Dropshipping is dead!
So many people are saying this and then they try to convince you to try a different business, which is a product or business they are involved in.
So, is dropshipping dead? This is an important question, it's something that anyone who wants to try dropshipping wants to know.
After all, starting a dropshipping business is not free, and no one wants to waste money on a dead business.
While you don't have to spend money on inventory, you still have to spend money on maintaining a website, plus you have to spend some money on advertising your products.
Let's take a look at the history of dropshipping, its growth over the years, and its future. First off, we need to define dropshipping, see where it came from, and set it apart from other types of businesses.
Once you understand the business model then you will see if it doing to be dead in the future or not.
Is dropshipping dead? Everyone will tell you it's dead to sell you some course on another method. Dropshipping has been around for years and online ecommerce is booming. It's not dead, Dropshipping is growing by millions a year, but you need to do it correctly if you want to make money from it.
What Does Dropshipping Mean?
Dropshipping is a business model where you sell someone else’s products. If you receive an order, you place that order with your supplier, and then the supplier would ship it to your customer.
That's the simple version of dropshipping.
Some have made changes, like asking a supplier to manufacture products with their own private labels, but it's still the manufacturer or supplier who ships the item.
Some people also use a new method called Drop Surfing, you can find more information about that in this article.
Everyone loves starting a dropshipping business because they don't have to take care of the shipping. You also don't have to buy products in bulk. You only buy a product once someone has ordered from you.
You use the money from the customer to complete the purchase from your supplier. The difference between what the customer paid you, and the actual cost of the product you bought, is your profit.
How Did Dropshipping Start
This business model isn't new. It has been around for so many years, even when there was no internet.
Before the the internet, there were already companies willing to ship their products to the consumer, and all you had to do was to take orders.
Dropshipping has been around since 1950s, and it was called Mail Order. At that time, people constantly received catalogs in their mailboxes at home. These catalogs contained dozens, if not hundreds of products.
The person who printed these catalogs did not manufacture the products listed there. They were manufactured and distributed by someone else.
If a homeowner decides to order, he would place the order either by phone or by mail, along with his payment.
The company that printed the catalog will order this from the supplier, and then the wholesale supplier will ship it to the customer’s house.
In some cases, the salesman will do door-to-door sales. He will knock on your door, and he will attempt to sell you an encyclopedia or an appliance. There was a time that the brand Electrolux dominated this field.
The salespeople who sold the Electrolux appliances, like cooking stoves and ovens, were not employees of Electrolux.
They sold the appliances at a higher price, then when someone orders, it was the Electrolux company that shipped the appliance to the consumer. The price difference between the capital cost of Electrolux and the salesman's selling price is the seller’s profit.
Will Dropshipping Work In The Future?
Dropshipping has grown more than ever because of the internet. You no longer need telephones and you no longer need to print mail order catalogs. All you need is a website and a supplier.
The first company to dropship was Amazon.
It listed many products from suppliers on the Amazon website. When a customer ordered from Amazon, the supplier was notified, and then the supplier shipped the products to the customer.
The idea was a hit. It made Amazon the world’s largest online business retailer.
Because of this, many businesses decided to copy this model, and this is why we now have dropshipping as we know today. Dropshipping is never going to be dead and it can't die. There is just to much demand and money involved so the future looks great
Because of Amazon’s success, many people wanted to do the same. If Amazon could ship to different parts of the world, then anybody can do the same, right?
Then we have another problem, how would you create a store to make this business work? We didn't really have any option to create online stores quickly.
How Did Dropshipping Become Popular?
AliExpress is a company in China that works almost exactly like Amazon.
The AliExpress website allows wholesalers and retailers to list their products, and they ship globally. Before buying on AliWxpress make sure you read our buyers guide.
The main difference between Amazon and AliExpress is that products that were sold in China were unbelievably affordable.
Because they also ship products globally, the first problem with the supplier was solved. People who started the dropshipping business with AliExpress created their own website.
It was a very time consuming process!
You had to copy the pictures from AliExpress, save them on your computer, type them back to your website, and then upload the pictures.
After receiving an order, you go back to AliExpress, and then you place the order. On top of this, you have to apply to a bank or a financial institution for a payment method. If you don't do this, how will you accept credit card payments online?
Some used PayPal, and they needed a technology expert to integrate PayPal with their websites. Again, this is a time-consuming and expensive.
Then, we were introduced to Shopify.
Shopify is an online portal where you can start you own dropshipping business. It's cheap to start a store, you can see put Shopify pricing guide here.
