Pros and Cons of Dropshipping: Does Dropshipping Work?

I did dropshipping myself, and I have first-hand experience of what it is like to build this retail business. It is from this experience that I built my list of the pros and cons of dropshipping. 

In addition, we will also discuss:

• Common Dropshipping Mistakes
• The Right Approach to Dropshipping
• How Can Dropship
• Other Dropshipping Considerations

In the end, I am hoping that this article will help you decide what next step to take. Either you can try dropshipping or put it in the parking lot and look for other business opportunities. 

Pros of Dropshipping

1. Low Capital Cost

It takes only $25 to $30 to start dropshipping. To start, you need a store, which you can easily get from Shopify. This store typically costs $25 monthly, depending on your location. 

The other two ingredients are effort and time. All you need to do to learn is watch tutorials, which dropship service providers easily provide as we do in our Dropship University. In addition, you can also always rely on the dropship tutorials found on YouTube.  

Since dropshipping, does not involve keeping inventory, you do not need to buy products that you will store in your house. You only have to choose products and upload them to your store digitally.  

Surely, you may need to spend some money on sampling the product yourself. Sampling the products is necessary, but it should not cost you a lot. If you are selling a product that costs $10, then you only need to spend $10 to buy the product for yourself. 

2. Fulfillment Automation

Another good reason to dropship is fulfillment automation. There are many dropship tools like Dropified, Printify, and AppScenic where automation is an option.  

Automation means you no longer need to log in to your dropshipping account to order the product from the supplier. During the set-up process, you will integrate your credit card with the dropship platform. 

Once an order comes in from your store, the dropship platform will automatically recognize it, and then send the order to the supplier even if you are asleep. The system will charge your credit card and pay the supplier. 

From here, the supplier will now process the order and ship it to your customer, not to you. Because of this, you do not need to watch your store like a hawk—you can sleep or go to work and let the system do its job.   

3. No Production Activities

You do not need to produce anything to be able to dropship, except perhaps your marketing materials like videos and images. However, both product images and videos may already be available from your supplier. 

Even if you do print-on-demand with Printful or Printify, you do not need to produce anything. The only thing that would come from you is the design. In dropshipping, the only types of work you will do are:

• Build your store
• Design your products (for print-on-demand)
• Create marketing strategies and execute them
• Place an order if you have no automated process

You do not even need to ship the items yourself or print shipping labels. The supplier will take care of all these. Your main focus is to market your goods and provide excellent customer service.     

4. Scalable Business

Lastly, dropshipping is a highly scalable business. Let us say that you first opened a t-shirt store. After a while, you can add more products to this store, such as shoes and handbags. 

Another method to scale is by building a new store in a different niche. For example, you can start a new store but this time, you sell kitchen items.

You can also decide to market your goods to another country. In most cases, dropshippers would typically market their items to US customers, then they would start marketing their store to Canada and other countries later on.

Summary: Dropshipping is one of the few businesses that require little capital. The risks are minimal, but the rewards are great.

Cons of Dropshipping and How to Solve Them

1. Too Much Competition

There are thousands of dropshippers. Many people who want to start a business resort to dropshipping because the business model is easy to understand and implement. 

So, how do you fight the competition? Here are my recommendations:  

• Penetrate a deep niche, not a general one
• Concentrate your marketing efforts on benefits, not features
• Sell only a few highly desired products 

A deep niche means you want to create a site where you sell highly specific items as regards the interests of people. For example, instead of just selling print-on-demand shirts (POD), sell POD shirts about politics. 

Do this, and you will make it easier for people to understand what kind of service and products you provide. You will also attract a specific group of people who are what we call an underserved market.

Next, instead of listing down merely the features of a product, focus your copy on the benefits. For example, do not say that the battery of the drone you sell has 10,000 mAh of power. People do not understand this. 

It is better to say that your drone can do an hour of flight time. Do this, and you will give the potential customer better reasons to buy. 

Finally, do not clutter your store with products. Upload or import only a few products but ensure that these are highly desirable. This may sound counter-intuitive, but it works better than creating the general store. Generally speaking, dropshipping stores that have too many products only make customers confused.   

2. Low Profit Margin

Dropshipping has a low margin for profit because competitors are undercutting each other. For example, if you buy a product that costs $2 in AliExpress, you can ideally sell this for $15 but you can’t. Other dropshippers are willing to sell this item for $3 and make a dollar. 

You cannot survive on that. In addition, likely, these AliExpress suppliers are also selling their items on Amazon. If you think about it, there is no way you can compete against these suppliers as far as prices go. 

