Every day I hear from entrepreneurs that often get a bad feeling that the online business model could be on their last legs. One main cause is the fact the technology is growing at neck break speed, which means that you’re trying to make money with certain online business models that simply become irrelevant.
Well, the main reason is that technology is both a blessing and a curse. On the one hand, it’s good for customers because it provides great new methods to buy products from businesses. On the other hand, these new methods eradicate old ones almost too fast.
For instance, a little more than 10 years ago, SEO (Search Engine Optimization) was pretty easy, but since Google has made all these updates to their algorithm, getting a site ranked to the top of search engines relies more heavily on the content along with other methods.
On top of that…
CPC (cost per click) prices on platforms like Google Adsense and Yahoo are going through the ceiling so people are opting for other techniques.
So, the issue that you’ll run into is that these business models will become obsolete.
So how does this affect dropshipping?
Well, you’ll have to do some research and find which areas of dropshipping still is profitable and why.
Which methods they’re using and how much it’s costing them.
And which marketing platforms make it easy for users.
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Table of Contents
What Is The Dropshipping Business Model?
Dropshipping is a method of distribution in which a store (typically online) doesn’t keep an inventory of the products they sell. Rather, these store use this dropshipping model in order to buy the product from a 3rd party vendor (Amazon, AliExpress, etc) and has the product sent to the customer directly.
Is The Dropshipping Business Model Still Profitable?
People usually ask us if dropshipping is dead. One quick way to know this is to look up how it’s doing on Google Trends.
According to Google Trends, you’ll see that people looking up information on dropshipping is steady and at the moment rising.
In addition, we continue to see popular programs like Dropship Lifestyle continue to grow.
The trend highlights five-year data and shows how popular it has become in the last few years alone. This also presents one more notion that dropshipping was a business before AliExpress became popular. Let’s see if AliExpress was popular five years ago or not.
In the image above you’ll see that the 5-year data shows that dropshipping has been on a progressive rise. One thing about dropshipping that you’ll see is that dropshipping has been around for about the same time as AliExpress. Now let’s look at a comparison of dropshipping and AliExpress.
You’ll see that within just a few years ago, dropshipping has been closing the gap because the popularity of AliExpress is on a decline.
Of course, we often hear people talk about how dropshipping is breathing its last, but this simply isn’t true since dropshippers just find another way to operate.
For the longest time, AliExpress was the king of the hill in dropshipping, but as of late, dropshippers have found ways to deal directly with product wholesalers.
Similarly, there are many different forums available where people are trying to convince the buyers and clients that dropshipping isn’t dead.
In addition, if you take a look at discussion forums across the internet, you’ll see people talking about how dropshipping is clearly not dead.
Consider the following:
You see questions like these all the time in Q&A forums like Reddit and Quora. Here are some replies that dropshippers made about dropshipping being dead.
So you can see why dropshipping is still thriving in 2021. For that matter, if you want to start a dropshipping business, now would be a good time, because…
- The world love e-commerce
- People buy online all the time
- Merchants are more willing to work with dropshipping businesses
- The news provide good publicity for ethical dropshippers
- Overhead is low so making money is easier with good marketing campaigns.
The money being made with dropshipping have topped $4 Billion. This is a 7%/year increase over the previous 10 years.
Let’s say you’re ready to start a dropshipping store and aim to earn $100,000 per year from it. How many products should you sell?
The first things you should do are:
- Do your market research.
- Determine your drop shipping costs.
- Lockdown relatively competitive factory pricing
Actually, there’s no one reason:
- Delays in shipping can cut into the amount of customers to your stores
- The product quality may not be what was advertised.
- The wholesaler may send your customers something that they didn’t order
- You could be liable if your wholesaler uses logos that are trademarked.
- It’s hard to brand your dropshipping store
How do you address these dropshipping issues?
- Create a strong rapport with good suppliers who sell quality products.
- Do your market research and only sell products that are trending up which will lower your shipping costs.
- Sell products that are high ticket items.
Is Dropshipping Legal?
Dropshipping is basically just a customer purchasing a product from a supplier. You’re just the middle man handling the product.
Of course, if your supplier has legal issues, you don’t want to make them yours. But dropshipping on its own is a legit business model.
Though an air-tight dropshipping contract can’t hurt.
There’s no U.S. law that is in place to keep you from opening a dropshipping store, but other countries’ laws may be different. But one thing that all these laws have in common is:
You can’t trick someone into buying something via bait and switch. This is illegal. So make sure that you’re dropshipping what the customer actually bought.
Or else, they can file a complaint against your dropshipping stores, even though your wholesaler is the one at fault.
Before You Market To Another Country, Know Their Laws
Some countries may not approve of specific products. So, make sure that you’re in compliance with other countries before you begin your marketing campaigns.
For instance, some middle eastern countries have religious objections to certain products (ie, India forbids the importing leather). So, be certain that your business is legally compliant.
Can I Drop Ship From The Comfort Of My Home?
Yes, you just need is a laptop and connection to the Internet.
Is Dropshipping Saturated?
It’s all about competition. When people ask “Is dropshipping saturated”, the thing they’re really wanting to know if the market is too saturated.
You see, dropshipping isn’t some get rich quick scheme that just recently came out. I know people who’ve been doing this since the early 80’s.
People get the wrong idea that since dropshipping has been around for so long, there’s no more market share to be had.
This simply isn’t the case.
In order to make the most of the dropshipping business model, you always want to have new suppliers with the best trending products.
Here’s the deal…
Products that were popular back in the day, may not be popular now… some might have made a comeback, but there are always others products that are trending better.
