Is dropshipping dead? I’ve been hearing this question for quite a while now, and it start getting annoying. That’s why I decided to write this article. So that we can answer this question once and for all.
Dropshipping has been a very popular online business model among beginner entrepreneurs for a couple of years already. With the rise of ecommerce YouTube gurus, more and more people are looking to jump on the hype train, and there is obviously a lot of misinformation out there.
If you’re here to find out whether or not dropshipping is dead or if it is still profitable, you’re in the right place! By the end of this article, you will know exactly if you can still make money with this business model.
What Is Dropshipping?
Dropshipping is a form of ecommerce. It is when you work with a product manufacturer who takes care of product creation, packaging and shipping for you.
It is one of the most popular ways to build an ecommerce business because it requires little up front investment, compared to wholesale.
Your job is to take care of your store and drive targeted traffic to your offers. An important upside of dropshipping is that you are able to build your own brand. Therefore, you are not tied to selling products with the manufacturer’s logo.
Once an order is placed on your store, the manufacturer will package the product and ship it to the customer’s house. Which means that once you get people on your website, you can sit back, relax and wait for the sales.
The biggest obstacle that beginner entrepreneurs are facing is finding the right suppliers that have quality products. I use SaleHoo for a couple of years and I was able to build strong relationships with reliable manufacturers.
Ecommerce business owners prefer to work with Chinese suppliers, as they usually have the best prices. However, the shipping times can sometimes be very long (up to 1 month), therefore some people prefer to work with U.S. manufacturers.
You usually need very little money to start, whereas the profit potential is very high. If you have the right training, you should be able to build a sustainable business.
Is Dropshipping Dead?
No, dropshipping is most definitely not dead. It is a legitimate business model and you can still make good money with it.
However, it definitely got a bit harder in the past couple of years. If you’re a beginner, you need to know these things before you jump in.(3)
After you will know these things, you can make your own decisions on whether or not you want to start a dropshipping business, or if you should try something else like affiliate marketing.
Let’s look at a couple of reasons why dropshipping got harder in the past 3-4 years:
#1: Profit Margins
The profit margins for dropshipping have gotten a bit lower. For example, when I got started, I could have easily gotten around 40% profit margins in my business.
This included the marketing budget as well, so as you can imagine, the profits were very good.(4)
However, if you buy wholesale products, meaning that if you buy a bulk quantity and store it in a warehouse, you will be able to get a better profit margin.
In regards to dropshipping, you can expect anywhere from 20%-25% profit margins. Which is not that bad, but it’s something to keep in mind.
#2: Low Quality Products
If you have bad luck and deal with crappy suppliers, you will get bad products. Especially in the beginning, you will probably not hit only home runs.(5)
Until you get some wins under your belt, the beginning of your dropshipping business will be quite hard. As mentioned earlier, the biggest challenge beginners face is finding high quality suppliers.
I use SaleHoo for a couple of years in order to find good suppliers. You should check it out, as it’s very efficient and affordable.
Therefore, it is a bit difficult to find good products in the beginning. However, once you get some experience, you will kinda have a sixth sense when it comes to choosing products.
Your business flair will improve as you move forward. But keep in mind this takes time and doesn’t happen overnight.
#3: Bad Customer Experience
As mentioned earlier, most dropshipping business owners prefer working with suppliers that are based in China. That’s because their prices are the best. Perios.
The Chinese companies have the best prices and you really get good value for money if you find the good ones. However, the shipping times are horrible.
Your customers will sometimes need to wait 3-4 weeks before they receive your product. Meaning that they will most likely not come back to your store.(6)
Even if your product is amazing, they will not like the fact that they need to wait up to 1 month in order to receive it.
Just think about it: if they buy something from Amazon, they will just need to wait 1 day. If they buy from you, they need to wait 3 weeks. Why would they want to do that?
Some business owners prioritize customer experience and choose working with U.S. based supplier for this reason. However, as you can imagine, you will need to pay more money for the products.
The U.S. suppliers have quite high prices, meaning that your profit margins will decrease even more.
Is Dropshipping worth it?
Yes, dropshipping is worth it. However, considering the recent changes, it will be a bit harder to build a successful dropshipping business.
If you have a budget, find the right suppliers and learn how to successfully market your store, dropshipping is definitely worth it. I currently have 2 dropshipping stores that are doing very well.
Just keep in mind that I’m doing this for a long time. Dropshipping is worth it, but it’s not easy. If you really like this business model, then I suggest signing up for SaleHoo in order to find good suppliers in China.
However, if you want to have more certainty and don’t love the dropshipping business model, I definitely suggest starting an affiliate marketing business. Simply because it is more safe and you can scale faster.(7)
If you become good at running Facebook ads, then you will be able to build a profitable affiliate business in as little as a couple of months. Affiliate marketing via Facebook ads is my primary way of making money online, and I always recommend it to anyone who wants to build a business.
Also, these are skills that will stay with you for the rest of your life, so it’s not just about the money. It’s about the ability of making money.
Dropshipping is not dead and you can still build a profitable ecommerce business. Ecommerce will never die. Actually, if you noticed the trend, it will most likely increase in popularity.
Amazon is the biggest company on the planet for a good reason. People prefer buying stuff online, as opposed to fighting traffic and staying in a never ending line of customers.
However, keep in mind that we are not in 2015 anymore. I’m not saying that it’s impossible to build a profitable dropshipping business, but it did get a bit harder.
If you love dropshipping as a business model, then the best thing you can do is start a dropshipping business. That’s because chance are you will not give up when things get a bit harder.
On the other side, if you just want to make money and you don’t really love dropshipping, I suggest you start an affiliate marketing business. It’s much safer and you can make money faster.
Meaning that you can scale your business in a matter of months until you are able to go full time. That’s why I highly recommend investing in Commission Hero, as it will teach you step by step how to build a profitable affiliate business.