Before getting started to do dropshipping business with AliExpress or turning your existing online business into the dropshipping model, the question comes: Is dropshipping still worth it in 2021?
Actually, you need to look further than others in this technology-dominating era. Digital and e-commerce technology have accelerated the development of online business. As technology continues to evolve, dropshipping will not suddenly “die” for no reason, unless dropshipping is breaking the law or not legit. But dropshipping is legal.
The process of dropshipping is simple: you list products for sale on your website. The product itself is manufactured and held by a third party. When someone places an order, the third party ships it directly to the consumer.
The ability to add inventory without having to deal with production, delivering the products, or renting warehouses seems like a dream.
But is dropshipping worth it? Let's explore more to help you make the best decision for your business.
The short answer is no. Some of the statistics you can find on the Internet suggest that the dropshipping market may be saturated and competitive, but that doesn't mean dropshipping is dead. In fact, it's more vibrant than ever. Do you know that the dropshipping market is expected to grow at a CAGR (Compound Annual Growth Rate) of 28.8% from 2019 to 2025? So here we will debunk the misunderstanding of the question "Is dropshipping dead?"
Because dropshipping has been around since 2006 it is often thought that the market has been around too long for new business. It was assumed that affiliate marketing had taken over all the niches that could be sold.
Of course, the competition you may face is fierce, but that's not the end. You can always find better suppliers and new brands to work with and sell the best and latest products.
Consumer tastes change all the time. Some things can be popular for three months and then completely be forgotten. As long as you stay up to date, you can stay ahead of the game.
Just because a company has been around for a long time doesn't mean it will not soon go bust. Look at Apple Inc., do they look like they're giving up? Of course not. Innovating, searching constantly, and not hesitating to expand your product list is the way to survive and go big in the market.
Increasing Ads Cost
Since it is unavoidable, you might as well learn to deal with it. In this saturated market with millions of competitors, those who come up with effective marketing campaigns will stand out.
Regular dropshippers will hear stories about how this amazing distribution model can turn anyone into a millionaire in just 90 days, and they dream of making a quick buck. Well, e-commerce is not a calm blue ocean, so you should expect to encounter difficulties.
One way to ease the “pain” of failure is to not sell low-quality products with low-quality marketing. A successful business always focuses more on suppliers and picks better quality products that add value to the marketing strategies.
Today, there are a number of online tools that can help you start your dropshipping business. E-commerce platforms like Shopify provide you with so many marketing tools specifically designed to convert or acquire potential customers.
Compared to someone selling the same product, effective marketing strategies may put you far ahead of the competition because you’re well prepared and use tools to take advantage of one’s sales.
When the market is this saturated, dropshippers will be competing for customers and suppliers, so you must maintain a good brand image to stand out and show them the value you can offer. Don’t cry saying “Dropshipping is dead.” The question is vexed.
Because it's not, but the residents of this market will try to beat each other down. Business is chaotic. You can’t stop because of competition since life is full of competition and you can’t just easily quit.
Yes, dropshipping in 2021 and beyond remains a profitable business model. A lot of people are starting dropshipping these days, but if you have the right mindset as you're building a real business, not a "quick-money store" then you're off to a good start! Dropshipping is considered a low-risk business model because it allows sellers to sell products to customers without the huge operating costs of the wholesalers.
There is more than one way to measure the health of dropshipping. Google Trends is a very valuable tool, which is often used to identify profitable niches, products, or brands.
Google Trends plots search interest on a relative scale of 0 to 100. The number you see on the right is not the original search times, but the relative number of searches for a given term. So if the score in 2010 was 50 and the score in 2021 was 100, the number of searches in 2021 was twice as high.
In addition to the hint that Google Trends demonstrates people’s interest in dropshipping over 5 years, there are real statistics that are more convincing. By 2025, the global dropshipping industry is expected to reach 557.9 billion and grow by about 7% year to year. You can also make a profit of about 50 percent on dropshipping compared to holding your own inventory.
The requirements for being a profitable dropshipper haven't changed much. For example, it remains critical to succeed in dropshipping by selling quality products, fast delivery time, and providing top-notch customer service.
Now you also need a branding and customer service experience that sets you apart from the competition. When customers can jump to different sites in seconds, you need to give them a reason to stick with your products.
Dropshipping has its own advantages and disadvantages. Let's look at some of the main things you need to know before diving into it.
Many people know dropshipping is great, but what makes it so great?
