Dropshipping has been around for a while now. Although many people are just starting to get introduced to it, it isn’t the most popular option for online businesses and entrepreneurship opportunities.
In fact, you may have heard that dropshipping is dead or dying, and even when many will argue this isn’t true at all, we have to disagree.
Dropshipping is dying already. Though there’s still time for those starting to gain something from it and bet for another business model in the near future, this depends on quite a lot on some luck and how they manage the entire process of getting revenue with the business.
If you ask us, we will skip it since it wasn’t the best online business either, even when it started and got quite popular for many reasons, which we will share with you today in case you’re interested in dropshipping or are considering it enough to the point of wanting to know if it is truly worth your time and money or not.
First, What Is Dropshipping?
If you’re very new to this world, you might not know what it is in the first place, and that’s quite all right.
After all, people who grow interested in dropshipping have heard or read about it a couple of times but never really searched for more details until now, when you’re truly considering this business option.
Thus, it is only natural to start with the basics yet crucial parts before jumping into why you should just decide to move on with another option (in this case).
Dropshipping is focused on a seller, who would be you in case of giving it a try, that aims to outsource fulfillment to a third party that is usually the supplier in this business model.
Basically, you are the seller of a product or service, but you are giving access to it as a third-party since the customer will receive any of them from the manufacturer or supplier.
Because it reduces overhead and operating expenses, this business model appeals to many eCommerce sellers and is the main reason it was booming a few years ago.
Dropshipping suppliers are paid to fulfill orders. While the logistics of dropshipping are dependent on your arrangement, it is common for this business model to follow this general sequence:
- Dropshipping suppliers source or produce the product or service (the latter is quite weird to use in this type of business model).
- You enter into an agreement with the dropshipping provider.
- Dropshipping suppliers store the inventory.
- You host the website or eCommerce storefront.
- A customer places an order.
- You will process the payment and details of the order.
- The order is sent to the dropshipper.
- It prepares the order (the manufacturer or supplier).
- This supplier or manufacturer ships the order.
You usually send orders to drop shippers or the company and third-party you’re working with. Then you notify customers that the products are on their way, and you have no control over the physical fulfillment process.
Why Is It Dead? The Truth Behind Dropshipping in 2021
This business model boomed because it allowed the sellers to make money without worrying about storage or inventory and having to deal with the logistics of traditional businesses that work around selling products.
In other words, they were saving lots of time and effort and could do everything online while earning commissions and managing every aspect without leaving their places.
However you see it, dropshipping has its big perks, and we can’t deny them. But the issue lies when it is compared to other business opportunities today.
Now, to enter the topic properly, dropshipping boomed back in 2016, and although it continues to go strong in terms of popularity, the truth is it has been going down over the last two years.
Anyone would think that is impossible considering the pandemic and how everyone has been trying to find new opportunities online and work around eCommerce. However, as we have mentioned a couple of times, people just discovered better business options.
Of course, other reasons are involved in why this model is dying and, in our opinion, won’t be profitable in the next 2 or 3 years at most.
Thus, if you were considering it, we can definitely give you enough reasons to decide to move on and focus on other opportunities:
- It is too competitive.
Well, anyone would say that every market is competitive, but when we say that dropshipping is at the top 5 of the most competitive ones, you’ve got to believe us.
But why is that? Didn’t we say it is dying already? It is a matter of looking at the situation and some benefits.
Dropshipping is a business that requires very little capital, which means many people can get started without having to invest lots of money like with regular business opportunities.
However, as a result, way too many people try it, and believe it or not, over 80% of them fail due to the competitiveness in the market and how they have to stay relevant as sellers.
Anyone would believe this should be simple because there’s a lot to sell, but it isn’t that simple, and only a few ones that know how to market and have been in the business for a while are actually earning income in 2021.
The increase in dropshippers can be positive for customers but negative for the shippers themselves, and you shouldn’t aim for markets that have plenty of people covering almost every space already.
- Dropshipping products tend to be old and overpriced.
The entire concept of dropshipping lies in how good you’re at finding products that are worth selling and will attract customers.
