{"id":4782,"date":"2022-06-29T11:39:00","date_gmt":"2022-06-29T11:39:00","guid":{"rendered":"https:\/\/mdlst2020prod.wpengine.com\/blog\/?p=4782"},"modified":"2022-08-24T09:52:28","modified_gmt":"2022-08-24T09:52:28","slug":"is-dropshipping-worth-it","status":"publish","type":"post","link":"https:\/\/www.modalyst.co\/blog\/is-dropshipping-worth-it\/","title":{"rendered":"Is Dropshipping Still Worth It in 2022?"},"content":{"rendered":"\n

Dropshipping is easily one of the most trendy business opportunities on the web over the last decade. <\/span><\/p>\n\n\n\n

Many entrepreneurs have been in this industry since the 1950s, when mail order companies <\/span>were born. These businesses consisted of mailing catalogs to every corner of the country and receiving orders and payments by mail.Then these orders, in many cases, would be outsourced to a warehousing and distribution company, who would pick, pack and ship the goods. This part of the value chain was known as the drop shipper. Many door to door salesmen also used drop shipping manufacturers and distributors to fulfill customer orders.<\/p>\n\n\n\n

Fast forwarding a few decades later, Amazon became one of first to drop ship on the web, using Seattle based book distributors to send orders directly to online shoppers. Amazon used drop shipping so successfully that it grew into the world\u2019s largest retailer. Today Amazon has its own warehousing facilities, but still utilizes drop shipping for some of its products.<\/p>\n\n\n\n

So, with 2020 arriving, it’s time to ask, is dropshipping worth it this year and this decade? <\/span><\/p>\n\n\n\n

Before we answer the question, let\u2019s define what dropshipping is and how it works. <\/span><\/p>\n\n\n\n

Dropshipping defined<\/strong><\/h2>\n\n\n\n

What is dropshipping? <\/a><\/strong><\/span><\/h3>\n\n\n\n

In this type of ecommerce business model, three separate parties are involved: the buyer (of the product), the drop shipper (the seller of the product), and the supplier (the manufacturer or third-party in possession of the product). The dropshipper markets and sells directly to the buyer, and then sends the order details to the dropshipping supplier. The supplier accepts the order and then drop ships the product directly to the buyer. <\/span><\/p>\n\n\n\n

In essence, the seller of the product doesn’t need to warehouse or fulfill the product direct the product to sell it to the buyer. The drop shipper merely connects the buyer and manufacturer, oftentimes without the buyer knowing that the seller and manufacturer are not the same party. <\/span><\/p>\n\n\n\n

This is the big difference between drop shipping and other means of retailing since the seller does not stock any products but depends wholly on the third party to fulfill its retailing needs.<\/span><\/p>\n\n\n\n

How dropshipping works<\/strong><\/h2>\n\n\n\n

The typical first step in starting a dropshipping business<\/a> would be to set up an online store. Fortunately, creating a store has never been easier, as many vendors, including Shopify and Wix, offer support on starting one.\u00a0<\/span><\/p>\n\n\n\n

Once the store is set up, you can either seek suppliers in a specific area or use applications to connect the store with suppliers based on your dropshipping business ideas<\/a>. The store is now well equipped to take orders from clients. After receiving orders and confirming that all details are correct, the next step is to deliver the order to the supplier. The supplier then ships the product to the client directly.\u00a0<\/span><\/p>\n\n\n\n

Another different approach is buying dropshipping products<\/a> on an online store, for example, Amazon, and dropshipping them on another site, like eBay. Dropshipping on eBay, of course, has a lot of restrictions depending on the online platform used. It is, therefore, essential to be familiar with how to dropship on eBay before pursuing this fulfillment strategy.\u00a0<\/span><\/p>\n\n\n\n

What brings in the money?<\/strong><\/h3>\n\n\n\n

As previously established, the drop shipper doesn’t have direct contact with the products. By merely sending the order to the supplier and shipping information to the buyer, how would you make money? Let us see what costs are incurred first, then what brings in the profit. <\/span><\/p>\n\n\n\n

Since this is an online store, the only apparent cost is maintaining a website. Some of the website costs are creating an online store, getting a domain name, and sourcing products connected to your sites such via Modalyst, Oberlo and Dropified. <\/span><\/p>\n\n\n\n

Just like any other business, another cost is marketing. The most common means of marketing online are social media ads, display ads, and search engine marketing (SEM). In the long run, other marketing methods like search engine optimization and content marketing would be added to the mix. <\/span><\/p>\n\n\n\n

The business will also have to incur customer support costs whenever issues with the product or delivery occur. You will also have to pay the supplier the price indicated for their product.<\/span><\/p>\n\n\n\n

Dropshipping websites earn money on the difference between the amount the client pays and the supplier’s price. The product must be priced a bit higher than the suppliers’ bid to make a profit. As a general rule, the margin must be high enough to cover the other recurring costs while not being too expensive.<\/span><\/p>\n\n\n\n

Is dropshipping legal?<\/strong><\/h2>\n\n\n\n

Good news: dropshipping online is perfectly legal! <\/span><\/p>\n\n\n\n

There are no existing laws barring anyone from running a drop shipping company. Depending on the country, however, some regulations govern how such activities are run. For people who drop ship between online platforms, there are also a few additional regulations for each website. <\/span><\/p>\n\n\n\n

It\u2019s crucial to know these restrictions beforehand and to use them to your benefit (within legal means, of course!)<\/span><\/p>\n\n\n\n

Has dropshipping died in the last decade, or is it still going strong?<\/strong><\/h2>\n\n\n\n

This is a question every drop shipping website has to answer very often on surveys and social media and is a hot topic on question-answer websites such as reddit. As most of the tech sector does, new methods emerge ever so frequently and always lead to the death of the old.<\/span><\/p>\n\n\n\n

Is dropshipping on its way to the grave then?<\/p>\n\n\n\n

Absolutely not! Learning how to start a dropship business is still going as strong as ever. In fact, the industry has been on a steady increase despite taking a slight dip in 2018, according to Google Trends data. The business is doing well both in the US and all over the world. The graph, focused on the last five years alone, shows that many people still view dropshipping favorably and even has a bright future ahead<\/span>.