To fix this problem, I recommend that you do print-on-demand dropshipping. This way, no one else has a product the same as yours. After all, in print-on-demand, you are the designer of the products you sell 

3. No Control Over Supply Chain

Another common problem in dropshipping is the absence of control. Since you do not manufacture the product, you do not have a say in its quality.  

On some occasions, your supplier may even send the wrong item. This problem is not uncommon if you work with suppliers from China, especially if you sell cheap items that cost only $2. I can tell you right now that the quality control and process control of the suppliers are highly questionable. 

To solve this issue, find a supplier that you can trust. You can do this by using a third-party dropship tool that vets its suppliers. Some examples of these are AppScenic, Printify, and SaleHoo.      

4. Difficult to Make a Brand

The last most common challenge in dropshipping is branding People will hesitate to buy from you because they do not know your brand. 

The only solution to this problem is to build credibility. You can either build it for free by creating social media channels and publishing content that helps people or pay an influencer to endorse your company.

Summary: Dropshipping is not a walk in the park. The challenges you will face are the same as what many online retailers do. The beauty of it is that, unlike typical retail, you do not have to spend a lot of money to get started with dropshipping.

The Right Approach to Dropshipping

The right approach to dropshipping is to follow a step-by-step plan. It is best to do it this way, so your every move compensates for the previous steps, thus bringing you closer to your goal. 

These steps are:

• Choose a niche and the products
• Select a supplier and test the product
• Pick a platform
• Plan your branding 
• Strategize your marketing efforts 

Let us discuss each one of these steps.

1. Choose a niche and the products

The first step to a successful dropshipping business is choosing a niche and the products that belong to the same niche. 

Some key considerations are:

• Market size for the niche
• The availability of the product
• Seasonality of the niche
• Price and competition

I suggest you choose a niche that has either a wide market or a small market but is underserved. You also need to determine if this product is readily available at any given time, and how many products a supplier can provide. 

Although seasonal products are not so bad, I recommend that you add these products only during this season. For example, I do not recommend dropshipping snow skis—these products will not sell outside the winter season. However, you can always add them to your store if your nice is a sports gear.

2. Select a supplier and test the product

Once your niche selection is final, it is time to look for a supplier you can rely on.  My advice is to buy the product and have it delivered to you.

The benefits of doing this are: 

• You can see the product in person
• You will know what packaging the supplier uses 
• You will have an idea of how long it takes for the supplier to pick, pack, and ship the item
• You will also know how long it takes for the package to arrive

There are dropship supplier databases where the suppliers know and understand what you are doing as a dropshipper. On the other hand, there are suppliers, such as the ones in AliExpress, who do not know that you are a dropshipper. 

For the latter, make it a point to contact the supplier and explain your situation/ this way, you can work out a standard packaging and refund policy with the supplier. 

3. Pick a platform

Next, pick a platform where you will build your store. There are many options out there, such as:

• BigCommerce
• Shopify
• WooCommerce and WordPress

The most popular and easiest to use is Shopify. Its founders built the platform for one purpose: e-commerce. As such, you can expect your website to be fast and responsive. Shopify also has an app store where you can choose and install applications that will add more functions to your store.  

There are many tutorials on how to build a Shopify store. If you want, you can also buy a pre-made Shopify store. 

4. Plan your branding 

Branding is one of the keys to dropshipping success. Your store must exude a personality—it has to appeal to your target market. 

Branding includes, but is not limited to, the following:

• Your logo
• Standard color schemes that you will apply to your website design
• A brand personality, such as sporty, masculine, feminine, kid stuff, etc. 
• Standard fonts and their respective sizes

Once your brand standard is completed, you must use the same for all your social media channels. For more information, I suggest you read our article on how to brand a product.     

5. Strategize your marketing efforts 

Finally, you must plan how you intend to market your dropshipping store. The most common ways are: 

• Blogging 
• YouTube and TikTok videos 
• Advertising
• Social media presence

All these are necessary. My suggestion is to pick two for now, especially blogging and social media presence. You can do advertising later.

It is important to point out and emphasize here that your content should be helpful. Avoid posting content that does nothing but attempt to sell. 

Summary: Dropshipping is a lucrative business where you can succeed, but only if you do things right. The best way to approach dropshipping is through the steps laid out in this section. 

Common Dropshipping Mistakes

Many people say dropshipping does not work—they did not succeed and in my opinion, they probably committed some of the most common mistakes in dropshipping. These are: 

• Choosing the wrong niche and market
• Not enough planning   
• Choosing unreliable suppliers
• Poor marketing strategy and execution

Let us discuss each of them. 

