- Is Dropshipping Worth it in 2023?
- Dropshipping vs Traditional eCommerce Comparison
- Why is Dropshipping So Popular?
- Is Shopify Dropshipping Still Profitable?
- Is Dropshipping Legal?
- What are the Pros & Cons of Dropshipping
- Dropshipping Tips to Make it Profitable
- What are the Best Product Ideas for Dropshipping Business?
- FAQs about Dropshipping
Is Dropshipping Worth It? (2023 updated)
Dropshipping — the eCommerce sensation!
It’s a business model that’s been used by thousands of entrepreneurs to kick-start their eCommerce journey, and thousands of Shopify store owners are still using it.
But the crucial question is:
Is Dropshipping Worth it in 2023?
Yes—it’s worth it as long as you do it the right way.
Dropshipping vs Traditional eCommerce Comparison
The term "eCommerce" is an umbrella term for all types of online businesses that sell products or services. Traditional eCommerce is one of the oldest methods of doing an online business.
Dropshipping is one of the business models, within the eCommerce umbrella, that has become popular in recent times due to enhanced infrastructure and logistics.
In traditional eCommerce, the workflow may look like this:
In the dropshipping model, the workflow may look like this:
The store owner owns and maintains the inventory.
The store owner does NOT own/maintain the inventory. The supplier does it.
The store owner requires a location for a warehouse or fulfillment center.
The store owner does NOT require any such location.
The store owner has complete control over the product’s quality.
The store owner can monitor the quality through samples and feedback, but ultimately, the quality depends on the supplier.
The store owner needs to invest capital into the warehouse/fulfillment center location and raw materials/inventory.
The store owner does not require an upfront investment for these assets and only needs to pay the wholesale price as and when the order is received.
Why is Dropshipping So Popular?
The dropshipping business model has become one of the most widely-used eCommerce models because it’s very beginner-friendly and relatively easy to start with a reasonable budget.
Also, data suggest that the pandemic has played a positive role in the growth and popularity of dropshipping businesses. 52% of customers in the US indicated that they will prefer to buy online in the future as compared to what they did before the pandemic.
Thus, it’s safe to say the future of dropshipping is bright in the coming times. And no wonder why Google Trends also shows that the dropshipping trend going upward.
Google Trends shows that the search volume for dropshipping has been going up, especially after 2020, in other words, post-pandemic.
Is Shopify Dropshipping Still Profitable?
When it comes to profitability, it mainly depends on business-to-business. When outsourcing the fulfillment and shipping process to a supplier, you may cut off some portion of your profit margin.
However, if you look at it from the perspective of ease of doing the business, it’s also worth the cost because they’re taking care of some heavy lifting, i.e., inventory management and the fulfillment process.
But if someone asks if dropshipping is dead, the answer is certainly “NO”. There are many profitable dropshipping businesses at the present time. That said, making your dropshipping business profitable is mostly up to you.
If you’re looking for motivation or real Shopify dropshipping results, FreshHoods is a great example. This Shopify dropshipping store has been making 6-figure revenue and 5-figure profit.
The brand placed its listing on Flippa (an eCommerce marketplace) for a whopping price of USD $5,500,000 as they're looking to shift their focus to B2B (Business-to-Business) and data-first company.
Is Dropshipping Legal?
Although this is a very broad question, in general terms, Yes—dropshipping is a legally acceptable business model.
Dropshipping model isn’t any wrong practice by any means. It’s just a retail business model where the dropshipper acts as an intermediary between the customer and the supplier, which is basically what’s been done by all brick-and-mortar retailers for years and years. Dropshipping is just its online version.
That said, you may need to check the laws and regulations in your country or where you want to sell your products. There could be certain types of products that may not be legally allowed to be sold. If you’re not sure about anything, it’s always advisable to consult with a legal professional.
What are the Pros & Cons of Dropshipping
Whether it’s dropshipping, traditional eCommerce, or brick-and-mortar business - all of them have their own benefits that come along with some challenges as well. So, let’s see the key benefits and drawbacks of the dropshipping business model.