Products in various industries can always sell to the right market, and they can sell very strong. Think about the Rubik’s Cube. This product sold like hotcakes in the 80’s… fell off for a while, then made a monster comeback. Some really unique products always have a tendency to be reborn.
Can I Still Get Dropshipping Products From AliExpress
Yes, and this is how the numbers can work out for you:
Let’s say you buy a product from AliExpress and sell it at $30, but your marketing and shipping costs run you $20. You’re profit from the product is $10.
You’ll need to sell approximately 1,000 products per month to make $100k/yr.
1,000 order X $10 profit = $10k/month
12 months X $10k/mo = $120/yr.
Using these numbers, to make over $100k/yr, your dropshipping store would need to move 34 products order every day.
Is Dropshipping Like Affiliate Marketing?
I would be doing you a disservice if I didn’t layout the differences between dropshipping and affiliate marketing.
Here’s a full breakdown of the similarities and differences between the two.
So what would you need to do to make $100k with affiliate marketing?
With affiliate marketing commission are paid on products also. So, referencing the numbers above, if the commission if 5%, you would have to earn $10k/month which $340/day.
To accomplish this, one of your customers would need to by a product at $100 for you to get a $5. So, if you wanted to make $340/day, your customers would need to by $7k/day or products.
Which one is harder?
I think it’s pretty obvious what the answer to the question is. The Dropshipping business can be quite lucrative.
Can I Build A Dropshipping Store On Shopify?
Dropshipping with Shopify makes it incredibly easy for sellers to launch ecommerce stores because they don’t have to manufacture products, maintain inventory or handle shipments.
What Are Good Niches And Products To Get Into?
Some niches that are still profitable are:
- Power Tools
- Tech Supplies
- Lifestyle Niche
- Beauty and Health Niche
- Drones And Camera Accessories
Profitable dropshipping products include:
- N95 Respirator Masks
- RC Cars
- Magnetic Charging Cables
- Pocket Language Translators
- Posture Correction Belts
- Waterproof Phone Cases
- Portable Mini Air Conditioner
- Wireless Chargers
- Car Phone Holders
- Scalp Massagers
- Instrument Repair Tool Kits
- Roller Elliptical Massagers
Is Search Engine Optimization (SEO) Dead?
No, SEO is very much alive; and with over $72 Billion is sales as a result I don’t see it going away anytime soon.
Can I Drop Ship With Ebay & Amazon?
When it comes to dropshipping, one thing that can be really confusing is whether it can be done with Amazon and Ebay. Think of it this way… the dropshipping business model isn’t locked to any particular brand. Whether you using telephones or walkie talkies, it’s still dropshipping.
It doesn’t matter if it’s eBay, Amazon or any other supplier that makes the news… you build a relationship with them, you can start dropshipping for them.
Just follow their guidelines.
Ebay will not bans all products from China and users must be a resident of The United States.
Amazon takes a hard line that their products should more than 7 days for delivery.
If you can handle this, then Amazon and eBay could be your golden ticket.
Amazon and eBay have many people that sell products through their dropshipping business. Some may only sell through Amazon, some only through eBay, some for both. They do this juggling act because they know how to work the program.
Why Do A Record Number Of Dropshippers Quit In The First Year?
People fail at dropshipping still all the time… so let’s lay out a few:
- Picking the wrong niche is one big reason. I once knew a guy that tried to target his drospshipping stores to a specific home appliance in a specific area in the U.S., but couldn’t sell a single one.
- Impatience is another reason. Some dropshippers just don’t see the necessity in setting up a dropshipping store. If this is the case, you might want to consider gambling with your money, you’re odds are better. Have you ever heard that patience is a virtue… well in the dropshipping business, especially if you’re a newbie in dropshipping, it’s a requirement.
- Budgeting is a 3rd reason. While it’s true that you won’t need a lot invested into your dropshipping business to get started, you still need to keep a tight budget. For marketing purposes, you’ll need to budge somewhere in the neighborhood of about $350-400 every month for advertising your store. If you can’t swing this, then it may not be the right time for you to get into dropshipping.
- Lastly, One of the biggest reasons so many dropshippers fail at this is that their dropshipping stores aren’t built on the correct platform for the products they’re marketing. Some platforms that are the best for marketing your dropshipping products are Google Adwords, Facebook Ads and Bing Ads. Basically, if other dropshippers are selling their products at a pretty high volume through their stores, but yours is failing miserable, then you’ll want to try changing up your marketing platforms. Split testing is always a good idea.
Are There Any Alternative Business Models?
I’m glad you asked.
Imagine you could set up a dropshipping website and were able to pull in so much traffic to that site that your products were selling off the shelves so well that you didn’t have to run any Google or Bings Ads.
Well, this is not a dropshipping business model.
It’s more like Digital Real Estate.
What Is Digital Real Estate?
Now, don’t get the wrong idea, this is not fixing and flipping junk houses.
I’m talking about creating small website, kind of like dropshipping store sites, but instead of selling products from Amazon, you’re selling services to local businesses.
It’s specifically called Local Lead Generation.
So let’s say you know a Tree Service guy in your neighborhood. You put up a small website for tree service in his city, then rank that site high in the search engines.
Then you forward all the calls you get to him.
But there’s one thing missing…
How Do You Make Money With This?
Simple… Passive Income.
Let’s say your Tree guy gets 10s calls every month. Each job that he does averages him about $1000. As part of your agreement, he would pay you 10% for each job.
That’s $100 x 10 jobs = $1,000.
$1,000 just for forwarding a phone call… every month.
What Do I Do Next?
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