Subscribe to Growave blog
Transform your Shopify experience with Growave!Try for Free
Imagine running a business where you don't have to worry about shipping logistics, stockpiling inventory, or the cost of having excess inventory sitting on shelves collecting dust. This sounds quite dreamlike, right? This is what dropshipping is all about, a business model that seems to provide high-reward, low-risk investments. But before you dive headfirst into the world of dropshipping, it's important to understand the pros and cons of this business model. Because it's not always sunshine and rainbows, taking a closer look beneath the surface will prepare you for the challenges that may arise along the way. But what is dropshipping and how does it work? What are the benefits and disadvantages of dropshipping? These and other questions will be answered in this post.
Here's what we are going to look at:
- What is dropshipping?
- Dropshipping pros and cons
- Is dropshipping dead in 2023?
- How to start dropshipping with no money?
- 10 steps to building a successful online dropshipping store
What is Dropshipping?
According to Shopify, dropshipping is an order fulfillment method where a business doesn’t keep the products it sells in stock. Instead, the seller purchases inventory as needed from a third party – usually a wholesaler or manufacturer – to fulfill orders.
To put it simply, dropshipping is a method of directly shipping products from the manufacturer to the consumer, where the seller doesn’t need a physical store to pull the item from. In this case, the seller acts as a middleman or middlewoman. The main difference between dropshipping and standard retail fulfillment is that you don’t own or keep any stock or inventory. You have a contract with one or two companies and they ship the products to the consumer on your behalf. There’s no need to have a warehouse, no need to carry any inventory, and no need to pack items in boxes and ship orders. What’s not to love?
Even though dropshipping business model might seem like a quick, easy, and risk-free way to start an online business, it is not as easy as it sounds because of how this type of business works and its competition level. So of course, there are downsides to dropshipping, but plenty of people have done it right and made a lot of money and as with everything, it takes time and effort.
The allure of dropshipping lies in its minimal start-up costs and the absence of the necessity to maintain inventory, making it an attractive option for aspiring entrepreneurs. In 2020, the global dropshipping market was valued at 128.6 billion dollars. The global dropshipping market size is expected to reach 500 billion dollars by as early as 2027. Roughly 27% of online retailers choose dropshipping. This proves the popularity of the business model, and it can be a long-term business if you know how to do it right. The benefits are very real but dropshipping is not a get-rich-quick scheme. It can be a significant source of income only if you’re willing to wait and as with everything it takes significant commitment, time, and effort.
So, if you want to become an online seller but don’t want to risk a lot of investment and maintain an inventory, then you should consider a dropshipping business.
But before you start your own dropshipping business, stop listening to people who tell you that dropshipping is effortless and promises quick financial gains. Don't be swayed by unrealistic expectations and make sure that you understand the pros and cons of dropshipping.
Dropshipping Pros and Cons
Pros of Dropshipping
1. Ease of Setup
This e-commerce business model stands out for its minimal start-up capital requirement, a significant advantage of dropshipping. But this applies to ecommerce in general. You don’t need thousands of dollars to get your online business up and running. Unlike the costly venture of buying, renting, and managing a warehouse, dropshipping eliminates these financial hurdles. Your dropshipping suppliers will take care of that. To store your products, you don't need a dedicated warehouse. Moreover, this low-risk business model doesn't necessitate a physical office. You can be your own boss, managing your entire business with just your laptop or smartphone - that's as good as it gets.
Do you need experience to start a dropshipping business? Not necessarily. You learn as you build your online dropshipping business. By immersing yourself in research, planning, exercising patience, dedicating time, and putting in hard work, your new business will experience growth and success.
2. Flexibility and a Broad Product Range
There’s an undeniable allure to being your own boss and doing something that you truly enjoy. The beauty of dropshipping lies in its unparalleled flexibility, which is its greatest strength. Dropshipping is easily one of the most flexible jobs that you can have.
