Why do Most Dropshippers Fail in 2023
Are you thinking about starting a dropshipping business?
You probably want to get started because you saw a flashy YouTube video of some young guys or gals livin’ it up in LA not having to do any kind of work because they have a fully automated dropshipping business and you were wondering maybe you could do the same thing.
We don’t blame you, it’s totally normal for anyone to want to get started in a business opportunity like that.
And we don’t wanna be jerks or anything, but we do want to kind of bring you back down to earth…
This review has been thoroughly researched with information and testimonials that are available to anyone in the public. Any conclusions drawn by myself are opinions.
- Low Barrier Of Entry
- Work From Home
- Multiple Suppliers
- Low Profit Margins
- High Competition
- High Advertising Costs
Why Listen To UsMy name is Josiah, and this is my Dad, Joel.
Together, we make up the team here at Scamrisk.
If you’ll let me bother you for two minutes, I’d like to quickly explain why I’m even here writing this review.
In early 2020, I had just graduated from college & had no real career prospects.
I knew I was destined for something more, but I had no clue how I was going to make it happen.
I had this sinking feeling in my gut all the time… like the “big man upstairs” had accidentally given me the version of life where I’d be mediocre forever, instead of the one where I was, ya know – happy & fulfilled.
I had fiddled around with some different online businesses in college:
Some random MLMs, a bit of affiliate marketing, a (failed) dropshipping store or two, all the usual suspects.
Even my dad had been involved in MLMs back in the day… selling knives & other random nonsense people (probably) didn’t need.
All I really wanted was to find something that was going to actually work for me.
Maybe those things had worked for others, but for me it all turned up a fat “0” in the bank account department.
So I searched! And searched… and searched… and searched…
And eventually, I somehow stumbled upon a program that promised to help me build an income online (read about it here if you’re curious).
I didn’t really want to be “rich”.
The thought of making a reliable $5K per month & not having to worry about clocking in to a 9-to-5 ever again was all I needed.
Sure, there were people in the program doing high-6 and low-7 figures per year… but that wasn’t what I was out for.
I just wanted to provide freedom for myself, and if I was lucky, take my family along for the ride.
Fast forward a few days and a few phone calls & I was enrolled!
Here’s the first “money making website” I put up:
I built that site in 2020, and it still makes me $1,500 per month. It’s a basic 5 page website I built based on a template the program provides.
The best part to me? My dad and I get to do it all together!
So between the:
Is why I recommend local lead generation as my #1 business model for making money online.
Sure, it takes some work and dedication – but anyone that tells you that there’s a business out there that requires no work is selling you a lemon.
I’m not saying you need to sign up for the same program I did, but I would definitely recommend giving the business model a peek!
There are some things you need to understand about this business model and yourself before you fully commit to dropshipping.
Today we're going to go over the ins and outs of dropshipping to see if this really is something for you, and we’ll aslo talk to you a little bit about an online business model that just destroys dropshipping in logistics and profits…
Dropshipping isn't too different from most online businesses, especially in the world of eCommerce business.
Sure, the dropshipping industry alludes to great income potential that you may not see in other industries, but at the end of the day, no magic bullet overcomes the massive pitfalls of this business model.
Let’s get something clear:
There is NOTHING passive about dropshipping, no matter how well most course creators sell the dream.
If you want that travel-the-world-making-money-while-you-sleep-laptop-lifestyle, dropshipping isn’t for you.
To run a successful dropshipping business, you need to be constantly on the lookout for new dropshipping products.
Scouring the internet for hot trends and trying to find the next fidget spinner will take hours out of your day.
Not to mention, it’s not enough to just have the hot new product...
You also need to get the customers.
That means ads…
Lots and lots of ads…
Testing, tweaking, targeting, spending thousands if not tens of thousands of dollars before breaking even.
Not to mention, Facebook hates dropshipping, meaning one of your top traffic sources could shut you down at any time.
All of this leads to a very stressful life, not a lot of money, and a lot of time wasted.
Time that could be better spent so you can actually live the life you want.
Now, what if there was a way you could build a passive income stream that’s actually passive?
An income stream that doesn’t require:
- Physical Products
- Low Margins
- Long Wait Times
- Angry Customers
- Thousands of dollars testing different ad campaigns
An income stream that brings in consistent revenues every single month (from a couple thousand dollars to well over $10,000)?
An income stream you could actually build in your spare time, and grow as large or as small as you want to, without having to spend hours a day running ads, researching products, and trying not to get banned by whatever platforms you’re using?
If that sounds like something you’d be interested in, check out Digital Leasing.
This is nothing like dropshipping, and that’s probably a good thing.
However, if you’d still like to know more about dropshiping, keep reading.
What Is Dropshipping?
