Dropshipping isn't hard. But the business model isn't a quick cash grab, and it's not easy. To be successful with dropshipping, take the time to do market research. Then be ready to test and fail with a ton of products before you land a winner. Learn as much as you can about the business and be prepared to do the hard work. Know what common difficulties dropshippers face and the best way to overcome them.
There are 2.64 billion digital buyers in 2023. That's 33.3% of the population worldwide who shop online. But it's a competitive market. Statista says that by the end of this year, the global dropshipping market will reach a market cap of $243 billion. Dropshipping isn't hard, but it takes work. And unlike local lead generation, you don't have any control over key aspects of your business, like shipping times and product quality. In 2024 dropshipping doesn't offer passive income. But it is a way to own a small business and make money online.
What Is Dropshipping?
Dropshipping is a business model within a business model, but it's just a different type of order fulfillment method for ecommerce. Dropshippers don't need to own or house inventory or invest a ton of capital. Instead, they rely on third-party suppliers. The supplier's job is to take care of the heavy lifting, like packaging and shipping. Then they deliver products to the customer, and you don't even have to touch what you sell in your online store.
But dropshipping businesses are a way to get proof of concept. For example, a drop shipper can test and experiment with various things. Then find a winning dropshipping product and scale or consider building a brand. Grandriver Research says the business model will reach a compound annual growth rate (CAGR) of 23.4% from 2023 to 2030 as more people shop online.
What Is The Hardest Part Of Dropshipping?
The hardest part of dropshipping is finding a reliable dropshipping supplier. Dropshippers need a supplier who can deliver high-quality inventory and fast shipping time to buyers. Data suggests that 84% of ecommerce retailers say securing a good supplier is the biggest barrier to starting their Shopify dropshipping store.
In addition, you need to trust that the product and packaging are on point. But any mistakes your supplier makes are on you. Unfortunately, you don't have any control over the supply chain, delays at the border, or customs rules. Truelist suggests that 42% of online shoppers expect a two-day shipping option. But the customer has no way to track packages. So dropshippers could face customer service issues, chargebacks, or negative reviews.
6 Common Difficulties With Dropshipping In 2024
1. Unrealistic Expectations & Low-Profit Margins
A common difficulty with drop shipping is unrealistic expectations. People see the gurus on YouTube that make the business model look easy. But dropshipping takes time to learn and really understand the concepts. Start by using the right tools for product research, like Google Trend, Keywords Everywhere, Ahrefs, or People Also Ask. What questions are people asking? What is your ideal buyer searching for online?
Next, check out competitor sites on TikTok and Facebook. Use Facebook Audience Insights, TikTok Made Me Buy It, or Amazon's most popular list. Or utilize third-party spy software like AdSpy or BigSpy. See what kind of ads get the best traffic. What channels get the most attention? What's trending on social media? The key is to shift your mindset. Then be ready to commit. Get good at the skills you need to win with drop shipping, like:
Do the right things and sell the best products. Find items to sell that will generate a profit. The margins of this online business model are razor-thin. For example, data says that profit margins for the drop shipping model span from 10% to 30%.
So don't take what's shown on YouTube at face value. It's easy to show overall earnings. But they don't tell the whole story. For example, How much did they spend on ads? What number of products did they test and fail with before they landed a winner? How many chargebacks did they get?
2. Slow Shipping Times & Breakdowns In The Supply Chain
Slow shipping times and breakdowns in the supply chain are other business model challenges. Because you rely on third-party suppliers as a dropshipper, you have zero control over how long it takes for a product to get to your customer.
But slow shipping times and a high shipping cost are one of the fastest ways to get a ton of customer complaints. In fact, research suggests that 66% of online shoppers will purchase from a competitor with multiple shipping options.
3. Product Quality & Unreliable Suppliers
As a dropshipper, you don't have any authority over product quality. Again, you're beholden to the suppliers to deliver high-quality inventory to your customers. But the product is everything. If your product isn't good, you don't have a business. The secret is to build a strong relationship with the manufacturer. Then source multiple suppliers. But remember, their errors are on you. So if the customer complains, it's your job to make it right.
4. Cut-Throat Competition & Picking The Wrong Niche
Dropshipping is competitive. Data suggests that there are 24 million ecommerce retailers worldwide, many of which are dropshipping sites. But the model doesn't work the way it did ten years ago. The old way is saturated. Now it's about marketing and knowing your target audience. Tap into psychological principles and the buyer's biggest pain points.
For example, What problems do they have? Where do they hang out online? What kind of content do they consume on the Internet? The goal is to be ready to learn new ways to get your Shopify store in front of a ton of eyeballs. Then pick the right niche and know what dropshipping niches to avoid. Choose one that is evergreen and has products that are hard to find. Ones with a WOW factor or that are part of the hottest new trend.
5. Customer Service Issues & Payment Gateways
One of the most common difficulties with dropshipping is customer service. A bad customer experience is one of the fastest ways to fail with the business model. In 2024, it's all about the customer journey. The secret is to provide more value than the competition. Online shoppers expect transparency, fast shipping, and no hidden fees like sales tax or shipping costs.