Armed with just a laptop and an internet connection, you have the freedom to work whenever and wherever you please. You can establish your own working hours because you are your own boss. You decide when you want to wake up in the morning even though the responsibilities of the business may cause you to wake up early naturally. What's more, the timing is entirely in your own hands. Whether you're the most productive in the morning, afternoon, or evening you get to choose.
Moreover, being in control means you decide which products to sell. If consumer preferences shift, you can swiftly adapt by introducing new products and removing the old ones from your shop. This dynamic nature allows you to test market trends and adjust your offerings accordingly with minimal risk. The agility to make real-time decisions and the ability to experiment with various products are integral aspects that make dropshipping not just a business but a journey of continuous learning and adaptation. All you really have to do is monitor the sales figures for each product and its specific variations.
As your business grows, the challenge of meeting increasing demand might become a roadblock. Fortunately, in the realm of dropshipping, this challenge transforms into an advantage. The operational responsibilities seamlessly shift to the supplier's capable hands, requiring minimal adjustments to your established business method.
The supplier takes care of shipping, storing, and manufacturing the product. The scalability of your dropshipping business becomes smooth. Unlike traditional models, where expansion might entail significant infrastructure investments, dropshipping ensures that your infrastructure costs remain stable. This not only contributes to cost savings but also allows for strategic allocation of resources. The funds saved can be strategically channeled into marketing campaigns, amplifying your business reach and accelerating growth.
Moreover, the beauty of having suppliers manage operational intricacies extends beyond financial benefits. It liberates your time, enabling a more focused effort on enhancing the customer experience. The capacity to direct attention toward customer satisfaction, service improvements, and strategic business development further contributes to the long-term success and resilience of your dropshipping venture.
While dropshipping is undeniably a cost-effective means to start an ecommerce business and a legitimate method to generate income, it does come with its own set of challenges.
Suggested reading: A Simple Guide to Starting an Ecommerce Business
Cons of Dropshipping
1. High Level of Competition
The dropshipping market is growing at a steady rate and because of the benefits it provides, a lot of entrepreneurs want to become dropshippers, so it is no surprise that the competition is so high. It can be a bit frustrating knowing that you are selling the same products as your competitors. The most successful and experienced ones can match and lower their product prices to win over your customers.
Solution: Before getting down to a product-selling business, you need to find a unique niche that makes competition irrelevant and it is really important to know your audience.
2. Less Profit
Your suppliers do all the hard work behind the scenes. They handle inventory and shipping and as a result, it lowers your revenue. When you store and manage your own inventory, you are buying your product in large quantities at wholesale price, and as the owner of a dropshipping business, you are likely to pay more for each item.
Solution: The only solution is to sell more products. Simple but true.
3. Product Quality and Brand Loyalty
There are certain aspects of the dropshipping process that you can’t control directly. For example, you cannot control product quality because you rely on your suppliers heavily. You don’t see the product you sell in your online store. Of course, you can promise your clients that the product is of high quality, but it may turn out that your product fails to meet customer expectations. They might not understand that it’s the supplier’s fault. There’s no way you can guarantee that a product has arrived on time and in proper condition. The product can be of different colors or sizes, or it can be damaged.
It’s hard to build a brand with dropshipping. If your customer loves the product you are selling, he’s more likely to focus on the product’s brand than on the dropshipping business that serves as a middleman or middlewoman between the manufacturer and the customer. Your supplier takes the credit for your work.
Solution: Make sure you understand how your suppliers manage returns. Moreover, you can request product samples from them. Order the same product from different suppliers to your house to choose the right one for your business. By doing so, you get an opportunity to check the delivery time, the condition of the package, and the quality of the product. Find a supplier that will let you place your logo on product packaging.
4. Stock Shortages
If your dropshipping business is booming and your product is selling faster than you expected, your online store might be at risk of running out of stock. It can leave your clientele with a bad taste in their mouth and the last thing you want is to disappoint your customers. Dropshipping makes you reliant on your supplier. If he runs out of stock, you run out of stock.