Dropshipping is an online business model where you sell products without stocking inventory. In this business model, a customer purchases from your ecommerce store while a dropshipping supplier handles the fulfillment process. With efficient market research, online tools and reliable suppliers, the dropshipping model can be very lucrative.
But, today we're going to talk about the Top 5 reasons many dropshippers fail...
So, let's start with #1...
Picking The Wrong Niche
Picking the wrong niche is hands down going to be the biggest is with dropshipping.
Look picking a niche for anything can be super stressful and there’s two ways this has predominately gone wrong.
The first is that most dropshippers pick the wrong niche from the beginning (likely due to poor or no market research), and when sales don’t come through, they don’t want to admit defeat and instead shell out even more money on paid advertising, eventually leading to a tanked dropshipping biz.
Sometimes there’s just a bad niche, in fact, a lot of them will not work out for you.
Listen to any kind of dropshipper on any blog or youtube who does one of those “Dropshipper tells all” styled videos…
Odds are they’re going to tell you that they’re typically successful in 1 out of every 10 niches they go into.
For them it’s not that bad because that one niche usually makes up for the 9 other failures, but let’s get real here for a minute…
Most people, and probably yourself reading this, don’t have the 10-20k it would take to successfully launch 10 different products.
Paid traffic is no joke and it can run up a bigger tab than a party in Boston on St Patty’s Day!
The second is to pull the trigger...
Let’s face it.
If you're trying to earn your way to financial independence, odds are you’re currently financially dependent on your 9-5, so you don’t have a whole lot of money to play with.
What we’ve seen a lot is that people will pick two or three good prospective niches but never take action on them… a failure to launch if you will… because they suffered from paralysis by analysis.
Lack Of Patience
Another reason why businesses fail fail is because they’re not patient enough.
You see, people will get very excited and super hyped up when they first start. And that’s not a bad thing… but they oversimplify everything about it.
Between the research, testing, and launching… a lot of time is going to pass. It’s not just as simple as hopping online, dropshipping a type of product and waking up to $1,000 in your store account.
In fact, most dropshipping stores don’t turn a profit for at least 6-12 months… and that’s not 6-12 months of putzing around, that’s 6-12 months of going at it hard, day after day after day.
You’ve heard of new years resolutions right?
And you know how quick people forget all about them?
The same goes for dropshipping.
A majority of people quit 30 days or less because all the see is a money pit when sales don’t come in.
Lack Of Capital
Unfortunately, sometimes people pick the right niche, and have the patience, but they just don’t have enough capital to last long enough before they turn a profit.
You see most people like the idea of dropshipping because there isn't much initial investment upfront for the products themselves.
We’re talking maybe a couple hundred bucks.
What people really don’t factor in however, is paid traffic. Yeah, this stuff really sneaks up on you.
If you google it like we did, you’ll see that most dropshippers recommend spending $5 a day in paid advertising.
With all due respect… that’s just kinda what they say to rope you in.
If you listen to any of the dropshippers on youtube, they’ll tell you that they spend thousands a month, a few even thousands a DAY in paid ads.
You’re not going to get rich off of a $5 dollar ad spend.
Has it happened? Sure.
Is it the norm? NOPE!
That being said, most of you guys aren’t going to be able to spare thousands of dollars a month in ads to turn the 6-figure profit that most of these youtube dropshippers flaunt around.
And when a lot of people come to that realization, they end up quitting and their dropshipping business venture never really gets off the ground.
Wrong Platform Choice
The best solution to this problem is to use multiple platforms to market the product and the one that provides the most ROI, use it further on.
Another common reason why dropshippers will fail is because they choose the wrong ad platform for their target market.
If you waiver from those popular platforms, odds are you aren’t going to see too much sales.
Beyond that, you could also have a horrible sites design.
Most people set Shopify dropshipping store and that has been beneficial to numerous dropshippers.
But if you try to make it your own, or try some really obscure website builder no one has heard of, it might not look professional to people and thus you won’t see sales nearly as high as they could be.
Misunderstanding Of Profit And Loss
Another reason why dropshippers fail is that they have a huge misconception of how much money they might make from the start.
On all the youtube videos or blogs promoting some dropshipping course they’re all to happy to share their screenshots of $100,000 in sales or even a million in sales.
But here’s the thing…they’re not pocketing that amount.
And if you ask us, that’s kind of misleading.
Their profit is made in the margin.
For example, let’s say that they sell a t-shirt for $25 on their site, when a purchase comes through, they find that exact t-shirt, and buy it for $20.
They make a $5 net profit… but out of that will likely come other expenses like shipping and ad spend refill.
So, as you can imagine, the real profit from all those big numbers is actually going to be quite small.
