Do you want to launch a new eCommerce store?
One of the interesting options entrepreneurs come across is dropshipping.
When you hear about this type of online business where you don’t create the products or stock them or ship them and stories about how people are making millions in a matter of months by just listing the products on their site and promoting them you could ask yourself ‘should I be doing this too?’.
The answer is yes, you should be doing this. It is definitely worth running a dropshipping business in 2019. But first, let’s understand why we had to question this model in the first place. Here are some reasons why many entrepreneurs are thinking dropshipping is not effective anymore.
Typical arguments against dropshipping
Despite all these advantages, one can often hear that dropshipping is dead, that it is impossible to make money this way in 2019. Let’s take a look at some of these arguments and check if they are true.
One problem with dropshipping is that profit margins will be low, as the manufacturer needs to make a profit too. According to Fit Small Business, you can pretty accurately predict your income by using two variables: profit margin (about 20 percent) and conversion rate (about 2 percent). After you subtract the expenses, the prospects may look rather weak. However, there are ways to make up for this:
- Compensate with volume. Spend more time promoting the products and sell a lot of them;
- Sell expensive luxury products. This way you can make more money by selling less;
- Sell branded products. They always win out in the end. If, for example, your shop only sells Hublot watches, you are more likely to attract customers than if you sell watches in general.
Too much competition
Another common gripe is that the market is oversaturated with dropshipping stores, and nobody needs another one.
Well, the same can be said about almost any business or industry. However, you should understand that eCommerce is growing at an explosive rate (it is expected to grow from $2.3 to $4.5 trillion in sales between 2017 and 2021), and dropshipping constitutes a huge portion of this growth.
If you intend to create just yet another store offering the same collection of products as everybody else, you aren’t going to make money. But you can go above and beyond:
- By choosing less saturated niches;
- By offering better customer service than everybody else;
- By offering faster delivery.
Little branding opportunity
With dropshipping, you have little control over what your product is, how it is packed, how long it takes to ship and so on. Creating a personal brand is, therefore, very hard.
Which means that you simply have to focus on what is in your hands i.e., customer service. By creating awesome product pages (ask the supplier for better-quality photos), offering an easy checkout, personalizing your email messages and directly communicating with your clients you will be able to create an image of a store that stands out, even if the products and prices are the same as everywhere else.
Why Dropshipping is Still Worth it in 2019
Now, we’re going to see a few reasons why this business still has a lot of potential. And why it can be your entrepreneurial gate in 2019.
Easy to set up a dropshipping business
The biggest benefit of dropshipping is the ease of setup. To create an eCommerce site in the first place you can use a tool like Shopify. It provides access to Shopify themes and apps that can help you set up the store quickly.
To add dropshipped products you can use a Shopify app like Oberlo. It makes it easy to import products from sites like AliExpress and add them directly to your store.
Using tools like these, you should be able to set up your eCommerce dropshipping store within a day.
If you set up a traditional eCommerce store, you need to brainstorm product ideas and manufacture products first. After that, you have to find and rent a warehouse to store the products and purchase a ton of custom packaging material. Only after you do all this, you can create an online store.
You will also need to hire photographers and marketers to take professional photos and write unique copy for you. You might even need to run a beta version of the site before the launch. This can take ages. When running a dropshipping business, you don’t have to worry about all this.
Here are some of the reasons why dropshipping is a good choice, especially if you are a beginner:
One of the biggest problems with creating a traditional eCommerce store is that it is expensive. Product manufacturing, warehouse rent, packaging materials, shipping – all this costs money, and a lot of it. Are you ready to take this risk? What if your product doesn’t sell?
With dropshipping, you risk almost nothing. You can set up the store for a few dollars. If things don’t work out, you can stop anytime without losing too much money.
When running a regular eCommerce store you need to constantly monitor the manufacturing unit, warehouse, and offices to make sure everything is running smoothly, but you don’t need to worry about this when dropshipping. Hence, you can do it from anywhere you, please.
More time to promote products and to offer customer support
You will have a lot of extra time on your hands, as you won’t be handling the tasks of running a store. In fact, your supplier will shoulder most of the more troublesome aspects of running a store, allowing you to focus on making sales. Namely, you have to attract customers and make sure you solve their problems as they arise. If you want to get your store to stand out and keep customers coming back for more, you should offer the best customer service as well. Many eCommerce companies fail at this. To develop a good customer service system by using a tool like Freshdesk.
These are all the reasons why you should be running a dropshipping business in 2019. It might take a lot of work to run it, but it is definitely easier than running a regular one. If you keep your eyes open and find the best manufacturers and products, tenaciously promote them, you surely will succeed.