While many perks come with running a dropshipping business, many are hesitant to begin because of the massive growing competition. This brings many people to ask, ‘is dropshipping dead?’
For those who don’t know, dropshipping is a fulfillment method where an online retail business (a dropshipper) acts as an intermediary between the supplier and the customer. Once a customer purchases a product from the dropshipper’s store, the dropshipper contacts the supplier. Afterward, the supplier ships out the product directly to the customer.
Lastly, the dropshipper keeps the profit between the source price and the selling price. With that said, the dropshipping business model has been around for years and is continuously gaining popularity within the eCommerce world.
All in all, the question remains: Is dropshipping dead? We’ll answer this question by looking at recent trends and how the business model brings in profits. By the end, we’ll have a better understanding of dropshipping and if it’s still worth pursuing in 2022.
Is Dropshipping Dead In 2022?
Dropshipping is all around us. Chances are, if you purchase things online, you bought from dropshippers before. In fact, according to Market Data Forecast, the global size of the dropshipping market was estimated at 128 billion dollars in 2020. This number is predicted to increase year by year continuously.
In other words, the world has embraced eCommerce, and more people are buying online than ever before. Meaning dropshippers have the potential to continue earning high-profit margins. Especially with the small investment needed to begin, dropshipping is a highly profitable business model.
Take AliExpress, for example. They don’t have physical warehouses like Amazon. The products there are from Chinese dropshippers who import products from Chinese suppliers we cannot reach.
When we purchase an item on AliExpress, the Chinese dropshipper then purchases the product from their supplier and ships it directly to our address (hence the dropshipping business model).
With more suppliers, dropshippers can expand their market reach and, thus, increase their sales.
Dropshipping Competition: Is There Still Room For Profit?
Now that we know that dropshipping is a low-risk business model, we can understand why there are so many players in the market. This is a cause for concern for those looking to enter the dropshipping industry . With the amount of competition, many question how the business model continues to be profitable.
Unlike traditional retail businesses, there is no such thing as product/niche saturation when dropshipping. Sure, some items have more competition on a particular market, but we can dropship from, and to anywhere we want.
Plus, new products are manufactured all of the time. There’s always room to add new products and catch new trends while targeting different audiences worldwide to increase sales and decrease competition.
Ultimately, dropshippers investing in marketing will see the most significant ROI (return on investment). Not only are they increasing their brand awareness, but they are also gaining a competitive edge in the market.
Advertising Costs On The Rise: Is Marketing Still Profitable?
Every year, we notice a slight increase in advertising costs – especially in Facebook and Google PPC (pay-per-click) ads. That’s because we have new competitors joining every year, which increases our ads’ bidding value.
Take a look at how much advertising used to cost 5-10 years ago and how much it costs today. The graph above shows the average yearly spending on advertising. One reason for the increase is more competitors joining the market. And, with that, we have more people bidding to get good ad placements, ultimately increasing the average ad placement costs.
On the other hand, the opportunities and profits increased as well. We have more products to sell and more markets to target. In 5-10 years from now, you’ll see how many opportunities we had today when it comes to online marketing.
We can see that digital advertising spending worldwide is increasing. In 2020, the total ad spend was approximately 378 billion U.S. dollars, and it’s forecast to reach 646 billion by 2024.
So, what does this mean for dropshipping businesses?
It’s clear that the dropshipping business model is growing exponentially every year. With that, we have more competitors trying to get their piece of the cake, resulting in higher ad costs.
On the other hand, there aren’t enough sellers to meet the growing global market demand. There is always room for more products to dropship to additional markets. That’s why dropshipping will always be a relevant, low-risk, high-reward business model.
Is It Worth It To Become A Dropshipper In 2022?
The short answer is: absolutely!
As we saw, dropshipping is on an upward trend. Without the need to store inventory or invest in initial start-up costs like traditional business models, dropshipping is an appealing venture.
Who wouldn’t want the ability to generate a passive income and work from anywhere around the world? It may sound too good to be true- but with the right tools and knowledge, it’s more than possible.
Moreover, the explosive growth is mainly due to consumers’ increasing online shopping habits. eCommerce, in general, is growing into an everlasting worldwide trend, showing no signs of slowing down.
And with the dropshipping business model, we can take part in this success and grow our own business empires.
Remember that you can choose where to dropship from (what suppliers to use) and to (what selling channel to use), along with the ability to target different markets on a global scale.
You can do it from anywhere and on your own schedule. Therefore, there’s no limit to how much and well you can profit from dropshipping in 2022.
There we have it! Although we can’t predict the future, we can trust the facts and figures. Dropshipping is not dying in 2022; in fact, it is thriving. The multi-billion-dollar industry will continue growing as long as consumers are buying products.
If we’re entering the dropshipping market, we must ensure we’re staying ahead of our competition. Using eCommerce tools such as keyword research apps, product research tools, and Amazon repricers can provide a competitive advantage.
By optimizing in every way possible, especially in product research, online marketing, and providing exceptional customer service, we’ll head towards the path of success.
There are no limits to how far we can go, and dropshipping businesses are scaling new heights in the eCommerce world. So, take advantage of this information and consider starting your own successful business in 2022.
About the Author:
AutoDS is the leading all-in-one dropshipping tool for eCommerce sellers of all experience levels. Offering automation and expert advice, AutoDS is a time-saving hero for dropshippers across the globe.