Dropshipping has been around for a while, but is it still profitable in 2022?
The truth is that dropshipping can be a great way to get into the eCommerce game without spending thousands of dollars on products upfront. In fact, more and more entrepreneurs are starting dropshipping stores, hoping to establish a successful online business. Furthermore, many see great results and are already planning for the upcoming year.
This article will help you understand what makes dropshipping profitable and show you how to maximize your profits. By the end, you will figure out the profitability of dropshipping in 2022.
What Is Dropshipping And How Does It Work?
Dropshipping is a fulfillment method where retailers do not keep the products they sell in stock. Instead, when a retailer receives an order from a customer, they purchase the item from a third party that ships it directly.
Imagine starting the dropshipping journey. Let’s see how our work looks daily:
- A customer makes a purchase in our store
- We Receive payment for the product from the customer
- We order the product from a supplier who delivers it to our customer
- We earn a profit
- The cycle repeats
For example, let’s assume we start selling sports shoes for 100$. Next, we receive an order from the customers who pay us immediately.
After the customer pays for the shoes, we order them from one of the shoe suppliers for a wholesale price of 70$ and inform our supplier to deliver them directly to our customer.
Once our customer receives the shoes, the whole process is complete, and we have a handsome profit of 30$. As long as we have the right product in our store, and can fulfill the demands we can start earning higher profits by repeating the same process.
Is Dropshipping Dead In 2022?
While many people believe we can’t use the dropshipping model in 2022, dropshipping is not dead. Yes, as simple as that, and neither will it be for more years to come.
With the popularization of eCommerce, dropshipping has become an attractive choice for many online businesses that are just starting.
Let’s see the graph below to understand why.
Source: Market Data Forecast
According to recent reports, the global retail and dropshipping industry will top $500 billion by 2025 and grow by 8% yearly. Moreover, the exponential population growth in developing countries and rising smartphone usage will make dropshipping more common worldwide.
Additionally, the retail environment is transforming at an incredible rate, and it’s changing the way of conducting business. Likewise, dropshipping is prevalent in many industries, from technology to fashion, and there are plenty of benefits.
Is Dropshipping Worth It In 2022?
The first thing that jumps out on the graph above is that dropshipping is absolutely worth it in 2022 and beyond. The exponential growth on the chart clearly shows that it is on an upward trend. What’s more, this trend will most likely continue to grow over the next few years as more people realize the benefits of dropping goods.
Who wouldn’t want an extra stream of income with little effort? Since ways of earning income have changed throughout the years, making money by dropshipping online has become another option to consider.
There’s no better time to start a dropshipping store than the present. Diving right into dropshipping early gives us enough time to establish our business empire and keep growing from thereon.
Is Dropshipping A Profitable Business?
You might be thinking to yourself, Is dropshipping profitable? With such a vast opportunity in the industry, dropshipping is not only profitable. It’s the easiest money you’ll earn.
One of the reasons it is profitable is that we don’t need to worry about startup costs with such an extraordinary business model. For example, we can save upfront storage and inventory costs. In addition, we pay for products only after being paid by our customers.
Not to mention, since dropshipping businesses don’t hold inventory, they can open as many stores and sell as many products as they wish with minimal added expenses. As a result, we can generate higher profits with relative ease.
All things considered, dropshipping is a low-risk venture with the potential for high rewards. Any products we sell leave us with a clean profit margin, and if the products don’t sell, it is not our loss to bear.
The biggest concern in dropshipping is marketing our store, reaching customers, and making sales. But, as long as the customers are buying our products, the business will keep making profits.
How Profitable Is Dropshipping?
Before we start dropshipping, it’s essential to know that the profitability of the dropshipping business model depends upon many factors.
Here are the factors that will help us estimate the potential earnings:
- Number of products in our store
- In-depth product research
- Marketing our store and products
- Upsells and cross-sells
- Overall look and feel
- Pricing and profit margin settings
Most sellers feel that the more products they add to their store, the higher the chance the business can take off quickly. That’s because the more shots you take, the more likely one of them will make it in.
However, we can’t just list random products to get more sales. That’s why product research is the most crucial step in preparing ourselves to build a successful dropshipping store. Failure to spend time product researching leads to frustration and a lack of meaningful profits in the business.
Likewise, our profits also depend on how we market our online store and products. A good marketing strategy can help us target audiences beyond our reach, resulting in additional profits.
Similarly, upselling and cross-selling are two factors that help us increase our profit margins. While upselling is the practice of encouraging customers to buy a higher-priced item, cross-selling means suggesting a related product to a current purchase.
