If you’re on social media, you’re probably familiar with the influencers who promise entrepreneurs they too can earn thousands of dollars in side income through a single dropshipping business. You may be debating whether dropshipping is worth investing in or not.
It is possible to create a successful, profitable online business as a dropshipper, but there are certain things to consider before pursuing this path. Read on for answers to whether dropshipping is worth it for you, and how to get started.
Understanding dropshipping
Dropshipping is a profitable business model where the order fulfillment process gets outsourced to another company. With a dropshipping business, you don’t have physical contact with your inventory. Instead, you source products through a supplier, then list those products on your own online store or marketplace. When you get an order, it goes directly to your supplier, who picks, packs, and ships the dropshipped products to your customers.
Is dropshipping worth it in 2024?
Dropshipping is still worth the investment if you’re looking for a low cost, small business idea. The number of people searching the term “dropshipping” has increased exponentially from 2004 through 2024.
The process of starting a dropshipping business is relatively simple:
- Create an online store.
- Find a dropshipping supplier.
- Select your products.
Then, watch the money roll in—right?
Not always. Opening your first dropshipping store can be a hefty investment, both in terms of time and attention. This guide shares whether dropshipping is worth it, alongside six things you need to know before opening your own online dropshipping store.
Why is dropshipping so popular?
The global dropshipping market is valued at $301.11 billion as of 2024, which is a 23.7% increase from the year prior. Experts predict a 24.39% average annual growth rate of dropshipping between 2020 and 2026, with the industry projected to hit an almost $500 billion valuation by 2026.
According to Grand View Research, as consumers increasingly turn to the convenience of online shopping, dropshipping has been rising in popularity alongside ecommerce. Entrepreneurs can take advantage of this online-first preference and launch their own business without physically touching the products they’re dropshipping.
That said, an influx of online creators who promise “get rich quick” schemes have adopted dropshipping, which has made it more popular. Bear in mind that, like any other business, dropshipping won’t be an overnight success. You need to put time, effort, and money into starting a successful dropshipping company.
The advantages of dropshipping
Dropshipping is a popular route for new business owners to start making money online. That’s because the dropshipping business model offers the following advantages.
Low barrier to entry
New entrepreneurs don’t need a lot of money to invest in dropshipping inventory. Once you sell a product, the dropshipping supplier handles order fulfillment and shipping.
What you do need, however, is strong promotion and branding skills—especially if you’re operating in a crowded market. You can enroll in free online marketing courses if you’re not super confident in this skill set.
Flexibility
Dropshipping isn’t like a 9-to-5. Sell as many (or as few) dropshipping products as you wish through your store. It’s a scalable ecommerce business model, allowing you to work whenever and wherever you like.
Take it from Caleb Dueck, director of operations at Sperry Honey, who says: “Print on demand is a great dropshipping model because you add additional value to the product with your design. Since your print-on-demand platform ships the order right to the customer, you still get the value of outsourced fulfillment while also bringing your own unique product to the table.”
Simple testing
Since other tasks—like order fulfillment and shipping—are taken off your plate as a dropshipper, your main focus is testing which products sell best. It’s why some entrepreneurs consider dropshipping a crash course in ecommerce marketing.
6 things to know before starting a dropshipping business
1. Is dropshipping profitable?
Our research shows the average ecommerce entrepreneur spends $40,000 in their first year of business. Product-related costs tend to be the most expensive, accounting for almost a third of their annual expenses.
Other common ecommerce expenses include:
- Operating costs (e.g., insurance, taxes, permits)
- Online store costs, such as your Shopify subscription plan and domain name
- Staff costs, if you’re building a team for order fulfillment
- Marketing costs, like social media ads or branding
Dropshipping allows you to significantly cut down on product and fulfillment costs. Since there’s no need to invest in developing new products, your product costs only involve sampling products that already exist. Instead of budgeting for order fulfillment staff wages, your dropshipping supplier handles that process for you.
That said, the luxury of not dealing with fulfillment, shipping, and returns comes at a cost. Dropshippers often pay a premium to source inventory from suppliers. With so many companies selling comparable products, there’s often a ceiling on how much profit you’ll make on each item.
Marketing tends to be the biggest expense for dropshippers. In a competitive market, the way you position your product matters. If competitors are selling a less expensive version of the same dropshipping product you offer, strategic digital marketing can help convince consumers you’re worth the extra money.
Like with any business model, the profitability of your dropshipping business depends on picking the right products to sell at the right prices.
2. How competitive is dropshipping?
Since anyone can start a dropshipping business with minimal upfront investment, it’s an attractive business model for entrepreneurs looking to sell products online. That makes it competitive—even more so if you’re selling in a popular dropshipping niche.
Despite a lack of official research data, dropshipping experts estimate that between 10% and 20% of dropshipping businesses succeed.
Stand out from the dropshipping competition by using techniques such as:
Choosing a less crowded niche
“Charging extra for the same product when you don’t add any value isn’t a viable business model for the long term, since the low barrier-to-entry means more competition and less differentiation,” says Caleb.
Building a brand
Cole Turner, who made millions through his dropshipping store, says: “The only way to be successful in dropshipping nowadays is to have a real identity as a brand, and have a real legitimate business, even if it’s not legit to start with. If you’re still shipping from AliExpress, you still have to be believable. People have to trust you.”
Prioritizing customer service
Dropshippers often fall into the trap of focusing solely on marketing and neglecting existing customers—despite the fact that existing customers are more likely to purchase products you’re selling.