The other issues are payment gateways and account bans. Financial institutions don't like dropshippers. For example, if you start earning a ton of money or there's an influx of cash going into your account, it can be a red flag. One that could get your store shut down by your payment processor. In addition, chargebacks and fraudulent returns can result in money lost. In fact, Dropshipping Helps says that fraudulent or unauthorized transactions may impede market expansion.
6. Paid Advertising & Online Traffic
Getting traffic to your online store is hard. SEO is really the only viable option. But it can be complex and time-consuming. As a result, you need to buy traffic with things like a Google ad or Facebook ads. But ad costs cut into your already super-thin profit margin. Plus, it's so easy for another dropshipper to come and copy your creatives.
Or offer a better deal and outprice you from the market. The secret is to gain a massive advantage in one area. For example, sell a product with a high perceived value. Or jump on a trend before it becomes saturated. But even then, it's hard to stay profitable unless you can set yourself apart from the competition.
6 Methods To Overcome Them & How To Make Money With Your Dropshipping Store
1. Sell Higher Quality Products With An Increased Perceived Value
To make money with your dropshipping business:
- Pick the right ecommerce platform.
- Create a website that looks like a real business.
- Include a compelling product description for every item and add a professional-level image.
- Keep your color scheme simple and congruous.
The idea is to design a store that's easy to use and simple to navigate. Focus on your product's worth. But choose things you can sell for $15-$45 and get a 3X markup. Find products that aren't easy to find, have a WOW factor, or solve a problem in a person's life. Then consider; How can you increase the perceived value of the item you're selling? What unique angle can you create to evoke emotion or impulse buys? Again, the goal is to be different and better than the competition. So to set your Shopify store apart, do things like:
The secret is to build a community and foster relationships. Lead with value and put the needs of the customer first. Then you become a trusted source. But you'll get more loyal customers and can make more money.
2. Develop Strategic Shipping Methods
Online shoppers want fast shipping, and they want it for free. TrueList says 42% of shoppers online expect a two-day shipping option. The key is to be transparent about delivery times and offer your customers options.
Data suggests that the primary cause of cart abandonment, as noted by 63% of customers, is hidden shipping costs. Instead, offer a tiered pricing model. Then you give your shoppers the option to pay for faster shipping (like free shipping after they spend $X). Other strategies to consider include:
Customize and personalize the customer experience with chatbots, content in their native language, or geo-locations on your website. Again, the more you know about your target market, the more personalized you can make their shopping journey. Use scarcity tactics like countdown timers, limited-time offers, etc. But studies show that FOMO can increase conversions by 8.6%.
3. Source Multiple Reliable Dropshipping Suppliers
In dropshipping, your supplier is the crux of your business. But there are a ton of scammers and pretend mediators. Genuine dropshipping suppliers can guarantee high-quality products and fair prices. But avoid suppliers who want ongoing or per-order fees or minimum order sizes. Instead, choose suppliers that offer things like:
But source more than one supplier. Then you never have issues around a lack of inventory or product delays. In 2024, the best solution is to find a local supplier like Salehoo, Worldwide Brands, or Inventory Source. Or do a Google search and contact the manufacturer directly. Another option is to leverage marketplaces like CJ Dropshipping or BigCommerce. The advantage here is that they all integrate with your Shopify app or any other ecommerce platform app. And they can offer faster shipping times.
Or you can try Amazon dropshipping. Amazon gives you an edge because the people are already there. It's a trusted platform with a consumer base ready to buy. It offers better profit margins and higher conversion rates. But it's still a cutthroat business model. Amazon reports that more than 5 million active sellers are on its platform. However, it's a chance to leverage a ready-made market and test products. Then you can fine-tune your processes, connect with the right suppliers and practice what you're learning.
4. Conduct Market Research & Leverage Niche Targeting
Invest in research and learn as much as you can about your buyer persona and your product. Then focus on your marketing strategy. For example, niche marketing is a highly targeted form of promotion. But it presents more opportunities for specialization and niche targeting.
The premise is to advertise products to a small, specific, and well-defined audience. Then you support and sell to an underserved or untapped population. Base your niche targeting on your customer's geographic location or psychographic data like interests, attitudes, and values. But it can also be based on demographics like age, income level, gender, education, etc.
However, this technique allows you to compete against fewer brands. Then you can create better marketing spend. The key is to use your ad budget in the right places. Go where your ideal buyer hangs out online.
For example, if they enjoy written content, start a blog. If they prefer videos, post content on YouTube or leverage TikTok creatives. Develop a unique angle. Then create content that shocks people or gets them to stop their mindless scrolling and check out your product.
5. Provide The Best Customer Experience Possible
Customer expectations are changing. Now buyers expect around-the-clock customer service, fast shipping times, and transparency around delivery. Online customers also want data safety and privacy guarantees and integrated online experiences. As a dropshipper, you have to exceed expectations. Deliver beyond even the highest expectations of a customer.
