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7 Reasons Why You Should Start a Dropshipping Business

The current times have witnessed an upsurge in online business. A lot of people wish to start a dropshipping business as a side hustle to earn some extra cash.

The biggest highlight of this business model is that you don’t have to own stock and keep inventory. It is basically a low-risk business option that can give you returns without the headache of investing in stock and renting out warehouses.

Basically, the working of dropshipping is simple,

  • You own a website where you advertise the products of a supplier/manufacturer.
  • As and when you receive orders from customers you forward them to the supplier and they fulfill it.

The difference between what the supplier charges you for the product and what you bill to the customer is your profit.

However, attractive the dropshipping business model may sound, you should know that it is not that simple. It takes hard work in being able to successfully make sales.

Image Credit – HnbWebsites

It isn’t necessary to stick to selling dropshipped products on your website alone. If you have a product range of your own, you can even sell those products along with the ones that are dropshipped. It is just that your customers will get a wider variety to choose from.

If you are contemplating taking the plunge, here are some morale-boosting statistics:

  • Online buyers are going to rise from 1.52 billion in 2016 to 2.41 billion in 2021.
  • 27 percent of online retailers have adopted the dropshipping model.

Table of Contents

Top Reasons To Start A Dropshipping Business

Now, you know how the dropshipping business model works and how lucrative it is. In case you are still not convinced about getting started, here are some valid reasons to start a dropshipping business.

1. Low investment

You need to confess! To start any business, you need money. Reports say that most businesses don’t succeed due to a lack of funds. Now, what if there is a business model that involves very less investment? Great, isn’t it? Dropshipping is one of them.

To start, all you need is a website, a computer or smartphone, internet connectivity, and a contact list of wholesale dropshipping suppliers.

In addition, you need an ecommerce platform to build your store like Shopify, BigCommerce, WooCommerce, etc.

Considerably, the basic initial cost to start a dropshipping business is as lower as $500.

2. No need to invest in inventory and have a warehouse

For any retail business, purchasing and stocking up inventory is a huge investment. You have to pay the rent of a warehouse and spend money on its upkeep.

And, in case your sales don’t pick up, your stock will simply rot in the warehouse. Moreover, you have to bear the wages of the staff that picks and packs your products. And it doesn’t stop here, you also have to pay for the shipping.

With dropshipping, there is no need to have an inventory of products. It is the headache of your supplier or manufacturer. Instead of blocking a big chunk of money in stock, you can use it in building your dropshipping business.

This model has no concept of inventory which indicates that even if your business is not doing that well, you won’t lose much. Maybe the amount spent on the website will be your major loss.

Another benefit of this business model is that the changes in the tastes and preferences of customers will have minimal effect on you.

You can offer exactly what they want as there is no compulsion of pushing out your old stock. This also lets you display a wider product range to your customers.

You can even sell products that are difficult to store and perishable because you are not the one storing them in warehouses!

Just make sure that you coordinate with the supplier via apps to know when the products are likely to go out of stock. This way you won’t disappoint your customers.

You can always send in your own labels to suppliers so that your customers will never come to know that you are into dropshipping. There are many dropshipping providers out there that have really great offers for you.

Also, as the product directly gets shipped from the wholesale supplier, it is less likely to get damaged.

Additionally, you don’t have to worry about stuff like organizing, tracking, labeling, picking, and packaging items before shipping. Third-party suppliers will take care of this.

Undoubtedly, there is no better time to start a dropshipping business because you have a number of dropshipping apps these days.

You can get in touch with wholesale suppliers via email and the remaining work like downloading the photos, changing the price of products, and tracking orders can be done from the app’s dashboard itself.

3. Many niches to choose from

Your online store can be built around a particular market segment or niche. You can cater to the needs of the smaller slice of pie and still see your business booming. This is applicable to both conventional and dropshipping stores.

When it comes to choosing a niche for your dropshipping business, the sky is the limit. You have several niches to choose from for your store but you must first check and find out whether they are viable or not.

You need to search for the most popular niches that have been doing well over a period of time. The niche has to be a steady one that is so that you are not out of orders overnight!

If you happen to find a gap in the market for a popular niche product, you must definitely try to do something to fill that in with your products.

After the initial research, you will get an idea of the inputs that will be needed from your end and you can start a dropshipping business.

4. Opportunity to display more products

As already said, with dropshipping there is no burden of stocking up items with you at the warehouse. Therefore, you can easily display a huge selection of products on your website.

Moreover, if the products in your e-store seem not worth selling, you can simply discard them. Even better, you can display a number of products from different brands and track which are selling better.