“Dropshipping [is] still a massive part of a merchant’s journey,” says Brian Peters, partnerships lead at Shopify, “and there’s always an opportunity to do it better—more quality products, faster shipping, better search/UX, etc.”
3. How long does dropshipping take to succeed?
Despite dropshipping being a low-risk business model, there’s still a large amount of time that needs to be invested before making your first sale.
Dropshipping success will include:
- Starting an ecommerce store
- Sourcing new products
- Finding reliable suppliers
- Marketing your products
- Building a brand
Expect to spend at least 10 to 15 hours per week to generate up to $2,000 in monthly revenue through your dropshipping business. But, like any other small business, the time you invest increases your odds of earning more substantial revenue.
Our experience shows it’ll take at least 12 months of full-time work on your dropshipping business to replace an average full-time income of $50,000.
4. How do you get the right dropshipping suppliers?
You can have the best marketing campaigns in the world. But if customers don’t like the products they’re receiving (or fail to receive them entirely), it’s likely your dropshipping business is doomed.
“Navigating supply chain complexities, such as shipping delays and quality control issues, requires proactive management and effective communication with suppliers,” says Adam Garfield, marketing director at Hairbro. “Despite these challenges, dropshipping offers flexibility, low initial investment, and scalability, making it appealing for aspiring entrepreneurs.”
Websites like Alibaba and DSers have thousands of suppliers ready for dropshipping store owners to plug into. Thoroughly vet any dropshipping suppliers you choose to partner with.
While vetting dropshipping suppliers, pay close attention to:
Shipping estimates
Online shoppers want fast, free shipping. Consider whether you’re able to offer this service by researching estimates on shipping times and costs from different suppliers.
Reviews and ratings
To improve quality control, check reviews from other companies using the same dropshipping supplier. Is the product quality up to scratch? Does it arrive with any defects? Is their order fulfillment process fast enough to meet delivery promises to customers? Do they accept refunds on your behalf?
Customer support
The most successful dropshipping suppliers welcome feedback and provide speedy customer service. The most important dropshipping tip is: Own your supplier’s mistakes. Hold suppliers accountable for their errors, but when communicating with customers, always take responsibility for the error and find ways to make it up to them.
5. How big of a priority is dropshipping customer support?
The importance of prioritizing customer support should not be underestimated. As soon as a customer orders an item through your online storefront, details automatically feed through to your dropshipping supplier. It’s their responsibility to pick, pack, and ship the item to your customer. Inevitably, something could go wrong at any point in that process, and it’s up to you to minimize the impact of any negative customer experiences by owning your supplier’s mistakes.
Although the time you spend supporting customers can be minimized by partnering with reliable suppliers, it’ll still take up a lot of the time you spend running your store.
Best practices in customer support include:
- Communicating delays proactively, such as updated delivery times
- Maintaining strict quality control standards with your suppliers
- Asking for another chance if a customer’s order shows up wrong (e.g., offer a coupon code on their next order)
- Making support easily accessible by including an on-site chatbot and links to FAQs in your order confirmation emails
These customer support best practices can help you avoid situations in which customers publicly complain about your store on social media. That’s important to avoid, since social media complaints may deter up to 93% of online shoppers from purchasing one of your dropshipped products.
6. Is dropshipping legal?
It’s totally legal to operate a successful dropshipping business, but there are some details you need to consider before setting up shop.
Business structure
Operating as either a sole proprietorship, LLC, or C corporation each has its own benefits. However, an LLC can provide greater protection as a dropshipper. With an LLC, you don’t risk being personally liable for any debt the business accumulates, like overspending on marketing.
Taxes
Dropshippers need to pay sales tax if the state you operate from collects it and an order is placed by someone living in your state. You may also need to pay income tax if you draw a salary from the business.
Contracts
Consult a lawyer to draft a dropshipping partner agreement and protect yourself in the event something goes wrong with suppliers.
Ecommerce policies
You’ll need privacy, shipping, and returns policies for potential customers to view when thinking about purchasing through your dropshipping store.
Business insurance
Risk increases as your dropshipping business grows. Consider investing in business insurance to protect yourself.
The future of dropshipping in 2024 and beyond
The dropshipping industry is growing at a remarkable rate, and its growth isn’t set to slow down anytime soon.
But with so many entrepreneurs turning toward this business model as a way to get rich quickly, you’ll need to put a lot of effort into your new dropshipping venture if it’s to stand out from the competition.
That’s especially true if your target market includes younger generations. “Millennial and Gen Z consumers are more aware of dropshipping than years past,” says Caleb, “and those younger purchasers understand that they can just buy those products for a cheaper price on sites like Temu and Alibaba.”
Dropshipping success lies in choosing the right products and suppliers, maintaining profit margins, and providing quality customer service. If you can prioritize those elements and be flexible along the way, then yes—building a future in dropshipping is worth it.
Read more
- The Ultimate Guide To Dropshipping (2024)
- 130+ Dropshipping Products To Sell for Profit
- AliExpress Dropshipping- How to Dropship From AliExpress
- 8 Dropshipping Software for New Dropshippers
- The 19 Best Dropshipping Clothing Suppliers To Grow Your Business
- Product Ideas: 17 Places To Find Profitable Products
- How Does Alibaba Work? A Guide to Safe Product Sourcing and Dropshipping
- 29 Best Affiliate Marketing Programs for Beginners
- 10 Best Providers for Print-on-Demand Books
- Dropshipping Fulfillment- Guide to Supply Chain and Order Fulfillment