Pros of Dropshipping Business Model:
Easy to Start
One of the main reasons why so many people choose dropshipping to begin their entrepreneurial journey is its ease of getting started. Creating a Shopify store and setting up a dropshipping business is a fairly easy process even if you don’t have any experience with the same.
No Need to Manage Inventory
You don’t need to buy or manage inventory. Just pay the supplier as you receive the orders on your store and it’s really helpful to manage your business with a small budget. Also, since you’re not managing the inventory, you don’t need to be worried about maintaining your products in a good condition when it’s in the warehouse.
Requires Lower Investment
Dropshipping business can be started with a low investment because you do not require to purchase inventory or invest any capital into a warehouse or fulfillment facility.
Important note: Just to be clear, it is not to say that dropshipping can be started with no money. Don’t fall into that trap. It will require money, so be prepared with a reasonable budget to manage your Shopify bills, advertising and marketing costs, and other miscellaneous costs.
Allows You to Try Different Products
Dropshipping business model is very flexible in the sense that you can test the different products before finalizing which ones you want to sell on your store. You don’t need to buy bulk inventory and that reduces the huge risk. If one product fails, you can switch to another one, post doing some more market research and testing.
Cons of Dropshipping Business Model:
High Competition in the Market
It’s quite obvious that since it's a popular business model, you may also have to face competition from many similar businesses in the market. Also, it’s possible that your supplier may be selling the same product to other store owners as well, meaning the same product could be sold by many stores.
Make Your Product Unique: Your product may not be unique in the market unless you do some differentiation in the product. But you will need help from the supplier to do so. You can come up with an idea to modify your product or add extra features. Communicate the same to your supplier to see if they can implement those changes.
Limited Control Over Quality
One of the biggest challenges with dropshipping is that you can’t totally control the quality of your products. Sometimes, it may happen that you can come to know an issue when you receive feedback from your customers. And that’s why it’s very important to find a reliable supplier who can deliver quality on a consistent basis.
Lower Profit Margin
Dropshipping businesses can be profitable. But we still can’t neglect the fact that you do have to pay a certain price for handing over the production, inventory management, and shipping to a third party. After all, they also need to keep their margin. So, it reduces your profit margin to some extent.
Less Potential of Building a Brand
As we discussed before, it’s possible that customers can get the same product from other stores as well. Also, depending on your supplier, it may or may not be possible to put your branding (brand name and logo) on the product packaging. All these factors make it difficult to build your brand.
Explore the Private Label Business: If you’re serious about building your brand, you should explore suppliers that offer private-label products. Private label products are the ones that are unbranded by their manufacturer and supplier and they allow you to sell those products with your own branding.
Inventory Tracking Can be an Issue:
While some dropshipping suppliers may provide you a real-time inventory tracking, it can’t be as good as tracking inventory in your own warehouse. You don’t want to run out of stock especially when your product is in high demand. However, you need to rely on the supplier to keep enough inventory in stock to manage your orders.
Dropshipping Tips to Make it Profitable
Select the Best Shopify Dropshipping App
- Shopify dropshipping apps help you source products from different suppliers and some of these apps supply products by themselves.
- Some of the popular Shopify dropshipping apps include DSers‑AliExpress Dropshipping, CJdropshipping, Spocket ‑ US & EU Dropshipping, and Zendrop ‑ Global Dropshipping.
- If you're looking to start a "Print on Demand" dropshipping business, you can check out Shopify apps like Printful, Printify, Gelato, and SPOD.
- If you're looking to sell jewelry products, you can check out the ShineOn: Print On Demand app.
Learn more: 10+ Best Shopify Dropshipping Apps in 2023
When you search the keyword “dropshipping” in the search bar of the Shopify App Store, you will find many different apps that are relevant. You can review their features, ratings, and reviews to choose the best app for your dropshipping business.
Build Business Around a Specific Niche
- You may either create a general dropshipping store and sell all sorts of products for everyone or you can create a niche-specific store.
- While it may sound tempting to sell many different products that are trending in the market, it’s better to build your dropshipping business around a specific niche.
- It helps you to channel your marketing and advertising efforts in a certain direction and get a better return on investment (ROI).
