Dropshipping 101

Is dropshipping dead in 2020?

Adam Eleiko  \ 07/12/2019

Dropshipping - A Proven Way To Make Money?


In recent years dropshipping has taken the online world by storm; with a record number of successful online businesses set up by digital entrepreneurs without the need to even leave the comfort of their own homes.

With that in mind, the very first thing one may think when confronted with the popularity of the business model - "Is dropshipping still viable in 2020, or has it become completely saturated and should be avoided?"

Dropshipping remains a viable and lucrative business model. Money can be made from selling your passion online. That being said, entrepreneurs will find they now have to be a little more creative and start thinking outside the box in order to beat the competition.

Entrepreneurs will find that they now need a competitive advantage, and doing the bare minimum will no longer suffice. This is due to the fact that dropshipping competition has skyrocketed, meaning that it is difficult to compete with dropshipping businesses that are putting serious time and effort into streamlining their business models, stores and marketing campaigns.

As with all business models, if the model does not evolve, it will become outdated. The use of technology further exacerbates this process. As was remarked by one clever commentator:

“Technology is a double-edged sword [1]: It furthers innovation at the cost of eradicating old ways of doing things. Search Engine Optimization (SEO) is a prime example: 10 years ago it was a walk in the park. Nowadays with Google releasing updates almost daily, old ways of ranking websites have become largely obsolete. Same goes with Cost Per Click methods such as Google AdSense, that have been largely replaced with targeted advertisement. ”

Often times, by the time you hear about something, it is often too late (does crypto ring a bell?). Could this be the case with dropshipping? Taking all of the speculation aside, let's have a look at the raw data. One good indicator would be to check how AliExpress dropshipping is trending using Google Trends. [2].

AliExpress dropshipping google trends graph

Here, Google Search Trends for the keyword Aliexpress Dropshipping show no sign of slowing down even in the slightest. But perhaps, this is due to the fact that AliExpress become more well known. However, Google Trends for the keyword AliExpress tell a different tale.

AliExpress Google Trends graph

This goes to show that whilst dropshipping started off as a relatively niche business model, tied to the notion of buying from AliExpress and re-selling at a mark-up, in 2020 it stands as it own great entity.

Dropshipping, like ecommerce in general, will only grow going forward. We detected that the top dropshipping stores all broke revenue records in 2020. The lesson here? The barrier to entry is higher, but the rewards at the top are much, much greater.

 

What Changed?

Back in 2016, dropshipping success was easier to attain. Facebook Ad costs were low, dropshipping ad creatives were single images (no product video had to be made) and dropshipping stores could look completely barebones - only needing to have a handful products and the Shopify Debut theme to sell. Since the amount of people dropshipping was so much smaller, you could succeed by doing less. However, this was a double-edged sword, in the sense that in 2016, far less people were inclined to buy online in general - especially from websites they'd never heard of before.

Now, in 2020, dropshipping is a very competitive business model - and the >rewards are greater than ever. In 2020, entrepreneurs need as many advantages as they can get. Their product selection has to be amazing, their store should be branded & optimised to convert, their ad creatives and ads must have viral potential. Their product descriptions must be tailor-made to convert. All of this led to SaleSource being built - to give the competitive advantages of million dollar dropshippers (and even more) to as many people as possible.

How Viable Is The Dropshipping Business Model In 2020?

The attractiveness of the dropshipping business model is an obvious one: Scale a business from the comfort of your own home to a million dollar brand. Easily validate your entrepreneurial ideas without having to purchase custom inventory. Sell your passion - and connect customers with products they never knew existed that solve their problems. In reality, the dropship business model requires marking up products far less than even some of the well established brands, like Nike, who sell sneakers that cost $17 to make in factory for a retail price of $170.

Pros

  • Rapid Scaling Potential
  • Low Upfront Investment
  • Instant Idea Validation
  • Only Requirement Is An Internet Connection
  • Potential To Create Million Dollar Brand (see MVMT Watches, InspireUplift)

Cons

  • Long Shipping Times
  • Low Margins
  • Difficult Returns Process

Dropshipping is not a get rich quick scheme, especially in 2020, when the store set up and foundation building stage must occupy more time than ever. Successful entrepreneurs take the business model seriously, and realise that the endgame is creating a trusted, well known brand. The potential for fast growth and profits has seduced many would-be-entrepreneurs to settle for short term profits above spending the time and energy to set up a long lasting business.

Is Dropshipping Dead?

This question remains controversial in 2020. But the answer, as you've seen, is a clear no. A simple Google search will reveal an amplitude of Reddit, Quora and other Q&A forums that are filled with vocal discussions on this topic.

Dropshipping quora answer

This makes a lot of sense: Why would the business model of not holding any inventory, and having a supplier fulfill orders be "dead"? China did not suddenly close its borders & cease all exports, AliExpress did not stop doing business with the West.

The dropship business model will always be viable, as long as entrepreneurs adapt and work harder to build solid businesses - it is a win win situation for the customers and entrepeneurs. Going back to the old adage: "When the going gets tough, the tough get going.". Dropshipping businesses that put their customers first, treat them with respect and provide real value are far more likely to succeed. This can be seen with stores like InspireUpLift, Bluecrate and Coolmaterial. These dropshipping stores have been around for many years and are still thriving in 2020.

Here are some reasons why 2020 is the best time to start a dropshipping business

  • The age of ecommerce is upon us, online businesses are thriving and projected to double growth by next year
  • Online payments are widespread and frequent
  • The concept of dropshipping is widespread and suppliers are on board with it
  • Sophisticated Software & Tools that simplify the process

The Competitive Advantage

There is nothing more natural in the world of business than competition. The competitiveness of the dropshipping industry is a strong indicator of growth and innovation, without which the industry would become stagnant. It is more important than ever to do your research efficiently and correctly in order to ensure that you have the upper hand.

With the vast amounts of products being added daily to platforms like AliExpress, Amazon and Ebay it is almost impossible to keep up with all of the latest trends. With that in mind, product research and marketing tools like SaleSource aren’t just handy, they’re indispensable.

Competitive market research is an absolute key to success in dropshipping and knowing what your competitors are up to can make the difference between a successful business that’s able to keep up with the demands of its sector and an unsuccessful one that fails to keep up to pace and innovate.

SaleSource allows you to identify the most reliable online suppliers, ensuring that your goods aren’t damaged and that your customers get them on time, Factory pricing where you can buy goods from AliExpress without the retail markup, therefore improving your margins.

And comprehensive product analysis , that lets you weed out products that will waste your time and money, allowing you to focus on the winners:

SaleSource Shopify Competitor Finder 

 

Final Words

Dropshipping isn’t dead and remains a lucrative business model for entrepeneurs interested in making money selling their passion. The only thing that has changed in 2020 is the amount of competition. Trying to trick the system and putting in the bare minimum effort is no longer viable. On the other hand, building a long term business, which provides real value to its customers is very much viable and continues to thrive.

 

[1] https://www.theguardian.com/technology/2012/dec/23/creative-destruction-john-naughton-networker

[2] https://trends.google.com/trends/explore?date=today%205-y&q=aliexpress%20dropshipping

[3] https://trends.google.com/trends/explore?date=today%205-y&geo=US&q=aliexpress

adam salesource shopify dropshipping
Adam Eleiko
Ecommerce expert, 7 figure dropshipper and anime loving nerd

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