It’s no secret that dropshipping has become a very saturated industry in recent years. If you’re an entrepreneur looking to make money online, you might want to start looking for dropshipping alternatives.
In this article, we’ll do just that—let’s go over a few popular alternatives to dropshipping for building your successful online business.
Everywhere you go it’s dropshipping this, dropshipping that—but how does dropshipping actually work? Dropshipping is a business model that allows you to sell products without needing to keep stock.
As a dropshipping business owner, you act as the middleman between the customer and third-party suppliers, like wholesalers or manufacturers. Once an order is made, the supplier fulfills, packs, and ships the product to the customer.
This makes dropshipping much cheaper and easier to set up than the traditional retail model, but it’s not without drawbacks.
The short answer is: yes.
The long answer is this: while dropshipping can still be a profitable business, there are a few key factors that have made it harder for dropshipping store owners to build robust ecommerce stores that really bring in money.
One big issue is customer support. When you start a dropshipping store, you don’t have control over the product—the dropshipping suppliers do.
This means when your customers aren’t satisfied with it, you’ll have a hard time providing proper customer support, and your business will suffer. You have to be prepared for high return rates and low customer satisfaction.
Another major problem with an online business model like dropshipping is high competition. Many dropshippers sell the same products, so you’ll have to stand out through social media, search engine optimization, and ads. Eventually, you’ll find that marketing and advertising costs can really eat into your profits.
Now you might be wondering—is there anything else out there I could try?
Well, I’m glad you asked.
Dropshipping certainly isn’t the only ecommerce business model worth trying out. There are a ton of other less popular (read: less crowded) avenues for you to explore if you’re really serious about starting your own ecommerce store.
From relatively similar online business models like print-on-demand or private labeling to less related ones like affiliate marketing or blogging, let’s take a look at the best dropshipping alternatives out there.
Print-on-demand or POD is a business model where the product (usually apparel or home & living goods) is only produced when a customer makes an order. Once an order is made, a POD supplier fulfills, packs, and ships the order to the customer.
It’s one of the most popular online business models and a good dropshipping alternative to consider when setting up your online business. Here’s more insight into how it works:
Setting up a POD online store is quick and easy. It doesn’t require significant upfront investment, and you won’t need to keep your own inventory or printing equipment. To add to all that, your supplier takes care of everything from product fulfillment to packing and shipping.
Another major plus for print-on-demand is the fact that you’re able to create original products with your own artwork. With POD, you’re selling something nobody else can—your own art, your brand. This makes it easier to find your niche, build your company’s brand, and increase customer loyalty.
If you start a POD business, it’s extremely important to find a niche. Here’s why: some of the best-selling print-on-demand products are t-shirts, but the market is already saturated with online businesses that sell t-shirts, many of which can afford to sell t-shirts at a lower price than you.
So you need to give customers a reason to buy from you—if your t-shirts are relevant to a specific niche and audience, they’ll have more value. If you want to learn more about choosing your niche, take a look here.
However, one of the biggest drawbacks with print-on-demand is that you won’t have complete control over product quality. This means it’s crucial to do your research and find a supplier with consistently high-quality products.
You should look for POD providers with low reshipment rates. Printful, for example, has a reshipment rate of just 0.24%—this shows that few orders are reshipped due to mistakes or defects.
Another great dropshipping alternative is selling digital products. These are products that exist in the digital format only—think ebooks, digital art, music, or online courses.
Customers typically receive digital goods through mail or by downloading, which makes this a good option for those who want to make a passive income without keeping inventory.
You wouldn’t need to worry about the hassles that come with selling tangible goods—product fulfillment, packaging, or shipping costs. Selling digital goods means lower overhead costs, higher profit margins, and more control over the product than you’d get with dropshipping.
However, there are a few downsides to selling digital products. First off, you’ll need to take precautions to prevent your product from getting stolen and sold at a much lower price. Online piracy is a real issue, and it’s important to do research on how to protect yourself from it.
Another issue you might run into is the abundance of freely available digital content. Why should people pay for your ebook when they can get a ton of other ebooks free of charge? To avoid losing customers to free content, make sure to really work on finding your niche and creating a solid brand.
This one’s pretty self-explanatory, right? Selling handmade goods is one of the oldest forms of commerce, and it’s never going out of style.
There’s really no end to what you can sell—bath bombs, soaps, tote bags, mugs, candles and more. Platforms like Etsy, for example, are completely dedicated to selling DIY products. Before you start your own store, you can browse Etsy for inspiration.
Selling handmade goods is a good dropshipping alternative because you can easily start your own business from home.
Plus, you’ll have complete control over product quality, which helps with providing excellent customer service. This means you’ll have an easier time building customer loyalty than most dropshipping businesses.
But this kind of online store might take more initial investment than dropshipping since you’ll need to pay for all the resources yourself.
