Is Dropshipping Dead (in 2022)?

Dropshipping is one of the most profitable business models in existence, with a global market worth $197 billion.  That’s bigger than the defence budget of Germany! There are hundreds of thousands of dropship stores and dropship providers all over the globe, from giant marketplaces like Amazon to one-person operations with just a few products.

Dropshipping has low start up costs so almost anyone can do it.  It’s still promoted as one of the best ways to make money online, by bloggers and entrepreneur coaches, because it’s cheap to start and low risk.  More people than ever are starting dropship stores in 2022.  But are they too late?

Is Dropshipping Dead?

Dropshipping began with mail order catalogues that were delivered to people’s letterboxes in the days before the internet.  When mail order companies moved online in the 1990s they took the dropship business model with them. In the early days, dropshipping was only available to business owners with lots of spare cash.  Websites that could handle product listings cost tens of thousands – or even hundreds of thousands – of dollars, so they were out of reach for ordinary people.  The websites themselves were difficult to manage and frustrating for customers.  To make matters worse, many shoppers didn’t trust online stores with their credit card details.

That all changed with Amazon and eBay.  The big platforms made it easy for people to sell online without having to build an expensive website. Dropshipping was about to hit the big time.

Then came AliExpress. AliExpress made it easy for dropshippers to sell products made in China with the click of a button.  Facebook and Instagram became places for customers to browse, explore and shop.  Better payment processes, faster checkouts and stronger security systems made buying and selling convenient, easy and fun.  The dropshipping boom had begun. With literally millions of products to choose from, and hundreds of places to reach buyers, dropshipping hit the big time.  It was accessible to everyone, profitable and easy.

Not any more.  The days of easy money dropshipping cheap products from China are over. Advertising costs have sky-rocketed.  Once-effective customer acquisition techniques have been destroyed by changes to privacy settings.  Consumer loyalty has been eroded by low-quality items and poor customer service.

The old ways of dropshipping are not working.

  • Facebook ad costs have doubled
  • Google’s algorithms have changed
  • Privacy settings on mobile devices prevent re-marketing campaigns
  • Competition is fierce.

With the old way of doing things, the quality of products can be poor and you can spend all your time managing complaints, returns and refunds.

The old dropship model doesn’t create loyal customers; customers often purchase once and never return. When this happens your customer acquisition costs are higher and your advertising costs are bigger. Without a loyal established customer base you constantly need to find new people to sell to.  It’s exhausting.

The Evolution of Dropshipping

Technology has changed and so have your customers’ expectations.  The old ways of dropshipping, using Amazon, AliExpress and eBay are being left behind.

A new era of Dropshipping is dawning.

In 2022 dropshipping is still profitable.  In fact, this year it will be worth almost $200 billion.  And it’s growing at a phenomenal rate.   In just four years it’s predicted to be worth more than double what it’s worth today, with an estimated value of $476 billion.

In 2022, there are new opportunities:

  • consumers everywhere have embraced ecommerce
  • more people are buying online
  • people are buying more and more often
  • smart phones make it easy to browse and pay no matter where you are
  • easy instant payments and buy-now-pay-later apps increase conversions

Dropshipping in 2022

Here’s how to build a dropshipping business in 2022 that will make sustainable profits far into the future.

Create a brand.  You want loyal customers that know and trust your brand and will keep buying from you.  Use your own store-front, not a generic marketplace like Amazon or eBay. With your own store you can control the look and personality of your brand.  Make your brand as premium or as down-to-earth as you want.  Just make sure it has a recognisable personality so that it is memorable to your customers.

Choose products with care.  To succeed in 2022 (and beyond), you need to offer a range of products that fit into a well-defined product category or that appeal to a certain type of person.  This is your niche.  Your niche needs to be one that people are willing to spend money on. Avoid products that are expensive to ship and products with very low price points, because these will make it harder to be profitable.

Provide a great customer experience.  From the moment your customer finds your product or store they should have a great experience.  That means providing detailed information about your products and your policies (shipping, refunds, returns). After the sale, continue providing top quality customer service, answer questions, provide updates about any problems and handle complaints in a timely and professional manner.

Work with great suppliers*. Bad suppliers will damage your brand and make your life harder.  Aim for suppliers who have top quality products and who can provide great service to you and your customers.

Build on a solid platform.  Use a popular, well-established ecommerce platform for your store.  Platforms like Shopify are built to make your life easy and – more importantly – to turn visitors into buyers.  Don’t waste your time or money on website developers or custom-built designs, choose a premium plug-and-play theme from your ecommerce platform, set it up once and let it do the heavy lifting for you.

Have a plan for getting customers.  Will you use paid ads or influencers to get your products in front of the right people? Will you work on getting organic traffic to your website using search engine optimisation (SEO) techniques? Which media platforms does your ideal customer use? You need to have a clear idea of this before you get started.  Be sure to collect customer emails from day one so you can keep them updated about new products and special offers.  A group of loyal customers who will buy from you over and will give you healthy sales  without having to spend as much on advertising.

Pay attention to your numbers. Measure the success (and failure) of your advertising and email campaigns by keeping track of how much money you spend and how many new visitors, customers and orders each campaign generated.  With good numbers you can see which activities worked best.  Armed with this knowledge you know what to focus on and what is not working.

Get Started

Dropshipping has more opportunities today than ever. It’s not the easy path that some online gurus want you to believe. But if you make a commitment to put in the effort and to persevere, dropshipping can bring you profits, fun and freedom.

Still not convinced? We found this fantastic article that covers all the ins and outs of if Dropshipping is worthwhile doing. It talks more about the benefits of Dropshipping, the downsides and a few awesome tips on how to make your dropshipping business a success. Here’s the link:

*Want to know how to find great suppliers for your niche?

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