Is Dropshipping Worth It? How To Set Up a Profitable Dropshipping Business
You may have heard mixed opinions about dropshipping online.
Some of them praise the dropshipping business model. They say that setting up a dropshipping store is one of the best online business ideas with less risk and greater returns. However, others may not agree.
So, is Dropshipping worth it in 2021?
In a word – yes!
I’ve studied various online business models, and I find drop shipping one of the simplest and cheapest models with a low barrier to entry.
Setting up an online store using the dropshipping model is convenient, low-risk, and easy. It does not involve a high setup cost, and you don’t have to handle inventory or pack and ship the products. An example is dropshipping these natural air freshener sprays.
Let’s dig a little deeper and see if a dropshipping business is a good idea for you.
Disclaimer: If you buy something using the links in this article, I may receive a commission at no extra cost to you. Know that I only promote stuff that I use and trust for the sake of my readers and the reputation of this site.
Recommended Dropshipping Platforms You Could Use For Your Business
Before we answer the question “Is Dropshipping worth it?” in more detail, here are the platforms we recommend you use when you start your dropshipping business:
Shopify is one of the most popular eCommerce platforms that helps you set up an online store and sell your products. You can check out Shopify here.
DropCommerce is a unique dropshipping platform that was built for US and Canadian suppliers. Since your suppliers are reliable, you will get only the highest quality products shipped to your customers.
Check out DropCommerce here and start your dropshipping business.
BigCommerce provides online retailers services like online store creation, hosting, marketing, and search engine optimization. You can learn more about BigCommerce here.
What Is Dropshipping?
Dropshipping is a method of order fulfillment where the dropshipper or the online vendor does not store or ship any of the ordered products.
Instead, these dropshipping vendors form agreements with online retailers and dropshipping suppliers. The suppliers agree to pack and ship the products directly to the customer once an order is placed.
Here is how the dropshipping business model works:
- A customer places an order with one of the dropshipping stores.
- The dropshipping vendor notifies the supplier of the new order.
- The supplier packs and ships the ordered item directly to the customer without any involvement from the dropshipping business owner (vendor).
- The vendor takes out his profit and sends the supplier the agreed amount for the ordered item.
Is Dropshipping Worth It? Pros Vs. Cons
Dropshipping is one of the most popular business models.
But why do so many online business owners choose to open dropshipping stores instead of regular online stores? Is Dropshipping worth it? Let’s weigh the pros and cons of dropshipping and see why it is a popular business model.
Here are the advantages of the dropshipping model:
- It is a convenient and simple method of order fulfillment.
- You need not deal with inventory and stocks.
- You need not rent out a warehousing space to keep any stock.
- You don’t have the hassle of packing and shipping your products to customers.
- You won’t have to deal with unsold products because you will never order more stock than you sell.
- You can test out different markets by selling different products in your drop shipping store.
Dropshipping also has a few drawbacks:
- Dropshipping is not easy, and it offers low-profit margins.
- You do not have direct control over the product quality of your dropshipping products and may have to deal with a lot of returns.
- Dealing with the wrong dropshipping suppliers c.ould hurt your reputation as a dropshipper.
- You may have to deal with high shipping costs.
- Your dropshipping inventory is not guaranteed.
Still, is Dropshipping worth it? Although the dropshipping market can be very competitive, you can still make a profitable business from it.
How You Can Set Up A Profitable Dropshipping Business
Dropshipping can be an excellent option for starting a business if you do not want to set up a traditional store on an eCommerce platform. You do not have to deal with the hassles of managing stock and packing and shipping products to your customers.
Dropshipping is low risk and has a low barrier to entry. If you build the proper foundation for your dropshipping store, you can make consistent profits.
Here are some ways you can set yourself up for dropshipping success:
- Narrow down on your dropshipping niche and curate your products.
- Carry out market research and see who your competitors are and what products they are selling.
- Make customer satisfaction a priority and create the best possible customer experience.
- Consider dropshipping supplementary products along with your own products if you own a niche store.
How To Choose The Best Suppliers For Your Dropshipping Business
You want to start a dropshipping business but how do you find the right dropshipping suppliers to work with?
Choosing bad suppliers will lead to poor quality products being delivered to your customers. Or maybe your suppliers aren’t able to ensure safe and timely delivery of your products to your customers.
Remember that the dropshipping supplier you choose to work with plays a crucial role in building or breaking customer loyalty.
One way you could test out your dropshipping supplier is by ordering a product for yourself. This will allow you to get a first-hand experience of their product quality, customer support, and shipping time.
How To Scale Your Dropshipping Business
Is dropshipping worth it? It is if you learn to grow it and increase your profits in a sustainable way. Here are some methods you could use to grow your dropshipping store:
Make sure your website offers a good user experience for shoppers
A badly designed shopping site is an instant turn-off for your customers. Make sure your site offers a good user experience so that customers can easily find the products they are looking for and navigate through a secure checkout process.
Keep your site clutter-free and engaging.
Include all the details of your product in the product description, along with clear photos of the product from different angles. Also, make sure the cost of the product is clear so that customers do not have any doubts about shipping costs and other additional costs.
Don’t forget to add user reviews as social proof on your site, as this will help you build trust among your potential customers.
Use SEO to attract more organic traffic to your dropshipping store
Search engine optimization (SEO) helps your dropshipping website rank for target keywords. When customers search for these keywords, your site can appear at the top of the search results if you optimize it for the right keywords.
