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is dropshipping worth it

Is Dropshipping Worth It? Weighing the Pros and Cons

Is dropshipping worth it? It’s a question uttered mostly by those thinking of starting a digital business.

Digital technology is fast-evolving, which is why e-commerce is becoming more and more popular among business-minded individuals.

Dropshipping, being a digital trade for more than a decade now, is still relatively young, which is why many don’t really know how it works yet.

What Is Dropshipping?

To better understand what dropshipping is, let us first clarify its meaning.

Dropshipping is a selling method of fulfilling a customer’s order through a digital store.

Here’s how it goes: First, the seller posts products online.

Next, when a consumer purchases one of the items, the dropshipper buys it from a supplier at a lower price.

The third-party supplier will then process the order and ship it straight to the customer.

Essentially, this means that the seller doesn’t handle the item.

As a seller, you get your share of the profit from the amount difference between the actual price of the item and how much you sold it.

It sounds easy when explained this way. However, there’s more to being a middle-man between the buyer and the supplier.

This order fulfillment process requires the seller to spend hours researching the right product to promote at the perfect time and on the correct platform.

Is Dropshipping a Good Business?

Is dropshipping a good business? Post this question in any forum and expect a mixture of answers.

There are plenty of blogs promoting dropshipping as the most effective option if you want to venture into e-commerce and become self-employed.

Admittedly, that claim is valid in some ways.

Maybe one of the best parts of going into dropshipping is its low financial upfront requirement.

One can quickly post an item for sale online without the need to have it in stock. You only buy a product from a supplier as needed.

So, capital-wise, dropshipping is an excellent business choice. However, don’t expect to earn thousands of dollars instantly. 

do you know if is dropshipping worth it

The Truth About Dropshipping

Let’s take a closer look at some facts and learn the truth about dropshipping to help you decide if you want to test the waters of e-commerce.

Low-Profit Margins

Since dropshipping does not require you to stock an inventory of all the products you are selling, you don’t need significant capital.

The problem is, you also get low earnings. You need a lot of sales before you can expect an increase in your profit.

If you are new to the dropshipping industry, your digital store needs steady traffic to build a following.

As a dropshipper, you need to manage your store, talk with suppliers, process the orders, and handle customers’ queries and complaints.

Highly Competitive

Again, dropshipping requires little capital, which also means you will have plenty of competition.

Also, more prominent companies can offer lower prices for the same product than new and smaller digital store owners.

No Control Over Supply

In dropshipping, vendors are dependent on their suppliers, but you need to handle all the client’s customer service needs.

If your customer has an issue with the product, you have to relay it to the supplier and wait for their response.

While you are waiting for the supplier to resolve the concern, you have to reassure the customer that you are doing something to fix it.

Legal Liabilities

Handling legal responsibilities is not a common thing for dropshippers unless you are dealing with dishonest suppliers.

Keep in mind that you are also responsible for whatever wrongful actions your supplier does since you are selling the questionable product.

Most experienced dropshippers always have the Dropshipping Agreement Contract ready when dealing with a supplier.

Branding Challenge

Dropshippers are the songwriters of a popular song. Your customers will remember the product brand but rarely your store.

That is why branding is essential if you go into digital trade. You have to make sure your customers remember your store when they shop online.

If you have loyal customers, it ensures consistent traffic to your platform, which is crucial for all online stores to survive.

How To Start Your Dropshipping Journey

If you are thinking of starting a dropshipping venture, here are some recommended steps for you to follow to save you time and trouble along the way.

Step 1: Invest Commitment and Dedication

Just like any other endeavor, you must have a long-term perspective and a significant commitment and dedication to build your dropshipping business.

Ensure you have a clear idea of what to expect from dropshipping and the amount of time and money you need to invest for this to work.

Invest your time to learn everything about the dropshipping business. And extend extra effort to know your market and your customers.

You will become a better entrepreneur as you learn new skills while knowing how to operate your business.

You can expect better chances of success in dropshipping if you focus your efforts full time on building your business. 

Investing money is also necessary to launch and operate your business. Shelling out at least $1,000 is enough for minor operating expenses.

Step 2: Market Research

You have to do some market research to choose the right dropshipping business niche that will make money.

Look for popular niches and trending products online to attract customers to your platform without competing with well-established online stores.

Niche products like beauty items, electronics, fashion, fitness, phone accessories, and yoga-related goods generally have an enthusiastic customer base.

Step 3: Competitor Research

Dropshipping is a competitive business, hence the need to learn about your competitors so that you can sell your products successfully.

It’s also crucial to have a comprehensive business plan to guide you through your marketing journey.

They say that competition is fair in dropshipping.

Try checking out other companies, including one or two popular ones, to help keep your focus.

Also, run a Google search about your products or niche to see the top businesses under that category.

It would also help to browse social media platforms and look for your niche in Facebook Ads to find the current top brands.

Finally, you can get updates from your competitors by subscribing to their email list.

