By Olga Lavrinovich
Is dropshipping profitable in 2021? Today, we’ll find out if you still can secure jaw-dropping profit margins with this business model! What’s more, let’s also discuss how you can make the most out of this industry growth.
“Can I make any money from dropshipping?”
“This business model has existed for almost a decade. Is there still any potential for growth?”
“Everybody has already started a store. Can I find a niche to benefit from?”
“Is dropshipping lucrative?”
Have you ever seen these questions on thematic forums and in blogs’ comments? Do you have the same worries about the future of dropshipping business and your potential profits from it?
In this article, we’re going to talk about the directions you can go to secure yourself steady dropshipping profit. So, read it carefully to learn how exactly you can use the growth of this industry to make money with ease!
Why is dropshipping a profitable business: developing markets are growing
Is dropshipping a good business model?
Judging by numerous success stories of lucky entrepreneurs, it might seem that everybody already does dropshipping, and the market is oversaturated. A lot of people nowadays buy products at wholesale pricing and sell them all over the world. All wheels are invented.
So, does it mean that starting a dropshipping business now is too late?
By 2025, the global dropshipping market value is expected to reach $591.77 billion. Compare it to the size of the global ecommerce market as a whole: by 2025, it is projected to be $24,265.12 billion. As you can see, dropshipping’s market share is pretty small. That obviously means enough room for the dropshipping industry growth.
A few years ago, dropshipping entrepreneurs mostly operated on well-developed markets with high internet penetration. But the situation is gradually changing. Today, this business model is not limited to developed countries only.
There are dozens of countries on the globe that gradually learn about ecommerce and adopt newer technologies. Social media commerce, affiliate marketing, dropshipping are creeping into people’s lives little by little. If you do some research and target these specific regions, you are highly likely to see huge success in your dropshipping venture.
Why is that?
- Internet penetration in developing countries is growing steadily
According to Statista, in 2020, the global average penetration rate reached 59%. Please note that in 2013, only 35% of the worldwide population could boast an access to the web.
That’s an impressive boost meaning that the number of your potential customers can rise dramatically. In fact, while in 2020, there were almost 4.66 billion Internet users worldwide, by 2022, this number is expected to reach 6 billion.
- Purchasing power across developing regions is rising
As a dropshipping store owner, you need to be sure that you’re targeting people who are both willing and able to pay for their purchases. Luckily, the citizens of developing regions are gradually getting more and more affluent.
In these countries, there slowly appears a segment of middle class buyers who are likely to shop online. And they surely can become a prospective target audience for you and the products you want to sell.
By 2022, the ecommerce sales growth from emerging markets (China, South Africa, Brazil, Russia, and India) is expected to reach 20% of all retail sales. Naturally, as more middle class representatives in emerging countries try to make purchases online, the ecommerce industry in these regions grows rapidly.
- It’s easy to meet the demand coming from the emerging countries
For a number of reasons, it’s not always possible for the emerging countries’ population to get items they need. That’s especially true for products of a foreign origin. These reasons might include underdeveloped transport infrastructure, limited stocks, or overly high prices for these items caused by huge distribution and storage costs.
This is why online stores using the dropshipping business model are the perfect place for these people to make their purchases. Such stores provide the opportunity to source the items they can’t find elsewhere in the country and buy them for a moderate price. If you, as a store owner, treat your pricing strategy right, both you and your customers will be happy with the products’ affordability.
Why does dropshipping profit grow: B2B segment gets more accessible
Traditionally, newcomers to dropshipping business start with selling their items to end users as they find it easier to target and reach these people.
However, if you have gained enough experience or just decided to try some alternatives, there is a way out for you. It might be an appealing idea to start working in the B2B segment, which means offering your dropshipping products to businesses.
As we can learn from Kingpin’s success story, a dropshipping store owner can do a great job collaborating with small businesses and selling products in bulk. You can follow the example and make good use of this market segment because it is not fully taken yet. In 2019, for example, the global B2B ecommerce market (valuing more than $12 trillion) was over 6 times bigger than the B2C one.
