Is Dropshipping Worth It in 2022?
Whether you’re just starting your journey with dropshipping or have been in business for a while now, you may be wondering if it’s still a profitable model in 2022. As life is gradually getting back to normal for many of us and the ecommerce boom has slowed, there are rumblings that making money online isn’t such a hot topic anymore. Some may even feel like the dropshipping industry is dead!
We’re here to tell you that it’s definitely not, and the data supports this. So if you’re wondering what the market currently looks like and how to make a profit from dropshipping, you’re in the right place.
What is dropshipping? A quick recap
Dropshipping is considered to be one of the most convenient, easy, and low-risk online retail models out there. Why is that? It all comes down to managing your own inventory. In traditional retail stores, inventory is kept by the retailer. In the dropshipping business model, however, it’s stored and managed by a third-party supplier.
In simpler terms, dropshipping is a way of selling items without having to keep stock on hand. You sell products in your online store, and when a customer places an order, your supplier receives the order and ships it out to the customer.
If you’re managing everything yourself, it can get expensive and risky quite fast. You need to pay close attention to your stock and make sure you’re ordering the right amounts. If something doesn’t sell, you’re left with too much inventory and lost investment.
With dropshipping, you don’t face that risk at all. You—the seller—don’t handle the inventory. A dropshipping supplier manages the storage, packing, and shipping of all your products directly to your customers. The best part? The customer never knows someone else was involved in the process! Have a quick look at this infographic to understand how the dropshipping business model works:
For a more detailed guide, check out our Ultimate Dropshipping Guide. And if your interest is piqued, here are some more in-depth articles that explain the specifics of opening a dropshipping store, setting up the business, and all technicalities that come with it:
Start dropshipping with Printful!
Why did it become so popular during the pandemic?
Dropshipping was starting to gain traction before the pandemic, but during the lockdown, its popularity skyrocketed. Because many people lost their jobs when companies, shops, and restaurants closed down, the situation forced many of us to think about other ways of making a living. This was made even more complicated by the fact that we were all stuck inside. People started researching different ways to make money from home and dropshipping quickly became a top contender since it requires little to no starting investment.
What’s more, you don’t need a lot of knowledge about running a business to get started—a good dropshipping supplier will not only offer a wide range of products, but also various support services that’ll help you run your business stress-free.
For example, here at Printful, we help business owners set up their store with Store Setup Services, design your branding with Design Services, organize photoshoots or videos to promote your new launches, and even offer customer support for your clients. That way you don’t have to worry about responding to emails and inquiries and can just focus on building your brand.
Plus, we have integrations with all the best ecommerce platforms, like Shopify, Etsy, and WooCommerce, so you can manage everything from just one account. Printful allows you to run your store without having to jump between different websites or keep up with complex processes. Manage your orders, add products, handle design elements, oversee customer service, and take care of all the other important parts of your business from your Printful account.
Still not convinced as to why dropshipping became so popular? Keep reading.
Advantages of the dropshipping model in a nutshell
We’ll break it down for you even further. Here are the major benefits of dropshipping:
- You don’t need to spend money on inventory until the customer places an order
- You won’t get stuck with unsold items because orders are handled on-demand by your supplier
- Operational costs are low since you’re relying on a third-party supplier who handles the logistics
- You can easily integrate your dropshipping service to popular ecommerce platforms (depending on the supplier you use)
- You can choose from variety of unique white label products that are customizable (depending on the supplier you use)
- The only thing you have to focus on are the interesting bits of your business, like marketing, creating designs, and building your brand
But how can we be so sure that dropshipping is still worth it in 2022? Let’s have a look at some of the data.
The dropshipping market in 2022
As many are going back to work and shops are opening again, the surge of buying online and the idea of making money from home seems to have lost some popularity. So even though it’s clearly easy to do and low-risk, is dropshipping still worth it in 2022?
Let’s dive in a bit deeper. Have a look at the data on the growth of the dropshipping market and its popularity.
Growth rate and projections
In 2020, the dropshipping market was worth over $128 billion, according to Market Data Forecast. But what about in 2022? The compound annual growth rate for dropshipping is estimated to be 32% from 2021 to 2026.
Another report from Grand View Research offers similar figures, indicating that dropshipping will be steadily growing at a rate of 28.8% through 2025. This means that by 2025 the dropshipping market will reach $557.9 billion!
As you can see on the graph above, the dropshipping market share has been growing at a steady rate since 2015, and it is nowhere near slowing down. In fact, the world of ecommerce, in general, has been flourishing for years, with profits reaching $4 billion in 2021—a 7% year to year increase over the last 10 years. In 2020 there were 2.05 billion online buyers, whilst in 2021 the number grew to 2.14 billion. These statistics show that dropshipping (and ecommerce in general) has continued to grow even as lockdowns were lifted and life began to return to normal for many of us.
