Dropshipping is not dead. However, certain models of dropshipping have died such as Amazon dropshipping due to strict policies and account suspensions. Shopify dropshipping and eBay dropshipping have both become extremely competitive and saturated. Meanwhile, TikTok dropshipping is on the rise as the more profitable model of dropshipping.
Dropshipping is a popular order fulfillment method and business model with minimal overhead requirement. As a dropshipper, you don't need to manage physical inventory or handle shipping. It has high scalability potential if you can hop on e-commerce trends and find winning products online.
Despite the simplicity of drop shipping, success is not straightforward and it's not a get-rich-quick scheme as some gurus might have you believe. The industry has changed drastically over the years. In fact, experts estimate that the success rate for dropshipping businesses today is only at around 10% to 20%. Numerous dropshippers have quit after realizing the business model is not really an ideal way to earn a stable income. The growing number of dropshippers has also made the market a competitive playing field. Plus, with razor-thin profit margins, you'd better know what you're doing if you want to make money.
In this article, we take a closer look at why I personally quit, what makes dropshipping difficult and why people fail with this model. We also share about its advantages and if it’s still worth it in 2024. Towards the end, we talk about why I think starting a local lead generation business is a better option than dropshipping.
Is Amazon Dropshipping Dead?
Yes, Amazon dropshipping is dead because the platform has made it impossible for many dropshippers to make a decent revenue. The numerous regulations and policy changes aren’t helping as well.
In a recent YouTube video, Andrei Kreicbergs warns potential Amazon dropshippers “have a high risk of getting your account suspended” plus profit margins are often “too slim.” According to Andre, sourcing from official distributors may also mean lower margins and limited product selections. Moreover, Amazon dropshippers need to work with suppliers that have letters of authorization from each brand they sell. So that's another thing you should confirm with your dropshipping supplier before using their services.
A Reddit thread also points out that some Amazon dropshippers have been "banned in 6 months or less" and had their earnings held for "90 to 180 days" even after following the platform's policies.
Is Shopify Dropshipping Dead?
No, Shopify dropshipping is not dead, but it has gotten way more challenging because of expensive ad costs and saturation. “Everybody wants to shut you down,” says Jordan Welch in a YouTube video, pointing out that frequent chargebacks can be a headache to deal with. Payment processors like PayPal and Shopify Payments may hold funds or shut down accounts because of chargebacks from unhappy buyers.
Today, Jordan Welch continues to use Shopify as a dropshipping platform to build his brand. “I simply use drop shipping as a means to an end,” he says. “Once I had a product that was selling consistently and had potential to grow, I decided to build a brand around that product immediately.” As a result of this strategy, he was able to increase his revenue by 5 times.
Is eBay Dropshipping Dead?
No, eBay dropshipping is not dead. However, running a dropshipping model on the platform has also become difficult because of policy changes. On Reddit, a dropshipping business owner shares how "you could dropship anything and get sales" on eBay around 10 years ago. "Those days are long gone," the person also adds.
Market saturation is another serious issue, with thousands of dropshippers selling the same products on the platform. As such, dropshippers today can only achieve success when they find niche items "that nobody is dropshipping on eBay."
Is TikTok Dropshipping Dead?
TikTok dropshipping is becoming more popular among dropshippers today. With over 1.8 billion users worldwide, the platform has a vast audience you will not find elsewhere. Currently, the hashtag #TIkTokMadeMeBuyIt has over 6.8 million posts.
Kamil Sattar of The Ecom King labels TikTok dropshipping as “the biggest opportunity in 2024 for you to achieve your first $10,000.” To succeed in TikTok, dropshippers need to integrate suppliers like CJ Dropshipping, so they can avail of verified 7-day shipping services. They may also leverage tools such as ShopPulse or Avasam for gaining access to product insights, running paid ads, and product importation within the platform.
Why I Quit Dropshipping: 5 Reasons Why Dropshipping Is Hard In 2024
I quit dropshipping although I had some pretty sweet success with the business model. In fact, I made two profitable Shopify dropshipping stores and I made a killing selling Shark onesies (to the tune of $48K in revenue in one month).
But for me, dropshipping as a long-term business model is riddled with issues. Plus, I could never achieve the kind of cash flow I've been able to produce with my lead generation business. Listed below are five reasons why dropshipping is hard in 2024, so go check it out:
Dropshipping is a low-entry business model. A lot of dropshipping courses focus on teaching people how to copy other dropshippers: from how you design your online store layout to your ad copy or creatives. It's this aspect of the business model that creates product saturation.
