Is Dropshipping Still Profitable In 2024?

The term “dropshipping” has been used a lot in the eCommerce world, and there is a slight confusion as to what exactly this model involves. Dropsipping is a selling method where the seller does not keep or purchase stock on hand. Instead, the model is designed so that the seller only needs to order from the supplier once an order has been placed by a customer.

This is an effective strategy and method because the seller does not necessarily hold the risk of spending too much on inventory and on unsold items. Below we will get into a few more advantages of the model, as well as its disadvantages:

Advantages Of Dropshipping

• Start With A Low Budget
• Low Risk
• Suppliers Fulfill Your Orders

Start With A Low Budget

Due to the fact that you do not necessarily have to invest in stock, and the business operates mainly online, the costs you need to start the business are very low. In order to get started, you only need the following:

An eCommerce store (Shopify, eBay, Etsy, etc.): this is where your store will be hosted. Consider your business needs before decidingwhich platform you will use.

A custom domain and business email account: to make your store appear professional, and legit. A trustworthy business always has a secure site and domain.

Test products: though you won’t need to buy thousands of products, its important o purchase 1 or 2 of the products you’ll be selling, so that you can create content using the products, and so that you can make sure shipping times and product quality are sitable to send to your store’s customers.

Your phone camera: marketing your store has to be one of the most important aspects of running an online store. Audiences are drawn to more user-generated content, and so creating organic content as the store owner, or with a team, gives you a personalised touch when it comes to showing the legitimacy of the products.

A PC/laptop: a working device that allows you to run your store should be a priority. Many eCommerce stores work better via PC and it makes it easier to complete multiple tasks at once.

Internet connection: when running an online store, the customer journey should be a seamless one. Making sure that you have connectivity at all times, so that you can attend to any queries, errors, or duties, should always be a priority.

Low Risk

When starting a business, there are a lot of risks involved, simply due to the fact that in the beginning, even with business plans and projections, it is never certain how likely your chances to success really are. With dropsipping though, you don’t stand much to lose should the business fail to succeed. This is once again due to the fact that there is low investment required, and you do not take on any stock until a customer pays.

The risk can also be minimised as a dropshipper due to the fact that suppliers have more experience when it comes to fulfilling orders, and so you as the sole store owner do not stand the risk of incorrectly fulfilling orders. In the case that the supplier does make an error, they usually have policies t correct and rectify the error on your behalf.

Suppliers Fulfill Your Orders

This is the general fulfillment process with many dropshipping stores:

1. Order Receipt

Customer places an order on your e-commerce platform.

2. Order Processing

The order is automatically forwarded to your dropshipping supplier through integration tools.

3. Inventory Check and Order Confirmation

The supplier checks inventory and confirms they can fulfill the order.

4. Packing and Shipping

The supplier packs the ordered product and ships it directly to the customer.

5. Order Tracking

Automated systems provide tracking information to both you and the customer.

6. Customer Notification

The customer is kept informed about their order status through automated updates.

7. Returns Management

Any returns or exchanges are processed according to the pre-defined policy.
 

Is Dropshipping Still Viable In 2024?

Dropshipping remains a viable and profitable option for beginners in 2024, with the global retail and dropshipping industry projected to exceed $500 billion by 2025. The model has many of its advantages to prove this.

With the right approach, including selecting in-demand products and reliable suppliers, dropshipping can provide great profit potential and opportunities for growth, making it an attractive business model for new entrepreneurs looking to enter the eCommerce market. But what do the experts have to say?

What The Experts Have To Say

Nicola Kinsella, SVP Global Marketing, Fluent Commerce

“Dropshipping is absolutely still a profitable business strategy for 2024 when the use of drop ship vendors (DSVs) is integrated in your business processes seamlessly. DSVs allow you to test out new products—and expand your product line.

“Which means more engaged customers and a way to attract net-new customers, too. There are challenges when it comes to working with DSVs, so choosing the right partners and technology solutions is crucial to success.

“One solution to not overlook? A distributed order management system (OMS). The right OMS will seamlessly sync inventory data from all DSVs, providing you with a near-real time view of inventory.

“This means you can provide timely order status updates, optimise fulfilment procedures, and manage returns effectively. With the correct resources and alliances, dropshipping is an effective tactic in 2024’s evolving landscape.”
 

David Janovic, Founder, RJ Living

“Dropshipping remains a relevant business model for entrepreneurs looking to enter the e-commerce space, especially as a market testing tool. It allows for low upfront costs and the ability to quickly adapt to consumer trends without the burden of holding inventory. This agility is crucial for validating product market fit before making larger investments.

“However, in my experience, transitioning towards local manufacturing or direct relationships with suppliers becomes essential as your brand grows. This shift not only helps maintain control over product quality and supply chain reliability, but also aligns with consumer expectations for ethical practices and sustainability.

“In 2024 and beyond, consumers are increasingly valuing transparency, sustainability, and quality in the products they purchase. By moving away from dropshipping and investing in local production or closer supplier relationships, retail businesses can better meet these expectations. This approach not only enhances brand reputation but also supports local economies and reduces environmental impact.

“While dropshipping can provide a starting point for new retail businesses, the evolution towards more sustainable and responsible business practices is where I see the future heading.”

Diana Zheng, Head of Marketing, Stallion Express

“As the head of marketing at Stallion Express, I have seen a lot of changes in eCommerce, especially in the drop shipping space. Let me tell you my top dropshipping tips.

The Resilience of Dropshipping: A Statistical Lens

“The dropshipping market is rising, and its importance will remain unchanged in 2024. Let’s look at the data:

“Market Growth: According to the Oberlo report, the dropshipping global market is expected to grow at a CAGR of 26.3 percent from 2024 to 2032 and is expected to reach a value of about $2505,59 billion in 2032.

“The Oberlo report states that the global market for dropshipping is expected to reach $301,11 billion in 2022, the first time it will surpass $300 billion.

Advantages Fueling the Surge:

“1. Inexpensive capital investment: The attractiveness of dropshipping stems from its inexpensive initial costs. Unlike traditional retail methods, entrepreneurs can open an Internet store without making significant expenditures in inventory or warehousing.

“2. Location Independence: The opportunity to run a dropshipping business anywhere in the world appeals to digital nomads and those seeking work-life balance.

“3. Broad Product Selection: Entrepreneurs can offer diverse products without stocking them beforehand, allowing them to respond quickly to changing market trends.

“4. Ease of Scaling: As sales increase, the model allows for expansion without the hassles of inventory management.

Navigating Challenges: Transparency and Customer Experience

“However, let us address the elephant in the room: challenges remain. The dropshipping landscape demands transparency and a continuous dedication to the consumer experience. Here’s why.

“1. Quality Control: Relying on suppliers implies giving up direct control over product quality. The importance of selecting trustworthy partners cannot be overstated.

“2. Shipping Times: Customers want quick delivery. Managing shipment timelines and communication is critical for avoiding disappointments.

“3. Brand Identity: To stand out from the crowd of dropshippers, you must use strategic marketing and storytelling.
The future awaits

“Dropshipping will thrive until 2024 and beyond. Entrepreneurs that embrace its benefits while overcoming hurdles will succeed. Stallion Express is committed to providing businesses with seamless cross-border logistics, ensuring that the dropshipping journey is profitable and customer-centric.

“Remember, the eCommerce world changes, but dropshipping remains—a tribute to its endurance and adaptability.”