It's not too late to start dropshipping because the e-commerce market is growing. According to Statista, the dropshipping industry is set to reach $243.42 billion this year. In addition, more suppliers are offering to dropship their products, and the attention that social media captures is only increasing. So there will always be an opportunity for dropshippers to advertise on these platforms and sell trendy physical products.
But in 2023, the way the game is played has changed. Now you need impressive, professional-looking videos and compelling copy that grab your target audience's attention. Dropshipping is about being the better marketer. And unlike the local lead generation business model that gets organic traffic. Dropshipping relies heavily on paid ads. So you need the skills to get people to stop their mindless scrolling and take action. Or you'll lose money on ads that don't convert.
Is Dropshipping Still Profitable Or Is It A Saturated Market?
Dropshipping is a straightforward business model. But this simplicity is the biggest problem with the business model. You don't hold inventory, and you require very little upfront capital. However, because the barriers to entry are low, the result is a competitive landscape.
But dropshipping's not a saturated market. You just need to be able to move into trends quickly. Create a better marketing trap than the competition. Scale your ads and stay one step ahead of the competition. Use research tools like Dropship Spy and Sell The Trend to spy on your competitors and analyze:
Even if you can carve out a sliver of the e-commerce pie, you can succeed with dropshipping. But you need to recognize that this business model takes time. It requires trial and error. Research, and testing multiple products to find a winner. You're looking for trending products with virality potential. You need to move quickly and maximize your profit potential. Know when to shut down your ads and look for your next hot-ticket product.
Dropshipping is super repeatable. What's challenging is figuring out the winning formula for your business. The key is to start with a good product in an evergreen niche (like the baby or fitness market). Target products that have a WOW factor or fill a gap in the market. Check out platforms like TikTok Made Me Buy It. Or software like Ecomhunt and FindNiche to find the best dropshipping products to sell.
Here's an article where we list all the dropshipping niches to avoid.
Is The Dropshipping Market Flooded To The Point Where It's No Longer Worth Getting Into?
Dropshipping has challenges, and there are a lot of players in the game. But the market's not flooded. You just need to be better than the competition at selling the right product. Dropshipping takes time and daily grind to be profitable. So if you want to succeed you need to learn the fundamentals and treat this like a real business.
Start by building a legitimate-looking brand with a user-friendly and easy-to-consume website. Stop using spammy sales features and clunky themes. They were popular in 2018, but they're not cutting it in 2022. Instead, use a modern and aesthetic theme (like Dawn on Shopify-plus it's free).
Your Website Should Include:
This store Warmly Decor does $1 million in sales per month, take a look at this homepage and notice how clean it looks and the use of great looking photos
You also need to know how to run profitable Facebook and video ads. Tap into customer psychology to create ads that stop mindless scrolling. People buy with emotion so you need to trigger a response that will result in a purchase.
Use a compelling hook that dives deep into their pain point and highlights how your product can solve their problem.
Pro Tip: Go to Amazon and find your product. Read comments and reviews. Use this information to create your marketing angles.
What Causes Product Saturation In Dropshipping?
The same research software that lets you spy on your competition can also tell you what the newest hot-selling product is in dropshipping. Software or a dropshipping app like EcommHunt and SaleSource identify the most popular, in-demand, and right items to sell in your online store.
Trending product ideas that are almost guaranteed to sell well. But the issue with this is that thousands of people subscribe to these tools. So, thousands of people get notifications around a potential dropshipping product that's selling now and run with it.
Depending on the dropshipping niche, most run to Facebook and set up multiple campaigns to capitalize on the trend before it fizzles out. Then, all the competition needs to do is find a high converting ad. Copy what's working, list it at a lower price and offer faster shipping. So it's up to you to find dropshipping products that will sell before the competition floods the market. Or come up with a marketing angle that will make your dropshipping store stand out and be different from the competition.
How To Find The Best Products To Sell On Your Dropshipping Store:
Use tools like Google Trends to gauge the best time to start selling (before products become saturated). You can also use tools like Dropship Rabbit to simplify product research. Find winning items across multiple platforms like TikTok Made Me Buy It and Google Keyword Planner. Determine if there's a market or niche for products you're thinking about selling and access:
- Is there a community around this niche or product?
- Do they have a following of passionate consumers? (example: pet niche and dog owners).
- What is the sales volume? Conversions?
- Seasonal or evergreen?
Research your competitors' sites and search their collections to find best-selling items. Look at their top-selling products and take advantage of what's already selling the best. Consider showing these products on the top of your collections. Or spending more ad budget on these items because you already know they sell.
Additional competitor research should include:
The goal is to make the most money in the shortest amount of time. Before the trend dies out and people are no longer interested in buying it. Find products with high conversion rates and low customer acquisition costs to minimize expenses and maximize your profit margins with techniques like:
- Build a legitimate-looking e-commerce store.
- Secure reliable suppliers.
- Modify your offer.
- Be on-point with your advertising strategy. Test campaigns using tools like Freshmarketer or Optimizely.
What Are The Biggest Problems That Drop Shippers Face In 2023?
New challenges are emerging in dropshipping. This means that a lot of the old methods don’t work. But the biggest problems dropshippers face in 2023 are things like:
Facebook & An Increased CAC:
Paid advertising is the fastest way to broaden your reach and get traffic coming to your dropshipping store. The number one choice for dropshipping is Facebook. But these ads come with a price tag and the average customer acquisition cost (CAC) is around $10.