You can do thinks like…
- Create an online store
- Have an online payment processing system in place
- Upload products to your store automatically from AliExpress
- Update the prices of the products automatically if the supplier changes the price
- Place the orders automatically
Shopify created a worldwide system that changed how dropshippers work and do business. Today, there are many other companies that do the same as Magento and WooCommerce.
Shopify isn't, but the monthly payment is totally worth it because you get so many services for a fraction of what it really costs.
The Rise of Dropshipping
Now that it's easy to have a website that works, it's easy to find suppliers, a lot of people now had the opportunity to put up online businesses from home.
This was made possible when companies that make dropshipping tools offered affiliate programs. They offered commissions to people who can convince others to subscribe to their software or buy it. You can refer people to Shopify and you get a commission for it.
Over the last few years all of thee stuff had fuel the booming industry.
Online E-commerce Statistics
Over the years, e-commerce has boomed to the tune of trillions. Below is a graph from Shopify that shows how much money is made worldwide, which includes dropshipping as a business model.
As you can see, sales are up year after year, and it is not going down. In 2021 the estimate for that year is $4.9 trillion dollars.
What this tells us is that no single business could have done this, not Amazon, not eBay, not AliExpress. This is a result of the efforts of everyone out their starting an e-commerce store.
Also, if you look at the behavior of customers closely, you will find out that a majority of people want to buy products from outside their country.
This is also one of the things that contributed to the rise of dropshipping. More than 50% of people from around the world want to buy products from overseas.
What this means is that they are willing to wait for the shipment and they trust online sellers who are not even known as global brands.
If you know that there are people from other parts of the world who would be willing to buy from you, will you not take the opportunity to get just a tiny slice of the $4.9 trillion? Of course you would!
Is Dropshipping Dead in 2019?
Because of the success it's had, dropshipping became a hot trend. Many people wanted to earn a quick buck. They thought that they could just set up a website, list someone else’s products, and then sales will roll in.
After a few months, they give up and said dropshipping is dead.
BUT, is it?
If you think about it, dropshipping is a serious business. It's not as simple as setting up a lemonade stand. It should never be thought of as a get-rich-quick scheme.
If you drop ship, you are competing against an entire world of e-commerce retailers. In a recent publication by Shopify, it now powers more than half a million businesses globally.
Half a million! And that is only from Shopify.
If you think about other platforms like Magento and WooCommerce, then you may be competing against more than a million dropshippers. This is why people who failed at it claim that dropshipping is dead.
They went into a business that they don't understand. They never bothered taking a course they just put up a website and attempted to sell a product that they think is cute, and expected sales to come pouring in.
No, dropshipping is not dead. It's growing, and if you don't jump in that $4.9 trillion will go to someone else. Will you be successful with your store? Who knows, no one can predict that for you. Most online business fail and so do offline businesses, that's just the way it goes.
Could you imagine if every single business someone tried to start was successful? the world would be a mess. But, we never have to worry about that because it would never happen.
Is Dropshipping Still Profitable?
Now that we know that dropshipping is alive and kicking, what is the future?
Well, Google will tell us! From the chart below you can see it's not going to slow down.
One thing you have to ask yourself is, are there really business models that die down? Surely, there are businesses that slowed down in popularity. Examples of this are networking and direct sales.
A networking business is a kind of business where you recruit people to sell, and then you earn a commission if they make a sale. Some popular companies that did this that do not make a noise now are Amway and Avon.
Direct sales means you sell a company’s product, and then you earn a commission. An example of this is Tupperware. While these companies slowed down in sales, they are still alive. Avon was founded in 1886. Herbalife was founded in 1980. As you can see, they are still here.
Although the networking and direct sales methods slowed down, they only took a different approach. Most companies today are now operating online, and they use business models like affiliate marketing and dropshipping.
Dropshipping is here to stay, and the future is very bright. If you think it's dead you will miss out on this. Naive people will simple miss this opportunity.
Related: Why Is Dropshipping Popular?
Dropshipping is dead because people who failed say so. Watch out of these individuals. To them, anything that they failed at is a scam.
Instead of looking for get-rich-quick schemes, focus your attention on learning, researching, and understanding how a business works. Don't be a fool thinking that if people did it easily, you could also do it easily.
If you build your Shopify store, you can only succeed based on your efforts and talents, not because it is a money-making machine. The reason there are dropshippers who earn tens of thousands a month is that they put in the hard work.
They spend countless hours and months without sales. They built their businesses with a passion, and they were rewarded for it.
Learn from your failures, and you will see that dropshipping is alive and well.