The great advancements made in e-commerce and mobile technology have brought about significant changes in the business world. Nowadays, you do not even need to own a brick-and-mortar store to sell products. Rather, you can easily sell your products online with just a virtual, e-commerce store. And one such type of business model is dropshipping. But, can you really make money dropshipping on Shopify?
With dropshipping, you do not require any stock to sell to your customers. Rather, you act as a middleman, taking orders from customers and then ensuring that the supplier sends the products directly to the customer.
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One of the most recommended platforms where you can carry out dropshipping is Shopify. Shopify is popular for its user-friendly interface, excellent loading speeds, reliability, and visually appealing online stores. However, all these positive attributes mean nothing if you can't make reasonable profits dropshipping on the platform.
So the big question is: Can You Really Make Money Dropshipping on Shopify? The answer is Yes.
Dropshipping Statistics and Trends
Statistics show that dropshipping records a global market value of more than $100 billion. This line of business is expected to increase its CAGR (Compound Annual Growth Rate) up to approximately 30% by 2025.
These findings are enough proof that dropshipping on Shopify is indeed a profitable business when you do it right. Also, consider the great impact that Covid-19 has had on the business world; with more lockdowns and restrictions being put in place, most people have ventured into online retail shopping.
Therefore, we can conclude that dropshipping has never been as popular and profitable as it is now.
Don't Jump Blindly into Dropshipping
Just because dropshipping on Shopify is gaining a lot of popularity recently does not guarantee that it will be a profitable business. For you to make a profit, you need to put in extra effort and go the extra mile.
Consider the following four tips that can help you make dropshipping on Shopify even more profitable:
1. Choose the Right Product
When you start a dropshipping business, you will need products to sell. However, it is not just any product that will work out for you; you need to find the right product that will attract more customers and generate sales.
To easily find the right products to sell, research the most recommended products by dropshipping gurus and experts. Alternatively, you can even download apps that teach about formulas for identifying profitable products.
However, you should not expect to find a ‘one-size-fits-all' answer for what product to sell. Remember that, the type of product that may work for other people may not necessarily work for you. Therefore, to ensure your success in the dropshipping business, you are recommended to go for products that meet the following three features:
- The product should be able to solve an existing problem in the market and/or have a WOW factor.
- It should have enough demand in the market – However, it should not be too common or saturated in the market.
- You should be consistent with the line of products you sell – Try to stick to a particular niche of products, rather than sell products of different niches and industrial lines.
2. Provide an Excellent Customer Service
Every person who starts a business has one goal in mind: to make profits. However, most business people focus too much on gaining profits that they forget one crucial aspect: providing a positive customer experience.
When you choose the product to sell, you want it to attract customers and appeal to their tastes and preferences. However, most customers and clients are more drawn by the experience they receive when shopping than the products they buy.
For example, one research study showed that 86% of customers were more impressed by sellers who treated them as individuals than those who treated them as just a number. In addition, 55% of customers commented that they would never give their cash to brands that provided a bad customer experience to their buyers.
Therefore, if you are to generate more sales and profits for your dropshipping business, you need to improve the quality of your customer service. Do not just settle on providing a good customer experience like most other sellers; rather, strive to provide an excellent, top-notch service and you will gain even more loyal customers for your product(s).
Furthermore, when operating your dropshipping business, you will need to develop a way for your buyers to contact you. After all, your customers and clients will need advice and support from you from time to time.
Therefore, you need to ensure that your customers can send you messages easily and that these are also responded to and handled promptly.
If you have a website, include “Support” and/or “Contact Us” sections. Also, it is recommended that you include an email address where customers can send queries and contact you about any urgent matter that they have.
The better the support system you provide, the better the customer experience will be, in turn drawing more customers and sales to you.
3. Track and Manage Your Expenses
Dropshipping helps to save a lot of expenses. For example, with dropshipping, you won't have to undergo any costs for setting up physical stores, paying for shop certificates, or other expenses associated with production and inventory storage.
However, there are still other bills and expenses involved in operating a dropshipping business on Shopify. Here are a few examples of such expenses associated with dropshipping on this e-commerce platform:
- Marketing costs, such as expenses for social media marketing
- Sales and subscription fees for the e-commerce website builder
- Permit fees or a business license
- Supplier fees
- Web hosting fees, for those online sellers who own a personal website
Therefore, to ensure that you make significant profits from the business, you need to track and manage your expenses. Otherwise, you could end up mismanaging profits and eventually having more bills to pay than profits.
The BeProfit margin calculator can help you track all your expenses, as well as turn all the complex data into graphs and charts that are easy to understand.
4. Reduce Customer Acquisition Costs
To really make money dropshipping on Shopify, you will need to make sales. And to make sales, you will need to first attract your target audience. However, while you might be desperate to drive more traffic to your site, you must lower your customer acquisition costs (the total cost required to get new customers).
To achieve this, first, prioritize your appropriate audience. Also retarget your customers to maintain loyal clients for a long time. When you work to improve customer retention, you lower your customer acquisition cost, while still acquiring loyal customers for your business.
More so, you will ensure low costs on your marketing strategies and more profit for your business.
Bottom Line: Can You Really Make Money Dropshipping on Shopify?
So, can you really make money dropshipping on Shopify? Absolutely yes! Dropshipping is undoubtedly a very profitable business to engage in if you do it right and you’re a bit lucky too.
However, you should be willing to put in that extra effort to make more profits from the business. Only by doing so will you be able to make significant amounts of profits from dropshipping on Shopify.