Is Shopify dropshipping profitable? This is a question that I get asked a lot, and it isn’t easy to answer.
There is no cut-and-dried answer, as profitability depends on many factors, including the products you choose to dropship, your overhead costs, and your sales and marketing efforts.
But in this article, I’ll do my best to give you an idea of whether or not Shopify dropshipping is a viable business model for you. So let’s get started…
So, Is Shopify Dropshipping Profitable?
What is Shopify dropshipping?
Dropshipping module has been there over the decades but recently become popular after the launch of the Shopify platform and the Oberlo app.
Shopify’s Dropshipping business model is structured around a supplier or manufacturer and the seller. It is simple, it’s a fulfillment model that allows you as a store owner to buy products from the seller or manufacturer and ship them directly to the customers after placing an order without you handling the inventory or shipping.
Let me simplify it.
You have a shop, and you don’t own the products, neither are you required to pay for the products in your shop before listing them.
For instance, you want to sell hoverboards but lack the capital to buy the hoverboards in bulk to list them in your online store, so what do you do?
Simple, you create a store and look for a supplier of your choice, get into an agreement then list the products on your store, when a customer places an order they have no idea you are just a middleman who has his markup set up on any product they will order.
So when they placed an order, you go to the supplier website, order the same order then they will ship the product directly to the customer and not through you.
If you listed the hoverboard at $145 and it only cost you about $49 you pay the $49 to the supplier and keeps the difference, how about that? Sweet right? But don’t celebrate yet.
Thus the power of Shopify Dropshipping business and what makes it more interesting is that it has been automated nowadays using apps that I will cover later in the course of this eBook.
Before Shopify dropshipping happened or any other form of dropshipping, the use of traditional e-commerce fulfillment models was the most popular.
These traditional modules of e-commerce required store owners to handle inventory; one had to buy products in bulk and cater to the warehouse that handles his stock.
The traditional e-commerce model required you to do your shipping, unlike the current dropshipping business module where almost everything is being taken care of by the use of an app and a platform that provides you everything from hosting, domain names, and apps to fulfillment options.
Dropshipping has helped eliminate the worries of inventory, handling shipping, returns, and the hustles that come with running a traditional e-commerce store.
In the century we live in, not everything comes on a silver platter neither are every innovation works perfectly. There are glitches to every system you may have tried out and dropshipping ain’t an exception.
So let me take you through the advantages and disadvantages of dropshipping.
This is the place you pause and ask me any question you may have before I take you through the pros and cons.
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Pros of Dropshipping
Compared to a traditional e-commerce system where you required considerable capital to start, cash for a warehouse or store, inventory capital, and much more, dropshipping has low start-up costs, unlike the traditional e-commerce system.
There are minimal risks involved when running a dropshipping business. God Forbid you to end up not selling the products in your shop, maybe due to poor marketing strategies or poor choice of products.
You can close your shop and walk away, unlike the traditional e-commerce where you left with inventory, and you have no idea how to get rid of them unless burning them! with dropshipping it is easy and straightforward you are not tied down to any inventory. If it doesn’t work pivot and choose something else to try out.
Since you are operating online while drop shipping, no law requires you to live in a specific place. You can dropship from anywhere you want in the world. You are not tied to the location you get your inventory from, in other words, you are a nomadic entrepreneur.
First, it’s a low-cost way to get started in ecommerce.
You don’t need to invest in inventory, and you can start your business with just a few hundred dollars. Second, it’s a great way to test products and markets without incurring the risk of carrying inventory. Third, it’s a flexible business model that allows you to sell products in multiple markets and niches.
Don’t be jumping all over the place yet! We have some disadvantages of dropshipping that may be wary you of.
Cons of dropshipping Business
Dropshipping business has a low -barrier of entry; you may think you are the only person dominating a particular niche only to wake up to thousands of other drop shippers selling the same product and using the same supplier like you.
This brings us to how to choose the right niche for your Shopify store which I will cover comprehensively. Now that is what makes most dropshipping businesses fail.
A customer can see over 10 ads selling the same product at different prices; this is due to the high competition of dropshippers. So the key is to fund a rare but in-demand product or niche and brand yourself around that.
In most cases, it’s rare to get direct contact with the real manufacturer of the product you want to sell. IN most cases we head up talking to suppliers who act as the manufacturer but in reality, they also drop shipping the product.
Dropshipping products tend to have a lower margin if you bought it in bulk rather than buying the same product in a small quantity. You will make a good margin if you buy the product in bulk and at a time suffer a loss or low margin if purchased the products in low volume.
Let this not bother you, you are going to learn the tricks and how you need to run your business smoothly overcoming the above challenges mentioned.
At times you may wish to have your store name or branded products to help you build a strong case online, but in most cases, suppliers don’t provide the option of sending your customers branded products unless you buy the products in bulk.
But still, it’s not guaranteed you will have them branded as you can remember you are not even sure you deal with the owner or manufacturer of the actual product.
- It can be challenging to find reliable suppliers.
- You have less control over the quality of your products.
- Shipping times can be longer than with other ecommerce business models.
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So, is dropshipping profitable? It can be, but it depends on several factors. First, if you can find reliable suppliers and sell in niche markets, you can certainly make a profit with dropshipping. However, if you’re selling in highly competitive markets or relying on low-quality suppliers, your business may not be as successful.
No matter what business model you choose, remember that ecommerce is a competitive industry. To be successful, you’ll need to offer high-quality products, provide excellent customer service, and continually test and optimize your business.
Dropshipping on Shopify is a viable business model, and there’s no doubt that it can be profitable. However, like any business, it takes a lot of hard work and dedication to make it successful.
We hope this article has helped you understand the basics of dropshipping on Shopify and given you some ideas for how to make your store successful. If you’re ready to start your own dropshipping business, sign up for a free trial of Shopify today.
If you are lucky enough to land yourself a supplier who would do the branding or customization for you on the products count yourself lucky.
Now let’s go into how to find or identify a niche or product you want to be listed on your site, or you intend to sell on your site. Shall we?
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