But it’s not just about market growth, there’s also continued interest from online users on the topic. Let’s have a look at some Google Trends data:
As you can see, the general trend for the word “dropshipping” is upward. Meaning, consumers are consistently searching for the term, most likely to learn more about it.
This is also the case with related phrases like “Shopify dropshipping” or “Amazon dropshipping.” This makes sense when you think about the fact that over 50% of Amazon sales are from third-party suppliers who use models like dropshipping. Or, that the Shopify platform has gotten super popular among retailers who use the dropshipping model.
What does this all mean? The dropshipping market is still growing, and the term continues to generate a lot of interest from online consumers. It’s pretty clear that starting a dropshipping business in 2022 is still a great idea.
Possible downsides to dropshipping
Even though the market is thriving and consumer interest is there, dropshippers still face certain challenges. But don’t fret, with the right information and strategy, any roadblocks can easily be overcome. Let’s go through some of the most common issues and how to solve them.
Is there too much competition?
The short answer to that question would be: no, definitely not. As the data shows, the ecommerce market is continuously growing, so more and more retailers will be needed to meet that demand.
But there’s still the matter of standing out from the competition. All you need is to choose the right niche for your business and then do some solid research. Learn about the best products in your niche and a potential audience for those products, but also your competitors. You can use tools like SpyFu , that will show you your competitors’ most valuable keywords, or BuzzSumo, which tracks the best performing social media content.
Are all the best niches already taken?
That’s the next logical concern. You need to choose a niche, but what if all of the “good” ones are already saturated?
Don’t worry, new niches are emerging every day due to changes in demand. In the online universe, innovative ideas are always cropping up, and anything can create the latest product niche—new social media trends, a TikTok video, or an influencer talking about something cool. If you spot a movement happening online, jump on it, and be one of the first to offer new, relevant products. There are various platforms that will help you stay in the loop, like Trend Watching, Trend Hunter, Cool Material, and of course, Google Trends. You can also use Google Alerts for specific words, like brands or product names, to stay informed about any news to do with your niche.
How can you make good product choices?
Choosing the right product supplier is crucial to having a thriving dropshipping business. You want to offer a variety of quality products that consumers will love. Make sure you get samples and try out the different products before settling on a supplier.
In terms of what to sell, the most important part is simply thinking about your customers: what do they need, what is valuable to them, how can you make their lives easier? Don’t focus on the sales as much as keeping your customers happy. That’s how you create a long-lasting relationship and a great brand name.
Learn more: Top 10 Trending Products to Sell Online
Is customer service important?
Sometimes business owners that rely on dropshipping from a third-party supplier let customer service fall through the cracks. But a dropshipping business model is no different: making sure your customers are taken care of is essential to the success of your business. Having customer support in place that will inform your customers of any shipping delays, changes in stock, or new launches, and that will respond to inquiries or complaints, can make or break your business. It shows that you care about your clients, but most importantly that you are a professional and your store is trustworthy.
How much money can you make from running a dropshipping store?
So, how much can you actually make from dropshipping? Well, according to Bluecart, quite a lot—assuming you follow the advice above and do your part. Bluecart’s calculations state that, on average, dropshipping businesses make around 20%-30% on each sale. Let’s see how that shakes out:
Assume you buy a product from a supplier for $20. Add shipping costs, and you sell it in your online store for $35. Shipping is $5, so that’s $10 profit for your small business. Now, depending on how much you’d like to earn a month, you have to calculate how many orders that means. If you want to be making as much as some of the more successful dropshippers, according to Bluecart, you’re aiming at $5000 a month. How many sales is that?
$10 profit x 500 orders = $5000
If you sell 500 items, you’ll reach your desired profit per month. Of course, costs differ depending on your supplier, shipping costs, type of products, and so on. But now you have a pretty good idea of what your earning potential could be with dropshipping when done right.
Start dropshipping with Printful!
Starting a dropshipping business
It’s clear that dropshipping is still worth it, and from the looks of it, will be for the next few years. So how do you start a dropshipping business? For a detailed, beginner-friendly guide have a look here. But these are some of the main points you should keep in mind:
Do market research
The most important part of setting up a dropshipping store is doing your market research. You picked a niche and now you have to search for what your competitors are doing. What type of products are they selling? Where do they source their products? What integrations do they use? What are their websites’ best performing keywords and best selling products? What is their marketing strategy like? Make notes of all these things and implement the best solutions into your own business.