Isn’t it a valid reason to consider making your way to the world of B2B dropshipping?
Why is dropshipping profitable: business strategies for B2C segment are evolving
It’s completely fine to keep working with day-to-day needs of ordinary people and stick to the good old business-to-consumer dropshipping. It’s a time-tested business with nice proven profitability, after all.
Still, if you want to reach new heights, you can heavily benefit from rethinking several aspects of your business approach:
- Your product strategy
Generic and easy-to-source items might be a good solution if you are targeting the emerging markets we have discussed above. But what about other types of customer segments? Are you sure you’re offering them what they actually want?
Take some time to research your target audience and look carefully at your product offer once again. Are you selling the same annoying basic goods as everyone does? Is it obvious for your store visitors that they can find all these items on AliExpress for a lower price?
Use additional sources to find the best items for your ecommerce store, and don’t forget to evaluate AliExpress items in detail before you import them on your website.
- Your branding
Product range is not the only thing that matters to your store visitors. Do you remember the primary reason why customers might prefer your store to AliExpress?
It’s all because of the atmosphere and the sense of belonging you create there. Dedicate a couple of days to creating clear and informative product pages, and enjoy the growth of your conversion rate – as well as the boost of your dropshipping profit!
Why is dropshipping profitable: getting mobile-first opens up new opportunities
It’s not a secret that the growth of mobile technology reshapes the online shopping industry in general.
Previously, it was more than enough to simply have a mobile-friendly online store to meet the public demand. Now, it’s essential to become mobile-first. If you want to achieve even more sales in your store, you need to keep your website relevant to contemporary technological requirements. And here is why.
- Mobile shopping rises rapidly on the developed markets
Rapidly growing mobile commerce opens up opportunities for dropshipping newcomers. According to Forbes, nearly 80% of shoppers said they started shopping more with mobile devices in 2020. Analysts expect that the share of mobile commerce will represent 44% of all ecommerce sales. In 2021, mobile commerce will generate almost 73% of all sales.
- Developing countries’ population predominantly uses mobile devices
Quite often, for this category of online shoppers, mobile devices are the only way to go online. It is reported that consumers from emerging countries are much more likely to use their smartphones to shop online in comparison to people from developed countries. The reason is simple: for them, these devices are the only affordable tools to get Internet access.
For example, according to Statista, in 2015, 41% of smartphone users said they at least once bought a physical product via a mobile app or website. In 2020, this number reached 91%.
In other words, whatever type of customer segment you’re targeting, building a mobile-first online store with the use of a responsive theme template is a must. This is the way you provide your customers with a comfortable shopping experience. So you can encourage them to come back later for more. And this is how you generate impulse purchases that contribute a lot to your overall dropshipping profits.
Why dropshipping is still profitable: automated management solutions get introduced
If you take a look at a typical range of day-to-day operations for dropshipping store owners, you’ll quickly notice that the majority of these tasks can be automated.
A wide range of issues that can be managed automatically includes:
- Items search and import
- Prices setting
- Orders processing
- Orders tracking
- Store promotion
- Store performance tracking
- And more
In sum, using the right IT solutions, you can reduce the amount of time you’re spending on routine tasks. So you will be able to dedicate more of your attention to things that really matter. In that way, it will be possible to make your dropshipping business more profitable.
Well, be able to manage your time more efficiently. So you get unlimited opportunities to reach and surpass the goals you’ve set both for your ecommerce business and personal life.
Isn’t a profitable dropshipping business the exact thing you’ve always wanted? It’s time to take action now!
By Olga Lavrinovich Olga is a Copywriting Director at AliDropship. Having graduated from the Faculty of International Business’ as an Advertising specialist, she puts years of her copywriting experience into making clear and informative guides, tutorials, and other educational materials for dropshipping newcomers worldwide.