Another downside to selling your own products is that you’ll have to take care of everything—packaging, shipping, product returns, and more. This can get overwhelming and costly, especially if there’s market demand for your products and your ecommerce store grows.
Drop servicing is a bit different from the other business models we’ve talked about before. Drop servicing is a business model where instead of selling, let’s say, custom t-shirts, you sell a service that’s carried out by someone else.
Similar to dropshipping, you’re acting as a middleman between somebody who does online freelancing and the customer.
For example, you sell graphic design services. Once a customer buys the service for $60, you hire an online freelancer to do the work for $40. When the work is complete, you deliver it to the customer, pay the freelance designer, and keep the $20 for yourself.
A drop servicing business, much like a dropshipping business, is easy to set up and doesn’t take upfront investment. Drop servicing is highly scalable, too—since you’re not the one spending time on these online freelancing tasks, you can basically take on as many clients as you want, without many restraints.
A major downside, however, is that you won’t have control over the end product. If the client is dissatisfied with the result, you’ll have to go back to online freelancers and get it fixed, which might be time and resource-consuming.
Another potential issue is trust—you’ll have to be honest with your clients and make it clear that you’re not the one completing these tasks.
Private labeling, sometimes known as white labeling, is a business model where you buy products from private label manufacturers and sell them under your own company’s brand.
This sets private labeling apart from dropshipping—with dropshipping, you can’t really control much about the branding of your product.
For example, Printful is a white-label company. Once you start your private label brand with Printful products, you control what logo goes on the label or how the packaging is branded. If you want to know more about branding options at Printful, take a look here.
Branding increases product value and helps with customer trust and loyalty. Not only does it make your online business look more professional, it also helps you stand out.
Good branding is something not many online store owners have, so private-labeled products can set you apart from other brands.
That being said, selling private-label products isn’t as easy as setting up a dropshipping store. You’ll need to put special care into product sourcing since many private-label manufacturers require a minimum order quantity.
Affiliate marketing is one of those business models that isn’t similar to dropshipping at all. However, it’s a popular way to generate passive income online, so let’s take a look at what it is and how it works.
Affiliate marketing is a business model where you have your own custom links that lead to a product or service offered by another business. This is called an affiliate link. Once a person clicks on your affiliate link and buys the product or service, you get a part of the revenue.
Affiliate marketing accounts for 16% of ecommerce global sales revenue, and while different affiliate programs pay different commissions, the typical affiliate commission is around 10-20%.
An example of an affiliate marketing program is Amazon Associates. It’s one of the largest affiliate programs in the world and is dedicated to promoting various Amazon products.
Source: Amazon Associates
Affiliate marketing is easy to set up and scale. It doesn’t require upfront investment, and if done well, you can easily turn it into a passive income.
Plus, unlike dropshipping, you won’t have to worry about packing or shipping the product—you’re just there to think about digital marketing.
But there are things you’ll need to keep in mind. First, you’ll need a dedicated audience to make money as an affiliate since this business model is commission-based. It’ll take a lot of time and patience to get where you want to be.
You’ll also have to follow the rules—each affiliate program has its own terms and conditions, so you’ll need to be careful and make sure you meet the company’s standards. It might take some time for you to find the affiliate program that works for you.
Last on our list of dropshipping alternatives—but by no means the least—is blogging. It might seem unlikely to make an income by blogging, but it’s certainly possible.
This business model is completely different from dropshipping and is more closely related to affiliate marketing. You generate income by starting a blog about a specific niche subject your readers will want to know about.
Let’s say, you start a blog reviewing various tech products. As you build your audience, you add in affiliate links and show ads in your articles. So whenever your readers buy the items or click on the links, you get a share of the revenue.
If you’re a person like me who enjoys writing, starting a blog will be a breeze. Make the subject something you’re really passionate about, and you might just genuinely enjoy keeping the blog updated.
Plus, this is one of those business models that really doesn’t take long to set up, and you don’t have the logistics to worry about. Similar to being an affiliate, you don’t have to think about product fulfillment, packaging, shipping, or returns.
However, it’ll take a long while before you actually start to make some money with blogging. Your audience will grow slowly, your income will be very small at first, and you’ll need to put in quite a lot of work updating the blog.
Which of these ecommerce business models did you find the most attractive?
Here’s one more quick tip: whether you want to start a POD store or add affiliate links to your blogs, remember that each of these dropshipping alternatives will take time to grow. Much like traditional retail, a profitable online business isn’t built in one day.
Arm yourself with patience, consistency, and good resources. If you need any more advice on starting your own ecommerce store, be sure to check out our vast resources.
On our blog, you’ll find everything ecommerce—how to start your business, how to find your niche, how to deal with social media management, and more.
That’s it from me—good luck!
Ilze Elizabete Strazda
Ilze Elizabete is a freelance writer with a background in law and international relations. In her free time, Ilze is an avid reader and painter.