Factors that impact ad spend include:
Timing & Bidding Strategy
Placement & Relevance Metrics
Facebook is run on an auction-style platform. So the more engagement (likes, comments, shares) your ads get, the lower your advertising costs will be. But you need to be aware of their compliance policies or risk your account being banned.
You also run the risk of Facebook ads being banned for things like:
Violating community guidelines.
Negative reviews and poor customer experiences.
But Facebook isn't your only advertising option. Test multiple platforms like YouTube and Instagram ads or creating videos on TikTok. Or even google ads and 9GAG. This will build your social proof and diversify your paid traffic. Find out where your target market hangs out. This is where you need to focus your advertising efforts. You also need to create a clear offer and meet objections head-on. We have a list of 11 effective ways to advertise your dropshipping store.
Use retargeting systems with software like AdRoll or MailChimp to increase your sales volume with discounts or special promo deals. SMS and email messaging are also one of the best ways to build engagement and consumer trust.
“Retargeting is the key to re-engaging the 98% of potential customers you lose after their first visit to your website”. Rebrandly
Shipping & Why You Need Local Suppliers:
Competing with free and fast shipping times from Amazon is another challenge for drop shippers. Sourcing inventory from China with 4-6 weeks shipping doesn't work anymore and 63% of consumers expect a standard delivery to arrive within three days. But there are ways to expedite the process like:
How To Secure Faster Shipping As A Dropshipper:
Supply Chain & Logistical Issues:
There's also the ongoing situation around breakdowns in the supply chain. Or limited inventory that could affect the profitability of your dropshipping store. So dropshippers need to secure more than one supplier and vet each potential wholesaler thoroughly:
- Do they have enough demand for their inventory?
- Too much demand?
- Is there a minimum order requirement for shipping products?
Software like Shipedge and Multiorders can help track inventory and supply issues. But your best line of defense is to have consistent communication. Take the time to build a trusting relationship with your supplier(s).
Dropshipping is a way to set up an ecommerce store without needing inventory. But as a dropshipper you should never leave the supply or order fulfillment component of your dropshipping business to chance.
3 Reasons Why It’s Not Too Late To Start Dropshipping:
There has been a massive shift in the market, but it's not too late to start dropshipping. Online shopping has exploded and only continues to expand. With retail ecommerce revenues heading for values of $5.4 trillion by the end of 2022. This growth has propelled new niche and sub-niche opportunities. Other factors to support that it's not too late to build a dropshipping business include:
More Marketing Alternatives:
The Availability Of Local Suppliers:
Use sites like Wayfair or Walmart to look for a product you want to sell. Determine who their supplier is and contact them directly. Find out if they are open to negotiating dropshipping or will allow you to sell their inventory in your store.
Or connect with supplier directories like Salehoo and World Wide Brands that easily integrate with your Shopify store and offer a ton of options for USA-based wholesalers.
3 Reasons To Believe It’s Too Late To Start Dropshipping:
The low barrier to entry is a drawing card for many people looking to start an online business. But the dropshipping model isn't as easy as some of the gurus would like you to believe. Here's why:
Shopify has over 700,000 sites. And an estimated 75% of those are dropshipping stores.
If you can't differentiate from the competition. Even if you find a winning product. It will be a challenge to compete in the market & stay profitable long-term.
Low Conversion Rates:
The goal is to secure 50% conversion rates. But most drop shippers are lucky if they hit 1%. (So for every 100 people you pay through advertising to come to your site. Only 1 person is buying your product).
Several factors result in low conversion rates for dropshippers, including:
Nominal Profit Margins:
As the competition grows, your profit margins get smaller.
Need to spend more money on advertising to secure a steady traffic volume to your site.
You might also need to reduce prices or offer discounts to maintain your sales volume.
Spend additional money to cover costs for faster shipping times.
Is Dropshipping Worth It in 2023?
Is dropshipping still profitable? Yes-100%. As an industry, it's thriving and continues to grow. But you need to be willing to put in the work. Be prepared to plan, test, and implement new methods. Invest the time in market research. Source products that meet a real demand or fill a gap. Solve problems and appreciate that dropshipping isn't about making a quick buck.
Make your online store sustainable by creating a user-friendly website and superior shopping experience for your customer. Sell quality products with fast shipping times. Establish social proof and stay one step ahead of the trends and you will see success with dropshipping in 2023.
How Do You Make Your Dropshipping Store Profitable In 2023?
Spend time on growing your business, pivot with trends, and stay ahead of new techniques and issues like:
Supply Chain & Inventory Shortages:
The Economic Landscape:
Inflation rates are skyrocketing, and this will directly impact the retail industry. Costs are increasing for materials, and as a result, wholesaler costs will go up. You need to sell for the minimum advertised price (these will go up too).
Profit margins might stay the same, but it will depend on:
Advertising On Social Media:
It's not too late to start dropshipping, and you can still be profitable with this business model. But old methods aren't good enough. You need to provide your customer with the best online shopping experience possible. Consistently land trending products and create an effective marketing strategy better than the competition.
Master the skill of creating beautiful-looking stores. Then establish social proof and outplay the competition. The local lead generation model, on the other hand, earns higher profit margins and has less competition. Of course, it's not too late to start dropping in 2023. The key is to make your business stand out from the competition. And provide the best customer experience you can.