A term not necessarily known by everyone, dropshipping has been around for some time. Dropshipping refers to a retail fulfillment method where the business doesn’t actually have the products it sells as its stock. Instead, the dropshipping retailer will sell the product, then inform the manufacturer or wholesaler directly. The product is then shipped from the original manufacturer or wholesaler. The dropshipping retailer doesn’t ever see the item or the products, nor is it involved in the actual shipping process. Because of this, dropshipping companies are able to focus on growing the customer base and brand as a whole, without having to consider stocking and shipping logistics.
Pros and Cons of Dropshipping
So why do businesses choose to adopt this model? For instance, there is low initial investment as the business does not purchase and stock any of the products listed on its site, which greatly reduces both risk and money to enter the market. Flexibility is another major plus. As the business is managed online and the physical goods are handled by manufacturers and suppliers, the business can be operated anywhere in the world. This means there is location independence which is appealing to digital nomads.
This model also means being able to offer a more expansive product selection than if you were to stock and hold specific items. Without the need to purchase them upfront, you’re able to quickly change to adapt to current trends, test out new products quickly, and even expand the options you have without risking any finances or having unsold inventory. With scalability, you have room for proper growth too, and you won’t be increasing the workload or general overheads. But there are some downsides to. Because it’s so easy to do, the marketplace is very crowded with dropshipping companies.
This makes standing out from the crowd quite hard, as you need to find a niche market. Because of the market saturation, the potential profits you could make are significantly reduced. This means you have to be smart with your pricing strategies and the way you optimize your business.
You’re also reliant on third-party suppliers for your inventory management and to fulfill orders. Should the supplier run out, or ship the product late, you’re the one who’s going to suffer in terms of reputation. Additionally, should a product not be up to standard, you’re the one dealing with any complaints and returns.
Is Dropshipping Still Worth it in 2025?
Despite the issue with so many other companies competing, the market has actually increased. In fact, it’s forecast to keep climbing and has already passed the $300 billion threshold. The market continues to expand too, with the dropshipping market sitting on a projected $476 billion by 2026. As such, there is clear indication that dropshipping continues to be a viable and robust business model within the e-commerce industry.
How to Start a Dropshipping Business
If you’re still unsure that this can work, just look at sites like AliExpress. This is a great example of using a platform for dropshipping, linking hundreds of suppliers and sellers together on one platform. Better still, not only does it offer thousands of products, but the web is filled with sites that provide AliExpress promo codes which can reduce costs for dropshippers, making the potential for profits even better.
And, it’s a strong place to start if you’re looking for somewhere to begin sourcing all your products from. It’s got a strong track record for shipping promptly too, which makes it an ideal starting point.
If you want to start a dropshipping store or business, then there are various steps to take.
- Do your research and choose suppliers that will meet your requirements.
- Look for suppliers based on their location, products, certificates, trade participation and overall capabilities.
- Find supplier information to see how many years of exporting they have, their production capabilities, audits, product catalogues and so on.
- Communicate what it is you require by reaching out and messaging them. Make sure that they will be able to meet your expectations regarding price, minimum order quantities, and any product customization that might be necessary. Ensure you always have up-to-date supplier pricing and inventory lists too.
- Ensure that the order placement is properly managed so that the supplier has the right details and shipping addresses to fulfill orders. Make sure any support and tracking information is shared so that you can pass this on to customers. And ensure that returns processing is easy and simple.
Once you have put in place a coherent business plan for dropshipping, make sure to also expand your business with overseas orders for increased success.
