Is Dropshipping Worth it in 2024?
The dropshipping business model is quickly becoming one of the most popular ways to start an online business, and it’s easy to see why. With low setup costs and instant access to products and no need to hold physical inventory, it’s no surprise that dropshipping is one of the top fulfilment methods in ecommerce.
However, with such an easy and low-risk business method, there are a lot of retailers choosing to join the growing market of dropshipping. So, is dropshipping still a profitable business model, and it is still worth it in 2024? The short answer is yes, it is definitely still worth it. As long as you are putting an adequate amount of time and effort into your business and are willing to do continuous market research along the way, you can still create a successful online business in 2024.
How Popular is Dropshipping in 2024?
Dropshipping is alive and well in 2024 and is still one of the most popular ways to make money online. However, to be successful with the dropshipping model in 2024, you need to invest the right amount of time and money to cultivate success in order to compete.
27 per cent of online retailers adopted the dropshipping method in 2023, and the term dropshipping saw a huge spike in Google searches at the beginning of the year, giving the indication that people looking to start businesses in the new year are choosing to go with the dropshipping method. Dropshipping was one of the most popular topics in Google searches in 2023, with more people wanting to learn about the fulfilment method and apply it to their business ideas.
Is the dropshipping business model still profitable in 2024?
The global dropshipping market was set to reach $243.42 billion in 2023, making it surpass $200 billion for the first time since it gained major popularity in 2020. With such a significant increase since 2020, it’s safe to say that dropshipping is still a profitable business model, and joining the market in 2024 is the perfect time to be a part of this growing ecommerce fulfilment method.
With an increase in preference for online shopping, dropshipping will also increase in its growth due to the convenience of not having to keep any physical inventory. Dropshipping will help keep up with the increasing demand of online shoppers because it is an easy way to stay on top of the changing trends in fashion, furniture and other products. More companies will choose to use dropshipping to lower their inventory costs in 2024 as warehouse rent prices rise and suppliers choose to invest less time and money into logistics and inventory.
Technology will also continue to help develop the dropshipping method, giving more solutions for supply chain issues and improving manufacturing and shipping times. With mobile phones and laptops, you can run your dropshipping store from anywhere in the world, giving you more time to spend on other important aspects of your business, such as customer service and marketing.
Is it too late to start an online store with the dropshipping method in 2024?
Dropshipping is still very much profitable in 2024, and it is never too late to start developing an online store because the dropshipping market is continuing to grow and is set to reach $500 billion by 2027, and starting now will help you be a part of this growth.
There are also more dropshipping suppliers than ever before in 2024, so retailers will have plenty of options to choose from.
Advantages of dropshipping in 2024
More people are shopping online in 2024 than ever before due to the pandemic growing the ecommerce market exponentially, and there are many advantages to choosing dropshipping as your fulfilment method.
Low startup costs
Costs to start a dropshipping business are very low, as are the risks associated when comparing it to starting your own online business from scratch. When starting your own business online, you have to go through the manufacturing process which requires a big investment, then you have to go through the rest of the supply chain hoping you will have enough customers interested in your product at the end of it to buy your items.
Dropshipzone allows you to feel safe while selling with no startup fees or ongoing membership fees, and you also don’t have to worry about minimum order quantities.
No physical inventory
You don’t have to worry about holding physical inventory with the dropshipping business model as suppliers take care of stock on your behalf of retailers. This helps to avoid risks associated with changing trends like overstock or stockouts which can happen if you order either too much or too little of a particular product.
Dropshipping allows you to sell products that have already been produced, skipping over the more tedious parts of traditional retail and allowing you to sell immediately to customers.
Ability to work from anywhere
If you have an internet connection, you can work on your dropshipping business from anywhere in the world. This is great for people looking to strike up the ideal work-life balance.
Want to take that trip you’ve been thinking of since the pandemic put a stop to international travel? You don’t have to worry about your business taking a hit and can easily access the tools you need to continue to grow your dropshipping store.
Easy to scale your business
The dropshipping method makes it very easy to scale and grow your business because you can stay up to date with changing trends. Because you hold no physical inventory, you have the opportunity to try different things and easily increase product turnover if your sales increase without completely changing and updating your supply chain, so your supply chain can grow alongside your business.
Major challenges to dropshippers in 2024
Competitive market
As we have said, the dropshipping business model is one of the most popular methods used to build and enhance an online store, so retailers may find it difficult to make a splash in the market. This is why finding a niche is important to break out from the crowd.
In 2024, there may be a silver lining to this challenge. Because the ecommerce market is growing larger each year, there will be a call for more online businesses to help meet the increasing demand for products.
Delays in shipping
Because of the level of product turnover dropshipping suppliers are facing in 2024, shipping times may prove to be unpredictable and many companies will experience delays if their supply chains aren’t prepared for changes in demand.