Solution: You need to strengthen your communication with your supplier. Ask him how much stock he has, and how fast he can find new inventory. But what if your current supplier runs out of stock? What are you going to do? The answer is simple. Find another supplier that offers the same products which is why it is important to keep in contact with multiple suppliers. You will always have a plan B. Communication is the key. Choose the right suppliers that are always accessible, cost-efficient, and easy to work with.
5. Customer Service
When it comes to dropshipping, it can be hard to control your customer experience and customers are the ones buying your products and supplying your revenue. Customer service is essential for your business; if they aren’t satisfied, they are more likely to leave bad reviews. Review ratings affect your company’s ranking on search engines. If your clients aren’t happy with the delivery time and product quality, you won’t be able to solve these issues promptly because you depend on a 3rd party. You can’t see the product yourself.
Solution: You’ll need to track the shipment with your supplier and if the product is damaged you can redirect your customer to the supplier for support. That’s why it’s so important to find a good supplier. Plus, you may want to invest in E-commerce software that lets you connect with your customers.
Related article: "What are the Benefits of Customer Loyalty in Ecommerce?"
Entrepreneurs considering dropshipping should weigh both the pros and cons before diving in.
Is Dropshipping Dead in 2023?
While the ecommerce landscape is constantly changing, some of you might be wondering, "Is Dropshipping Dead in 2023?".
Dropshipping is not dead at all and is still profitable in 2023. The popularity of dropshipping continues to ascend in 2023, exhibiting a notable surge in search interest of about 50% year-over-year. It is a legitimate and popular business and just like any other business, it will take time, effort, and consistency before you start making money. With the growth of the digital market, dropshipping businesses have a lot of potential to succeed. But the main question is still open: Is Dropshipping Dead in 2023? The answer is yes but with a few caveats.
The success of a dropshipping business is heavily dependent on a number of important factors:
Firstly, the niche you choose can be a game-changer. Finding a unique niche or providing standout products might help your store stand out in a crowded market. It's like finding a cozy, uncharted island in the vast ocean of e-commerce.
Second, you must have a solid marketing strategy. Engaging marketing strategies are the wind in the sails of your dropshipping business. Using social media, email marketing, and other digital marketing channels can drive traffic to your dropshipping store and convert website visitors into customers.
Moreover, building strong relationships with trusted suppliers is similar to having a trustworthy crew on your ship. It guarantees that your customers receive their orders precisely and on time, which in turn builds customer trust and satisfaction.
Lastly, great customer service is the anchor that keeps your customers coming back. In the choppy waters of online shopping, providing a smooth shopping experience and prompt responses to customer inquiries can significantly improve your store's reputation and profitability.
The market is saturated with products from many popular niches, and the competition is fiercer than ever but people are still choosing dropshipping business in 2023.
Customer expectations have increased. They look for high-quality products, fast shipment, and excellent customer service. Building solid connections with trustworthy suppliers and spending money on customer service are necessary to meet these expectations.
So, dropshipping is still pretty much alive but it has matured. A more strategic approach, an emphasis on customer satisfaction, and a readiness to change with the changing e-commerce landscape are necessary for success. Dropshipping is still worth it but not if you do it the way most people do.
But what if you don't have enough money or no money at all, is it possible to start a dropshipping business?
How to Start Dropshipping with no Money?
Starting a dropshipping business with little to no money is challenging, but not impossible. All you need is a working computer and a stable internet connection. With these, you can establish an online store and commence the selling of products. While this may appear as a pathway to easy money, the reality is that the competition is fierce due to the low barriers to entry. Virtually anyone can initiate a dropshipping business with minimal or no capital.
Then you can create an online store and start selling products. While this might sound like easy money, the competition is high since it has few barriers to entry. Almost anybody can start it with less money or no money at all. This business model is still profitable in 2023 and in order to succeed you should invest some time, and choose a good niche market. So, these are two things that all entrepreneurs should take into consideration before starting out.
As we've told before, this type of business requires some time, hard work, perseverance, and determination, and by choosing the right products to sell online you distinguish yourself from your competitors. What niche you are working on matters big time as it is the foundation of your online dropshipping business.