Also, everyone tries to sell the same products to the same target audience. So to make money, you must constantly hunt for the next best dropshipping product. You need the skills to create Facebook or Google ad campaigns with a WOW factor. And that can drive online traffic to your store. Otherwise, you’ll need to be willing to cough up a significant amount of money for paid advertising.
Another challenge is that ad costs are skyrocketing today. With FB ads, you're paying $$$ for every impression. So without a high enough click-through rate (CTR) or conversions, you're bleeding cash. And if the product doesn't have a viral component, it won't get enough clicks on Facebook to generate real profits. So your success is often short-lived.
If you want a sustainable business, you’ll need to find something that requires a high-level skill - like owning a local lead generation business. With this, you are building and ranking generic websites and then leveraging Google to reach the SERPs' top. You can then generate organic traffic and leads you can sell to small business owners to earn cash on a regular basis. And because lead gen is a learned skill set, there's a higher barrier to entry so you're not faced with market saturation. Natural barriers control the competition and this creates a business with longevity. You're like a plastic surgeon with a skill set that a lot of other people don't understand. In comparison, anyone can do drop shipping so they can easily copy you out of your own market. And this can end up costing you time and money.
Jared Goetz coined the term 'drop surfing.' Dropshipping is about finding the right product. So you need to be able to jump on current trends and ride that viral wave like a surfer. But the idea behind this makes a lot of sense. Consider that you don't have to educate the public if something is trending. So your ad is immediately going to garner attention because the awareness is already there. Then you can turn that awareness into money.
However, the problem is that all trending products eventually die out. So you're always looking for the next winning product. Plus, every new product has its own set of variables which means you’ll need to do more testing. You also have to develop the best content strategy for your ad campaigns each time. Or harness the secret to create dropshipping ads that convert. This product inconsistency can make it challenging to scale your dropshipping business. And if you don't know what dropshipping niches to avoid or what makes a winning product, you're not going to make it with the business model in 2024.
Facebook is the go-to platform for dropshipping advertising. The downside here, of course, is that those customers belong to Facebook and if you don't comply with their rules, you will get shut down. Consider that you have zero control over the platform. So if Facebook suspends your account, you're out of dollars and time.
If you don't understand the algorithms and you don't have the skills to develop ad copy, you'll end up with low-quality traffic that will still cost you money. Facebook also runs on a bidding system, and with more dropshippers using the platform, the cost per click has understandably gone up.
So this means lower profit margins for you. It just keeps getting more challenging to create a profitable dropshipping business, especially if you don't have the skills to drive organic traffic to your store. This then poses the question of whether dropshipping is saturated or if advertising on Facebook is the best way to drive online traffic to your store. So you need to research and know where your ideal customer hangs out before you pay for ads.
To make money with dropshipping, you need to sell inventory. But when people return products, you're out the cost of the item and you could be on the hook for shipping. Otherwise, you may face a charge from your wholesaler. And with profit margins sitting between 10% to 20%, you need to sell a ton of products if you want to be successful. For example, if you sell a product for $50 (which is a reasonable price for a dropship product), then your net profit at 20% is $10. So if your goal is to make $10,000 per month, you will have to sell to 1,000 customers.
Now consider that 10% to 15% of your customers will request returns or refunds. And because you have zero control over product quality or shipping times, you spend a lot of time doing damage control. Also, it's not uncommon to get emails from customers daily and this can become both stressful and time-consuming. So instead of creating a passive income, you are doing a ton of work for small profit margins at best.
You may even lose money along the way if you don't have a reliable dropshipping supplier or use a random wholesaler overseas. (Or you're trying to sell knock-offs from a Chinese supplier). And if you get too many chargebacks or returns, you could also face penalties from your payment gateway or get suspended from platforms like Facebook. You also risk getting negative reviews from customers. With drop shipping, having too many negative reviews can be the fastest way to lose potential earnings.
Pro Tip: People in the industry don't talk much about this side of drop shipping but ongoing customer support issues can be a constant problem. The never-ending barrage of complaints is among the biggest reasons people quit the business model.
Dropshipping can get boring. Think about it. You're doing a lot of the same things every day. You have a checklist that includes the following:
- Checking your ad campaigns
- Looking for new trends
- Addressing customer service issues
The business model can become very monotonous. You have no personal contact with anyone and all you do day in and day out is to look at digits on a screen. Plus drop shipping is less about innovative products and more about what's hot right now or the next big trend.
And most items sold by dropshippers aren't products people need. They're impulse buys - this is what sells. But it's not a business model that offers a meaningful way to help people and that was my number one reason for quitting dropshipping. I wanted to be part of an online business where I felt I was making a difference—doing something that added value to people. As such, it’s absolutely no surprise why local lead gen is now my number one recommendation.
