Dropshipping is not easy because the business model requires much work to succeed. Dropshippers need to choose the right niche, find a reliable supplier, and learn how to stay one step ahead of market trends. The goal is to capitalize on winning products before they become saturated. As such, dropshipping business owners need to market their products aggressively to gain traffic from their target consumers.
As an online business model, dropshipping has a low barrier to entry and affordable startup costs. The number of sellers has since seen exponential growth over the years. It has also resulted in intense market competition. According to a Yaguara report, dropshipping now “contributes to 23% of all online sales in the eCommerce industry.” In addition, over 30% of eCommerce stores use the dropshipping business model in fulfilling orders. In addition, course creators such as John Yoon of Project Verum Ecom also teach aspiring dropshippers how to get started in the industry. According to their website, their program offers a complete blueprint with proven techniques based on 3 years of eCommerce experience and as “tested across 50+ stores.”
Despite these figures and claims, dropshipping actually has a low success rate. In fact, about 80% to 90% of businesses fail within their first year of operations.
In this feature, we look at 5 common reasons why some believe dropshipping is easy and 6 reasons why it’s actually hard. We also share 7 strategies on how you can improve your business and introduce you to local lead generation - an easier, more scalable online business idea that can bring you true passive income in no time.
Is Dropshipping Easy? 5 Reasons Why Some Believe It Is
1. You don't need formal education or business experience to start.
You don’t need formal education or business experience to start with dropshipping. Australian entrepreneur and digital marketer Lachlan Delchau-Jones describes it as “the perfect first business.” According to him, dropshipping is “the entry point for a lot of people to business, ecommerce, and entrepreneurship.”
If you’re an aspiring entrepreneur, you can find free information by checking out dropshipping courses on YouTube. Some examples include How To Start Dropshipping With $0 by Isabella Kotsias (Baddie in Business) and the Free Shopify Dropshipping Course by Kamil Sattar (The Ecom King).
Another idea is to sign up with paid dropshipping programs to fast-track the learning process. Some of the top-rated paid dropshipping courses online are eCom Success Academy by Adrian Morrison, Supreme Ecom Blueprint 2.0 by AC Hampton, and eCom Elites by Franklin Hatchett.
2. It's a low-risk and low-cost business venture.
Dropshipping is a low-risk and low-cost business venture because it requires minimal overhead expenses to have a diverse dropshipping product portfolio. Instead, third-party suppliers that manufacture products and ship orders on your behalf.
The risks are lower than having a traditional brick and mortar business. For example, you can build your dropshipping store on Shopify. The platform offers a free 3-day trial and a 3-month trial for $1 per month. After that, you only need to pay $25 per month for a basic Shopify subscription for solo entrepreneurs.
Alternatively, you can create your dropshipping website with Wix, which has a free 1-week trial membership. Their business and eCommerce plans only range from $17 to $35 per month.
3. You don't need to pay for products upfront and won't get stuck with unsold stocks.
You don’t need to pay for products upfront and won’t get stuck with unsold stocks as a dropshipper. Inventory management, order fulfillment, and logistics are handled by your chosen third-party dropshipping suppliers. As such, the business model allows you to test various products and niches without the huge expenses. This is important in dropshipping because market trends often change and sellers always have to be on the lookout for the latest winning products to succeed.
4. Dropshipping creates an alternate income stream.
Dropshipping creates an alternate income stream for people. It can be an ideal side hustle for people who want to earn extra money during their spare time. On average, dropshippers can make $1,000 to $3,000 per month while successful dropshippers may earn up to $100,000 a year.
5. YouTube gurus seem to be making a ton of money with dropshipping.
Another reason why some believe dropshipping is easy is that YouTube gurus seem to be making a ton of money with the business model. Some even say they earn as much as $1 million per year on dropshipping.
That said, some claims and screenshots shared on YouTube may be misleading. The reality with dropshipping is that profit margins are usually slim. Your earnings will depend on the quantity of your monthly sales. It’s definitely not easy to make money with the business model, especially if you’re just starting out.
6 Legit Reasons Why Dropshipping Is Hard
1. Dropshipping generates razor-thin profit margins.
Dropshipping generates razor-thin profit margins since dropshippers only earn 10% to 30% of each product sold. That may not be much, especially if you haven’t found a winning viral product yet.
In 2024, paid ads are the best way to get in front of a broad audience. With ad costs rising, dropshippers often spend expensively just to attract traffic for their products. However, traffic doesn’t always translate to sales, so the process can be problematic.
