Is Dropshipping Dead? A 2022 Outlook

Is dropshipping dead?

By Ecombridges    •   Updated July 26, 2022

Dropshipping has been growing in popularity throughout the pandemic as a side hustle for entrepreneurs, and even a full-time income for some. With all this increased popularity – many are asking the question “is dropshipping dead?”

In this article, we're going to cover the risks associated with dropshipping, along with why we think dropshipping is still a viable option for new entrepreneurs to get started in 2022 and beyond.

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What is Dropshipping?

Before we ask “is dropshipping dead in 2022 “, let's first briefly cover what dropshipping is.

Dropshipping is essentially a business model where the business owner does not manage the holding of inventory, packing, or shipping orders. Instead, when a customer places an order on a website, a dropshipping business would then place an order directly with the supplier and have the order shipped straight to the customer's doorstep.

Dropshipping business model

There are several obvious pros to dropshipping. The main one is that the business owner doesn't have to hold inventory at any point in the process.

This makes the overall cost of starting a business much lower than traditional business models. A large portion of the cost of setting up a new business usually relates to purchasing inventory to stock the storefront.

Aside from not holding inventory, there's lower overhead because there's no need to staff employees to manage the inventory/order shipment process. With a dropshipping business, these processes are simplified to either the click of a button or automatic order placement with your supplier when a customer places an order.

Is Dropshipping Dead, or Is Dropshipping Oversaturated?

Many of the people asking “is dropshipping dead” are actually asking “is dropshipping oversaturated?”.

Because of how easy it is to enter the dropshipping world, you do see a lot of new entrants into the market with this business model.

However, you have to keep in mind that dropshipping is just that, a business model.

To say that the dropshipping market is oversaturated means that you'd have to compare all industries that drop-shippers are operating in. While some niches might be oversaturated, others are barely touched or are just gaining in popularity.

Let’s dive a little deeper into ways that dropshipping can appear oversaturated.

Is Dropshipping Dead? Many Source from the same Suppliers

In the dropshipping world today, many people are sourcing from the same suppliers, often found on sites like AliExpress.

Ever been shopping on Amazon and noticed that a lot of different brands are selling what seem to be identical products?

The same thing is happening with dropshipping stores, they're just harder to spot because they're not consolidated in one place like Amazon.

Sites like AliExpress have factories that are largely producing the same products between them. On the positive side, this means that if you find a product that sells well you have a couple of options on which supplier to use. However, it also means that your competition will be able to find and source a very similar product offering for their store with just a few clicks.

This can lead to a lot of dropshipping stores offering similar products on their site. There are ways around this issue though. The key is differentiating your product from your competition.

One way to differentiate yourself is through marketing, which we will cover a little later in this article in depth.

Another option is to find a niche for a very specific market that does not have an oversaturation of drop shippers. Niches can be anything, for example, if you're interested in knitting you could have a dropshipping store that sells knitting supplies.

Is Dropshipping Dead? Competition is Fierce!

Another reason dropshipping can appear oversaturated is because of how many new entrants we see into the dropshipping world each day. This stems from how easy it is to set up a new dropshipping store.

With tools available like Shopify and all the seamless integration it offers with dropshipping suppliers and order management, someone can come up with a business idea and have a new store launched in the period of just a few days.

On one hand, this is very exciting. It’s never been easier to start your own business or side hustle than it is today. However, this ease also brings a wealth of competition to the market as well.

One thing to keep in mind though is while many people enter the market, not everyone sticks with it. Dropshipping is often marketed to new entrepreneurs as a get-rich-quick scheme. When they don't see immediate success many drop their business idea altogether.

So, while it may seem like there are endless amounts of competition, there's less than you think. It is still definitely possible to find the right niche and product to launch a successful dropshipping store.

Avoiding the Pitfalls: Creating a Successful Dropshipping Store

Let’s talk about some of the common pitfalls new dropshippers experience, and how to avoid them.

Marketing

One of the most important factors for success in a dropshipping store is deciding how you're going to drive traffic to your website.

What is your marketing strategy?

Many people underestimate the importance of marketing. They assume that it will be easy to create a paid ad and launch it immediately after creating your website.

Let’s discuss the best way to get started with paid ads, and then some other free options as well.

Paid Ads

The most common way that dropshippers do this is through paid ads on sites like Facebook, Google, or Pinterest, with Facebook Ads being the most popular.

One word of caution though. Paid ads are an easy way for new entrepreneurs to spend a lot of money very quickly, without seeing a huge return on their investment. The most common pitfall new dropshippers make is creating poor quality ad content and not understanding how to set up a campaign on the ad platform of your choice.

Before you dive headfirst into the paid ads world, it’s best to make sure you fully understand what you're doing. How to create good ad content and how to set up and run an ad campaign are two core concepts to learn before you launch your first ad.

There are many free tools out there to get an understanding of how paid ads work. YouTube is a great resource, although beware of people trying to sell their masterclass in dropshipping for a hefty price. Other paid resources include Udemy and Skillshare as well.

Creating Social Media Content

Aside from paid ads, there are also many other ways to get creative with driving traffic to your site.

One of the best ways to get started is through free social media content. While this method may take some additional time, it’s FREE and essentially zero risk to you.

The worst-case scenario is that you post on social media sites and nothing happens. Best case, you go viral and your store is a huge success. In reality, you'll likely fall in between here over time and start to develop a following of potential customers.

Two sites that we recommend getting started with social media marketing are TikTok and Pinterest. TikTok is a newer social media site, but because of its newness, it’s less saturated than Instagram. As a result, it’s easier for entrepreneurs to get their posts in front of larger audiences.

Pinterest is an option that is also overlooked by many. Pinterest is essentially a search engine that many people go to when they already have the intent to buy. This means that if you have content on this site and someone stumbles upon it in their search, they're often already looking for a product and will likely check out your website.

While content-based strategies take a little more time to develop, this is an easier way for people to get started without the financial risk of paid ads.

Select the Right Product

Select the right products so you won't have to ask

This may go without saying, but selecting the right product is key to your success as a dropshipper. When evaluating products, you want to look for products that will sell well but are not in an oversaturated market. This can be tricky and often feels like you're walking a very thin line.

To help ensure you're selecting the right product, you'll want to use tools available to you. Shopify's apps like Oberlo offer some statistics around products on AliExpress that can give you additional insight into what is trending. Google is also a good option and place to start.

If you're still trying to find your niche, a good place to begin is the areas that you're interested in. When you're passionate about the product and already have industry knowledge, you're going into the market with a leg up on a lot of other dropshippers. Look at your interests and try to think about what products you use regularly.

Our example of knitting earlier is a great interest-based niche. From there you could expand into other craft supplies or related products.

Conclusion: Is Dropshipping Dead?

So, back to our original question: is dropshipping dead?

In short, the answer is no.

However, as discussed throughout this article, there are considerations you need to be aware of to ensure success for your dropshipping store.

When considering launching a new dropshipping store, be sure to evaluate how saturated you think that niche is, and what your plan is for driving traffic to your store.

Lots of people keep thinking “is dropshipping worth it?” and without taking any action, they can be sure that dropshipping is dead for them!

However, with careful planning and market research, you can help increase the likelihood of success for your dropshipping store.

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