You might have come across the dropshipping business model if you’ve been researching ways to start a new business. You might also have noticed that it’s become incredibly popular recently. So, why is this?
Dropshipping is so popular now because it’s easy to start, you don’t need much capital, you can sell almost anything, and it offers flexibility. You can also work with any supplier, you don’t need a warehouse, and the supplier handles the shipping. It also allows you to focus on customer service.
In this article, I’ll discuss 16 reasons dropshipping is so popular now and how it may be an option for your online business.
Why Do So Many People Choose Dropshipping?
So many people choose dropshipping because it’s a business model catered to selling products online. The seller buys products from the supplier at wholesale prices, and the supplier is responsible for keeping inventory, packing, and shipping orders. Thus, this model saves sellers time and money.
After selecting an e-commerce platform for your business, you create an account and choose templates for your storefront.
Finding a supplier is usually easy because most e-commerce platforms provide recommendations. After negotiating prices and shipping terms with the supplier, they will give you product photos and descriptions to use in your online store. Still, many drop shippers aim to provide more information themselves.
Thus the dropshipping model lends itself to e-commerce and provides a fuss-free platform from which sellers can reach their target market.
Popular Reasons To Consider Dropshipping
Dropshipping has increased in popularity recently, with many people choosing to use this business model to become an entrepreneur. Although it involves a lot of work, you can reap many benefits if you give it all you’ve got.
If you’re on the fence about starting a dropshipping business, here are some compelling reasons to consider it:
1. It’s Easy To Start a Dropshipping Business
If you’ve decided that a dropshipping business is for you, you can get it up and running within a few days! All you need to do is:
- Decide which product you want to sell.
- Approach a supplier and agree on wholesale prices.
- Sign an agreement with the supplier.
- Open your dropshipping store on your chosen online platform.
It’s also a good idea to create a business strategy to decide how you’ll market the business and approach customer care.
2. You Don’t Need Much Capital
In the previous section, I mentioned that the dropshipping model involves initiating a working relationship with a supplier who stores all the inventory. This exchange means you don’t have to invest in large quantities of expensive products before starting your business.
You also won’t have a physical store but an online account with an e-commerce platform, where you will create your storefront. There’s also no need to rent offices or employ staff, and you can work from home.
The only essential items you’ll need for a dropshipping business are a reliable computer and a fast internet connection, two items you probably already have.
Here’s a helpful table comparing the capital required for dropshipping businesses versus traditional ones:
|Dropshipping Business||Traditional Business|
|Office and warehouse insurance||No||Yes|
3. You Can Sell Almost Anything
The dropshipping business model allows you to sell almost anything. This versatility means you can sell products you’re interested in or know a lot about, making the experience incredibly rewarding.
However, to maximize profits and scale their businesses faster, most drop shippers choose products that they know are popular and will sell well.
Examples include the following:
- Fast fashion items
- Toiletries and makeup
- Baby clothing and accessories
- Smartphone accessories
- Water bottles
Selling consumable items (such as cosmetics) is an excellent idea because you can receive repeat orders if you develop a loyal customer base.
Instead of playing it safe with a fast-selling product, some drop shippers enjoy innovating and exploring a variety of product sales. This versatility lends itself to those who wish to pursue multiple revenue streams.
4. It’s Easy To Sell Different Products
When you have a dropshipping business, switching to another product is easy. Some drop shippers don’t enjoy selling certain products and opt to sell items they know a lot about to answer customers’ questions more effectively.
Other drop shippers continuously monitor the consumer market and sell products that are currently in demand.
Below are a few examples:
- Face masks and sanitizer during the COVID-19 pandemic.
- Gift sets and Christmas decorations during the holidays.
- Heart-shaped goods and candy in the run-up to Valentine’s Day.
- Fidget spinners due to a kids’ craze.
Whatever the reasons for wanting to sell a different product, it’s just a matter of striking a deal with a new supplier.
5. You Can Focus on Customer Service
Dropshipping involves the supplier handling the following:
- Sourcing products.
- Managing stock levels.
- Organizing stock in the warehouse.
- Packing products for shipment.
- Shipping orders.
As a seller, this leaves you with more time to focus on providing excellent customer service.
Many sellers might list the same products at similar prices on dropshipping platforms. What sets you apart from your competitors will, therefore, be your customer service levels.
Most drop shipping platforms allow buyers to leave reviews for sellers, and focusing on obtaining five-star reviews should be your goal.
A drop shipper’s day will typically involve the following customer service aspects:
- Responding to customer queries about products.
- Responding to reviews.
- Replying to comments and questions on the business’s social media platforms.
Many drop shippers find it rewarding to deliver exceptional customer service and enjoy positive feedback.
6. It Offers Flexible Hours
Traditionally; working involved going into an office at 9:00 am, taking an hour for lunch, and then leaving at 5:00 pm. There was very little flexibility, and parents with kids would feel guilty asking for time off to attend to a sick child.
Thankfully, this is all changing, and running a drop shipping business has proven that you can work from almost any location and still be productive. Furthermore, as long as you put in the required hours, your working schedule can be flexible.