Find the best dropshipping suppliers
As you’d probably expect, there are multiple suppliers out there and different suppliers operate differently. Make sure you research the dropshipping suppliers within your niche and read about the different integrations they offer and the store setup process. Look into their product quality control, shipping fees and practices, and what type of customer support they provide. The key to success is making sure your chosen supplier offers everything you need and more.
Choose the right ecommerce platform
Picking the right platform is crucial to making sure your store is successful. You want to choose a platform that will work well with your niche, has easy to understand software, and will help your brand stand out.
Add products to your online store
This is the fun part! You get to add all of your favorite products to your store. Make sure you don’t forget about catchy descriptions, high-quality pictures, and well-thought-out prices.
Work on marketing
Marketing is how people find out about your business. You can have the best online store, but without good marketing, no new customers will stumble upon it. Have a look at some of the hottest marketing tips of the season here, and for the basics of Social Media marketing, you can visit here.
Interested in learning more about how to connect with potential customers? Great, let’s keep going.
Successfully marketing your dropshipping business in 2022
At this point, you already know quite a bit about dropshipping. We explained what it is, how and why its popularity is growing, as well as how to address potential challenges. But what do you actually need to become successful at dropshipping in 2022? This section will cover keep points to think about to ensure you’re successfully marketing your business.
Become an SEO expert
SEO is short for Search Engine Optimization and is the process of improving your page’s visibility in search engines like Google or Bing when people are searching for products and services related to your business. Your website will appear closer to the top in search results if you use certain keywords that people are typing into the search engine.
The most important part is identifying the correct keywords. A great tool to help you do that would be the Keyword Planner. It gives you information on related keywords, how big the search interest is, as well as suggestions for other words to broaden your content. It will also come in handy when you’re planning a Google Ads campaign, as these two tools both come from Google and work together well.
You also need to create content that is optimized correctly. To better understand the ins and outs of SEO and how to use it correctly to grow your business, have a look at our SEO guide for beginners. Here are some of the basics:
- Include specific and informative descriptions of your products full of relevant keywords
- Use alt tags for all product images
- Create a sitemap and submit it to Google
- Have a Meta Title and Meta Description for every single page using the targeted keywords
- Add targeted keywords in your product names
- Make sure to get backlinks to your site from other websites
These are the basic strategies you need to implement for your page to start ranking in search results.
Use Facebook Ads to target your audience
Facebook Ads are an extremely useful tool that will help you market your online store to people who are actually interested in your products and might become potential customers. As opposed to other advertising, with Facebook Ads, you’re in control of who sees your content. Target the people who have shown interest in your niche in the past, or a specific demographic. All of these factors will ensure the highest performance of the ad, with the best return on investment.
With Facebook Ads, you can also determine where your ad is placed across a variety of social media platforms. You can advertise on Facebook, Instagram, Messenger, or Audience Network, ensuring that the ad shows up exactly where your potential customers spend the most time.
As you can see, successful marketing isn’t as hard as it looks. It requires some research and hard work, but in the end it’s worth it.
Is Printful right for your dropshipping business?
At Printful, we offer a range of dropshipping products and services, as well as online store setup services, photo, video, and design services, and even customer support for your clients. Our products are 100% white-label and customizable, and we offer a wide variety to choose from.
Plus, our integrations work with all the most popular online stores, including Shopify, Etsy, Woocommerce, Prestashop, BigCommerce, and many more. We’ll guide you step by step through the setup process, and give you all the tools and information you need to be successful.
Now, simply go ahead and get started! The best time for dropshipping businesses is still ahead of us, so don’t waste a minute.
Below are some of the top dropshipping FAQs, in case you had more questions. And if you need any support from our end, simply leave us a comment or email our amazing support team at [email protected]
Start dropshipping with Printful!
Do dropshipping stores ship internationally?
Yes, most dropshippers choose to ship internationally to reach a wider clientele, but it isn’t a must. We do advise you to pick a supplier that has this option in case you want to expand in the future.
Can I combine dropshipping with a business I already own?
Absolutely. A lot of business owners decide to choose the dropshipping model for only a part of their inventory. It’s a great idea for high-maintenance products, like expensive goods, large or heavy products, fragile products, etc. All of those would need special conditions and are more expensive to maintain. Dropshipping is the perfect solution for this problem!
What are some dropshipping product suggestions?
Dropshipping works well for any type of product but is especially great for new trends and unique niches. For example, vegan products like cosmetics or clothes. Have a look at this article that talks about different types of trending dropshipping products in 2022. It’s best to research trending topics and create products that might fit within the topic.
Is it a good idea to offer bulk discounts?
Absolutely! Using discounts is a great way of attracting customers to your online business, especially at the very beginning of your dropshipping journey. The key is to offer discounts for products that will still bring you profit at a discounted price. You should think about profit margins for the different products in your niche and focus on including some products with high profit margins.