When it started, it was simple to find affordable products people were interested in and decided to acquire through your website as the seller so you could add part of the earnings to the price of the item.
However, nowadays, most products are way too expensive. When you translate this into your revenue, you notice that you won’t even earn the usual 30% most sellers and businesspeople when offering products.
Also, the products depend on seasons, and you have to continuously update the catalog you offer and make sure the items aren’t getting old, which is quite tricky.
Suppose you have a look at some dropshipping stores or websites. In that case, you will notice prices aren’t that good anymore in deciding to use dropshippers site instead of purchasing the products directly to the manufacturer and supplier, which is what many people are doing right now.
To make it simple: Overpriced and old products mean you don’t get much revenue based on your efforts anymore.
- It takes too long to start dropshipping.
Even when it means it is online, it doesn’t mean you will get started in a matter of hours or few days.
Dropshipping takes time and hard work, and you don’t even know if you will succeed due to the previous reasons so far.
Now, focusing on this reason alone, dropshippers have to build a site where they will offer the products, market them to bring customers, work in other platforms’ profiles, and research for products to handle orders and send them.
The huge problem is taking too long to start lies in building a reputation and attracting customers.
It isn’t a secret for anyone that online stores or eCommerce are everywhere right now, and with eBay and Amazon being at the top all the time, it is hard to bring customers to a specific site where they can order some products.
When you consider these factors, you notice you will have to go a long way before you actually start earning something.
Building a website can take weeks until it is finally accessible and properly optimized.
Also, you have to deal with researching products and set prices, which doesn’t guarantee people will buy.
And finally, marketing is never easy, and you will need to target and retarget your audience until you are generating leads to convert them into customers.
It is a tough and long journey, so it isn’t worth the effort in the long time since other business models allow you to start in a matter of weeks instead of months, and ROI and revenue are guaranteed in a shorter period of time.
- The never-ending China trade war.
You might not know about dropshipping: Most of the products are imported from China due to the suppliers that make prices cheaper (of course, you can use local suppliers).
Then, if this is the case, why is it bad to rely on this country as well? Don’t worry. We’re not getting political, but it is necessary to get a bit deep into this.
The goods imported from China are much more expensive due to tariffs and the current situation between the United States and the country.
Thus, if you are interested in dropshipping from China or plan to dropship, it is worth doing some research to find loopholes that can help you handle this problem.
If you are unable to, you will end up spending much more in taxes and tariffs than anything else, and revenues won’t even be worth the time and effort, which is what happens with most dropshippers.
- High shipping duration.
Considering that most products come from China, it is expected for them to arrive quite late.
Even when you have suppliers in your country, it is hard to process dropshipping orders for many of them, and the results will end up being quite the same since shipping that would usually take about two days could take about 6, believe it or not.
Focusing on the long-distance shipments, products brought from China or other countries take between 7 to 21 days, and it depends a lot on the problems that could arise in the process.
When customers wait for their products, it is pure suffering and thinks, “I won’t buy this again. It takes too long.”
They start noticing that even when they might pay a few bucks more, it is worth getting something near them as long as the shipment doesn’t take that long.
- Poor customer support.
This depends a lot on the dropshipper or seller (you). Still, the truth is that dropshipping is not the best when it comes to customer support for one reason in particular: It is almost impossible to handle complaints or problems when you’re not the original seller or supplier.
You can solve problems like payments and every step in the purchasing process that is related to your role in this business.
However, shipments, deliveries, and the common issues most customers have are not usually handled by you, which can make people quite upset.
Of course, you’re saving yourself some hard work, but it is easy for your eCommerce to drop its reputation when you’re unable to have full control over your support and problem-solving option for customers.
Thus, this takes us to one thing you can’t change in this model: You don’t have control over every step in the process, resulting in poor attention in the long run.
- Product quality isn’t what people expect.
It is hard to offer high-quality products unless you’ve tested them before, and as much as we hate to admit it, many of the products that come from China are pretty low quality, with some exceptions.
This leads people to use dropshippers as a way to access them and try, but when they are not satisfied with the product, the reviews fall on your website, not the supplier’s site.