And that’s the misleading part, they’ll show you all these big numbers and all these crazy yet real screenshots… but that’s not their take home earnings they are leading you to believe.
Dropshipping Pros And Cons
- Low Barrier Of Entry: You can literally start a dropshipping online business overnight.
- Work From Home: You really can work entirely from home and never have a boss.
- Multiple Suppliers: You’ll have no shortage of suppliers to work with for several products.
- Automation: You can automate almost every process of dropshipping to free up your time.
- Low Profit Margin: As you can tell from earlier in the article, China is squeezing profit margins to extremely low levels.
- High Competition: Because of low barriers to entry, everyone hops in the market and there are literally millions of people selling the same products.
- High Advertising Costs: Whether you do SEO or Paid Ads, your costs are going to be in the thousands each month. Odds are you will spend more money advertising for your products than actually buying products.
- High Shipping Costs And Delayed Shipping Times: Thanks to the pandemic, there are all sorts of new protocols that have been put into place. This means more costs passed onto you.
- Volume: You need to make a high volume of sales just to turn a profit. In fact, you might as well just try affiliate marketing instead (sarcasm) because your profit will be just about the same at the end of the day.
Clearly the list of cons outweighs the pros…but now let’s take a deeper look into some frequently asked questions regarding dropshipping.
Is Dropshipping A Scam?
So, is dropshipping a scam? Not at all. You can make money with this model, but it’s definitely not as easy as you might think.
There’s a ton of work to be done upfront, no real guarantee of success, and – most importantly – you need to do a ton of volume to make any real money. Now, there’s nothing wrong with front-loading the work and making the money later.
But if you’re grinding it out for 3 months, $3-5k in the hole on ads (because that whole “get started with $5 a day” thing is total BS) and then your reward is 15% profit on a $12 product (which comes out to $1.80), it’s not really worth it.
What if, instead, you could do that same 3 months of work (in your spare time), and your reward was a $500 to $2,000 payment that came in every single month? And what if you actually didn’t need to wait 3 months?
What if you could get started today and have your first payment in a week? And what if you could double it next week?
Well, that’s the power of Digital Leasing.
And, unlike dropshipping, you can legitimately do this from anywhere. It’s a true lifestyle business.
Your laptop and an internet connection is all you need. Some of the most successful students in this program run their entire 6-figure businesses from:
- A camper in the middle of the woods
- A beach chair on the water in Mexico
- A small villa in Greece
They’re able to travel around, living their lives first, and focusing on their income second.
Because even if they stop working for an extended period of time, the money keeps coming in.
So adventure, memories, and experience are the top priority. And they never have to worry about how to pay for the next trip, or consider asking for time off.
If this sounds more like the type of life you want to lead, just click here to find out more about Digital Leasing.
What Does The Internet Have To Say?
Now let’s take a look at what people on the Internet have to say about Dropshipping. We’ll start with Reddit first…
Hi, I have been working on my Dropshipping business for about 6 months now. I know it doesn’t happen overnight. So far I have a general store on Shopify. I sell winning products and digital products. I have not made 1 sale yet. I am working on the marketing aspect of all this right now while working a full time job. I just wish I could at least know just one person who is doing this successfully that is NOT a YouTube/TikTok influencer guru. It’s really hard to tell if they are actually successful in Dropshipping or just making & selling their brand/courses and things like that. I’d love to chat with someone who is actually successful with all this, and if your kind enough to chat with me directly would love to just learn and network if you have time. Thank you! – ChancePlaintain7000
Here are a few replies…
I would say yes, totally. It is still a viable option. However, it’s not a “get-rich-quick” scheme. Like any business, success depends on hard work and dedication. You must do your research and find the right products to sell. You must also be prepared to invest in marketing and advertising to reach your target audience. I always recommend focusing on building a community. Probably using social media and growth services such as ascend viral and you’ll be comfortable with your audience to use them as your reliable source of quality traffic for the longest term. Also, you should be prepared to provide excellent customer service to ensure customer satisfaction. I hope you get the help you are searching for. Best of luck. – OkWillow9976
I related to you. I’ve always want my own business but despite doing my homework I really don’t know what I’m doing. I think you need help from an expert, that’s what I’m looking for. – Middle_Department564
I did have some good $500 days with different products but, ultimately stopped because I was losing a lot of money testing products with paid ads – lanikers
As you can see, some individuals were able to run a successful dropshipping business, but others are stuggling. It really is a roll of the dice.
Setting up your own online store can be a profitable business model. However, the most successful dropshipping companies do spend quite a bit of time and money each month on dropshipping niche research.
They invest heavily into researching suppliers, marketing strategy and search engine optimization.
If you’re wanting to get started, you should set up your limited liability company (LLC).