Tips to help you improve the SEO of your dropshipping store:
- Include target keywords in your product names and product descriptions.
- Include alt tags for all your product images.
- Create high-quality content on your site that will help you rank for your target keywords (such as blog posts).
- Include a meta description for your site pages with your target keywords.
Promote your store with Google Ads
Google Ads will help you gain more exposure and targeted traffic to your dropshipping store. The Google Ads dashboard gives you deep insights into the success of your ad campaigns by showing you your clicks, and conversion rates so that you can determine which ads are giving you the best return on your investment.
Test out your marketing campaigns and optimize them
Test out your marketing campaigns and make changes to them regularly. This will help you understand what strategies work best for your dropshipping business.
1. Is dropshipping a profitable business model?
Yes, dropshipping can be a profitable business model if you do it right. Dropshipping involves much lower startup costs than owning a traditional store.
Dropshipping stores do not need to purchase and maintain inventory from dropshipping suppliers. That means they do not need to rent out warehouse space or deal with unsold goods. They only need to pay for goods that are sold, thus increasing their profits.
2. What is the biggest risk to dropshipping?
The biggest risk to dropshipping is not having control of the product or shipping. There are many unreliable dropshipping suppliers who could put your reputation on the line by sending customers defective or poor quality products, or not shipping the products on time.
That is why it is important that you find reliable dropshipping suppliers to work with.
3. How does dropshipping work?
When a customer orders a product, the dropshipper places the same order with the dropship supplier. The supplier then packs and ships the product directly to the customer. This way the dropshipper does not need to handle inventory and shipping.
4. Is dropshipping worth it?
Dropshipping can definitely be worth it if done right. Dropshipping requires low investment and expenses and can yield high profits for dropship store owners due to its low-risk nature.
5. What’s a good alternative to dropshipping?
A good alternative to dropshipping is to sell traditionally but outsource your warehousing and shipping processes. You can use dropshipping as an add-on business strategy as opposed to it being your main strategy.
6. How do I incorporate dropshipping into my business?
If you want to integrate dropshipping into your traditional eCommerce business model (which is something I recommend you do), it is pretty simple to do.
If you already have an online presence in stores, research what products will suit your niche audience. Find out how your competitors are pricing similar products and set your prices according to the market.
Find a good supplier and figure out what fulfillment process would be best for both of you.
That’s it! All you have to do now is list your products and promote them to your audience.
7. Is dropshipping legal?
Yes, dropshipping is completely legal. Make sure that your suppliers are legit and protect yourself with a dropshipping agreement contract.
As a dropshipper, you are acting as a distributor for other product companies. Companies can choose to sell their products on their own website, use a marketplace like Amazon, or sell through dropshippers like you.
8. How much does it cost to start a dropshipping business?
The truth is, it can cost you $0 to start a dropshipping business. You can do this by using free trials and free plans of tools like Shopify to set up your store. But after the free trial, you will definitely have to shell out some cash before you start making cash.
Also, free plans do not guarantee your dropshipping store’s success.
To set up and run a profitable dropshipping business, you can expect to spend around $150- $200 in your first month.
9. What are the benefits of dropshipping?
There are many benefits of dropshipping:
- Starting a dropshipping website is simple.
- Dropshipping requires very little investment.
- Dropshipping involves very little risk.
- You do not need to rent a warehouse for inventory.
- You do not have to deal with unsold products.
- You need not worry about packing and shipping your products when a customer orders them.
10. Do I need to register a business entity to start a dropshipping store?
Yes, you will have to register your dropshipping business once you start selling products. But you don’t have to do this right at the start.
You can choose to register your business when you make a consistent profit from your sales.
11. Is dropshipping allowed on eBay?
Yes, eBay allows dropshipping.
eBay also refers to dropshipping as ‘product sourcing’ and allows it as long as the dropshipper guarantees safe and timely delivery and customer satisfaction.
12. Is dropshipping allowed on Amazon?
Yes, Amazon allows dropshipping.
However, you may not purchase products from another seller on the platform and enter your customer’s address and contact details. Also, you cannot enter a different seller’s name or contact information on the packing slips.
You should also be responsible for the delivery and return processes.
13. Is dropshipping allowed on Etsy?
Since Etsy is a marketplace that deals with vintage, handmade, and one-of-a-kind products, it can be difficult to dropship on this platform.
However, Etsy does consider print-on-demand products as an acceptable dropshipping product since designs are usually created by a person. Just make sure to mention your printing suppliers and contractors in the description of your Etsy shop.
14. Do dropshippers ship internationally?
Some dropshippers do ship internationally, but this will incur a lot of other costs like shipping fees, customers, and duties.
However, each country differs in terms of international shipping conditions and fees, so most dropshippers do not want to get into the hassle.
15. Where do I find dropshipping suppliers?
You can choose to contact brands directly and tell them you want to work with them to sell their products to your audience. You can work out a discount with them and list the products on your dropshipping website.
When a customer places an order on your site, you can send the order to the brand for processing. There are many services like DropCommerce that help you do this by streamlining your orders, syncing your inventory, and processing payments. However, DropCommerce only connects you with North American suppliers.
So, is dropshipping worth it?
Dropshipping can be a very profitable online business model with very low risks and low startup costs. However, you need to treat dropshipping as a business and invest in the right platform if you truly want your business to succeed.
You can get started with Shopify to set up your dropshipping store here. If you want all the tools you need to run your dropshipping business, start your free DropCommerce trial by clicking this link.
Happy dropshipping! 🙂