Dealing with low-quality products is very common for dropshippers since very few high-quality ones are worth the process of offering them as a third party. Why? Because if they’re good, more formal businesses will take them over.
This process will just exhaust you in trying to find good ones, maintain your reputation, and satisfy the customer.
- Everything’s about marketing.
Although every business has to rely on it, dropshipping is exhausting in terms of marketing because the core of its success lies in it.
You have to focus on your marketing strategies again and again and again.
You have to target, retarget, make sure you retarget again, and this is a never-ending process.
As we mentioned, we know businesses rely on this strategy nowadays, but if you don’t do proper marketing, there’s nothing your dropshipping business will be worth.
Thus, you have to invest in Google Ads and marketing professionals if you are not well-versed in the topic.
And even if you have great strategies, it doesn’t guarantee your business will boom among customers.
- It offers a very low margin.
Dropshipping is a convenient and efficient way to fulfill orders, but it’s not the most profitable even when the seller doesn’t have to invest that much either.
Although you’ll be buying products wholesale, they won’t come at wholesale prices.
You won’t be purchasing products in bulk but instead one-by-one from your customers. This means you’re not getting the best prices nor the lowest due to the number of products you’re buying at once.
You’ll also have to pay additional fees to the wholesaler to pack and ship every customer order, and your profit margin will be affected accordingly.
Dropshippers typically make between 10% and 15% profit when regular sellers make about 30%. Also, they typically make the least profit on high-ticket items, while accessory products with lower margins are more profitable.
It isn’t the best business unless you have a monopoly for some items and have grown to the point of being the starting place for many.
- Inventory is never guaranteed.
Dropshipping makes it difficult to know the stock availability of your products since you rely on your suppliers’ websites (direct or indirect ones), and you have to constantly review their products to determine if you should leave them available or not on your website.
The stock levels of your suppliers will affect your ability to fulfill customer orders. Since those levels can drop dramatically and you might end up selling products that you don’t have, customers will be more than unhappy.
This problem can indeed be solved, but it is inconvenient because it adds more work to your routine. You have to rely on different suppliers when you aren’t sure how to access the product again or just wait until the same one has it available once more.
Skip Dropshipping & Say ‘Hello’ to Lead Generation
We will never get tired of telling others: There are many ways to generate money that don’t involve dropshipping difficulties. Even if it can be equally hard, you get many more benefits and better results.
There are many business models available. So, it won’t be difficult to find something less expensive that is worth your time and effort.
We have used many options and can confirm that digital marketing, Amazon FBA, affiliate marketing, and similar methods are all viable. Anything that is online tends to be.
Dropshipping isn’t completely dead, but we wouldn’t bet on it due to the road it is taking, and the future everyone is predicting to the point of trying to move to another niche as soon as possible.
In our personal opinion, it is possible to find simpler business opportunities that don’t have to make you sweat all the time.
Besides the ones mentioned above, we are actually fans of lead generation.
This business model can be done entirely online and requires less investment than dropshipping in the long run. Also, you get much more earnings and are able to call it yours without relying on others.
Why Choose It Over Dropshipping?
We aren’t here to try and sell you something. We just want to let you know your options and make sure you’re aware of the most viable ones based on what you’re trying to achieve.
That being said, we know you must be worried about this option if you’ve never heard of it, but this is what you must know about it:
- It is important to work hard from the beginning in order for your business to grow. But it pays off once you start making money passively in the future.
- Advertisements during your marketing strategies aren’t necessary. This business model relies on organic traffic (free).
- You can be a success regardless of your competence since clients never run low.
- It is stable, and clients will always come to you.
- You don’t rely on third parties and can control every aspect of the business.
But with this and how good it sounds, how can you start? We recommend a complete training program we have used as it covers every step you should go through.
Before you can even finish it, you will generate the leads that are the base of this business model and have some income, but this is only if you are truly interested in the business.
Do you want more info? Click here and access it now!
Here’s Our #1 Recommended Online Business Model:
Interested in starting an online business to build passive income? Check out the local lead gen business model. Click here to learn more.