Why People Fail With Dropshipping
People fail with drop shipping because they don't understand the business model. Others also fail to recognize that there are dropshipping mistakes to avoid. To succeed in the business, you will need to do extensive market research and be prepared to test and fail again before finding the best winning products.
Even if you have a stellar store and great ad copy, you will still fail in your dropshipping business if you don't have a winning item. The reality is that you don't need to reinvent the wheel. Your goal is to look at merchandise selling well now and design a better offer. In essence, dropshipping is all about being a better marketer and finding gaps in the market. Use spy software like BigSpy or PiPiAds to determine things like:
- Where are your competitors lacking?
- How can you make your product stand out?
It's about controlling the narrative with the best products. However, you will need to be able to act fast. Drop shipping is about jumping on trends before they become saturated. Plus you want to sell items with potential of going viral while also meeting a demand in the market. So you should focus on the platform your ideal customer hangs out on. You need to be ready to change your copy or increase the amount of content you publish to get eyes on your online store.
In 2024, driving online traffic to your dropshipping store can be one of the biggest challenges. But you need to attract a stream of customers if you want to make money. So you either have to pay for traffic on social media platforms like Facebook and YouTube or you need the skills to create organic posts on platforms like TikTok and Instagram reels.
It's not too late to start dropshipping and it’s still possible to achieve success in the business model. But if you don't want to fail, you need to treat your dropshipping store like an actual business and be prepared to invest significant amounts of time and resources to make a profit.
What Percentage Of Dropshippers Are Successful?
Only 10% to 20% of dropshippers are successful. The other 80% to 90% of the dropshipping industry struggle with marketing. Some also have a hard time creating a high perceived value for their products and don't realize how hard dropshipping is to master and dominate. Others don't know which drop shipping niches to avoid while some choose the wrong inventory. Another common issue is that some dropshippers don't have a reliable dropshipping supplier that can promise quality products and fast shipping times.
So if you want to be among the 10% to 20% successful dropshippers, you need to become a better marketer and find winning products to sell online. This requires constant research on your part. You need to leverage tools like TikTok Made Me Buy It and Google Trends to find hot-ticket items you can sell in your store. You can likewise use third-party software like AdSpy or Dropispy and check out competitor sites. Look for things like:
Dropshipping Competitor Analysis
What type of ad copy is working for your competitors? How can you make it better? What platforms are they using for paid ads? Does your target audience hang out there, too? Is there a gap in the market? Can you create a unique angle to capitalize on it?
The goal is to stay one step ahead of trends and beat the market curve. When you do that, you can hone in on a marketable product that brings in a good profit margin. In most cases, you may also want to aim to trigger impulse buys from your target audience.
Is Dropshipping Still Profitable?
Yes, dropshipping is still profitable if you can drive online traffic to your store, make sales, and generate a profit. As such, you need to be prepared to move fast and treat your ecommerce store like a real business. In fact, you need to find and capitalize on a winning dropshipping product before the market becomes saturated.
However, it’s a fact that your wholesaler will do the majority of the heavy lifting. They will handle fulfillment and inventory duties while you act as a middleman between them and the customers. As a result, your profit margins with the dropshipping model will often remain between 10% to 30%. In comparison, your earnings are much less than traditional ecommerce or other online business models, which can gain profits of up to 50%. If you’re aiming for bigger profits with drop shipping, you can also consider picking high-ticket items.
Find merchandise you can sell for a profit on sites like Amazon Best Sellers list or Google Trends. Or go on platforms like TikTok, Facebook, or Reddit and find information on:
- What are people talking about?
- Are certain items generating buzz online right now?
- What are people searching for?
You can also use third-party tools like ecomhunt or NicheScraper to see what's trending out there right now. Ultimately, the key is to pick a product that isn't easy to find or can:
If you can increase the perceived value of a product (through digital marketing) or successfully grab the attention of your target market, you can definitely make money as a dropshipper. Just make sure you do this with a compelling hook and a unique angle. Give people a reason to stop mindlessly scrolling and click on your offer. Tap into customer pain points and focus on how your product can help make their lives better.
Advantages Of The Dropshipping Business Model
Dropshipping isn't a get-rich-quick kind of deal. Like any business model, there are disadvantages and risks to dropshipping. Of course, the business model also has its unique advantages, especially for people who don't have much upfront capital to spend or space to house inventory. Some of the main pros of dropshipping include things like:
How Much Money Should You Have To Start Dropshipping?