Once customers arrive at our store, they want to have a different and unique experience. The better our online store looks, the better chance of converting traffic to sales. Therefore, we need to make sure that we’re different by optimizing photos, having trust badges, and attractive landing pages.
Finally, getting pricing and profit margin is crucial because the proper pricing prevents us from losing money on products we sell. Most importantly, setting the right profit margins makes the difference between a highly profitable store and one that is hardly breaking even.
Is Dropshipping Still Profitable In 2022?
Dropshipping can be a profitable business once we get the basics right. But will it be the same for 2022? Absolutely. We can remain assured that the profitability of the dropshipping businesses is not slowing down in 2022 because of various factors.
The first reason is that the Covid-19 pandemic has fuelled the rise in eCommerce as more and more people are finding it convenient to order products online. This provides us a great market to explore as we can now cater to a large mass of online shoppers never seen before.
Furthermore, essential ports are enduring a massive influx of shipping products resulting in long delays. If governments cannot keep up with the high demands for goods, it’s a clear signal that the sale of products is only growing.
Additionally, the dropshipping market data graph shows an optimistic forecast for 2022, which means we can be confident that it will be profitable next year. If you still don’t believe it, take a look at the screenshot above showing a beginner dropshipper who went from $0 to $1060 in a single week!
Is Dropshipping Saturated In 2022?
If you’ve been thinking about starting an online store but haven’t yet pulled the trigger because you’re worried about competition, then you need to know that dropshipping is not saturated.
As long as you find the right products to sell, customers will always want to buy them.
But there might be other competitors selling the same product at similar rates, right?
Yes, there’s no doubt that the dropshipping industry is seeing rapid growth and increased competition. But even with this competition, you can carve out your market share by using innovative marketing techniques, listing templates, engaging product titles, and attractive images.
One of the ways we can differentiate ourselves from the rest of the pack is by optimizing our eBay templates. The following article will teach us to optimize our eBay templates, which will enhance our customer’s overall experience when browsing through our stores:
Similarly, this video will help us to make an extraordinary impact by teaching us to customize images to our taste professionally:
How To Make Money Dropshipping
If we’re looking to make money from a dropshipping business, then we must follow these five basic steps:
Step 1: Find good products to sell (product research)
Step 2: Choose a Supplier
Step 3: Choose the right selling channel
Step 4: Import your products
Step 5: Fulfill orders
The first step is to research and find good products to sell in your store. Choosing the Right products means building a solid foundation for your online business.
Secondly, we must choose the right supplier to source the products. Building good relationships with suitable suppliers can go a long way in our dropshipping journey.
The next step is to pick a selling channel to sell our products on. There are generally two types of selling channels: marketplaces and eCommerce platforms. While eCommerce platforms allow us to customize our stores without any technical skills, marketplaces can generate traffic flow to our store with hardly any upfront marketing investment.
The fourth step is importing products to our stores from our suppliers. Since we don’t own any inventory, we have to gather all the information about the products from the supplier and create related listings in our stores.
Last but not least, fulfilling customer orders in time and with accuracy is a must. While fulfillment can occur manually or automatically, the automatic method is preferred because it saves us precious time.
Ultimately, Step 1 is the essential step we need to take to make money dropshipping. Selling the wrong products can sit in our stores and stall our growth. However, the right products can skyrocket sales and rake in profits.
How Much Does An Average Dropshipper Make?
Dropshippers typically make around $1000-$5000 per month, or more if they handle business well. Furthermore, the profit can be much higher for entrepreneurs with intelligent business methods and the right mindset.
However, maintaining a profitable store depends on our stores having highly sought-after products, proper marketing, effective sales platforms, and repeat customers. On the other hand, our revenue might slump if we don’t invest enough time in the business or have the right tools to handle the operations.
What Are The Most Profitable Products To Dropship?
Luckily, there are countless profitable products to choose from in many different categories.
Here are some product ideas that would get us started on the right path:
- Health and Fitness
- Pet Products
- Home Decor and Home Improvements
- Automotive accessories (e.g., Car seat)
- Patio, Lawn, and Garden
Because we can never go wrong with selling trending products, staying updated with the latest trends is vital.
Also, we can cash in on products that are just coming into popularity. This way, we can ride the early wave of success our product will see before it becomes an eCommerce trend.
While selling and creating trends are good ideas, the most profitable dropshipping products have the highest profit margins. Commonly known as high ticket dropshipping, selling more expensive items yields higher profits on each order.
Beginner’s Tip: Try out High ticket dropshipping. Selling more expensive items, like a desk, can yield much higher profits. 20% of $2000 is a much better profit than 20% of $40.
Who Are The Most Successful Dropshippers?
