Today’s article on Burning Question: Is Drop shipping Dead In 2018? is brought to you by Olga – Content Creator at AliDropship.
Let’s welcome Olga in our blog, and learn from her invaluable experience!
In some sense, the “Is dropshipping dead?” question is quite similar to the “Is there life on Mars?” enigma: it seems to be settled once and for all, but now and then, new evidence surfaces, and the debates start all over again, more ferocious than ever.
What does each of the opposing parties say?
Why “is” drop shipping dead in 2018? Arguments, hypotheses, speculations
Most typically, the people who don’t believe in the bright future of dropshipping list the following 5 reasons of its inevitable decline:
Looking for quick and easy money, lots and lots of people launch their own drop shipping store, and commonly start working in the same business areas.
Instead of making their own independent niche research, they look for ready “hottest niches of 2018 or 2019” lists shared across the Web, and, obviously, end up selling almost the same products as everyone else does.
Extreme market saturation
Some researchers claim that a speedy growth of any business industry eventually leads to a burst of this “bubble”.
In other words, the more dropshipping stores get opened, the sooner the whole industry will run out of its steam, and collapse.
Given the sharp increase of dropshipping popularity, this scenario, by some estimates, already looms over the horizon.
Easy access to global online retail platforms
The point here is, the majority of items sold in dropshipping stores can easily be found on AliExpress, or Amazon, or elsewhere: local sellers ask much lower price for these items, and arrange effortless shipping to any point on the globe.
That being said, Internet users don’t need to trust random online store with their money – instead, they can go on a worldwide known and well-reputed platform to purchase the desired items and enjoy the substantial financial savings.
Tricky nuances of the business model
Even if the global business perspective is not taken into account, there are some smaller dropshipping aspects that might bother both the newcomers and the experienced entrepreneurs.
They include long delivery terms, unclear legal and tax status of stores owners, troubled customer service in case the buyer finds the original Chinese labels and inscriptions inside the received package, and other subtle managerial issues that the entrepreneurs have to handle on a daily basis.
Unclear overall potential
A general idea here is the following: “If drop shipping is really as good as they say, why isn’t everyone a self-made billionaire yet? Clearly, all the benefits of this business are exaggerated, and nothing significant can be achieved through it”.
As you can see, these arguments logically contradict each other: dropshipping opponents state that this business brings more trouble than profits to the owners, but, surprisingly, they also admit that the community of dropshipping newcomers grows rapidly. Why, indeed, would so many entrepreneurs invest their time and money into a loss-making venture?
How do dropshipping supporters respond to these claims?
Each of the points mentioned below might seem reasonable at first, and even scare off a potential dropshipper. What you need to remember, however, is that each and every of these “arguments” is based on a very simple thing: a lack of the relevant knowledge.
As soon as you perform your own, independent and unbiased research of drop shipping industry, you’ll see that all these “downsides” and “difficulties” are greatly exaggerated. Let’s take a closer look at each of these points.
A dropshipping store can stand out from the competition in multiple ways
It’s all about the specific atmosphere that is created within the store thanks to the owner’s efforts. This atmosphere can be cultivated through numerous different actions, from crafting a signature in-store design to adding absolutely unique and rare items to the product line.
Whatever is the preferred way of building a signature store identity, it is vital to remember that the correct niche choice is the key to successful business customization and branding. As long as the niche is narrow, demanded, and well-defined, there is nothing to worry about in terms of the store promotion and growth.
Dropshipping industry can’t be affected by a bubble burst
First of all, dropshipping is, in fact, not only a business model, but also a logistic outsourcing method that entrepreneurs use to fulfill the incoming orders. This method of indirect product reselling is convenient and cost-efficient for both the store owners and the original suppliers, which is why it is highly unlikely that entrepreneurs will give up on such an easy and lucrative logistic solution.
At the same time, economically speaking, even a rapidly increasing amount of dropshipping stores doesn’t pose any significant threats.
A quick look at eCommerce stats makes it clear that there is plenty of room for further industry progress, and the market is far from overheating: the volume of retail eCommerce sales is growing steadily, and the number of digital shoppers also increases accordingly.
In other words, a surge in the amount of dropshipping stores is matched with sufficient buying activity, which clearly states that the industry is well-balanced.
Many buyers prefer smaller niche stores to retail giants
For a number of reasons, AliExpress, as much as Amazon and other huge shopping platforms, is not as appealing to picky customers as cozy little shops tailored to suit every individual buyer’s needs.
If the store owner treats the niche choice carefully, knows a lot about the products featured in the niche, and understands the target audience’s requirements, there is a great chance to build a shopping destination that is more well-organised, buyer-friendly and customer-oriented than any gigantic, hulky online store.
There is an adequate solution to every store management issue
The most feared dropshipping situation – a way-too-long delivery that makes the buyer turn super angry – is, in reality, quite easy to avoid.