▪ No Inventory Stress
In a regular retail type of e-commerce business, it is obvious that there is a need to keep a large number of products in stock as they have to manufacture or prepare products in bulk and fulfill orders themselves. Dropshipping has just taken this headache out of the mind.
The word "inventory" does not exist in dropshipping. When you read dropshipping and inventory together, the sentence may be like dropshipping needs no inventory. You don't have to collect products in bulk or worry about them damaging over time.
You don't have to keep track of inventory that can take up a lot of time and resources. All those are transferred to the suppliers. You can focus directly on expanding your business rather than taking care of products for which you currently have no buyers.
▪ Low Business Budget
For most business, especially e-commerce, entrepreneurs must have huge budgets that they can spend on manufacturing and preparing the product, packaging it, maintaining records, and shipping it to customers.
But dropshipping significantly reduces the cost of all this. The seller does not have to invest anywhere until there is an order, which is ultimately paid for by the customer. So the risks involved have become very stable.
▪ Huge Amount of Products
E-commerce sites that operate successfully have something in common - they offer diversity. Dropshipping comes at the best time when people are willing to explore products online and look for variety so they can have something closely related to their tastes.
With no boundaries in maintaining inventory and low start-up costs, the added bonus is that the seller can offer a lot of variation rather than a single product. In addition, it is easy to add many other products on e-commerce sites without considering the cost.
So there's a huge variety of products and variants. This is such a huge opportunity for every creative person who wants to be an entrepreneur.
▪ Lower Risks
Inventory in normal retail online stores tends to pressure sellers to move it on a regular basis, otherwise, the product will quickly become worthless. If this happens, it's a huge shock to the seller because all the money goes away immediately when the inventory is emptied.
In dropshipping, the seller does not buy the inventory and in fact, only pays for the product when he gets an order from the online store. It is a safe and secure system that the seller will not crush into severe risks.
If by chance the online seller can't sell the product and doesn't get any orders, he still doesn't have to pay anything except for the bad marketing he did. So, relatively speaking, it's a safer side.
▪ Free Location
An amazing dream for today's entrepreneurs - to work anywhere, anytime. Dropshipping offers this advantage because one of its shining features is that it doesn't matter where the seller operates unless the seller has a bad Internet connection.
The seller can actually travel with his laptop, set up his dropshipping e-commerce store, and scale it up. The business can easily grow by making sure that communication with customers and suppliers doesn't break down.
Now that you've seen the outstanding benefits of dropshipping, let's move on to the drawbacks.
▪ Lack of Control
In the dropshipping business all activities are not handled by the seller, but by the third-party suppliers, so you can call it an uncertain game sometimes if you end up working with untrustworthy suppliers. Once you found the suppliers, all you can do is to trust them, but you can't control their activities.
If there is any mishandling of any order, customers will not complain to the suppliers but to you. When a customer places an order from your website, all responsibility will be borne by the seller, aka, you.
▪ Hard Stock-Tracking
Since the sellers in dropshipping do not keep any inventory by themselves, they may suffer some losses if the suppliers do not have enough products. It will render the orders unpredictable. If there is a sudden increase in demand for any product, the seller will not know if the stock is low and if it will take more time to be able to process the orders.
Third-party vendors are offering products together for many sellers, so it is sometimes difficult to monitor the out-of-stock notification. In addition, all of these suppliers may not be very supportive in updating their sellers' inventory. This is a real challenge for sellers.
But as we mentioned above that there are lots of tools that can help with the marketing of the business, there also are tools and apps to help with qualified & trustworthy suppliers and stock notification. DSers is a top-ranked dropshipping tool in Shopify’s App Store with over 4,000 positive 5-star user reviews.
DSers is here to help you ensure that you keep control of any conditions in your order. Is this order placed? Has it been delivered yet? Is the store having problems with AliExpress?
With DSers’s dropshipping technology, shop owners are able to automatically track the status and information of all orders. New orders will appear immediately upon reception and will move to a different tab based on their current status.
In the paid plan, DSers will automatically update the inventory information of the suppliers for the application, and it will update your product inventory information in your online e-commerce store.
This way, the data in the back-end will be similar to the inventory provided by your AliExpress vendors. If the products are out of stock on AliExpress, users of DSers also have the possibility to render a product automatically unavailable in the store.
Now you know that dropshipping is a legitimate business model which will grow even more in the coming years. Is dropshipping worth it? The answer is yes. With the growing demand for online shopping around the world, anyone determined to take up the job can be highly profitable.