The first step to being a successful dropshipper is finding good products. Although the best products are hard to find, they can quickly establish the store as a successful business once found.
Secondly, successful dropshippers are willing to test new methods and keep experimenting. This is where those who lack ambition will give up when faced with obstacles. Conversely, those with the right mindset and drive will push through difficulties learning from their mistakes.
Ask Rafael Cintron how he did it. Rafael is from Puerto Rico and built a 7 figure e-commerce business by the age of 25. Surprisingly, Rafael’s dropshipping journey began in 2017 when he started working as a freelancer for a Shopify-based eCommerce store. There, he learned all the basics of dropshipping firsthand and saw how much potential it had. Afterward, Rafael quit his 9-5 job to start a store to make profits for himself rather than for his employer.
Another excellent example of a successful sensation making it big on Shopify is a 14-year-old Nehorai Klein from Shoham, Israel. Nehorai proved that age was just a number when he started his first online business on eBay at the age of 12. Now based in Shopify, his online store is named ‘the dream room,’ which sells wall decals and other home decor items targeting the Israeli market.
Here is a special video where we can gain insight on dropshipping from an expert:
What is a Good Profit Margin for Dropshipping?
Wondering how much is an ideal dropshipping profit margin? Don’t worry because we’ve got you covered.
Generally, dropshipping profit margins run around 20%- 40% on each product. While profits sometimes fall below these figures, staying in the 20%-40% range ensures that we can maintain a profitable store.
Unfortunately, there is a popular misconception in the dropshipping world where sellers believe they must start with low-profit margins ⸺ sometimes as low as 10% ⸺ and only increase margins once the store grows.
However, starting small is not a requirement. Some drop shippers begin with 30-60% right off the bat and make high profits immediately. Furthermore, we can further raise our profit margins by increasing prices after consistent sales or trying strategies like high ticket dropshipping.
Finally, there is no need to lower your margins if a product isn’t selling. If we are having difficulty selling products, it’s probably because they are not appealing to our target audience. Similarly, the choice of selling channels, suppliers, and an unoptimized product page can all account for poor sales.
How To Boost Your Dropshipping Profits With Automation
Aside from picking the right products and setting good margins, dropshipping automation is one of the best ways to increase profits.
We know very well that manual dropshipping is very laborious and time-consuming. That’s where automation allows us to save time and effort by having a software do most of the work.
With all the saved time, we can focus on scaling our business by optimizing our stores and adding more products. Additionally, automation reduces errors while importing products and filling in shipping details.
Here is a list of 3 automation tools to help you boost your dropshipping profits:
- Price & Stock Monitoring
- Fast & easy Product Importing
- Automatic Orders
Price & Stock Monitoring
First up, we have a Price and Stock Monitoring tool. Our stores can be adversely affected if we fail to keep an inventory of our products. Often, it results in unhappy customers and loss of profit.
AutoDS’ Stock and Price Monitoring tool helps us keep track of stock levels and price fluctuations while saving us the time and energy required to do these tasks manually. Whenever our dropshipping supplier runs out of a particular item, AutoDS marks it out of stock in our store.
Similarly, when our supplier changes a product’s price, the tool automatically updates the new one and ensures the preset profit margin is still the same.
Fast & Easy Product Importing
Next in the list, we have the Product Importer tool. Importing and listing products with AutoDS’ Product Importer enables us to add a product with exact product images, descriptions, specifications, or the same title.
Similarly, AutoDS fulfills our wishes, saving us time to do it manually even if there’s a ton of products to import. With the help of a bulk importer, we can import thousands of products at once within a few seconds.
Finally, we have automated ordering, a helpful tool for any dropshipping store. Initially, our businesses may receive few orders, allowing us to fulfill orders and handle returns manually.
However, once there are several orders per day, it takes much time to do it manually. Therefore, instead of spending most of the time filling in necessary details and processing all orders, we can let an automation tool do it for us.
AutoDS’ Automatic Orders helps automate the tiresome process of manually doing those tasks with perfect results. Moreover, it allows us to focus on other vital tasks to scale our business or spend time with our family.
There you go, you have all the knowledge about the future of dropshipping in 2022. With dropshipping projected to be a multi-billion dollar industry in 2022, there is no doubt that the trend will continue further into the future as long as products are still in demand.
Take advantage of the information at your disposal to start building your dropshipping business today because today’s investments are tomorrow’s returns. Also, stay ahead of the competition by collaborating with trustable suppliers and using an effective automation tool.
There are no ceilings to achieve tremendous success if you have all the correct information and reasonable effort. Here are some guides and articles to help you along the way: