dropshipping influencers on TikTok?
Some popular dropshipping influencers on TikTok include:
- Chris Record
- Gary Vaynerchuk
- Tai Lopez
- Grant Cardone
How can I tell if a dropshipping influencer is legitimate?
Here are a few tips for determining if a dropshipping influencer is legitimate:
- Look for transparency: A legitimate influencer should be transparent about their successes and failures and should be willing to share details about their business.
- Check their credibility: Look for influencers who have a track record of success and who have been in the industry for a while.
- Be wary of overly-promotional content: If an influencer seems more focused on selling products and courses than on providing valuable content, they may not be as legitimate as they claim.
- Read reviews and testimonials: Look for reviews and testimonials from people who have actually used the influencer's products or services to get a better understanding of their credibility.
What are some examples of successful dropshipping businesses?
Here are a few examples of successful dropshipping businesses:
- Casey Neistat: This filmmaker and entrepreneur used reverse dropshipping to quickly launch his own line of sunglasses and generate over $1 million in sales in the first month.
- The Honest Company: This natural and organic personal care products company used reverse dropshipping to test and validate demand for their products before committing to large inventory orders.
- Kylie Cosmetics: Kylie Jenner's cosmetics line used reverse dropshipping to quickly scale and reach $420 million in sales in just 18 months.
What factors contribute to the success of a dropshipping business?
There are several factors that can contribute to the success of a dropshipping business, including:
- Choosing a profitable niche: It's important to select a niche with a demand for products and a relatively low level of competition.
- Partnering with reliable suppliers: It's essential to work with suppliers who can deliver high-quality products on time and provide good customer service.
- Building a professional-looking website: A well-designed website can help attract and convert customers.
- Implementing effective marketing strategies: Using a variety of marketing tactics, such as social media, email marketing, and paid advertising, can help drive traffic and sales to your website.
- Providing excellent customer service: Building a good reputation with customers is crucial for a successful dropshipping business.