Every year, the number of entrepreneurs is increasing drastically.
With this change, new entrepreneurs are looking for a way to escape their old life and enter something new, and more independent.
They're looking for a way to make a name for themselves, own their own lucrative businesses, and experience freedom.
Following their pursuit, they will eventually run into a business we all know as 'dropshipping.'
A simple business model where you're essentially setting up a site and selling a supplier's products.
It's a very well-known business due to the fact that you don't need 1000s in startup capital to begin - all you need is a few hundred dollars, and a passion to succeed.
But every year, the question still arises - "Does dropshipping still work in 2021?"
Although the dropshipping business model is simple, and often easy to execute, there's still a high chance of failure when done incorrectly.
Therefore, to answer the question, 'Does dropshipping still work in 2021?' we need to take a look at the changes that happened with dropshipping over the past few years.
Only then can we decipher this question.
Let's find out whether dropshipping still works in 2021/22, or not!
There's one big determining factor that can dictate whether a store is successful or not.
A few years ago, it was alright to throw a site up on Shopify, find a random product, and advertise it.
People were still somewhat new to the eCommerce landscape and so they would purchase any product they thought was cool.
It didn't matter where the product was being sold, how it looked, or whether it was branded or not.
Today, on the other hand, it's a lot harder to get away with dropshipping your products.
Instead, you're going to want to adopt the 'private label' model.
Private labeling is very similar to dropshipping with a few major changes.
Firstly, private labeling doesn't necessarily mean that you don't need inventory.
Unlike dropshipping, private labeling allows you to brand your product, your packaging, and the content inside it.
With private labeling, suppliers normally have something called an 'MOQ' (minimum order quantity) that you, the merchant, must abide by before they can help you sell.
This is because, as a supplier, it's not very profitable or time-efficient producing products with different logos or packaging for people who only order 1 or 2 products a week.
When your sales volume is low, you're not going to be doing private labeling, you're going to need to stick to dropshipping.
However, once your order quantity exceeds a certain barrier, you've essentially proven that people like your product and that it's time to move on to private labeling.
Before you make the switch, ensure you also have a low refund rate so that you don't end up losing a lot of money once you make the bulk order and realise everyone eventually returns your products.
This can be due to a few factors, mainly:
- Quality of the product
- Matching description
When you move from dropshipping to private labeling, you have a much higher success rate.
Let me give you a scenario.
A while ago, when I first made the jump into entrepreneurship, I started a store called Flexiposture, a site that sells lumbar back stretchers.
On my site, the delivery said, 'to your door within 45 days or less.'
Now, let's say that you're a prospective customer who is looking to purchase this product.
You have 2 main options staring you in the face.
You're on my website and ready to make the purchase, the only issues you're hashing out are the logistics.
You scroll down and see the 45-day delivery, what do you do next?
A) Buy the product anyways
B) Don't buy the product
C) Buy it from Amazon instead
See, Amazon has the ability to deliver products to their customer's doors within the same day.
Most commonly, however, they do next-day delivery which is usually free for Prime customers.
It's very difficult to compete with something like this when you're a small store looking to get started in eCommerce.
In fact, your chances are probably better to sell on Amazon instead.
However, that's a whole different beast in itself.
Customers no longer put up with long delivery times.
The only way they'll accept it is if you're selling something you can't find anywhere else and they really need it.
It's almost impossible to find a product no one's selling on Amazon already.
So, what is the solution?
Again there are a few solutions. For example, we can go back to our example on private labeling.
When you order bulk quantities of products, you need to get them shipped to a warehouse.
Luckily, we don't need to own a warehouse - we just need a fulfillment company to work with.
There are a ton available if you search for them.
This way, you can offer 3-day delivery to customers without needing to do any of the extra work.
Our other option is a long shot, but might still be viable.
Many Chinese and overseas suppliers are seeing the opportunity in building warehouses in places like the United States or Europe.
You might be able to find a supplier that has a warehouse outside of China - this way, they can help you deliver the product with 5/7 days of the order being received.
Now, it's much easier to compete with Amazon when delivery is as fast as 3-5/7 days.
Do you know why many entrepreneurs fail?
It's because they don't care about their end customers - they only care about what's landing in their pockets.
It's the reason I failed in the first place - I didn't care about how my customer's experience was with my brand and so I didn't succeed.
More importantly, I didn't have the mindset of someone successful.
Lots of entrepreneurs simply find any random supplier on Alibaba, and sell their products without testing it first, getting samples, receiving images and videos, etc.
This is especially true for those who teach you how to do Aliexpress dropshipping - stay far away from those gurus.
When we start dropshipping, we first need to ensure that we're thinking from a long-term perspective.
We're not just looking to make a bit of money quickly then quit, we want to make a ton of money, consistently, over the long run.
So how do we do this?
It's very simple - stop worrying about the money, and start worrying about the customers who will use or interact with your brand.