Choosing to work with dropshipping suppliers who operate in your region will help to avoid delays in shipping. Dropshipzone works exclusively with trusted Australian suppliers and is a great solution for reducing shipping times and costs for dropshipping businesses.
Customer relations
Using dropshipping can make it difficult to build personal customer relationships because you aren’t directly involved in the manufacturing process, meaning you don’t have hands-on experience with how the products function. You may not be able to directly address customer concerns about product faults because you don’t have immediate access to physical inventory.
To minimise the repercussions of this challenge, implementing great customer service strategies will help avoid negative reviews and feedback.
9 factors influencing the success of your dropshipping business
You can’t just expect to start dropshipping and immediately see profits, there are a few factors that directly contribute to your success:
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Customer service
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Level of competition
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Quality of marketing
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Shipping strategy
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Time investment
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Quality of products
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Professional website
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Finding a niche
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Conducting market research
1. Customer service
The most successful dropshipping businesses implement great customer service. It is a huge factor in the profitability of your online store, and it’s something that once you invest your time and money in, you will notice a big difference in your sales revenue.
Along with selling niche products, having great customer service will help you stand out from your competitors. Customers are more likely to be satisfied with your store if you have exceptional customer service, will be loyal to your brand and word-of-mouth will increase.
94 per centof customers say that they have avoided shopping with a business because they saw a bad review, and many customers say they don’t even trust companies or products with ratings lower than four stars, so you must be doing everything you can to increase customer satisfaction.
Having contact information readily available for your customer is the first step to increasing satisfaction, as your customers need to be able to reach a customer service representative to resolve any problems they have. If businesses don’t have contact information, you will often see many one star reviews that complain their issues were never resolved as they couldn’t reach the company. Providing no way to contact you is a quick way to lose customers. Having a phone number or email available will ensure customer needs are met, and using your social media direct messages is another efficient way to reply to customer issues quickly.
Another option is implementing a live chat feature into your ecommerce website, where customers can get real-time help from experts. These can also have 24/7 service for customers in different time zones, and customers are more likely to feel satisfied with the level of service. Live chat features also give your website a reputable and professional look. Using this method might require more of an investment of your time and money, but in the long run, it will be extremely beneficial to the longevity and success of your dropshipping store.
It’s also important to do ongoing research about the most frequent questions your customers have. Creating a dedicated page where customers can find answers will be beneficial to customer satisfaction. 67 per cent of shoppers said they preferred a self-service strategy over speaking to a company representative, and 91 per cent said they would use an online knowledge base like an FAQ page to answer their questions, so it’s clear that in 2024 shoppers want the option of finding the answers for themselves.
2. Level of competition
There are lots of competitors in the dropshipping market, however, this shouldn’t dishearten you. Because of the growing popularity of online shopping, there is bound to be competition with any business model.
If you create a business strategy that can do things your competitors can’t, you may find you increase your customer base by simply doing something other brands aren’t. You should keep a close eye on what your competition is doing online, like what works for them and what doesn’t. Without this information, you won’t be able to create the best business strategies to stand out.
3. Quality of marketing
The profitability of your online store will be extremely dependent on the quality of your marketing strategies, and adequate levels of planning must go into each campaign.
It is predicted that 55 per cent of marketing is digital and digital advertisements can increase brand awareness by 80 per cent. Using things like social media marketing is a great way to connect to more customers and increase the visibility of your brand.
Email marketing is another form of marketing that will continue to thrive in 2024, and reports show that email advertisements have a return on investment of $36 for every $1 spent which is higher than any other form of digital marketing. So, if you’re able to get your email marketing right with eye-catching images and compelling copy, you should see great results.
4. Shipping strategy
Choosing a dropshipping supplier that is local to your region is extremely important, it allows for the fastest shipping times which will heavily impact customer satisfaction. Companies with faster shipping times and free shipping will always sit ahead of their competitors as customers are more likely to choose your products when comparing prices and times.
Choosing the right supplier also helps to reduce supply chain risks, logistical issues and therefore shipping costs and delays. It’s also important to choose suppliers with the best shipping fees as this helps reduce supply costs and increase revenue. You should get to know their quality control, and what kind of risk management strategies they have in place to ensure you are ready for changes in demand throughout the year.
Dropshipzone works with reliable suppliers you can trust to fulfill your orders and allow you to succeed by offering fast and affordable shipping strategies.
5. Time investment
Another factor to consider is the amount of time you will have to invest to have a successful dropshipping business. To create success, you have to put in the work and take it seriously. It is competitive, and if you aren’t putting in the work like your counterparts, you are likely to fall behind.