1. Choosing the wrong niche and market

Dropshipping is a highly competitive business model. It is easy to build a dropshipping store and much easier to choose products that you can sell. 

The one mistake that dropshippers often make is choosing an item or a product type on a whim. For example, they choose the kitchen niche, but they know little about it.

To do it right, pick a niche that you fully understand. You need to have a passion for it. If you do, you will know the pain points of customers, and you will find the right product that will solve their problems. 

2. Not enough planning   

You must plan your dropshipping business—create a feasibility study and also plan for your brand, your theme, color scheme, etc. 

Many dropshippers build their stores with no plan. They choose a niche and follow instructions from courses, without thinking ahead of the potential challenges. 

Here are some things you need to plan for:   

• Website provider or host and website speed
• Reliability of suppliers
• Blogging and marketing efforts
• Branding standards
• Customer support services
• Payment and refund and other financial arrangements
• Social media presence and posting schedules

At every step of the way, you need to ask yourself: how will this action lead to a sale? List down all your plans and keep track of when you completed them. It also makes sense to track the performance of your actions to see if they yield results.    

3. Choosing unreliable suppliers

There are millions of products that you can dropship and there are thousands of suppliers you can choose from. Many dropshippers failed because they selected suppliers without even ordering the items themselves. 

As such, they end up dealing with bad products, customer issues, and refund requests, and the suppliers would not even respond, or the supplier would outright deny the refund request. 

Here are some of the best practices when choosing a supplier: 

• Pick a supplier from a dropship supplier tool where the company validates the supplier’s credibility
• Order the product yourself
• Check the shipping options and shipping speed

For supplier marketplaces, I recommend Printify, SaleHoo, Dropified, and AppScenic.

The best way to pick a supplier so to do a test order. This way, you can see the product in person and measure the supplier’s effectiveness and efficiency in shipping. 

If ordering the product is not possible because it is too expensive (furniture, for example), please ensure that you read the reviews for the product and supplier by their dropshippers. 

4. Poor marketing strategy and execution

Dropshipping is like any retail business. You need to have a marketing plan to be able to reach out to your target market. I can say from experience that marketing is one of the most difficult aspects of dropshipping. 

Here are some tips:   

• Know your audience; create a persona or an avatar of who your target market is
• Be one of them; engage people through social media and help them. Do not just post product discounts or any marketing material.
• Solve a problem—all your ads and posts, if possible, must show the consumer how your product is solving a problem

Marketing is tough, and it is why companies spend millions of dollars on this effort. This is not to say that you do not stand a chance. What you need to ensure is that you are reaching out deep into the emotions of your target buyers. 

Summary: You can succeed in dropshipping if you avoid these four common mistakes. Treat dropshipping as a serious business and not just a hobby. Forecast potential problems and find a way to solve them even before these problems exist.

How Can Dropship.IO Help You Succeed in Dropshipping

Dropship.IO is a multi-tool that provides everything you need to succeed as a dropshipper. In this section, I will provide a snapshot of the best and most important features of the system.

1. Product Database

The product database is where you can find products and see sales data. Here is an example: 

As you can see, this screenshot has been sorted from top sellers to the bottom. You can use keywords and other filters to narrow your search. 

This system is what you need to validate if your product idea is in demand. It also allows you to see the level of competition, or what specific product type customers prefer over the others. 

2. Sales Tracker

The sales tracker provides a glance of the top stores and top products. In addition, it is a tracker that allows you to spy on competitors and products.  

Here is an example: 

This is a list of the stores that I am tracking. If I click on one of them, I will see this: 

What I can do with this data is to come back from time to time and see how a store is performing. This tells me what kind of market this product or store has, and I can analyze if the market is seasonal or not.  

3. Competitor Research

The competitor search area allows you to look for stores based on keywords. Here is an example: 

This screenshot is the search result for the keyword “drone.” We can see several products and the stores that carry them. In addition, we know how many products each store has, the creation date of the store, and the product creation date. 

If you click on TRACK, this store will be part of your SALES TRACKER list. From the sales tracker, you can view several details like:

• Shopify theme used
• What store apps are in that store
• The social channels that the store uses

The Competitor Research tool is a spy tool. It makes it possible to see what your competitors are doing. In some cases, you can even find who their suppliers are. Its main benefit is that you can leverage data to see what secrets your competitors hold.  

4. Ad Spot

The Ad Spot tool is a search tool for Facebook ads. Instead of waiting for an ad to appear on your Facebook feed, you can use keywords and other filters to search for specific ads relevant to your niche. 