A happy customer is a lot more valuable than an unhappy one.
Let's say you just had a purchase of $100.
The customer receives their order and is very happy with it, they love it!
This customer is now worth $1000s to you. Do you know why?
They're going to go out of their way and share your product on social media, with friends, family, colleagues, etc.
They're also going to give you a good review, comment on your social media, and maybe even come back and order more products.
You've got a lifelong customer now.
On the other hand, let's say the product's quality was abysmal.
The customer receives their products and they hate it, it's the worst thing they've ever seen!
Now, this customer is not worth $100 to you, they're not worth $1000, but maybe... -$1000?
That's because this customer is going to go around and tell people your brand is terrible.
They're going to tell everyone your products are bad and that no one should buy them.
They might go for a refund and taint your brand and business.
This could easily result in a loss of $1000s worth of sales.
Focus on product quality. When your product is good, the money will follow.
It becomes a lot easier to build a long-term, successful, and profitable business.
Site & policies
You're looking for a product to buy and you come across a site.
The copy is terrible and low quality, the imagery, and theme are dysfunctional.
The images are pixelated.
There are no reviews, no trust badges, the whole site just seems off.
You keep scrolling down, looking for something that could change your mind about it.
"Do they have a 'contact us' page?"
"Do they have a 'refund policy' page?"
Don't think so.
"Do they have a 'Terms of service' page?"
Doesn't look like it.
"Do they have anything that makes me trust them?"
When you're dropshipping, you need to pay close attention to what customers will think when they land on your site.
Will they think it's a safe and legit place to buy from, or will they just think it's another dropshipping store that's trying to make a quick buck?
When they see your ads, do they think this is a high-quality, real brand, or just a copycat?
People are much more cautious of fake websites nowadays.
This might not be the case, you might not actually be scamming people, but if your site gives them a slightly bad feeling, they're gone.
Don't lose customers because of a simple mistake like this.
Ensure that you've got everything set up correctly.
Put yourself in your customer's shoes - when you go on a website, what makes you think "this is legit!"
You can start with basic things like:
- A support/ticketing system
- The images and videos you use
- The overall theme of the site
- The policies
- Fast shipping
These should be enough to make your store look legit.
Images are easy to make - you can use basic Photoshop skills to make them yourself or get someone on Fiverr to make some images for you.
On top of all of this, you MUST have a custom site domain.
A domain is simply the address of the site - for example, my blog's domain is mohamadalasadi.com.
If you're setting up a new Shopify store, your domain will be 'storename-shopify.com.'
When you're advertising your products then people land on your site, they're going to be immediately thrown off by this domain.
It's a lot better to spend a few bucks a year on a domain - this can increase your sales from 1 in 1000 visitors to every 5 in 100 visitors, which is ideal.
We've touched on customer service in the previous point, but it's important to talk about it on its own.
Customer service is said to be one of the most important factors in a business.
You can differentiate your business from others by simply having much better customer service than them.
This way, a big brand might have all the customers and money, but if you show customers you care about them more, they're a lot more likely to go for your brand.
This is because people want to work with businesses that resonate with them.
If your company is just a site that sells products, they're probably not going to have a great experience.
However, let's say you use a free ticketing system like Tawk.to.
There's an example on my SaaS - Hawk Prospecting.
When visitors land on your site, they're immediately greeted with a message that asks them if they need help.
It's like walking into a store and one of the workers walks up to you and asks if you need help, only this time it's a digital thing.
Customers will usually pick the brand that is more likely to help them after the sale too if they run into issues.
When customers make an order, email them and say thank you - follow up with them and ask about the product and their experience.
Every business is a people's business - unless you do forex, which again, is influenced by people and banks.
Yesterday, I was checking one of my competitor's Amazon listings - they easily make 10s of millions with all their products combined online.
However, this one product makes around $400,000 per month on Amazon alone.
They have almost 5000 reviews on it, with an average 4.6-star rating.
However, when we scroll down to the reviews, the first one I saw was that their customer service is terrible.
The customer was waiting for a month, and still hasn't received the help they need.
The product they received was not working, completely finished.
After trying to call over 20 times, with 15-minute holds, he still couldn't get through to them.
This makes for such a simple differentiator - make sure you're there when the customer needs you.
Facebook is another example - likely one of the biggest businesses in the world, they have absolutely no way of reaching their support team.
A massive company like that barely invests in building a powerful support system.
There's no way to reach them, when you have an issue, you're essentially left hoping they find you.
You don't need a big brand in order to offer good customer service - you can always do it now.
That's it - those were the biggest differentiators in dropshipping from a few years ago.
Therefore, to answer your question, YES.
Dropshipping still works in 2021/22, but only when it's done right.
Following the principles outlined above, anyone can build a successful dropshipping business.
If you're looking to start one, I suggest reading my article on starting a dropshipping business in a week with less than $100.
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