Where should you start?
The first logical step would be finding the right supplier for your business. Finding dropshipping suppliers can be tricky as there are plenty of suppliers. If you find the right one you can deliver your items on time and in proper quality. A good supplier is the foundation of your business. How do you find the right one? You can order the same products from different suppliers to check the delivery time, the condition of the package, and product quality. The one who delivers your product on time without damaging it and in proper quality is the best supplier for your business. Customer satisfaction should always be your top priority because having happy customers is crucial for your store’s success.
Here are the suppliers you would want to check out:
It’s completely free to sign up with AliExpress. You can search for millions of products you want to market on your own store and it is totally free to dropship through AliExpress. It’s extremely important especially if you are just starting your online business. This platform offers a wide variety of products, from men’s and women’s fashion, furniture, mobile phones, car accessories, and toys to office supplies and even pet foods. Plus, they offer free shipping on many products.
With your free account, you can get access to thousands of dropshipping suppliers from the US and Europe and choose the best products from different categories to sell. Moreover, they have a faster shipping time.
This wholesale platform can be accessed completely free and is best suited for online E-commerce stores, wholesalers, and retailers. This dropshipping directory helps connect wholesale suppliers and retailers and you don’t have to register to search for good products. If you are looking to learn this process and earn some extra money then WholesaleCentral is your perfect choice. With Wholesale Central you get some of the best suppliers.
Now that you have your supplier, it’s time to build your E-commerce store. Luckily for you, there are free web store apps. What are they?
This user-friendly app continues to be one of the most popular platforms for online merchants as you can dropship through a Shopify store. Shopify provides you with all the features you need for creating an E-commerce business and you don’t even need a web hosting service for your website. Despite all of its features, it is easy to use. You can try a 14 day-free trial but you have to buy a monthly subscription fee of 29$. Using Shopify for dropshipping is a good decision.
You need to install WordPress along with WooCommerce. Even though it requires some setup it is totally worth it. But you will need a web host. Luckily for you, it offers some nice affordday freeable WordPress hosts. With WordPress, you can create an online store, while WooCommerce is an E-commerce platform that may help you in selling and shipping your products online.
Invest your time the right way
You need to invest your time into your dropshipping business to succeed. Here are some of the best ways to invest your time when you build a dropshipping business.
Choose products – You need to think about the products you are going to be selling. You should find trending, niche products that will be winning for your store. Once you know what products you want to sell, it will be easier for you to judge the quality and set appropriate prices. Then you can add them to your online store and you’re ready to go.
Work on your dropshipping store’s design – The success of your webstore depends on the design of your website, too. Make sure you pay enough attention to it. Considering the fact that you don’t have the resources to hire a professional designer because you are just starting out, you can still design your website or logo. By designing your website yourself, you can learn a lot of new things about some important design elements. Don’t forget about your basic pages as you need to prepare content for them. These pages should include the following information: About Us, Privacy, Terms of Service, Shipping and Supply Details, Contact Us, etc.
Market your products
You should spend more time on marketing because without it, you won’t bring enough customers and traffic to your online store especially if you are a new player in town trying to be discovered. Social media marketing can assist you in selling your products. You just need to know where your target audience hangout online.
There are many payment gateways available now but PayPal is one of the best ways to accept payments from your customers online. It is a good payment solution for dropshipping stores. Another reason why it is so popular among online entrepreneurs is that PayPal doesn’t charge a monthly fee and they don’t charge for inactivity or limited use of the card. What’s more, it accepts all prominent cards.
10 Steps to Building a Successful Online Dropshipping Store
1. Select a Niche
The term ‘Niche’ is frequently used in the eCommerce world. It refers to the particular area of a selected industry in which you are working. For instance, you can operate your store in the fashion industry, and your niche can be selling clothes for working women, teenage girls, etc.
By having a niche, you’ll be able to focus on how to develop your dropshipping business website, design your content, and most importantly to target your potential customers.
