What does the future of dropshipping look like?

What does the future of dropshipping look like?

What does the future of dropshipping look like?

Dropshipping is the most prolific ecommerce business model, but it’s far from being the only option. As you explore launching your own store, then dropshipping is likely to cross your mind. 

There are tons of success stories around the web of people who set up a dropshipping store to make passive income, only to become self-made millionaires or rake in six-figures in their first year. 

It happens, but not as often as you think.

Even though dropshipping is still legal, and some people are still making a profit, but it’s on its way out in favor of more personalized, authentic brands. 

Because dropshipping ultimately limits your ability to delight your customers. It funnels your creativity and leaves you at the expense of suppliers who don’t always deliver what they promise. 

Dropshipping is by no means the Wicked Witch of the West in ecommerce, though. Its market value is expected to hit $557.9 billion by 2025. Electronics and fashion rest at the top of the models’ most profitable niches, and there is likely more potential to sell in Asian Pacific countries as internet access and delivery accessibility increases. 

So, before we even dive into whether dropshipping is worth it in 2022, let’s tackle some bigger questions.

What is dropshipping, exactly? 

You might be familiar with the term and general idea, but a lot of ecommerce entrepreneurs still don’t know exactly how dropshipping works. 

Here’s the simplest way to put it:

  • You find a supplier like Alibaba, Aliexpress, or Salehoo to provide products for your site.
  • You make an ecommerce store to promote your inventory or start selling on Amazon.
  • Your customers place orders, which are then sent to your supplier, who packages and ships them out. 
  • Your profit is the cost your customer paid minus the cost of your product and shipping.

Essentially, dropshipping is selling products that you don’t have on hand. This cuts down on the need for space to house inventory, as well as the initial investment required to purchase goods. You purchase products as they are ordered through your supplier, only paying when you make a sale.

A lot of media portrays dropshipping as a zero-effort, get-rich-quick gig, but that isn’t the case. With such an oversaturated market, you’ll have to work double-time in 2022 to actually make a brand with dropshipping products people want to buy.

If you’re choosing a popular supplier, you’ll likely find yourself seeing products that are being sold left and right across your industry. This can make your brand feel unoriginal and, ultimately, uninspiring, which is why many entrepreneurs are adopting different ecommerce models today. 

Is dropshipping legal? 

Wait, so you can actually sell products you don’t own and make money? That’s legal? Yes! 

Dropshipping is legal because you are not directly profiting from sales until you make a purchase through a supplier. They handle the order fulfillment, so essentially, your brand stands as a third-party vendor between the supplier and your customers. 

There are no laws that prohibit dropshipping, but there are some caveats you should know about.

  1. Products might not be what they seem. A lot of suppliers will use false advertising and sell cheaply made products that look nothing like their picture. If you haven’t even seen the inventory, this could be disastrous when customers receive a horrible knock-off of what they thought they purchased. 
  2. Some suppliers are unreliable. Not all suppliers are made equal, especially with so many aware that dropshipping is a booming industry. Many are located in Asia, where there are factories that mass produce goods for cheap. Unfortunately, some may advertise themselves as legitimate businesses, only to wind up never fulfilling orders and taking you and your customers’ money. 
  3. You’re responsible for your customers’ satisfaction. At the end of the day, your customers won’t blame your supplier if their experience is anything but amazing. They made a purchase from your brand, so they’ll expect you to distribute refunds and handle any issues that arise from your supplier’s errors. This can become costly and even unmanageable for a small business’s finances. 

Is dropshipping profitable in 2022? 

You can still make money dropshipping in 2022, but it won’t be easy. While dropshipping is still 100% legal, the market is currently overly saturated. That means you’ll need to make a distinctive brand with an incredible shopping experience to really draw in customers.

For most people, the days of tossing a few products on Amazon and raking in thousands of dollars a day are over. Some people still get lucky, but for the majority of dropshippers, it’s a long journey to becoming profitable. 

This means you need to always be thinking about how your sales will influence your suppliers’ stock. You also have to pay fees, which can range from 5% to 15% of every sale. 

There are also some reasons why dropshipping is becoming a less favorable model in 2022.

There Are Still Supply Chain Disruptions 

The pandemic changes supply chain routes for the foreseeable future. The effects of the major disruptions in 2020 are still happening today. With the majority of suppliers situated in Asia, this means lengthy delivery times that can range anywhere between 14 to well over 30 days. 

Customers aren’t going to be enticed by waiting more than a month to receive a package. This is why having your own inventory and handling shipping can result in faster, more reliable service. 

More Expensive to Promote Due to New iOS Updates 

Updates to iOS 14 and 15 have made it harder to promote products to iPhone users. Customers have a lot more control over their personal data, so marketers will have to pay for direct-to-consumer (DTC) marketing that directly requests information from customers.

This means running mass ads that lead to tons of traffic won’t be the norm for dropshippers in the future. They’ll have to work hard to connect with their audience and convert leads one by one. 

Personalized messaging is becoming increasingly necessary in the digital marketing world. Building a brand that speaks directly to your audience should always be at the heart of your business strategy. 

What are your other options? 

Let’s say you decide not to dropship. What else can you do? 

There are several options out there, including wholesale, white labeling, and in-house fulfillment. Many brands are even embracing the artisan life and learning how to make their own products for their customers. 

But if you are interested in selling goods directly, you may benefit more from housing your own inventory, then fulfilling the orders on your own. This also allows you to build a more unique, authentic brand that provides better service to its customers. 

If you’re ready to get started with a new wave of ecommerce, we’re here to help. Popup is a no-code experience rooted in the customer journey. We put your audience first, so you can create a one-of-a-kind buyer’s experience they won’t forget. 

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