2. The dropshipping market is extremely competitive.
The dropshipping market is extremely competitive, mainly because of the business model’s popularity and low barrier to entry. In 2024, reports say there are between 12 to 24 million ecommerce businesses on the internet. TrueList reports that dropshipping is the fulfillment model of choice for about 33% of online stores. The bad news is that highly profitable niches - like fashion and pet supplies - are saturated because everybody wants to sell the same dropshipping items.
3. It's so easy for another dropshipper to copy your winning ideas.
Another drawback of dropshipping is that it’s so easy for another dropshipper to copy your winning ideas. The issue with the dropshipping model is that when you find a viral product or create effective ads that get attention, others can easily duplicate your formula. Some may even offer a lower price tag to push you out of the market. Moreover, your supplier's images and product descriptions are available to everyone selling the same products. You need to be an excellent marketer if you want to stand out in your niche.
4. Some dropshipping suppliers can be unreliable.
Some dropshipping suppliers can be unreliable - and this can negatively affect your business. You definitely want to avoid suppliers that sell low quality items or cannot guarantee quick shipment of orders.
According to the data shared by OnlineDasher, 74% of customers say product quality “is the most important factor in keeping them loyal to a brand.” Forbes also indicates that 90% of customers expect 2 to 3 day shipping to be the standard while 32% intentionally “abandon their carts if an estimated shipping time was too long.” Auctane CEO Al Ko also says that consumers “will continue to choose businesses with low-cost or free shipping options.”
5. You have zero control over the supply chain.
You have zero control over the supply chain as a dropshipping seller. In fact, you don’t handle any product or keep any inventory. Customer orders and shipment procedures are handled by third-party providers, such as manufacturers, retailers, wholesalers, and fulfillment centers.
While the dropshipping business model effectively reduces costs, it also brings certain disadvantages. Dropshippers have limited control in both order fulfillment and customer service. Supply chain issues, such as handling customer returns, stock shortages, or sudden price increases can have a direct impact on your potential sales and earnings.
6. You constantly need to drive traffic to your dropshipping store.
You constantly need to drive traffic to your dropshipping store to make sales. Social media platforms such as Facebook, Instagram, and TikTok are particularly popular among dropshippers. These tools can be useful for both free and paid marketing strategies.
As a new dropshipper, much of your budget will go towards marketing. Paid ads will help you get noticed by your target audience. In a YouTube video, Shopify dropshipping mentor Nathan Nazareth recommends that “a daily ad budget of $20 per ad set” should be a “great place to start” for beginners. “You always want to try to start your ads at midnight the next day,” he also adds. “That way, it has a full day to distribute that budget.”
7 Strategies That Can Make Your Dropshipping Business Easier
1. Pick a profitable dropshipping niche.
Picking a profitable dropshipping niche is one of the secrets of achieving success in the business. Choose one that isn’t too broad and generates enough search volume or consumer interest.
Specifically, you want to find in-demand products that still have low competition levels. Trending products often change from time to time. You can use research tools like Google Trends, Google Keyword Planner, and Meta Audience Insights. Additionally, you can explore Amazon, eBay, Etsy and other online marketplaces.
2. Become a dropshipping specialist instead of a generalist
Becoming a dropshipping specialist allows you to become an expert in your chosen niche. The fastest way to boost your profits is to be considered an authority in the market. Doing so allows you to create unique value propositions that directly appeal to your target audience and fine-tune your marketing strategies better. When done right, you may also charge higher prices.
In a Shopify blog, we read that specializing “allows you to communicate more effectively with your customers, stand out more easily from the competition, and compete against a smaller field.”
“You don’t want to just sell backpacks,” the post also reads. Instead, you want to sell “backpacks designed for around-the-world travelers obsessed with lightweight gear.”
3. Create a professional eCommerce store.
Creating a professional ecommerce store takes your dropshipping game to the next level. People will find it easier to trust your business if you have a legit-looking site design that’s also easy to navigate. So optimize your online shop by using the best product images, detailed descriptions, and clear calls to action.
4. Work with more than one reliable dropshipping supplier.
Working with more than one reliable dropshipping supplier allows you to protect your business. You avoid the risks of overselling and running out of inventory. As a dropshipper, it’s always better to have at least 2 to 3 dependable suppliers.
You can find suppliers on Printify, WholesaleB2B, and other similar platforms. Do your research and make sure your potential suppliers:
- Are active for a minimum of two years
- Have positive reviews from other dropshippers
- Can guarantee fast shipping times
- Can offer several options for communication
- Don't have any hidden fees or extra charges
5. Learn everything you can about your ideal customers.
Learning everything you can about your ideal customers will make it easier to market your dropshipping business. Know who you are trying to reach by determining the following information:
- How old are they?