This strategy provides you with first-hand updates about how they market their products.

Step 4: Choose a Supplier

To ensure your dropshipping business’ success, you have to be very careful with choosing your supplier.

You don’t have anything to sell if you don’t have a supplier.

After deciding on what product to focus on, look for a distributor with high-quality service.

Step 5: Build Your e-Commerce Store

Next, look for an e-commerce platform where you can do your business, like selling products, processing payments, and creating traffic.

These e-commerce platforms allow you to manage your products and sell them in different places. You can also accept payments in various currencies.

It’s easy to design and develop your online store, as these platforms provide tools to modify how your store looks.

Step 6: Choose a Business Structure

If you are serious about this business pursuit, it’s best to take the necessary steps to make a legitimate one.

One of the most straightforward business structures is the sole proprietorship.

However, it does not offer personal liability protection. A lawsuit may jeopardize your assets under the sole proprietorship structure.

An LLC or Limited Liability Company can protect your assets by building your business as an independent legal body.

Although LLC’s protection is not flawless, it’s better than the sole proprietorship’s lack of security.

The one that offers the most liability protection is the C Company, which is how most significant businesses are built.

However, a C Company is more expensive to set up and may have to shoulder double taxation.

You can also check this business startup checklist to guide you with what you need to do when building your business.

Is Dropshipping Worth It?

Is dropshipping worth it? It depends on a seller’s perspective.

You can venture into dropshipping if you have an established business and wants additional and reasonable income.

However, if you expect a more significant profit after several purchases, then dropshipping is not the right business for you.

A dropshipping entrepreneur must exert effort, money, and time for the business to survive and prosper.

Here are some pros and cons of dropshipping to help you decide if dropshipping is worth a try.

Pros:

  • You have the option to sell various products, whatever your platform niche is.
  • You have a useful business model patterned after big and popular online marketplaces.
  • You are not required to keep an inventory of all your products.
  • You do not have to worry about packaging and shipping of items.
  • You are not required to provide upfront capital.

Cons:

  • The high price-point of handling and drop-ship charges can eat up your profit.
  • Some companies don’t drop-ship their products.
  • It’s hard to monitor the availability of an item from the supplier.
  • You may encounter some suppliers with inconsistent service.

facts if is dropshipping worth it

Can I Really Make Money With Dropshipping?

As mentioned earlier, dropshipping is still one of the most sought-after businesses in the e-commerce industry.

It’s a thriving business, too, as most people have learned how to adapt their lives to how technology works.

Dropshipping allows new entrepreneurs a safe and convenient way to open a business without doling out significant capital.

To ensure your dropshipping business can bring in money, you must choose what product or niche you want to focus on for your platform.

Do extensive research to determine if your chosen product can attract a particular market.

Also, check the average price of the product and if your customers can afford it.

How Much Does the Average Dropshipper Make a Year?

The amount of money an average dropshipper can make may vary depending on multiple factors.

Some average entrepreneurs can make as much as $100,000 in a year. 

You can differentiate dropshipping into two categories: low- and high-ticket varieties.

Let’s look at how they differ from one another.

Low-Ticket Dropshipping

This low-ticket dropshipping model is the one usually advertised online. Here, you need to create a digital store on an e-commerce website.

You can create a specialty store selling specific products or only a general store that sells almost anything.

You can now post products sourced from an online marketplace to your digital shop based on your created store. 

Next is advertising your store on various social media platforms, like Facebook and Instagram.

If possible, you can also ask some online influencers to promote your products for a price.

Some seasoned dropshippers don’t recommend this low-ticket business model due to a large amount of time and money for advertising.

Your initial advertisement might click but may not last for long, which means you need to create another one. Doing so requires time, money, and effort. 

If your product supplier is overseas, you will encounter shipping delays and custom issues, which can take a toll on your business.

Due to these reasons, the profit per product sold is low. Your website may earn higher if you can also increase your sales.

High-Ticket Dropshipping 

According to experienced dropshippers, high-ticket dropshipping is the way to go if you want a more viable business.

With this business model, you also have to create a digital store on an e-commerce website.

However, instead of merely uploading items, you have to partner with well-established suppliers.

These stable distributors typically sell expensive or heavy items, making them perfect for dropshipping.

You can post their products on your platform and advertise them on Google Ads using the perfect phrase or keyword.

This technique will generate earnings from consumers who are continually searching for products online, creating traffic for your platform.

You can now look for other established suppliers or products and repeat the process until you create more ads that will sustain your business.

Is Dropshipping Profitable?

To conclude, let's answer this question: Is dropshipping profitable?

As discussed, this business model is useful in bringing in profit for your business.

You can sell all types of products at a lower cost since you don’t have to stock the items and keep them on hand.

Undeniably, this order fulfillment method can generate more income than other e-commerce ventures.

Conversely, it’s more reasonable to venture into dropshipping if you include it in an already-established business with regular traffic.

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