While you can get the dropshipping business model work, it is hard to manage a successful dropshipping store at scale… not to mention all the competition and stolen ads.
That’s why we still recommend Digital Leasing. There is less competition and better margins to be made!
Are There Alternatives To Dropshipping?
Yes, there are plenty of other business models to choose from if you want to pursue making money online. Here are just a few:
Our #1 Recommendation In Making Money Online In 2024
Our review team has spent months researching, reviewing, and vetting dozens of business models and thousands of programs.
While there may be no “perfect business”, the research IS conclusive: Digital Leasing is the #1 online business model for those just starting out.
Whether you’ve never made a dollar online, or you’ve been in this space for a while but never really “made it,” Digital Leasing is for you. Why?
1) It’s Flexible: got an hour a day? You can do this. Ready to drop everything else and dive in full time?
You can do this. Yes, the more time you put in, the faster you see results. But even with a little time each day, you can move the needle in a Digital Leasing business.
And because this system is so flexible, you don’t have to constantly be working to make more money. It’s called PASSIVE INCOME because if you stop working, the money doesn’t.
Imagine taking 3 months off to just tour around Europe, rent a cabin in the woods to write a book, hike the Appalachian Trail, or live on the beach and surf all day. This is only possible if you have an income stream that’s not tied to your time.
2) You Own & Control EVERYTHING: With dropshipping, you don’t really own anything. Sure, you may have your own dropshipping business, but you have no control over the quality of the products. You don’t even own the products because they go straight from the supplier to the customer.
Yes, if you’ve got a Shopify store, you technically own that. But if every ad platform suits you down, you’ve got a dropshipping store with no customers. Which is literally worthless.
With Digital Leasing, you own the assets, which means you have all the power and all the control.
3) Little To No Startup Costs: It’s possible to get into Digital Leasing with zero dollars upfront.
Because, using the strategies outlined in this program, you can get a client to pay you BEFORE spending a penny out of your own pocket…even before you do any work.
Even without getting paid in advance, you can have your first Digital Rental Property up, running, and generating profits for less than $100.
4) No Inventory: Ok, so technically you don’t have to worry about inventory since you’re not filling up your garage or a warehouse with products.
But, you still have all the headaches of a physical products business.
Since most dropshipped products come from China, you already have a 2-3 week wait time from when a customer places an order.
But right now, with global supply chain issues, your customers would be lucky to get anything in less than a month.
Imagine finally landing your first dropshipping customer after months of experimenting, and then getting hit with a refund request or chargeback because they had to wait 6 weeks to get their order.
With Digital Leasing, a 100% online business, you never even have to think about that risk.
5) Easy To Duplicate: Ok, here’s the best part: once you have your first Digital Rental Property up and running, you can literally DOUBLE your income with a few clicks, a couple keystrokes, and a single phone call (and you don’t actually need the phone call).
Remember: each Digital Rental Property is worth $500 to $2,000 a month in semi-passive income (over 95% profit). Every time you decide to create another one and increase your income, it gets easier.
Because you have more knowledge, more experience, more results, and more momentum. If you wanted to double your income with dropshipping, you’d have to double your inventory, your profit margins, OR your average order value.
And, guaranteed that’s a lot harder than a few clicks and a few minutes of your life.
6) Make Money Helping Real People: This part is what makes it all worth it. 99.9% of the time, dropshipping provides no value to anyone but the seller.
In a lot of cases, it has a negative impact on the customer because of poor product quality and an overall bad experience (i.e. waiting 6 weeks to get your order). And that makes it pretty hard to sleep at night.
But with Digital Leasing, you’re actually helping people by solving your clients’ biggest problem: Small, local businesses need more customers, and with Digital Leasing, you are unleashing a flood of happy, paying customers for these businesses.
You make money by helping them make money. Not a big, faceless corporation either…a small business owner who’s using that money to put food on the table for their family, start a college fund for their kids, or take care of a sick parent.
Once you see how Digital Leasing makes a real impact in the lives of real people, you’ll sleep like a baby with a big smile on your face.
Now, the choice is yours. You could continue browsing, looking at ways to run a business online like Dropshipping which could one day make you money.
You could continue researching, never making a decision.
OR, you could take a look inside, consider what you really want, and join a program that makes your dreams a reality. At the same time, joining a community of over 2,000 successful students that are living life on their own terms thanks to Digital Leasing.
A consistent, reliable, semi-passive stream of income that doesn’t depend on you or your time to keep producing profits.
All while genuinely helping real people who are grateful and happy to pay for it. If this sounds more like what you want out of life (or if you just want some nice side income), click here to learn more about Digital Leasing.
#1 Business Recommendation
We each make around $10,000 per month with the help of this system.yes, show me more