[UPDATED] Is dropshipping dead?! One of the biggest ecommerce business models that made people millions by just sitting in their homes and arbitraging products can’t die so soon… Is it the case? Let’s find out.
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Digital entrepreneurs are often haunted by the uncertainty that whether their business model is still profitable. With the pace at which technology is evolving, we now have both: a ray of hope and a grim understanding that new digital business models are short lived.
Technology is a double-edged sword; on one side where it benefits the users and brings new ways of conducting businesses, it also makes old methods fade fast. For example, search engine optimization (SEO) was easy around 10 years ago. But now, as Google has brought out new updates time and time again, the way we used to rank websites has become outdated.
Similarly, cost per click (CPC) methods such as Google AdSense, Chitika, BidVertiser, all have slowly faded out. They are now replaced with native advertisements and content discovery platforms.
So, in short, every business model will fade away.
Coming back to the topic, whether to know if dropshipping is dead or not, we will have to analyze various dropshipping methods that are still viable, search for stores that are still using dropshipping as a business and prospering, and find out marketing platforms that can make dropshipping easy for the users.
Is Dropshipping Business Worth it in 2018?
The debate on the viability of Dropshipping in 2018 – Source: the Fastlane forum
Here are a few things that are slowing down the pace with which dropshipping businesses were growing:
- High shipping duration
- High cost of goods
- Lack of customer support
- Refunds take a lot of time
- Product quality is too low
- Unprofessionalism of sellers
A proper ecommerce business needs to satisfy the customer. But when it comes to dropshipping business, we see that customers are often neglected for profit. In fact, most dropshippers are using Shopify stores for their products. They don’t focus on maintaining high standards of their stores as they are selling the items through social media advertisements.
They only tend to sell a product to a customer only once. This leads to poor customer experience and often decreases their trust in the business model as a whole.
What is the remedy for such a situation?
The remedy is simple. Treat customers with respect. We have many stores that are selling dropshipping items at a high margin and are still thriving. These include Bluecrate.com, wish.com, and a few others.
Why Are Some Dropshipping Stores Thriving?
The reason some dropshipping stores are thriving while others aren’t is that these dropshipping businesses keep customers first. They give priority to their buyers and try to solve all their needs. Yes, they sell products by keeping a little margin, but they compensate that to the customer by allowing him to get refunds faster or to help them with all the questions they have.
So, if dropshipping businesses want to stay sustainable in 2018, they need to give their customers a priority.
Is Dropshipping Still Profitable?
Yes and no. Confused?
It’s simple! Dropshipping is as good as you make it so. Before starting out, just plan how much you can spend and how much return you expect.
Let’s say you want to know how to start a dropshipping store and aim to earn $100,000 per year from it. How many products should you sell?
Here are the calculations:
You get a product of $15 from AliExpress and you sell it for $30. After cutting the shipping costs and the cost of advertisements, your actual profit over the product is $10.
So, in order to make $100,000 per year you need to sell at least 1000 product per month.
$10 profit x 1000 orders = $10,000 per month
$10,000 per month x 12 = $120,000 per year
So, if your idea of a successful dropshipping store is to earn $100,000 per year, then you need to sell at least 34 orders per day.
Dropshipping vs Affiliate Marketing: Which One Is More Profitable?
It would be wrong if I don’t compare dropshipping with affiliate marketing. So, let’s say we want to make $100,000 from affiliate marketing as well.
In affiliate marketing, we get a commission for products we sell. Let’s say the commission percentage is 5%. You need to make $10,000 per month or $340 per day based on the above calculations.
To achieve that one customer should buy a product worth $100 so you get $5 commission. And, to make $340 per day, your customers should buy products worth $7000 per day.
So, which one do you think is more complex?
I think this answers the question very well about how profitable dropshipping business can be. And, what you should do to make it more lucrative for yourself.
Is Dropshipping Allowed on eBay and Amazon?
One more gray area where most dropshippers become confused is whether they can do it with eBay or Amazon. To explain it, dropshipping is a business model and not specific to any brand. Even if you are using phone calls to dropship a product, it will be called dropshipping. So, whether it is Amazon, eBay, or any other online platform, you can still start dropshipping on them. Obviously, all these have a few restrictions. eBay doesn’t allow products from China and users need to reside in the USA. Amazon says that products shouldn’t take more than a week to deliver. So, if you can abide by these policies than you can start dropshipping on Amazon and eBay as well.
In fact, many people are still doing dropshipping business on both these websites. They sell products of Amazon on eBay and vice versa while keeping a good amount of commission. The only way they succeed is by understanding both the systems.
Dropshipping is not dead. It is still a lucrative business model and anyone with the right insights can reap huge profits by using it wisely.
Starting dropshipping? Do you know which platform is best for Dropshipping? Read our post on ‘Best Ecommerce Platforms for Dropshipping.’
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