Before diving into the profitability of dropshipping, let’s talk about what dropshipping is all about. Dropshipping is a business model that has gained prominence among young entrepreneurs because of two main things —one, how it is linked to the internet, and two, the ease and expedience of the system.
Dropshipping is simply a retail fulfillment method. The main difference between the usual retail method and dropshipping is this — in the latter, the seller does not need to own an inventory of his or her products.
That means the sellers do not need to store their stocks and more so, they do not need a huge capital to start the business. In order to fulfill orders, the sellers just purchase stocks as needed or when needed.
Basically, this is how it goes — the seller buys the item from the supplier, which is the third party. The third party then ships the item straight to the customer. It’s trouble-free on the part of the sellers because they do not need to do the packing and the shipping of the product — including the storage.
Now let’s go back to the question — Is dropshipping profitable? The quick answer is — Yes, it can be profitable. Dropshipping is not too risky as this business method allows the sellers to sell items without laying upon themselves large costs. Due to these lower costs, dropshipping becomes profitable and more expedient compared to other business systems.
It is easier for entrepreneurs in the dropshipping business to try out their ideas with more pros and fewer cons. If you plan to go into this, you will have more leeway in picking out what products you want to sell because as mentioned earlier, less capital is needed. You don’t need to come up with a huge amount of money in order to set up your own online store. The investment is very minimal and the profits quicker.
Back in the day, sellers needed to invest thousands of dollars in order to purchase stocks for their inventory before they were able to push the items in the market. Today, through drop shipping, you are not obliged to buy the product until you have completed a sale and your buyer has already paid you in full. As mentioned, it’s less risky and there’s no need to shell out a huge capital.
Because of its unique system, it’s easier for dropshipping sellers to get started. It’s also easier to maintain your online store as your overhead costs are minimized. There is no need to pay for a storehouse, no need to pack and ship your orders, no need to painstakingly do accounting and an inventory of stocks, and there’s no need to handle the hassle of returns and inbound deliveries.
It’s definitely easier to manage and definitely easier on the pocket. All you need to do is invest in a good laptop and a stable internet system. You can set it up in the comfort of your own home — there’s no need to pay for rent on that either.
Another great perk about this is you can work anywhere — as long as you have your laptop and you just have to make sure you have an internet connection that is not wonky.
You can even test if your product will work, without the fear of failing. Because there’s nothing to lose except your time. Let’s say you tried to sell ladies’ accessories and you realized your target market is not interested in it—then you can just stop pushing it and find another product to promote to your market. You can do it with a drop of a hat and without spending a ton of money. Another thing is you can sell different products to different target customers all at the same time without spending a dime.
Finally, it’s easier to expand your dropshipping business without the fear of losing huge capital investments. Your sales will grow and obviously, there will be additional work. But with this system, you can dodge the so-called growing pains in starting a business. Of course, there’s no 100 percent easy business, but definitely, in dropshipping, the costs are lower, the work is faster and the difficulty lesser. Hence, it can be profitable.
However, bear in mind that there is no get rich quick route in any kind of business. To be successful in this dropshipping business, your time, effort and your hard work are necessary to take your business off the ground and to make it successful and sustainable.
Make sure you do it right and you practice methods that have been tested and proven to achieve favorable results. Of course, you also need to make a thorough assessment before jumping right into the dropshipping business — or any business for that matter.