You can start Shopify dropshipping for as little as $100. But the less capital you have to spend, the fewer products you'll be able to test. And you need to consider that you'll have to cover the cost for non-negotiables like:
If you want to set yourself up for success from ground zero, you should plan on a budget of up to $3,000 to $5,000. You then have the cash flow to test products and cover ad spend. You can also opt for better wholesalers, which generally means faster shipping times. Go check out our US dropshipping suppliers list for more information.
Pro Tip: Plan on spending $200-$300 for every product you want to test. And 10%-30% of your budget on paid advertising.
Is Dropshipping Worth It In 2024?
Yes, dropshipping is still worth it in 2024 but you need to be prepared to invest the time to learn and understand the business model. You should also have a big enough budget to test the market for several products. Moreover, you need to have realistic expectations going into this business.
Drop shipping isn't about making a quick buck online. So you need to research to find the best niche and winning products. You should be skilled in creating ad campaigns or organic content with virality potential. In most cases, you will need to spend on paid ads to scale fast and get a steady traffic of customers checking out your store.
If you learn the skills and understand platform algorithms or know how to go viral on social media platforms, dropshipping can prove to be a worthwhile business. You get the opportunity to perform product research without a ton of risk or capital. This can lead you to testing products quickly and finding a hot-ticket seller. Besides, the goal is to find a winner before the market reaches saturation. So if you want to achieve profits with drop shipping, you need to be able to control the narrative by increasing a product’s perceived value. You also need to be better than the competition as you constantly advertise your dropshipping store.
Still, it’s a fact that dropshipping has become more complicated and challenging through the years. This has led some to believe that dropshipping is no longer as profitable and scalable as it was years ago. On X, digital solopreneur Pascal Kordon outright declares that dropshipping is dead since dropshippers only get to keep $20 for every $100 they earn.
Pascal K. — Digital Solopreneur
@creatorpascal
Dropshipping and e-commerce is dead.
Why? Because you have to pay suppliers, shipping & all
kinds of other shit.
For every $100 you make, you only get to keep $20 of it.
Digital products are the new hype & have been for a while.
Build a product once, sell it forever.
8:31 AM · Feb 9, 2024
Conclusion: Could Lead Generation Be A Better Choice Than Dropshipping?
Dropshipping might not be dead but the rules have changed much over the years. While it’s still an attractive, low-cost business model for anyone, you're also leaving critical aspects of your business to chance. For example, you don't have control over quality or shipping times. And you need to always be on the hunt for the newest product or create a better offer than the competition. Of course, you also need to understand how to stay ahead of market trends. You need to be prepared to test and fail and test again to be successful with the business model. More importantly, you should know when to shift gears or call it quits and find the next hot-ticket product to keep making money online with this model. Again, you have limited or no control over fundamental aspects of your business, so working with reliable suppliers is a must.
If you want a business where you control every aspect and one that is backed by a proven concept, you may want to consider local lead generation. This business model allows you to earn a stable monthly income without selling physical products or competing against thousands of competitors. Instead, it only requires a minimal cost to start building and ranking websites. For example, I have built a lead gen site from scratch in about 15 hours, spending only around $500 for it. This site has been making me $2,000 per month for years now. This is just one of the more than 80 sites I own and rent to local business owners - and each of my clients happily pay me month after month for bringing leads to their companies. In fact, I earn around $52,000 monthly using this business model.
As a drop shipper, I was always hustling and looking for the next winning product. With local lead generation, I've been able to create a passive income while working less. Instead of being a middleman, I am a digital real estate owner who makes money from top ranking sites that deliver leads.
Have you ever used Google Ads for dropshipping? How would Facebook Ads bidding system compare to Google Ads bidding system?
How can i find places to start generating leads for people to start paying me online?
Damnn, just wanted to start a dropshipping store… after reading this I have to overthink this again. Thanks for sharing this to the world a lot of people are praising dropshipping as the number 1 business to start as a newbie. Maybe there is some good coaching in this business but gonna have to think through it!
Thanks for sharing this, it really open my eyes!
cool
Hi Ippei, Shiv
I’ve been looking around on your site and also checked some of your webinars and videos. Also read some of your thorough e-commerce training courses reviews to understand if that could be a way for me to get started with online business. Your site is very informative and helpful.
I have a fairly well paid full time job as a manager in a global and well known IT company, but I’m longing to set and work towards my own goals and have a more 1:1 ratio between my invested time and rewards instead of having to be concerned about office politics, career planning, managing employees, attending meetings and much the other stuff that comes with a normal working day at a big corporate workplace.
I like what I’ve heard so far about the Lead Gen business model that you are teaching and practicing and want to learn more. I live in Stockholm, Sweden. Will your concept and business model work also here, or is it applicable in the US only?
Thanks,
Adam
yes it works there in Sweden or you could live in Sweden and get US clients