Don't lose a potential customer because you can't solve a problem. Instead, provide the best solution. Stay current with market trends. Build your online store on a reliable ecommerce platform like Shopify or WooCommerce. Then automate tasks with a dropshipping app like ZenDrop or Spocket to manage inventory and order fulfillment.
But again, make sure your store looks like a legit company. Data says you only have 15 seconds to grab visitors' attention on your dropshipping site. So become a customer-centric online store. Forbes suggests 82% of shoppers want brands to embrace a 'people-first' approach. But if you focus on your buyer's needs first and provide the best solution to their problem or sell a product that invokes emotion. Then you can make money with the business model in 2024.
6. Leverage Organic Traffic & Be The Better Marketer
The only way to drive a ton of eyeballs to your offer is to be the better marketer. Paid ads will get you a few fast wins. But they cost money and will cut into the already uber-skinny profit margins of your drop shipping business. Instead, leverage organic traffic with an omnichannel approach. Be active on all the right channels. Get on social media and host live streams or share content that adds value to people's lives.
Become a content creator, prioritize social commerce, and build an online presence. According to Abdalslam, dropshipping stores with at least one social media account often generate 32% higher revenue. Connect with influencers. Learn SEO tactics to get your site to the top of the SERPs. Make your offer unique. Something that standouts from the competition and will stick in people's minds. Provide the best answers and the reason why people need to buy it right now.
Yes, the dropshipping business is still profitable. Dropshipping is an online business model that gives you access to a global ecommerce and mobile commerce market. Forbes cites that mobile commerce is set to be worth $511.8 billion in 2023. But dropshipping isn't dead. If dropshipping were dead, then ecommerce would have to be dead. But ecommerce is making record-breaking sales online. Research suggests that the ecommerce industry will generate $6.3 trillion globally in 2023 and grow 10.4% by the end of this year. The key is to find a product people want to buy.
You build a loyal audience by overdelivering and leading with value. So the dropshippers who understand the new rules of the game can earn a ton of money with the model in 2024.
The benefits of dropshipping include a low start-up investment, marginal overhead costs, and minimal risks. Other benefits of drop shipping include:
A benefit of drop shipping is that it's a chance to test a ton of products without the need to own or house inventory.
Another benefit of the business model is that you can pivot fast with low risk and marginal investment if a product isn't a top seller.
A benefit of dropshipping is that you can work from anywhere and sell to a global market.
People say drop shipping is a scam because they've tried the dropshipping business model and failed. But they didn't take the time to understand the concepts. Or they quit before they made any profit. So now they think the business is a scam. But instead, they should have been ready to test more products and invest the time to learn as much as they could about their target market.
Dropshipping is a legitimate business model. More people are buying products online than people selling products on the Internet. Data says that approximately 23% of all online sales are fulfilled by drop shipping. So in 2024, it's a path to building a successful ecommerce business and making a steady income.
90% of dropshippers fail in the first thirty days. Research shows that the average success rate of a dropshipping business is between 10% and 20%. Dropshipping is work. It takes some savvy business sense, product research, and an understanding of how to read trends.
To succeed, you need to stay one step ahead of the hottest new product. Then sell as many as you can before the market becomes saturated. Dropshipping is about being the best marketer. Create a unique angle and tap into buyer pain points. The key is to give people a reason why they need to buy your item.
Yes, you can lose a lot of money dropshipping. Sadly, this is not a business where you get rich instantly. Dropshippers can face problems connecting with the right customers or sourcing multiple suppliers. Other ways you can lose a lot of money dropshipping include:
Be ready to lose money for at least a year. Keep a close eye on your ad spend. Data suggests that paid advertising costs will rise by 20%-30% this year. And this is one of the leading reasons people quit dropshipping.
So take the time to research. Learn as much as you can about your potential customer. Then be ready to pivot fast when things aren't working.
Yes, dropshipping is legal. The dropshipping model is just another type of order fulfillment in the ecommerce industry. But it's a legitimate business idea. Of course, you need to be willing to do the work. Plus, you have to find a reliable supplier that sells high-quality products and isn't illegally using another company's intellectual property.
Why Local Lead Generation Is A Better Way To Make Money Online In 2024
Local lead generation is a better way to make money online in 2024 because, unlike drop shipping, with local lead generation, you're in complete control over every aspect of your business. It's a proven concept. Build and rank simple websites that target the right location and offer one service. But because the focus is on the local market, your lead generation sites can get to the top of the SERPs in as little as six weeks to six months. And unlike dropshipping, your websites get organic traffic.
At the top, you're in front of a ton of people who are looking for the service you offer. With lead generation, you don't need to rely on paid ads or worry about account bans. Once your site starts producing leads, sell them to a business owner for profit margins as high as 85%-90%. You're like a digital landlord. But you own the website, the tracking number, and the leads. So you own valuable digital real estate. You can build as many sites as you want anywhere in the world (not just where you live). Build an empire, and you can secure a passive income.