Whatever, the target audience is likely to prefer can be put up. This way, customers will return to your website to see what new products you have to offer.

They will feel valued when they find what they have been looking for all along. Thus, you must always keep checking the list of trending products from time to time.

Tip – Start a dropshipping business with a few products initially and expand gradually.

5. Trending online shopping over outdated Physical stores

Online shopping is preferred these days as people can get stuff delivered to their doorstep with the click of a button. It saves both time and effort which are quite valuable in this age.

As most people want to buy things online, this gives you another good reason to open your e-store. The dropshipping model will work really well for you.

Moreover, the clear-cut fact is that brick-and-mortar stores are now old-fashioned. Though a study shows that 55% of online shoppers still prefer buying from a retail store, the retail business has taken a turn from physical stores to the digital world.

Businesses have turned more practical and willing to keep up with the trending competition; especially during the COVID-19 pandemic.

The point is that no one wants to bear the utility bills, staff wages, inventory, and store rent. This is why most retail businesses are going online these days.

In addition to that, people are now moving away from e-commerce giants like Amazon and eBay. They prefer buying directly from the individual stores instead.

This is obviously great news for you to start a dropshipping business. It is a golden opportunity and you should definitely grab it.

Interestingly, it is expected that by 2023, eCommerce retail purchases will rise from 14.1% to 22%.

6. Wider global reach

The traditional e-commerce stores usually need to get their products sourced from wholesalers abroad that too in bulk amounts. They have to be stored in warehouses before being marketed and sold.

This is a tedious job that involves a lot of time and money. You will also have to deal with banks, export-import agents, and many intermediaries.

With drop shipping, you don’t have to worry about importing products and stocking them up in your warehouse. No matter where the customer is located, the product can be directly shipped by the supplier without you having to come in between.

This way you can reach out to customers all across the globe easily. You can market and sell products to new customer bases in different parts of the world.

There are many suppliers who have their warehouses in different countries. You can get your orders fulfilled easily.

Statistics say that 58% of Canadians, 28% of Americans, 29% of Britons, and 67% of Irish citizens purchase goods online from across the border. These can be great markets for you too!

7. No boss overhead + Work flexibility

Being your own boss with your dropshipping business is probably the biggest charm of getting rid of your monotonous 9 to 5 job. There is no fear of meeting the deadlines, reaching the targets, and having a boss to report to.

As you are fully responsible for the output of your business, you are obviously more likely to put in your best. The risk and profits both are yours and you have to balance them right.

Moreover, it is completely on you how to proceed with your plan of action. Though you will end up doing all the work yourself and this may sound like a con, but not having a boss on your head is a huge relief! It lets you set your own rules.

Another benefit is that you have a lot of work flexibility. In fact, you are free to work remotely.

You, your supplier, and your customer can be on different continents altogether. And, with dropshipping business, this won’t be a problem. You can handle everything remotely without having to move around.

Basically, your business travels along with you so you don’t have to worry about your geographical location. You just need your laptop/smartphone and an active internet connection to get everything in place.

It gives you the opportunity to travel even while you are at work.

The Bottom Line

To start a dropshipping business this is the right time. However, you will have to put in the effort. Initially, you will need funds to build your e-store and advertise it.

You may lose money and feel demotivated BUT don’t make the mistake of moving away from the scene too early.

Generally speaking, the minimal investment involved and the freedom to work remotely can actually be good for you to get started with. Just ensure that you are into dropshipping products that are viable.

You can carry out a litmus test and see whether entrepreneurship is your cup of tea or not. With dropshipping, the chances to succeed are higher.

You can at least earn your living by being your own boss. The risk is less and you will get to follow your own rules.

However, there are some drawbacks too:

1. The profits are low

Just because the headache is less in this business does not mean that it is all roses. As you are not stocking inventory and spending less, your returns are also on the lower side.

The only way out to survive is by doing the business in high volumes.

2. The competition is high

As the investment is low, anybody can get started with a dropshipping business. As a result of that, you will find a lot of competitors.

Apart from that, one supplier can deal with many drop shippers and as a result, the same product will be sold at different rates by competitors. Consumers might buy from where they get it for cheap.

3. Lack of control on product quality and shipping process

If the customer feels that your product is of substandard quality or tells you about an issue in the packaging and shipping, you can’t do anything about it. It is just not in your control.

In addition, there is a communication problem too! You need to pass on the messages of the customer to the supplier to resolve an issue.

However, if followed carefully, dropshipping is a profitable business model to start with!

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