Many students enjoy running dropshipping businesses, and this business model I recently mentioned is an excellent way for college students to earn a passive income.
Drop shipping is so popular now because the flexibility improves one’s quality of life. Examples include:
- The ability to run errands during the day.
- The option of being a part-time student.
- Earning an income as a stay-at-home parent.
- Traveling the world and simultaneously earning money.
7. You Don’t Need a Warehouse
Before dropshipping, if you wanted to start a business selling a product, you needed to buy it in large quantities and store it in a warehouse. The risk and cost of doing so prevented many people from starting a business.
As a drop shipper, you don’t need a warehouse because the supplier stores the inventory, saving you money on costly warehouse rentals, electricity bills, and insurance.
8. It’s Less Risky
In the previous section, I mentioned that the traditional product-selling business model involved buying products in large quantities and having to store them in a warehouse.
This bulk buying can be risky because you have to spend a lot of money buying a product that might not sell. Also, you might only see a return on your investment many months down the line when your business gains traction.
With a dropshipping business, the supplier carries the inventory risk. If your product doesn’t sell or you find out the quality is poor, you won’t lose anything aside from time, and you can find another supplier with a better product offering.
9. Exposure to a Massive Customer Base
Opening a dropshipping storefront takes place on e-commerce platforms, such as Shopify or AliExpress.
These platforms always have massive traffic volumes, and using the platform exposes your store to customers worldwide. As your dropshipping store gains traction, you gain good reviews, and you sell more products, your storefront will start showing up at the top of customers’ search results.
10. You Can Work With a Preferred Supplier
Dropshipping is popular now because you can work with your preferred supplier. Whatever product you choose to sell, there are likely multiple suppliers, and you can select the one offering the fastest shipping times and the one with the best reputation.
Other factors to consider when choosing a dropshipping supplier include:
- Responsiveness to queries.
- Returns policy.
- Product quality.
11. Marketing Is Simple
Marketing a dropshipping business is inexpensive and straightforward. The best marketing strategy is to have a professional-looking online storefront, including:
- Clear and high-quality product photos.
- Informative product descriptions.
- Clearly defined shipping and returns policies.
- Professional responses to reviews.
Apart from a storefront, some drop shippers also market on social media platforms, which doesn’t cost anything apart from time and effort. However, some drop shippers pay to boost advertisements.
Once you have established your dropshipping business, you’ll develop your own personal brand, and if you market it consistently, you can become well-known.
12. The Supplier Handles the Shipping
If you have a small business selling products online, the shipping part of the business can be time-consuming, costly, and complex.
When you receive an order from a customer, you need to attend to the following:
- Print the shipping label.
- Purchase packing materials.
- Pack the order securely for shipment.
- Arrange to drop the package off or have a courier service collect it.
- Provide the customer with shipping information and updates.
- Investigate it when the customer doesn’t receive the item.
To keep your prices competitive, you also need to negotiate reasonable shipping rates with logistics providers and monitor their performance.
Opting for the dropshipping business model eliminates all of these aspects, allowing you to focus on growing your business and satisfying your customers.
13. You Can Easily Scale Your Business
Another reason dropshipping is so popular now is that it’s easy to scale your business. As long as you select a reliable supplier, update your online storefront regularly, and provide excellent customer service, there’s no reason your dropshipping business won’t grow.
Once you find a product that sells well, you can introduce another and repeat the process until you sell multiple products.
14. The Supplier Handles Returns
With the dropshipping business model, you don’t have to handle product returns, which is a hassle for most product-selling businesses.
If customers aren’t happy with the product, they can send it back to the supplier. When this happens, you’ll need to refund the customer and claim the money back from the supplier.
Dropshippers need to negotiate a workable returns policy with the supplier, including whether or not the customer must pay for shipping if they return something.
Although not having to handle returns is convenient, drop shippers should monitor the returns rate, as a high one could mean poor product quality. In such instances, they might consider working with a different supplier.
15. You Don’t Have To Source Products
Sourcing products is time-consuming and challenging for most businesses, but dropshipping eliminates this complex step.
Dropshippers pay the wholesale price, typically slightly lower than the retail price, resulting in low margins. However, if you scale your business and start selling significant volumes, it can add up and give you a healthy income.
Sourcing products directly from the manufacturer usually means paying a lower unit price, especially if you buy in bulk. These savings mean better margins and a higher earning potential.
16. You Can Sell Your Own Products in the Store
Some drop shippers make their own products, such as the following:
- Handmade greeting cards.
- Decoupage boxes.
It can be almost impossible to drive high customer traffic to your private online store selling handmade goods, and many Etsy sellers struggle to make a living.
However, if you have a dropshipping storefront on an online e-commerce platform, you could upsell your handmade products and supplement your income.
Dropshipping has become incredibly popular recently, and it’s easy to see why. It makes it easy for anyone to start a business, as long as they have a:
- Reliable and fast internet connection.
- Willingness to work hard and provide exceptional customer service.
The main benefits of dropshipping include the following:
- Flexible working hours.
- The ability to work from anywhere in the world.
- Not having to keep stock in a warehouse.
- Not being responsible for sourcing and shipping products.