It will improve your SEO too. Search engines will direct the people to your website if they want something specific in which you deal. For instance, if you have goods for senior citizens, then search engines will direct all the people looking for goods for old aged people, to your store.
Write down your options, conduct research, and then finalize your niche.
2. Determine the Competition in the Market
The second step to building a successful dropshipping business is to research the level of competition in the market and who are your main competitors.
Researching about the competitors lets you know if the product you are planning to sell has a wide demand or not. It also makes you aware of the prevailing price level in the market, reviews of the customers about the product, and what are the weak points of your competitors’ stores on which you can capitalize.
3. Find a Supplier
Once you’ve finalized your niche, your next step in building a successful dropshipping business is to find the right supplier. Selecting the supplier is the most important step for your business. It could take your business to new heights or can make it a big failure.
The goods that will go to your customers will be shipped by the supplier under your business name. This means that your brand’s image is at stake. Therefore, thoroughly research the suppliers available in the market. Read the reviews given to them by people and then decide if you want to display their products or not.
If possible try ordering a few pieces of the sample from them. This will allow you to check the quality of the product, how well it was packaged, and how much time did it take to reach you. All these factors will help you to decide whether your customers will be happy with such a product and service, or not.
If you are satisfied with the quality, have a proper conversation with the supplier. Ask tons of questions and clear your concerns before you select them. If you have doubts or are not comfortable dealing with him, then keep looking for a better supplier.
Alternatively, you can get in touch with designated dropshipping platforms for assistance. For instance, DropCommerce is a leading eCommerce application that enables businesses and entrepreneurs to dropship high-quality products from North American suppliers.
Nihao Jewelry offers both wholesale and dropshipping services with no minimum order to make your dropshipping business easy.
4. Build your Website
After selecting the supplier, let’s move on to the next step; building your website.
Your website is the place where people will select the items and place their orders. Make sure that the website you develop is properly built to provide the best shopping experience to your customers.
You don’t have to get a degree in web development to build your website. No need to write long strings and blocks of code to make an eCommerce website. There are myriad platforms available on the internet to build your website with just a few clicks.
If you are using WordPress to develop your website, then there are many themes available to choose from, for your dropshipping business. Some themes are free, and some are premium i.e. you have to pay for it.
The same applies to Shopify, there are many themes to select from. Make sure whichever theme you pick is suitable for your business. The layout is clean, the navigation menu is clear and visible, and colors and designs go with the idea of your brand and products.
Furthermore, check how products will be displayed on your website, whether will they appeal to your potential customers or not.
Before finalizing any theme, check its demo. It will give you an idea of how your website will appear to people.
5. Add Products to your Website
After building and designing your website, it’s time to turn it into an online shopping store.
For every eCommerce store, images are of utmost importance. The pictures will have to do the job of appealing to the senses of your customers and convincing them to order the products.
Since you won’t have the inventory to take the pictures and upload them on your website, you can display the pictures of the products that are uploaded in your suppliers’ store.
Many dropshipping inventory management apps simplify the job for you and save you from adding pictures manually to your store. It also calculates the shipping charges, the charges of your supplier, your profits, etc.
If you don’t like the pictures uploaded on your supplier’s store, then you can ask him to send you a few samples and then you can take the aesthetic pictures of the products and upload them on your website.
6. Set a Fair Price
What is the main objective of running a business? To earn a profit, right? To make your dropshipping business successful and profitable, you must set a reasonable price for the product that covers the cost of the product and other overhead expenses.
A simple rule of thumb to set the price is to multiply the actual cost of the product by 3.
This will allow you to manage your marketing, day-to-day, and other expenses of running the business. You can increase or decrease the price depending on the amount of profit you wish to earn.
Don’t set a lower price to compete with your competitors. Reducing your price means lowering your profit, or covering the expenses from your pocket.
7. Write Catchy Descriptions
Pictures alone cannot convince the customer to buy from your website. You need persuasive product descriptions so that your customer has no other option than to add the product to their shopping cart.
