Does dropshipping still work in 2024?

What is dropshipping?

Dropshipping is a retail fulfilment method where a store doesn’t keep the products it sells in stock. Instead, when you sell a product, you purchase the item from a third party and have it shipped directly to the customer. As a result, the merchant never sees or handles the product. Followings are the list of 10 dropshipping suppliers:

• AliExpress
• Alibaba
• SaleHoo
• Worldwide Brands
• Doba
• Wholesale2b
• Wholesale Central
• Spocket
• CJDropshipping
• Zendrop

The challenges associated with dropshipping Competition?

Shopify: As of November 2023, according to the technology tracking tool BuiltWith, there are more than 4.4 million live Shopify stores globally. In the same year, the number of ecommerce stores live in the United Kingdom that use Shopify to power their stores exceeded 180 thousand. This growth has been rapid in recent years. If you are starting now, you will have to compete with them and remember the number is increasing exponentially every day.

Tiktok: TikTok, known for its cost-effectiveness, features a platform with relatively low charges for vendors. These vendors predominantly engage in direct sales, often sourcing products directly from China, contributing to competitive pricing. The platform’s marketing dynamics leverage the effectiveness of influencers, who, enticed by lucrative commissions, play a pivotal role in promoting products.

Temu: Temu, recognized as the most downloaded app in the USA and UK in 2023, has revolutionized the market by facilitating direct sales from factories to consumers, eliminating intermediaries. This disruptive approach has caused a stir due to Temu’s aggressive marketing strategy, unbelievably low prices, and an eclectic range of products. Here are a few examples of the substantial savings that customers can experience on Temu compared to other platforms:

• Massage gun: £11 (Saving of 58% compared to £25.99 on Amazon)
• Garlic crusher: 74p (Saving of 93% compared to £8.49 on Amazon)
• Rubber sliders: £1.49 (Saving of 86% compared to £10.99 on Amazon)
• Sunglasses: £2 (Saving of 83% compared to £12 on Amazon)
• Trainers: £6 (Saving of 80% compared to £30 on Amazon)

AliExpress: AliExpress, a platform specializing in the direct sale of affordable products sourced from China, has enhanced its competitiveness and appeal to customers with the introduction of a new 5-day delivery service. This swift delivery option has intensified competition in the market and notably impacted dropshippers. Nevertheless, for those engaged in dropshipping, AliExpress also presents an opportunity as a supplier.

Cost of advertising: Running ads can be expensive, especially because it’s getting more and more competitive. If you’re not familiar with running ads, you might need to hire someone, which adds to the costs. Overall, the high competition is making advertising itself more costly.

Shopify Plan: Website subscription involves a monthly fee.  You will have to pay it regardless of whether you make sales or not.

Product’s Life. Sustainability becomes challenging when products have a limited lifespan, because many people adopt the same strategy and sell identical items. The widespread use and promotion of similar products, especially when endorsed by YouTube influencers, contribute to market saturation. While these influencers may position themselves as Shopify experts, it’s unclear whether they are genuinely successful in selling products on the platform.

Shipping: Extended shipping times, ranging from 10 to 15 days or more, diminish the desirability of a product or platform. This drawback provides a distinct advantage to competitors like Amazon or eBay, which are known for their faster and more efficient shipping services.

The opportunities associated with dropshipping

Less investment: Low Initial Investment: Dropshipping requires minimal upfront investment since you don’t have to purchase inventory in bulk.

Low Initial Investment: Dropshipping requires minimal upfront investment since you don’t have to purchase inventory in bulk.

No Inventory Management: You don’t have to deal with managing and storing inventory, which can be a significant logistical advantage.

Wide Product Selection: You can offer a wide range of products without the need to invest in and store inventory.

SEO and Ads. Success in sales hinges on your proficiency in advertising and your ability to master SEO for generating organic sales. Being adept in these areas not only saves costs but also drives organic traffic to your store, resulting in profits. SEO, or Search Engine Optimization, plays a crucial role in enhancing your online visibility and attracting potential customers without relying solely on paid advertising.

Marketing: Influencers and virality can be game-changers for your business. If you have a substantial following on social media, you can channel significant traffic to your store without the need for extensive advertising spending. This approach can lead to the organic growth of sales, as your influence and viral reach bring attention to your products or services.

In conclusion, the viability of this business model, which was undoubtedly profitable in the past, is subjective in 2024. Its current profitability depends on the individual’s approach. Personal success hinges on factors such as the ability to generate organic traffic and manage advertising costs. In my own experience of nearly six months, I’ve found it to be a survival journey. The challenges I faced, such as the need to hire someone for ads, underscore the importance of a nuanced understanding of the business.

For newcomers, it’s crucial to heed the advice provided earlier, engage in thorough research, and invest time in comprehensive product and market analysis. It’s essential not to be swayed solely by the perspectives of influencers on platforms like YouTube. While opportunities exist, success demands more than mere chance; it requires diligence, strategic thinking, and a realistic understanding of the market dynamics.