In general, there are two views on dropshipping. The first one is that you can get rich quickly, and the other is emphasising the difficulty of entering the market, let alone making a profit. We have seen a surge of people talking about dropshipping, and many are claiming success in this market and selling courses. This post will clear some of the frequent questions about dropshipping for anyone thinking of entering the market.
As a whole, the dropshipping business is highly oversaturated today, especially with many online courses that making it extremely simple for a novice to enter the market. This has created heaps of mediocre competition and online guru courses that raised awareness of the business model worldwide and distrusted people from e-commerce sites due to frequent product replication, mediocre ads, an unoptimised business model, and an unrealistic delivery timeframe.
Dropshipping has been around since the beginning of the internet. However, dropshipping gained attention in 2016 and became extremely popular in 2019. It is easy to conclude that the recent attention was due to the pandemic where we witnessed an increase in online shopping.
5 Issues with dropshipping that you should know
There is no dought that the dropshipping business model is quite successful. It has become full-time income for many, and there is no dought that dropshipping will continue to be profitable in the future. However, there are fundamental issues with drop shipping that you must consider:
1- Low-profit margin
With most dropshipping products, the profit margin is low. In general, you only have two options to profit in a competitive market: raise your prices and risk losing sales to cheaper competitive products or increase your ads by putting more money into the business. The issue is that if you do not have a niche product, you will most certainly struggle.
2- Difficulty in building brand
Dropshipping is a business governed by the reputation of its brand and the authority of the product reviews. When you think of a successful brand, think of The Oodie or other successful product that created value for customers and gave a reason for people to buy it. Importing cheap and easily replicable products will not get you far in this business.
3- Market fluctuation
With dropshipping, you usually do not operate on fixed overhead costs; your supplier might raise prices due to an increase in raw materials costs, variable shipping costs, making promotion and increasing the volume of ads for seasonal products for high shopping periods such as Christmas. The market fluctuation could force you to look for another supplier or stocking on products.
4- Delivery time
No one likes to wait. Giant e-commerce stores such as Amazon has trained people for years to expect fast deliveries at low costs. If you are not giving people a reason to wait for your product, you can lose business to other more reliable sites. Exercising your authority as a reputable product takes time and convincing product to make people wait.
5- Level of commitment
Dropshipping is not as passive income as people market the idea, and it is not a set and forget thing. You will most certainly spend time dealing with unsatisfied customers, returns, faulty products, supplier negotiations and marketing. Although most of your customers will buy the product without dramas, you can expect to spend a considerable amount of time to make sure everything is running smoothly.
How much does it cost to lunch a dropshipping store?
There is no fixed start-up cost. You need to pay for a subscription for an E-commerce store, domain name, marketing and tools. You can start a store from as low as $300 to as expensive as $2000. The two most important costs that you should be prepared to pay are samples and ads.
Samples: With drop shipping, you do not have to worry about carrying inventory. Your supplier ships the product directly to your customer, making it easier for starters because you do not have to worry about handling the product yourself. That means you do not have a direct influence on the quality of your product. Therefore, you must be willing to order multiple samples to check the quality of your product.
Ads: Paying for ads is how you promote your products. Therefore it is crucial to make sure your product reaches as many people as possible. Only a few people end up on your website, and out of those people, only a handful ends up buying the product, which means that you need to get comfortable spending within $100-$300 a month on ads.
Is it worth paying for a dropshipping course?
In general, many free resources can help you understand the basic idea and how to start dropshipping. The business itself takes time, practice and discipline to see results. Usually, you need to put in extreme effort for the first 6-12 months, which no one can help you with it other than yourself. Therefore, unless you do not have basic knowledge in dropshipping or feel the need to get help from the start, you should consider a course.
If you are thinking of taking a course, you should do your research. Unfortunately, too many paid online courses with mediocre contests and overpriced info products make it extremely difficult to spot a good course. Therefore, if you must pay for a course, check an article I wrote here to help you filter fake courses by online gurus.
You should know that it does not require many skills to get into this business, so it is frustrating to see online guru ads trying to sell costly courses which are mostly selling you the same information you can learn if you do a bit of research.
The Bottom Line
Overall, dropshipping is successful and can be highly profitable for niche products. Although there is high competition, you can still enter the market. But you need to avoid replicable products and unreliable suppliers that do not have quality control. Most of the time you spend as a starter is experimenting with ads and products to see what works with your customers, so use that time carefully to understand the market.
In general, paying for courses is not necessary if you are starting dropshipping today. If you are going with Shopify, you can find many free resources on their website and online to get you started without extra cost. The most important thing is that you have to work for a while before seeing some results.