A good product description increases the chances of a sale. Therefore, make sure that you provide all the relevant information about your product. Highlight its design, size, and other necessary details that a customer would be interested in knowing.
Make sure to use easy-to-understand language. Refrain from using difficult vocabulary and terms that will be hard for the general audience to comprehend.
8. Invite the Public to Shop from your Store
Congratulations! Your store is ready. Now you just need customers. Forgetting numerous customers, let’s take help from the marketing.
Without having customers, your dropshipping business will be useless. To bring in more customers and generate sales, you’ll have to market your business like a maniac.
Thanks to the dropshipping model you don’t have to worry about purchasing goods, storing them, or packaging them. This leaves you ample time and resources to work on your marketing strategies and to invest in various marketing channels.
Select every possible channel and start making your presence there. Capture the attention of a huge audience by joining social media by making your business profile there. Create engaging content, connect with prominent people in your industry, and stay active in groups and communities to let people know that you exist in the market and have excellent products for them.
Also, start blogging. Blogs are an excellent way to drive organic traffic to your store. It lets you incorporate the keywords that your prospective customers will use to find you. Create useful and engaging content, add graphical elements like images, infographics, GIFs, and videos, and make it useful for the visitors.
Suggested reading: Blogging for Ecommerce: 6 Reasons to Start a Blog
If you deal in tech goods or products that require proper demonstration, then you can even create your own YouTube channel and create videos that demonstrate how to use the product, or what other benefits can be brought out of it.
9. Create Exciting Offers
One of the best ways to attract customers to shop from your newly established dropshipping store is to offer compelling deals and bundles on your website.
Hold sales and offer special discounts to your prospective customers to make them buy from your store. Reduced prices speed up the decision-making process of the customers.
Bundles are also a great way to induce them into taking out their credit cards.
You can create a bundle of your bestsellers and offer a few pieces for free, or for reduced prices. To make it more effective, create a sense of emergency in your buyers. Run a timer on your website, when the audience sees the time is running out and the offer will expire soon, they’ll take less time to think and more time to fill up their carts.
10. Stay Active
To pump up the revenue of your dropshipping business, you need to stay active to drive in orders and profits. Try to spend at least a few hours on your website and your business social media accounts. Reply to the questions and concerns of your audience, and engage more on social media to increase your brand awareness. Try to process orders at your earliest. The sooner you begin processing, the sooner your customer will get their ordered goods, and it might earn you a loyal customer. Lastly, you can use a shipment tracking app to help your customers keep an eye on product delivery and improve the trust factor for your store. RushShopify app is one of the best options for offering automated shipment tracking to your customers with a beautiful interface.
Dropshipping business model has become extremely popular these days and despite what other people might say it is still popular worldwide. It is one of the easiest ways to start an E-commerce business and requires minimum investment but it’s not without its own challenges. It’s crucial that you look at them before getting started. In our article, we've explored the ins and outs of dropshipping. From understanding the meaning of dropshipping to delving into the dropshipping pros and cons.
Our exploration of "How to Start Dropshipping with no Money" opened doors to aspiring entrepreneurs, emphasizing the accessibility and flexibility inherent in this online business.
We've also explored a practical roadmap in "10 Steps to Building a Successful Online Dropshipping Store."
It's clear, that dropshipping, with its low-risk entry and adaptability, continues to be a profitable ecommerce business for those willing to navigate its nuances. Success in dropshipping lies not only in understanding the mechanics but also in strategic supplier partnerships, effective marketing, and an unwavering commitment to customer satisfaction.
So, whether you're an ecommerce newbie or a seasoned ecommerce business enthusiast, consider the possibilities that dropshipping unfolds. The journey is yours to start, and with the right approach, the world of online retail is at your fingertips.
Embark on your dropshipping odyssey and turn the page to a new chapter of e-commerce success!
To succeed with dropshipping, you need to choose carefully your suppliers, and the types of products you’ll be selling, be patient, and work hard.