- Where do they live?
- Are they single or married?
- What do they do for a living?
- What are their interests and what motivates them to shop online?
- What social media platforms are they spending most of their time online?
- What kind of content do they respond to the most?
Having specific information allows you to create effective ads that connect with your target market better.
6. Add value to your customers’ lives.
You can add value to your customers’ lives by selling the best products in your dropshipping store. As a seller, you’re aiming to tap into their pain points by showing how your products can solve their problems.
In a Medium article, ProductMafia founder David Linder says investing in test orders ensures you can provide quality products for your buyers. “By doing so, you can avoid sourcing from suppliers with low-quality products and zero into dropshipping suppliers who have the same product but with better quality,” he writes.
Furthermore, you can be socially responsible by selling eco-friendly products and supporting worthwhile causes.
7. Provide stellar customer service and shopping experience.
Providing stellar customer service and shopping experience will help you attract new and returning buyers. According to Business.com, repeat buyers spend up to 67% more than one-time customers. Data also suggests that acquiring a first-time buyer can cost 5 to 25 times more than retaining an existing shopper.
5 Ways Dropshipping Has Gotten Much More Challenging Than 5 Years Ago
1. Customer expectations have increased through the years.
Dropshipping has become more difficult because customer expectations have increased through the years. Buyers now expect high-quality items and fast shipping. Research shows that 42% of online buyers want 2-day shipping options. Online shoppers also want transparency around shipping costs. Customers want a seamless shopping and checkout experience.
Include clear product descriptions and quality product images that feature several angles. Offer several channels of communication and deliver fast response times. Utilize chatbots and have a detailed FAQ section on your online site. Customers also expect a low-friction refunds and returns experience, so make sure they understand your policy.
2. Market saturation
Market saturation has made dropshipping more challenging today than it was 5 years ago. With the low barrier to entry, we are constantly seeing an increasing number of new dropshippers in the industry. This means numerous dropshippers selling the same products, using the same suppliers, and targeting the same niche market.
According to a Google Trends report, the search for the term dropshipping on Google has shown an upward trend over the years. In fact, it reached a peak interest value of 100 on January 1 to 7, 2023. Moreover, online data also reports that 175,000 dropshipping stores were created in the 1st quarter of 2023.
3. Ad desensitization.
Ad desensitization is another challenge for dropshipping businesses today. Expert research suggests that the average person sees between 4,000 to 10,000 ads in a single day. This can make things tricky for you since dropshipping heavily relies on advertising. In 2024, dropshippers need to leverage paid ads to drive online traffic to their products.
4. The need for elevated marketing strategies.
Dropshipping businesses today need elevated marketing strategies to achieve success. Again, you're competing against numerous dropshippers selling the same products and using the same suppliers. You’ll need to advertise the right way, using a mix of organic strategies and paid ads to get attention from the right people. As you learn how to drive traffic to your website and convert visitors into paying customers, you can grow your potential earnings.
5. Inventory management issues.
Inventory management issues continue to be among the top reasons why dropshipping is hard in 2024. As mentioned, dropshippers don't physically hold their products but rely on suppliers to fulfill orders. Depending on a single supplier puts you at risk, so you need to have at least 2 to 3 reliable suppliers.
What Is Dropshipping?
Dropshipping is an ecommerce fulfillment style business model. Dropshipping business owners sell trending products online but do not hold any inventory. They rely on third-party providers to handle order fulfillment duties. In return, dropshippers make 10% to 30% from each customer purchase.
According to research, the global dropshipping market is growing continuously and experts anticipate it will hit $301.11 billion in 2024.
Dropshipping FAQs
Drop shipping is good for beginners if you want to own an online business but do not have a large sum of money to invest. However, it's not a get-rich-quick scheme. It takes time, effort, and consistency to make money with the business model.
The key is to be ready to do the hard work. The demand has increased but as a vehicle to make money, the returns have gone down because of the low barrier to entry. Today, many dropshipping shops are selling the same products and are using the same suppliers. You're also competing against eCommerce platform giants like Amazon. Add to that the increasing cost of marketing and advertising to get your business in front of your target demographic. Plus, dropshippers need to provide excellent customer support and sell winning products to generate decent profits each month.
