Is Dropshipping Really Worth it? 3 Facts That Prove its Profitability
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As the eCommerce industry has been taking over the globe at full speed, billions of businesses have been following in its footsteps, switching from executing functions while being physically present at their workplace to a convenient online work mode. The reasons behind this unanticipated fast change are numerous, to which we can add the vast development of the digital world, causing things in the eCommerce retail section to really start evolving abruptly without any warning. You can learn further about this by checking out these dropshipping statistics.
Once modifications started taking place, entrepreneurs quickly began altering their business plans so that they’d allow them to do their jobs remotely while still enabling them to accomplish their tasks and reach their targets efficiently. One such business model that has been turning heads for quite some time now is the dropshipping method, both the traditional and reverse dropshipping form.
Despite the excellent reputation dropshipping is enjoying, there’s still one question that has made people feel suspicious and insecure about launching a dropshipping store: is dropshipping worth it? So, in order to put your minds to rest, we’ve gathered a few facts that illustrate this model’s profitability and have supplied you with a couple of statistics to support our points of view, as well as a detailed clarification fo what is dropshipping.
How does dropshipping work?
Dropshipping is a type of eCommerce business model which entails managing an online store without the typical tasks that come with running a regular one, the most important thing being not having to take care of product inventory. Instead, once a customer purchases an item from your store, the order is directly forwarded to your dropshipping supplier, which takes complete care of the delivery process by dispatching the products from their warehouses.
Additionally, in order for your clients to have full access to the merchandise, you’re offering, many dropshipping suppliers provide entrepreneurs with an automated service, allowing them to import the product catalog into their stores and benefit from automatic inventory updates and order placement.
A similar method was used by mail-order companies in the 60s and 70s, which enabled customers to put orders through a simple phone call, while the catalogs were sent by mail on a regular basis. In the 1990s, with the internet let out in the outside world, online shopping experienced an unimaginable boom, representing a prominent change that enabled the creation and evolution of various eCommerce models, including dropshipping.
Is dropshipping legal?
Yes, dropshipping is totally legal. This is one of the main things beginners in the eCommerce industry question. Many often express doubts about starting a dropshipping business because of the way this business model works: generating profits with no product inventory and minimal start-up costs. Luckily, we’re here to debunk all myths.
As discussed above, dropshipping is a fulfillment type of business model where dropshippers don’t deal with the products themselves but through a dropshipping supplier. Just like many traditional stores stock their inventories by ordering their products from vendors or manufacturers, dropshipping stores do the same thing with the exception of not selling them physically.
Thus, having this in mind, dropshipping is an entirely legal business that provides online stores with a convenient way to sell their merchandise. Depending on the countries you’re dropshipping to, there might be, of course, a few laws and regulations you may need to take into consideration in order to ensure your online business runs smoothly. But other than that, launching a dropshipping store is a legitimate eCommerce retail method.
Is it profitable to dropship?
Yes, dropshipping can be quite a profitable business idea. Let’s take a look at a few well-researched facts that represent solid evidence of the lucrative nature of dropshipping.
Economical storage management
As we’ve already mentioned earlier, dropshipping doesn’t require any inventory handling as your supplier takes all the responsibility for managing the storage and dispatching the products to the customers. That being the case, you’ll be able to avoid the trouble of renting and running a warehouse, something that can be pretty costly.
To illustrate, a report by Statista displays the prices of renting a warehouse in the European logistic real estate market. According to the study, in 2021, London was the most expensive city to rent a storage room where business owners are expected to pay up to 197 euros per square meter per year. England’s capital is followed by the Scandinavian metropolises Oslo and Helsinki with 135 and 120 euros respectively, and Dublin and Birmingham with a little more than 100 euros per square meter for a year.
Having a virtual store will open your doors to an incredibly large customer network, giving you the opportunity to expose your business to new markets across the globe and, consequently, enabling you to increase your dropshipping sales.
For instance, research conducted by Statista on the fashion eCommerce market shows that in 2022 the market’s global online sales have reached well over 770 billion USD, expected to keep on growing and generate more than 1 trillion USD by 2025. This study demonstrates how much online shopping has developed and expanded, alluding to the fact that opening an online boutique based on dropshipping and selling to an international audience is a worthy investment.
In fact, this is easily achievable by finding dropshipping suppliers capable of providing you with worldwide shipping, such as BrandsGateway, for example, thus, supplying your store with a sweet business deal.
Scalability includes everything that contributes to growing your business:
- raising brand awarenessș
- promoting your store’s productsș
- retargeting costumes.