Create a solid Customer Acquisition Strategy
- When starting a new online store, it’s quite challenging to bring traffic to your website. You need to have a robust customer acquisition strategy in place even before your launch your store.
- You may look into the budget required for paid ads on platforms like Facebook and Google.
- Create cost-effect marketing strategies such as content marketing, social media marketing, email marketing, etc.
- Also, you can take advantage of Shopify Collabs to take help from influencers to promote your products.
Work on Search Engine Optimization (SEO)
- This applies to not just dropshipping stores but to any online store. SEO is one of the most important elements to bring organic traffic to your Shopify store.
- To enhance your store’s SEO, you need to work on your store’s content, proper use of keywords, image optimization, speed optimization, etc.
Invest in Creating a Premium Website Design
- Invest time and money to ensure that your website looks premium. If customers do not find your website appealing or trustworthy, they may exit your website even before checking any of your products.
- Thus, it’s imperative that you create a website design that looks professional and captivating. You may use GemPages to enhance your store’s design without writing a single line of code.
- GemPages can also help you create high-converting mobile landing pages to boost your dropshipping store’s conversion rates.
What are the Best Product Ideas for Dropshipping Business?
While dropshipping offers you the flexibility to sell a wide range of products, it can also be tough to decide what exactly to sell on your store.
Before we jump into the list of specific product ideas, let’s see the general logics that could help you to find products with the higher potential to increase your sales:
- Products Needed on a Recurring Basis:
There are certain products that we all need to replenish on a recurring basis. This can also give you the chance to build a subscription model in your business. For example, beauty and skincare products like face wash, shampoo, body wash, and make-up items are usually purchased on a repeated basis.
- Evergreen gift items:
There are several occasions throughout the year when people love to gift items to their loved ones. Some gift items could be needed only during specific seasons or holidays but there are other items that can be given as gifts no matter what season it is.
For example, jewelry items can be gifted on several occasions throughout the year. Ring to Perfection is one of the Shopify stores that we’re reviewed and included in our list of Top Shopify Dropshipping Stores that you can learn from.
Rings to Perfection offers luxury jewelry products like bracelets, anklets, and rings to its customers at affordable prices.
- Products for Corporate Clients:
Just like individual customers require some products on a recurring basis, there are also some business clients that require certain products on a regular basis. For example, if you’re selling stationery items to a business client, you can build a long-term relationship to get continuous business from them.
Also, there could be some products that they may not require on a repeated basis but in bulk quantity. For example, office tools or equipment.
Now, let’s take a look at some of the top product categories and examples for dropshipping businesses:
1. Digital Content Creation Tools:
Considering the increasing popularity of digital content creation, you have a great opportunity to sell products that are specifically produced for such content creators. For example, many content creators require ring lights for creating video content that they publish on different platforms.
Here are some of the products in this category: Portable chargers, tripods, microphones, camera lenses, backdrops, etc.
2. Gaming Products:
Gaming products also offer you a wide range of products that are in high demand due to people’s love for gaming. Here are some examples of gaming products: Gaming keyboards and mice, gaming earphones, chairs, posture correctors, and so on.
When brainstorming product ideas, always keep in mind that you should try to find out the products you are passionate about. Apart from checking the profit potential of the product, it’s also important to ensure that the product is aligned with your values.
3. Home Décor & Kitchen Items:
Home décor products also have a good market because we all love to see our homes look beautiful. Some examples of home décor items are clocks, posters, candle sticks, lighting, bedding, pillows, etc.
Also, kitchen items are something that people need to use in their day-to-day life and it makes their job easier. Here are some examples of kitchen tools that you can sell: Pop-up toasters, cookie cutters, vegetable cutters, foldable trash bins, etc.
Learn more: Best Home Decor Dropshipping Suppliers for Your Online Store
4. Women’s Clothing & Apparel Products:
We all know women love shopping. And if you want to sell clothing and apparel products, women are your best customers. Within this niche and product category, there are many different products that you could sell on your Shopify dropshipping store.
Here are some of the products in this category: Crop tops, dresses, leggings, lingeries, one-piece swimwear, and the list goes on and on.