Dropshipping in 2022 might not have the same hype as it did two years ago, but it is still thriving with a lot of money to be earned. Here’s our exhaustive guide to building and sustaining a profitable dropshipping venture today.
What is Dropshipping
Dropshipping is a retail fulfillment method in which businesses don’t keep any products in stock. They outsource everything from procuring, warehousing, and logistics to a 3rd party- wholesalers or manufacturers.
It’s a mutually beneficial model where the 3rd party benefits from increased sales while the dropshipping businesses don’t have to bear the high initial cost of warehousing.
How does Dropshipping work
Dropshipping works with a straightforward business model that hasn’t changed much since its inception. It involves 3 key players- the supplier, the dropshipper (you), and the customer.
The supplier: The supplier is the workhorse of the entire dropshipping model. They manufacture the products, stock them in warehouses, accept orders from dropshipper and even ship them out within the prescribed time. They sell products to the dropshipper at reduced or wholesale prices and are responsible for replacing defective ones.
Even with all the grunt work involved, suppliers still find their side of business massively profitable. They usually work with multiple dropshippers at a time and reach a far broader customer base than previously possible.
The dropshipper: The dropshipper is the front-facing person for customers. They brand the supplier’s products as their own, usually through the website, social media and product labels. The customer seldom knows the supplier who manufactured and shipped the product to them.
Like any retail business, dropshippers work with margins. They price the product at a certain amount more than what the wholesaler provides, which becomes their profit. However, as there are no overheads like shop rent and warehousing, all the profit is kept by the dropshipper.
Customer: For customers, dropshippers provide multiple benefits. As overheads are low, they usually get products at a lower price than what is available in local stores. Also, most dropshippers work in specific niches. This gives the customers access to interesting products, designs or merchandise that otherwise wouldn’t be available.
Is Dropshipping profitable in 2022
Definitely. Dropshipping is a profitable startup idea in 2022 and will continue to do so for many years. It all comes down to how you approach the segment.
If you are looking to start in a generic segment like consumer apparel, you will be in competition with a vast number of new as well as established players. You might find it difficult to survive in this space. Instead, finding a small but popular segment is important.
How to build a Dropshipping startup in 2022
Find the right niche
Before starting your dropshipping business it is important to understand both the market demand as well as your interest.
Use tools like Google Trends and UberSuggest to understand if enough people are searching for the niche you have in mind. Popular niches always have a lot of competition, so it is important to find your USP within the segment. You can also start looking for niches that have recently started trending or the ones you are confident will be popular in the future.
The business aspect aside, having a personal interest in the niche will let you love what you are doing. If you have enough knowledge in the segment, you can build up a loyal following and promote your dropshipping brand in the process. However, keep in mind to balance business and personal interests, as an excess or lack of either will be detrimental.
Checking the competition
Once you understand your segment, look for broad and niche competitors. Broad competitors help you know what the customers demand from the segment and new trends that you can leverage. Niche competitors are the ones you will be in direct contention with.
If you don’t find any competition, research the market a bit more and determine if there is a discernible first-mover advantage
Finding the right supplier
The supplier or manufacturer is one of the most important players in your dropshipping business. They manage your entire fulfillment process and if not chosen wisely, you risk ruining your reputation with customers.
Suppliers can be found from many sources, including local businesses or warehouses, domestic aggregators or even international ones like Alibaba. Regardless of which one you choose, gain a proper understanding of their business. This includes the quality of product, fulfillment time and return policy. Check for reviews on various platforms like Google and Facebook, and ask for samples of products before if possible.
It is also important to understand how the supplier can work with your business in the long run. Top suppliers provide additional branding services, white-labeled packaging, priority customer care, print-on-demand and customizations. Depending on your audience, some or all of these might benefit your business.
Creating your Dropshipping platform
Once you have your niche and suppliers sorted, it is time to build your online store. There are multiple store-building platforms available today, with varying levels of features, customizations and difficulty. You can also choose to make your store from scratch with the help of coding. This gives you the highest flexibility to design and scale your business.
Some platforms that you can use to build your dropshipping shop include:
Another way to dropship is to join an eCommerce marketplace such as Amazon and eBay. While less flexible than owning an eStore, these websites cater to millions of customers each month, and you get immediate exposure without extra marketing.
Marketing
If you build an online store, you need to find a way to bring people to your website. This is done with the help of marketing.
Half your work is done if you or your brand is already famous- as a creator, influencer or domain specialist. You can promote your website to your existing followers and start from there. However, marketing from zero takes effort and would come down to your brand’s promotions, attractiveness and unique selling proposition (USP).
Social media is an excellent place to start. Initially, concentrate on one or two platforms that your intended audience frequents. Focus on building an active user base there instead of bringing them to your website. The latter can be done once your followers are comfortable with your brand.
Paid advertisements, SEO and influencer marketing are other things you can try to promote your website.
Learn and upgrade
Finally, dropshipping is a highly dynamic segment, and you should always be on the lookout for new trends and changing consumer needs. Adapt to the changes within your industry and provide your customers with what they want, when they want it.
Alternate DropShipping startup ideas for 2022
While you can earn a decent living by selling products in your dropshipping store, there are other avenues in this segment where you can thrive!
Help Dropshippers build their store
As I said, dropshipping in 2022 is a very competitive field with more people looking for robust platforms where they can host their stores. You can take advantage of this demand and start an online store-building platform like Shopify or Bigcommerce.
These platforms use intuitive drag and drop features to help their customers build online stores, integrate with many different applications, and host effective content management systems.
Earlier skilled developers and months of hard work were necessary to achieve this. Now, with software solutions such as iScripts GoStores, entrepreneurs can easily create and manage their own eCommerce-builders with relative ease
Be the distributor
Distributors take a holistic approach to the dropshipping segment and connect many key players and their subsidiaries, including dropshippers, online stores, suppliers and even influencers. They host products from multiple suppliers on their platform, which resellers can use.
If you are an existing distributor, you can attract more resellers by providing them with a platform to build their own online stores. This can be done with the help of software such as iScripts GoStores.
Instead, If you want to build a dropshipping distribution network from the ground up, that would require more extensive solutions like iScripts MultiCart Enterprise.
iScripts MultiCart Enterprise (MCE) is a comprehensive software that can help you build a large-scale distribution platform, such as the one mentioned above, with ease. It has numerous integration options, is highly scalable, and supports multiple white-labeled storefronts. The possibilities are endless!
Check out demos here:
iSCripts MultiCart Enterprise demo