Here is an example:

You can filter your ad search with the following:

• Reaction count
• Number of comments
• Number of shares
• Video length 

With the Ad Spot tool, you can find ads that work based on the reactions of the people who saw the ad. From here, you can play the video or view the image, and pick up some of the best practices that make the ad work. 

You can, to some degree, copy bits and pieces of the ad. This way, you do not have to spend so much time planning and creating your ad creative. 

5. Dropship University

Finally, we have a university where you can learn everything you need to know to succeed in dropshipping.  

Here are some examples of the video lessons: 

• Connecting Shopify with Dropship.IO
• How to use the product database, sales tracker, etc.
• How to find suppliers
• How to use the portfolio database to your advantage

Essentially, the video lessons will help you maximize your Dropship.IO account to analyze competitors, find products, and make sales. 

Summary: Dropship.IO is a premier dropship tool that makes it possible to search for winning products, leverage competitor data, spy on stores, and find reliable suppliers.  

Other Dropshipping Considerations

Dropshipping does not only work on Shopify or other self-hosted websites. You have the choice to do it in other marketplaces. The question is: should you? Allow me to present the pros and cons of each. 

Pros and Cons of eBay Dropshipping 

Contrary to what many people say, you can dropship on eBay. Just be careful not to sell products that people can easily find online, like Amazon as eBay does not like this at all.  

Pros of eBay Dropshipping

• Easy to build an eBay store
• No worries about finding customers
• You can do either an auction or Buy It Now

Cons of eBay Dropshipping 

• High level of competition 
• Customers’ attention span is low

It is a good idea to dropship on eBay if you do not sell common items. For example, you can sell stuffed toys that have personalization options or shirts that you designed. If you dropship products readily available from other dropshippers, you will compete against price.     

Pros and Cons of Amazon Dropshipping

If you ask me, my opinion is not to dropship in Amazon. Most supplies in China are already selling on Amazon, and you will end up competing against them. Nevertheless, below are the pros and cons. 

Pros of Amazon Dropshipping

• Lots of customers
• Easy to set-up

Cons of Amazon Dropshipping

• Lots of fees
• You are competing against the suppliers

While Amazon is one of the biggest marketplaces in the world, I do not suggest dropshipping here because there is nothing you can sell that is not already there. Similar to eBay, I would only dropship items that are unique, such as print-on-demand products.  

Pros and Cons of CJDropshipping

CJDropshipping is a marketplace where you can find products and import them to your dropshipping store. Most of the products here are from China. 

Pros of CJDropshipping 

• Lots of suppliers in the system
• CJ integrates with many platforms
• You can ask CJ staff to source products for you

Con of CJDropshipping  

• Slow turnaround time for orders
• Shipping is expensive

Because ePacket no longer exists, shipping from China to America and the rest of the world has become too expensive. While CJ is still an excellent place to find products, you have to set your customers’ expectations that shipping can take a while, at least two weeks.  

Pros and Cons of Print-on-Demand Dropshipping

Finally, we have print-on-demand or POD dropshipping where you can use systems like Printify and Printful. 

Pros of Print-On-Demand Dropshipping

• You can design products 
• No one else will have a product with a design like yours
• There are many suppliers and product types to choose from
• You do not need a design tool because it is already embedded in the system  

Cons of Print-On-Demand Dropshipping

• The products are expensive 
• Shipping is also expensive

While POD is one of the best dropshipping options, please note that shipping costs are extremely high. For example, a coffee mug has a shipping cost of $9 from America to America.

The best way to justify this cost is through some serious marketing and branding—make your product look luxurious and target people who have a lot of extra money to spare.

Summary: There are many ways to dropship and many sites where you can dropship. Of all these, I still highly recommend that you build a website. This way, the people who come to your website will not see other products but yours only. 

FAQ: Pros and Cons of Dropshipping

What is the downside of dropshipping?

The biggest downside of dropshipping is spending money on marketing g and not making sales. Other than that, your financial exposure is really small.   

Is dropshipping a big risk?

No, dropshipping is not a big risk. You can start dropshipping for as little as $30 monthly.  

Is dropshipping a good idea for beginners?

Yes, dropshipping is an excellent idea for beginners. You do not need to be an expert in retail to make it an e-commerce website.

Is dropshipping still good money?

Yes, dropshipping is still good money provided that you do your due diligence in product research, site creation, and marketing.

Summary

The next step now is to sign up for a free account with Dropship.IO. I encourage you to test the system and see how it can help you beat the cons of dropshipping. We do offer a 7-day free trial where you can use all the features with no financial commitments.

From here, you can find a niche and products, then also look for suppliers you can consider working with.