The biggest issue with drop shipping in 2024 is that even if you get lucky and find a trending product, it's just so easy for others to copy. Nothing can stop another drop shipper from taking your product and outpricing you from your own market. To be profitable, learn as much as you can about the business model. Also, consider the following factors:
90% of dropshipping stores fail in the first 30 days because they don’t understand the business model or invest the time to research and develop the right marketing strategy. To make money online as a dropshipper in 2024, you should:
- Treat your online store like a real business.
- Provide the best customer journey and focus on delivering real value.
- Advertise effectively on the internet. Be ready to test and fail with multiple products before you land a winning one.
Dropshipping is not an easy side hustle but it can be a way to make money outside of your 9-to-5 day job. The business model is flexible and you can do it anywhere with an Internet connection. However, you have no control over key aspects of your business, such as branding, product quality, and the order fulfillment process.
There can also be some issues with payment gateways, and you'll need to spend top dollars on paid ads to get in front of a vast audience. There's also the risk of getting banned from platforms due to ad copy with false promises or poor customer service. These are issues that can permanently shut your online business down.
The biggest problem with the dropshipping model in 2024 is that it's super competitive. It takes extensive research and aggressive marketing to earn money. You need to understand how to evaluate market trends to be one step ahead of the competition. Learn how to write compelling ad copy and create videos with potential to go viral. Again, dropshipping is about testing many different products before you can start making money. It takes work and the willingness to commit to the process to earn a consistent income stream as a dropshipper.
Dropshipping is legal and is a popular ecommerce business fulfillment method worldwide. This business model allows a person to sell items without investing in products or worrying about inventory storage. Instead, drop shippers rely on third-party suppliers. But in 2024, you need to ensure the suppliers you work with observe legitimate business practices. You can get into legal trouble if you source from companies that sell counterfeit products or violate intellectual property laws.
The success rate for drop shipping is 10% to 20% within the first year of operation. Majority of dropshippers fail early because they don't fully understand the business model. Others mistakenly believe that dropshipping is an easy way to get rich. A lot of new dropshippers also fail to recognize the importance of product quality or timely shipments.
As a dropshipper, you are competing against Amazon and other big players that can offer same or next-day delivery. Simply put, relying on wholesalers from China with 3-to-6 week shipping times will not work anymore in 2024.
Dropshipping is worth it in 2024 if you want to make money online and are ready to invest the time and effort to learn the business model. Ecommerce continues to see record-breaking numbers with the compound annual growth rate (CAGR) for dropshipping seeing an estimated 32% increase from 2021 to 2026.
The key is to find a profitable niche and learn everything about your ideal customer. Next, be ready to test products and fail several times before finally finding items that sell well. You also need to understand market trends and learn how to stay ahead of your competitors. Capitalizing on a trending item before it becomes saturated will increase your chances of generating huge profits.
The average income for dropshippers in 2024 is 10% to 30% for every sale. An established online store can earn $20,000 to $50,000 per month. Meanwhile, beginners may earn an average dropshipping income of around $1,000 to $3,000 a month for the first year. To earn $5,000, you'll have to earn $10 profit X 500 orders = $5,000.
Related Dropshipping Articles
- Is Shopify Dropshipping Still Profitable In 2024?: Read our comprehensive breakdown of the business model, including how to succeed, why people fail, and tips for making more money with drop shipping in 2024.
- Is Dropshipping Easier Than Affiliate Marketing?: Learn about the similarities and differences between the business models and what to consider before deciding which is better for you and your long-term goals.
- Best Dropshipping Niches (What Are The Hottest Picks In 2024?): This article covers how to find a profitable niche and the top 17 picks in 2024.
Why Local Lead Generation Is An Easier Business Model Than Dropshipping
Local lead generation is easier than dropshipping in 2024 because it's a way to make money online without relying on third-party suppliers. Like dropshipping, you don't need to own or store inventory, plus you can do your business anywhere with an internet connection.
The premise of local lead generation is simple. Your work involves building generic business websites from scratch and then ranking them on top of search engine results. Once you achieve that, you can offer your digital property to local businesses who can benefit from the organic traffic. You then sell those leads to business owners for profit margins as high as 85% to 90%.
Each site takes around 10 to 15 hours to build and about $500 to rank. For example, I built my Grand Rapids tree care website in 2014 in about 10 hours. The site continues to make me $2,000 per month for almost a decade now and is only one of over 80 digital properties I own. Now I make up to $52,000 per month in passive income.
There's also less competition in lead generation since you’re only competing with local businesses for search engine ranking. Moreover, your strategies will not be easy for others to duplicate. Lead generation is definitely a learned skill set that results in a higher barrier to entry.