Something else to keep in mind is that the more your business scales and grows, the more time you are likely to have to put in. This shouldn’t be cause for alarm, and should instead excite you. Once your business is established and you are earning a profit margin, you can spend money and invest in employees to help with customer service and marketing, and this will only grow your potential as a dropshipping store.
Think about it like this: the more time you invest, the quicker you will see profitability and success. The less time you put in, the longer it will take you to see a significant amount of revenue.
The great thing about dropshipping is you can choose how much time you want to put in. If you’re not quite ready to take the leap and have it as your only source of income, you can still work on the business in your free time. Just know that success will not happen overnight, no matter how much time and energy you put in. Dropshipping is a long game, and it’s worth it in the end.
6. Quality of products
To keep shipping costs and times low, many online retailers will look to move away from international dropshipping giants like Alibaba and towards local suppliers in 2024. This will help to improve the quality of the products you can offer and remove some of the stigma associated with dropshipping and low-quality items.
To create a long term business strategy that is profitable, product quality will be one of the most critical factors. Cheaper products may result in higher profit margins in the short term, but eventually, they will result in higher return rates due to faulty products. This will heavily impact customer satisfaction, so it’s important that you opt for a local dropshipping supplier with a high-quality product range in 2024.
7. Professional website
Building a creative, functional and eye-catching website for your online storefront will be one of the most important factors in creating success as 88 per cent of online shoppers choose retailers that deliver great website experiences. Your website is the face of your business, so it’s imperative that it accurately reflects your brand while also being appealing to customers.
Your storefront should be professional while also engaging. It should also be user-friendly with a simple home page that shows what your brand is in a quick snapshot. Use high-quality, large images so that customers can get a great idea of the product details, as large images increase sales by up to nine per cent. This will give your website that competitive edge and customers will be more likely to trust that you are a reputable brand.
Choosing from the best ecommerce platforms, you can find our list here, will be the first step to building a successful website, so pick the one that fits with your business strategies and aligns with your future plans. Using SEO (Search Engine Optimisation) keywords in your product descriptions on your website will help your product and website visibility on search engines like Google and Bing.
In 2024, customers want to experience faster load times when shopping online, and they are much more likely to spend more time on your website if the load times are fast. Load times can affect the number of abandoned carts, which amounts to $18 billion lost each year in ecommerce.
8. Finding a niche
Due to the level of competition online, finding a niche business idea will help your dropshipping store stand out from the crowd. Think about what makes your products different from your competitors and create unique selling points, as this will help increase the value of your products.
It’s also much easier to find a target audience and narrow down your marketing strategies with a niche, which in turn saves you time and money. You may find that this also helps reduce your competition if you can find a piece of the market that hasn’t been widely saturated yet.
By finding a niche that you’re passionate about, you’re more likely to have the potential to grow your sales and have higher profit potential because your target audience will be interested in what you are selling rather than seeing your dropshipping business as just another furniture company.
Planning is key here, as being successful in the dropshipping industry isn’t as simple as picking a niche and watching it succeed, you must understand the market and your target audience and plan your marketing strategies to target these consumers to stay a step ahead of your competitors. If you’re hitting places that your competitors are missing and using marketing to let people know, chances are you’ll be off to a great start with your ecommerce store.
9. Conducting market research
How much market research you do and how frequently helps you figure out what your competitors are doing, as well as who your audience is and what they want. Tools like SEMrush can help you collect data and analytics on the market, including the size and how much interest your chosen product niche is getting.
Conducting market research will help you stay on top of trends which is extremely important to the success of your business. Trends can change quickly, so try to make the most of each trend before it changes to ensure your profits are as high as possible and you don’t miss out on sales.
Taking note of what your competitors are doing by reading ratings and reviews can give you an idea of what your customers like and what don’t they like. Notice what keywords they are using, discover what strategies are working for them and think about applying them to your business.
Find out the age, gender, income, occupation and interests of your target audience, as the more you get to know them the more likely you can accurately target them with products and marketing.
Using Google Trends data can show you what people are searching for and when giving valuable indicators for what to expect throughout the year. For example, you might see an increase in the number of search terms for knitted cardigans in winter, so you would want to ensure your supplier is stocked and prepared for seasonality changes.
Summary
Dropshipping is still worth it in 2024, and if you’re looking for a low-risk fulfilment method that uses third party suppliers to fulfill customer orders on your behalf, then it’s the business model for you.
The most successful dropshipping stores in 2024 will have exceptional customer service, stay on top of trends and use marketing strategies to promote their business and have an efficient supply chain that can remove any logistical risks to cut costs and offer fast and free shipping times to consumers.
Dropshipzone works with reputable Australian suppliers and retailers who offer the highest quality products to help you have a profitable dropshipping business in 2024. Sign up today to join Australia’s leading B2B2C marketplace and sell more, more often.
