Is Dropshipping Profitable?

Is Dropshipping the ultimate side gig?

Is it still profitable?

How difficult is it to get started?

There are magnificent stories going around about dropshipping, suggesting that it is any easy way to start an online business and how it could quickly turn into a full time job. These statements beg the question, how rare are these occurrences and how likely are they to succeed in 2022?

The question that immediately comes to mind has to do with the prevalence of e-commerce in our lives and what sort of growth we should expect. In simple terms, imagine having all of your shopping delivered in timely manner to your front door. This is the motivation behind e-commerce so long as it is financially viable. It's faster, easier and more convenient. There is undoubtedly merit to online shopping and delivery. The shear simplicity and easy of use is ground breaking, at least enough to warrant consideration. I'm sure that many people would agree with me in saying that there is already a serious transition taking place. Perhaps it will never occupy the whole because of how delightfully shopping is in general, but it may very well occupy a significant proportion of sales. Needless to say, there are numerous reasons for a business to employ the internet as a sales channel.

As is the purpose of this article to assess the merits of dropshipping, I thought it appropriate to begin by addressing the negative comments made about the ethics of dropshipping. As you may already know, many critics due to the rather large volume of inquires regarding dropshipping have made public criticisms to simmer the rather large buzz around the rather spicy business model. Naturally these criticisms are in good nature because they both reduce the amount of interest on the topic and also protect people with poor insight from financial loss. Although the sort of negative comments made are imperfect, they are a necessary cooler to reduce the possibility of simultaneous failure by the unassociated who know little to nothing about dropshipping. On the whole, if too many people find the business model as flawed then the whole system will fail. A wave of negative results will certainly call for a full stop.

What are the criticisms against Dropshipping?

One of the most prominent criticisms points towards the harsh disconnect between the party involved with managing the dropshipping store and the actual finished goods. The dropshipper is effectively neglecting their responsibility of product oversight. Toyota would not be the same if they didn't have such careful attention to detail at every stage of the manufacturing process. This disconnect between the store owner and the deliverable product is labelled as a form of dishonesty because there is no absolute way to guarantee the finished good. As we well know, everything has a fair value and it's difficult to establish trust when you don’t handle the goods yourself. By dropshipping you are effectively deferring trust to the supplier, without physical inspection prior to initiation you cannot guarantee quality. These same critics will also say that the products is inherently overpriced because of the double mark up from the merchant and warehouse.

Low barriers of entry can be a doubled edged sword. The small capital requirement also invites two sorts of people into the equation, bad actors and those who are wholly unequipped. These two categories of people could lead to damages and agreement amongst industry professionals. One thing we never want is everyone agreeing to the same negative news which would bring about wide sweeping action.

The fact of the matter is that the customer may never learn about these discrepancies in the supply chain. This obscurity is the underlined issue which blurs the lines between transparency and deception. Dealing over the internet is problematic already and bad actors will always exist. There needs to be trust between customers and merchants when dealing online, honesty is always a good policy. Trust and honesty are the best hedges against risk, it is important to focus on trust as a means to resolving the underlined issue. The two most obvious solutions to this problem is demonstrating quality and fair pricing.

The Merits of Dropshipping:

Until this point I've mentioned only criticisms, but there is obviously more to the story. Accessibility is objectively a good thing because it is a means of income re-distribution. It also serves a few other macro-economic purposes.

1.    Due to economies of scale there is an abundance of goods that are warehoused and require a destination. The inception of dropshipping stems from the manufacturers inability to allocate their supply globally.

2.    The role of the dropshipper is comparable to a marketing role. Dropshipping resolves a distribution problem for manufacturers by using private resources and expertise as their labor and capital. Manufacturers or warehouses shift the burden of actually selling the goods, efficiently offloading their inventory.

3.    This makes sense from a macro-economic perspective and thus dropshipping is viable as a piece of the puzzle.

4.    Under normal circumstances this would be considered ingenuity, but there is an element of profiteering involved which beckons abuse.

5.    It’s certainly a creative way to have small players to sell on their behalf and at their personal expense.

6.    It’s an extended partnership at the end of the day, and you shouldn’t feel guilty for connecting suppliers to customers.

I believe there is genuine merit to dropshipping as a business model. One thing is for sure, there is a lot of talk about dropshipping. Most notably amongst people probing its reliability as an extra source of income.

Digital Marketing and Dropshipping

Dropshipping is heavily reliant on your knowledge of digital marketing because you actually have to deliver the product to your customers screen, and naturally digital marketing has its own complexities. It’s not as simple as its made out to be, but the whole e-commerce industry is advancing in the right direction.

1. At the most basic level, you need to understand how search engines rank your site.

2. You need to know how to create winning graphics and advertisements to actual capture leads, this could involve videography or photoshop.

3. You need to build your pages authority, possibly by blogging or link building.

4. You need to know how social media scales, and how the major advertisement companies Facebook and Google earn their revenue.

5. You need to understand how to develop a digital asset like a website and the software service industry.

6. You need to know how to identify industry trends and the nature of demand.

7. You need to understand how to manage your financials, including taxation and accounting.

Just to put things into perspective, SEO or SMM can be entire career paths on their own. You need to be at the very least tolerant to self-learning and technically savvy.

Is Dropshipping legitimate?

In the plainest terms, If you have a buyer then the demand itself is proof of legitimacy. We see a lot of people using dropshipping as a launching pad for their careers and this we can gladly encourage, especially if you use the proceeds to build a trust worthy company and contribute to society.

Is the business model considered dishonest?

No, but some bad actors may take advantage of the anonymity of the internet. So long as you are taking responsibility for the goods you deliver and you operate by the book.

Is there stable income?

There is cashflow, there is no such thing as stable income without a winning formula, which takes time and investment to develop. Dropshipping is categorically risker than traditional business models, but the downside is far less severe as exit opportunities are abundant.

Keys to Success

If you want to build a strong market presence, trust is going to be your greatest asset. If you manage to consistently deliver an honest service, then through the eyes of the shopper, you will be just another e-commerce business that is in differentiable from any other business. If you are just starting off, your first objective should be to generate that first bit of cashflow. Which only needs to be enough to reinvest and incrementally scale your business. This will bring new life to your business and serve as proof that it's actually feasible.

When has it been easy for a young entrepreneur to gather the capital required to open a physical store, and since when has it been easy to earn a dollar?T his is a real opportunity, and those comments about dropshipping overlook what it has done for the sole entrepreneur that’s looking for a means to stand on their own. If you are prepared to go the distance and risk some money setting up your business, then I wish you best of luck and remember if you need a good loyalty and rewards program Growave has your covered! We offer a complete marketing platforms for 14-days free and $9 a month afterwards. I recommend you read about our Shopify app so that you know why Growave is a must have asset for your dropshipping business.