With online purchasing becoming a preferred shopping form for many consumers out there, in comparison to the physical ones, dropshipping stores are considerably much easier to scale. This is because in order to expand your eCommerce business there’s no need to hire extra staff or open new stores, for example. By being mindful of their goals and implementing smart marketing strategies, dropshippers can experience speedy scalability, allowing them to generate their target profits much quicker than usually anticipated.
Statistics that confirm dropshipping is worth it
We finish this article by supplying you with a few statistics that assert that dropshipping is worth it. In order to provide you with reliable data, we’ve turned to Statista, a database company conducting well-grounded research on various topics, including eCommerce retail and dropshipping.
Statistics about the dropshipping market value
Throughout the last decade, the dropshipping business model has undergone incredible positive changes, experiencing a great rise in sales, which can be demonstrated by the following study carried out by Statista. Looking at the graph below, we can observe a clear increase in the value of this market on a global scale.
From being valued at nearly 130 billion USD in 2020, in just 2 years, the dropshipping market reached approximately 197 billion USD. In addition, within the next four-year period, the study forecasts that the dropshipping value will surpass over 470 billion USD.
Statistics about platforms offering dropshipping services
Nowadays, aspiring dropshippers have the possibility to turn for help to many platforms offering convenient assistance such as online store-building services. With a single Google search, one can come across an abundance of such companies, saving business owners time and effort they could invest in something else. According to Statista, Canadian eCommerce platform Shopify appears to be among the leading companies offering these services. In 2021, it’s estimated that Shopify has dropshipped nearly 1.9 million products, making the enterprise quite a popular place for dropshippers.
If you decide to use Shopify to build your business, it would be smart to look for a supplier that can offer you a plugin for Shopify-based stores. To illustrate, luxury clothing B2B marketplace BrandsGateway will supply you with a convenient Shopify integration, providing you with a smooth and efficient way to run your store.
Statistics about the search interest in dropshipping
One last research Statista supplies interested dropshippers with is the search interest of the term ‘drosphipping’ in Google Trends. Serving as a tool that analyzes keyword popularity based on multiple criteria, including time and location, Google Trends is often used for dropshipping, not only with the purpose of checking if the term is still trending, but also to search for product options that would be profitable to dropship.
As it turns out, as claimed by Statista, starting from 2016, the keyword dropshipping has been experiencing continuous growth, thus pointing out a significant interest in the business model. Below you can a look at the Google Trends graph supporting the study by Statista.
Dropshipping with BrandsGateway
Now that we’ve provided answers to the most commonly expressed concerns about dropshipping, the only thing left is preparing to launch your dropshipping store. To start you off on the right track, we highly recommend joining your forces with a supplier like BrandsGateway. This supplier will offer dropshipping resources you need to develop your business plan into a prospering store:
- a beneficial personalized contact;
- regular weekly arrivals;
- automated integrations for Shopify, WooCommerce, Shift4Shop, and Wix via Shopify and Shift4Shop apps and Wix and WooCommerce plugins, which happen to offer outstanding add-ons like these best Shopify dropshipping apps, best WooCommerce plugins, and top Wix plugins;
- chance to expand your business significantly via CSV-files integration for Amazon dropshipping and eBay dropshipping;
- a complete guide on how to start your own business.
So, take a look at how to start dropshipping with BrandsGateway, and don’t hesitate to get in touch with them.
In a word
With businesses turning to eCommerce more and more often, it’s obvious that online retail is slowly but surely becoming the new normal. Among the many business models, entrepreneurs are using to establish their virtual stores is dropshipping as well, a fulfillment method allowing store owners to run their businesses with the help of a supplier, who takes on the duty of managing the inventory and processing the orders. Because of the way it functions, many believe dropshipping is too good to be true. Nevertheless, with the information we’ve provided you above as well as with this dropshipping case study you can check out, you can ease up your mind and rest assured that dropshipping is a legitimate and profitable business method worth giving a try.
Dropshipping is a profitable business method as it requires low start-up costs, allows you to avoid storage expenses, and enables you to reach out to a wide international audience.
Yes, dropshipping is a legal business model offering convenient running of your online store and supplying you with great work flexibility.
You can launch a dropshipping store as a beginner by starting with analyzing the market, choosing a product niche, finding a supplier, and creating your website with the help of a web-building platform. For more information, you can check out this guide on how to start a dropshipping business.
Dropshipping is a low-cost business, meaning you don’t need a lot of money to get your online store off the ground. Since with dropshipping your supplier takes care of the products, you won’t have to deal with inventory costs. Moreover, because you can choose the web-building platform and marketing channels you prefer, you can easily control how much you’d like to spend and easily stick to your budget.
Yes, dropshipping can certainly be a side hustle that can allow you to earn dropshipping passive income as the business model offers great flexibility in running it.
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