Is Dropshipping Really That Easy?
Some entrepreneurs mistakenly assume that because the concept of dropshipping is simple to understand, the business model itself is then an easy way to make money.
Like most business models, the devil is in the details. Variables like the amount of effort put into product research, the amount of time spent perfecting the website & quality of marketing materials all come to mind. In this sense, it's better to put it this way: Dropshipping is not easy, but it is much simpler than starting a brick and mortar retail store. Compared to many other business models, the number of things an entrepreneur has to focus on is reduced, allowing more time to be spent on growing the business versus being stuck in an endless cycle of managing day-to-day operations and finance.
While we would still not consider dropshipping "easy", dropshipping is in fact easier than it used to be - with all-inclusive and affordable ecommerce platforms like Shopify, reliable product research & marketing tools like SaleSource and supplier management tools like Oberlo (and oberlo alternatives)- now is the best time to start dropshipping.
However, there are also pitfalls to the business model that many of its proponents fail to mention: Low margins, long shipping times for the customer and very high competition.
So is dropshipping "easy"? Upon further analysis, we can discover some recent developments in 2020 that have made dropshipping easier, as well as other factors that have resulted in dropshipping becoming more challenging and time consuming.
The Ecommerce Landscape In 2020
With global ecommerce sales projected to reach almost $5 trillion by 2021, the consensus is that dropshipping is not only profitable, but also scalable. With ecommerce giants like Amazon, AliExpress and Ebay taking over and leaving offline retailers out of business, shopping online has become the fastest growing industry on the Internet.
In the midst of all of this, we consider dropshipping to be the perfect stepping stone for those wanting to sell their passion online. Many people claim to be making a living off dropshipping and so an obvious questions arises: How easy is dropshipping in reality?
Whilst dropshipping is not perfect business model, its downsides have not stopped it from being one of the top choices of prospective online entrepreneurs. The biggest reason for this is perhaps the ultra-low barrier to entry, that requires a small upfront investment of a few hundred dollars in order to get started.
In summary, the best time to start selling online is now, and dropshipping can be one of the best ways to learn the ropes of ecommerce while making a profit.
Finding Winning Products Is The Key To Dropshipping Success
Despite risk of preaching to the converted, this is a point that is worth reiterating. Arguably the most critical part of a successful dropshipping business is finding the right products to sell. It is no coincidence that the top ten dropshipping stores (by revenue) have an average of 721 products uploaded - and eight out of these ten stores have over 600 products uploaded.
Many entrepreneurs create bare minimum stores, import poorly researched & presented products, spend thousands of dollars on ad campaigns and end up disappointed when they lose their money. In a landscape that encourages the get-rich-quick mentality, it's no surprise as to why these entrepreneurs thought they would succeed - but remember, bare minimum effort = bare minimum results.
In reality, the formula to dropshipping success looks a lot more like this:
- Heavily research problem solving products to sell using SaleSource
- Import only the best to your store using Oberlo
- Brand & beautify your store using Shopify
- Create viral marketing materials for your "best of the best" products
- Test marketing one product at a time through your marketing channels (most effective - Facebook Ads, Influencer Marketing, Pinterest)
- If the product sells profitably, scale, if not, test another product
Here are some factors you should consider when picking a product to sell:
- Does the product solve a problem?
- Is the products supplier trustworthy?
- Can the product be marked up profitably?
- Is the product suitable to go viral in a video or image ad?
- Is the product already saturated with dropshippers selling it?
- Do you (personally) know much about the product and its niche?
There are millions of potential products to consider these factors for, a time consuming task for any dropshipper - which is where SaleSource comes in handy by allowing you to browse vetted products that already meet these criteria.
The Platform That Makes Dropshipping Easy
For those on a low budget, it may be very tempting to use a platform like Squarespace or Wordpress in order to set up their dropshipping business. That would certainly be a good option for those that are tech savvy and know their way around setting up, building and maintaining websites. However, our favourite all in one solution is Shopify.
Shopify simplifies building, scaling and maintaining an ecommerce business. The Shopify platform takes care of most of the main essentials, allowing you to focus on the core tasks of product selection, store building and marketing.
Shopify also works hand-in-hand with Oberlo, which is one of the best ways to import products from Aliexpress into Shopify. Both Shopify and Oberlo work hand-in-hand with SaleSource, which is the best platform for dropshipping research & marketing.
Finding A Great Supplier Will Make Things Easier
The nature of the dropshipping business model means that as an entrepreneur, you are reliant on suppliers to fulfill and deliver your customers orders. Therefore, it is key to use SaleSource to find a reliable supplier that will deliver your products on time and undamaged.
Characteristics of a good supplier include:
- ePacket shipping and delivery
- Good Aliexpress reputation score in all 3 categories
- Fulfills your orders on the same or next day
- Takes responsibility for when things don't go as planned
- Performs regular quality controls
SaleSource is the perfect tool for finding serious and reliable suppliers that are also the manufacturers as opposed to middle men, therefore these suppliers are able to offer the most competitive, factory prices. You can use SaleSource with Oberlo, which conveniently lets you import products directly from the suppliers AliExpress page into your Shopify store.
All of that sounds good, what about the downsides?
One of the downsides of this business model is that it offers smaller profit margins compared to other models. Understandably so, convenience comes at a cost - the cost of acquiring almost every customer through a paid channel.
Because of the fact that your supplier will charge you higher fees for smaller orders (non-wholesale), this will be reflected in your product pricing, if you are to remain competitive.
Another thing worth mentioning is that, whilst your supplier handles most of the pressure, this doesn't mean that you get to sit on the beach, sipping cocktails. Customer services is still your responsibility, and you will have to deal with returns, refunds and other customer issues. Having a solid customer service setup with Live Chat, Live Order tracking and friendly, prompt responses will help make sure your store does well in the long run.
While dropshipping is a great and simple to understand business model for those wanting to get into ecommerce, it certainly isn't easy. By following the tips on the SaleSource blog and using the right platforms, you can save yourself a lot of time and effort. To succeed in dropshipping, you have to beat the competition and we hope that SaleSource can help you do just that.