Discover The Power Of Affiliate Marketing For Ecommerce
Dropshipping is an appealing mode of ecommerce due to its ultra-low setup costs.
While its popularity cannot be denied, entrepreneurs are now asking themselves whether it is still a viable option.
- Long shipping times and the inability to compete with Amazon or other giants
- Small markups and profit margins due to a saturated market
- Low-quality products which can be bought cheaper elsewhere
While these are legitimate concerns, let’s look at some facts:
- Almost 33% of online stores use the dropshipping fulfillment method
- In 2017, $85 billion of sales were made via dropshipping fulfillment
- Ecommerce is growing around 15% every year, dropshipping included
If we look at the facts, it is clear that dropshipping is not dead, but it’s still worth analyzing if it’s worthwhile in 2020 due to the dynamic nature of ecommerce.
The Pros Of Dropshipping
There are three major advantages when it comes to this fulfillment method:
- Low start-up capital needed as there is no buying of stock or related payments like insurance and storage
- A dropshipper can plug any product into their website without being tied down by owning stock, which creates ultimate flexibility and a low risk business environment
- Due to no money spent on inventory, there are more funds available for marketing
This method is low-risk, easy to start, and appealing in its simplicity as an entry point for absolutely anyone seeking to get into ecommerce.
The Cons Of Dropshipping
There are some disadvantages of this fulfillment method that should be taken into consideration:
- There is almost no control over production, lead times, and quality of products
- The profit is much lower than the traditional method due to no discounts associated with buying in bulk
- There is poorer ability to provide good customer service due to the control being in the hands of the manufacturer or supplier
As you can see, dropshipping isn’t a bed of roses and there are many things to consider.
What Is The Situation In 2020?
For 2020, the overall consensus is that dropshipping is still profitable. Every year, profits from it has been increasing steadily by around 7%, which makes it a highly attractive prospect for aspiring online entrepreneurs.
Alongside the disadvantages of this fulfillment method and the question marks that arise in its context, the massive increase in ecommerce sales overall simply creates a situation where dropshipping rises too.
Another element which is boosting ecommerce in general, and dropshipping alongside it, is mobile shopping. Small retailers report increases of around 30% in conversion rates for sales that are done via mobile, and this too is a clear trend set to continue.
When You Should Choose Dropshipping
Choosing this fulfillment method is a no-brainer in the following cases:
- You Are New To Ecommerce - If you are still learning your way around this field and have no experience, the very last thing you want to do is buy inventory.
- You Don’t Have Startup Capital - it is a great way to get started with an online store, with no upfront costs (besides marketing), and you can do so very fast. This enables you to try out business models with no capital risk so you can try several times before you make it - without burning out financially after your first or second try.
- You Haven't Figured Out Your Marketing Strategy - In dropshipping, the only true costs are setting up your ecommerce site and marketing it. If you still don’t know the best way to market a product it is recommended that you test a few strategies while using the dropshipping model - as this will enable you to test demand and your own marketing effectiveness, prior to any commitment.
Dropshipping is not dead, and it is even profitable.
However, it is not as easy as it used to be due to these two key reasons:
- A saturated market which creates vicious competition
- Inability to compete with larger companies which offer better customer service
The remedies of these key issues are very clear and adopted by many.
Dropshippers that recognize their place on the ecommerce map and these key challenges, tend to do well and report the highest profits.
Here are some ultimate tips to ensure you succeed:
- Develop Relationships With Your Suppliers - If you do, you will have more control and clout over the full process and your customers will feel the difference.
- Create A Community - If you work on a blog alongside your online store, you will increase sales and strengthen your image.
- Invest In Your Website - If you throw up a website with poor design and language that offers no added value, don’t expect huge sales. Creating a professional website is easy today with a variety of affordable and accessible ecommerce website builders that are user friendly even for those with no tech experience.
- Choose Unique Products That Can’t Be Found Elsewhere - This will give you an edge and make up for longer shipping times, as customers won’t mind waiting.