It is simply necessary to pay attention to the shipping options offered by the original supplier, and, ideally, only fill the store with the products that can be delivered by ePacket method.
Also, it is important to state the shipping terms clearly on every product page and on the checkout page in order to prevent the buyers from getting unrealistic expectations about the estimated time of delivery.
Actual AliExpress sellers who openly share their drop shipping experience explain that they highly value the orders coming from drop shipping store owners (as they mean a stable source of income, it is a mutually beneficial partnership for both sides).
This is why there is no reason to worry about slowdowns in orders processing, or suspicious Chinese inscriptions or irrelevant leaflets/promo materials in the shipped packages: if the seller is warned that the order is placed by a dropshipper, the necessary precautionary measures will be taken.
From the legal point of view, dropshipping store owners aren’t directly obliged to register their businesses officially; still, this process is relatively easy, and it might provide the business owner with some additional benefits related to the convenience of payment processing.
And when it comes to taxes, supplementary technical solutions can be employed: with their use, it is possible, for example, to enable various tax settings within a dropshipping store. Quite notably, automated drop shipping solutions not only solve the tax issue, but also help the store owner outsource the majority of the daily managerial tasks.
Numerous success stories prove the business efficiency
The promising prospects of a well-thought-out dropshipping store are proven by countless success stories shared by people across the globe, from the Netherlands to Uganda, both possessing some relevant knowledge and having no previous experience at all.
Whatever is the background of these stories, all these people have something in common: they managed to ramp up their businesses to the point they don’t have to work for someone else anymore. This level of financial independency is certainly inspiring enough for everyone who considers launching their own drop shipping stores.
What does the future hold for drop shipping business?
So, dropshipping is not dead in 2018, and it doesn’t show any sizes of weakening. But, what should we expect of it in a year or two?
The role of developing countries as foreign outlets will become more noticeable
The talks about “an overheating market” and “extreme stores competition” mostly describe the situation across the European countries and the United States. Indeed, as for now, the citizens of these countries are more likely to launch their own drop shipping stores as they easily enjoy the benefits of cutting-edge technologies, expert knowledge, and well-developed transportation systems.
Still, luckily, the world is changing for the better, and the majority of developing countries gradually gets an improved access to these amenities as well. It means that new, untapped markets become available, and it becomes possible for entrepreneurs to offer their products to radically new segments of customers who never had the opportunity to source these items before.
The significance of marketing will grow
With the appearance of new regional markets, entrepreneurs will have to fight for the attention and loyalty of first-time customers. Every store will have to develop its specific competitive advantage not only in terms of product range and price level, but also with regard to the seller-to-buyer communication and the means of making new audiences familiar with the store offers.
Most likely, a personalized approach will dominate the industry as it is the key to winning the hearts of new buyers and securing repeat sales. It means that business owners will heavily invest into the solutions that automatically tailor the store to a specific buyer’s needs in terms of products suggestions and the way of content demonstration.
Obviously, the importance of branding will grow as well, and, as it was already mentioned, the owners of narrowly defined niche stores will have a great advantage over the owners of general webstores due to the deep understanding of the niche peculiarities and the audience’s typical queries.
Larger scale businesses will grow out of dropshipping stores
The experience of running a drop shipping store and promoting it by means of social networks and SEO is a highly valuable asset. It is not unlikely that seasoned dropshippers will eventually get motivated enough to expand their business into bolder ventures of a much larger scale, and, in fact, this is happening already.
Summarized: some frequently asked questions about drop shipping
Q1: Is drop shipping a good business option in 2018?
Yes, and it is expected to stay highly promising for years to come. Numerous statistical reports prove a vivid activity in the sector: the e-commerce retail turnover keeps growing, and online shoppers gradually increase the volume of purchases they are making. In other words, supply and demand here stay well-balanced, and therefore, researches expect that drop shipping business is due to thriving in a long-term period.
Q2: How to secure the store profitability in a long-term period?
If dropshippers want to make their stores gainful in the long run, they need to pay a careful attention to the most important aspect of launching a dropshipping business – evaluating the potential of the niche they’ve chosen. Plus, they also need to invest in personalized marketing and customer relations improvement: a strong store brand is the key to outsmarting competition.
Q3: How to run a dropshipping store easily and conveniently?
In order to get enough free time for building a competitive brand and maintaining high-quality personal communication with the existing and prospective buyers, dropshippers commonly refer to additional tools that enable semi-automated store management. These tools cover a wide range of daily operational tasks, and simplify such processes as product import and orders processing significantly.
For some businesses, dropshipping is just a first step on the road to building a huge enterprise of global importance. For example, the roots of Amazon (which is currently considered to be the world’s third-largest information technology company by revenue) can be traced back to a humble bookselling dropshipping store.
And believe me, nothing stops you – and your own business – from following this pattern and carrying on the tradition.
We feel honoured to have Olga’s insights featured in our blog, and we are incredibly thankful for the knowledge she has shared with us.