If you’re on social media, you’re probably familiar with the many influencers who promise entrepreneurs an easy pathway to success via dropshipping. You may be debating whether dropshipping is worth your time.
Below, discover if starting a dropshipping business on Shopify can still be a profitable venture in 2024, and learn six key factors that influence its success.
What is dropshipping in 2024?
In 2024, dropshipping remains an attractive business model for entrepreneurs looking to enter the ecommerce space without a significant upfront investment in inventory or warehousing.
In the dropshipping business model, order fulfillment processes are outsourced to another company. That means sellers don’t have physical contact with their inventory. Instead, products are sourced through a supplier. When a seller receives an order, they pass it directly to the supplier who picks, packs, and ships the product to the customer.
Is dropshipping worth it in 2024?
Dropshipping is worth the investment if you’re looking for a low cost, small business idea. The number of people searching the term “dropshipping” has increased exponentially from 2004 through 2024.
The process of starting a dropshipping business is relatively simple:
Then, watch the money roll in—right?
Not always. Opening a dropshipping store may require less investment than a traditional retail business, but dropshippers must still invest considerable time and energy to get their businesses off the ground.
Why is dropshipping still popular in 2024?
The global dropshipping market is valued at $351.8 billion as of 2024, which is a 23.6% increase from the year prior. Experts predict a 24.39% average annual growth rate of dropshipping between 2020 and 2026, when the industry is projected to surpass $500 billion.
According to Grand View Research, as consumers increasingly turn to the convenience of online shopping, dropshipping has risen in popularity. Entrepreneurs can take advantage of this online-first preference and launch their own business without physically touching the products they’re dropshipping.
That said, an influx of online creators who promise “get rich quick” schemes have adopted dropshipping, which has made it more popular. Bear in mind that, like any other business model, dropshipping doesn’t present an opportunity for overnight success.
The advantages of dropshipping
Dropshipping is a popular route for new business owners to start making money online. That’s because the dropshipping business model offers these primary advantages:
Low barrier to entry
New entrepreneurs don’t need a lot of money to invest in dropshipping inventory. Once you sell a product, the dropshipping supplier handles order fulfillment and shipping.
What you do need, however, is strong promotion and branding skills—especially if you’re operating in a crowded market.
Flexibility
Dropshipping lets entrepreneurs sell as many or as few dropshipping products as they like. It’s a scalable ecommerce business model that provides stores with the ability to stay agile and evolve their product catalog alongside consumer trends.
Simple testing
Since other tasks—like order fulfillment and shipping—are taken off your plate as a dropshipper, your main focus is testing which products sell best. It’s why some entrepreneurs consider dropshipping a crash course in ecommerce marketing.
Take it from Caleb Dueck, director of operations at Sperry Honey, who says: “Dropshipping models like print on demand let you add additional value to your products. Since your print-on-demand platform ships the order right to the customer, you still get the value of outsourced fulfillment while also bringing your own unique product to the table.”
6 things to know before starting a dropshipping business
1. Low costs make dropshipping profitable
The average ecommerce entrepreneur spends $40,000 in their first year of business. Product-related costs tend to be the most expensive, accounting for almost a third of annual expenses.
Dropshipping allows you to significantly cut down on these product and fulfillment costs. Since there’s no need to invest in developing new products, your product costs only involve sampling products that already exist. Instead of budgeting for order fulfillment staff wages, your dropshipping supplier handles that process for you.
Like with any business model, however, the profitability of your dropshipping business depends on picking the right products to sell at the right prices. Dropshippers often pay a premium to source inventory from suppliers. With so many companies selling comparable products, there’s often a ceiling on how much profit you’ll make on each item.
Marketing tends to be the biggest expense for dropshippers. In a competitive market, the way you position your product matters. If competitors are selling a less expensive version of the same dropshipping product you offer, strategic digital marketing can help convince consumers you’re worth the extra money.
2. Dropshipping is highly competitive
Since anyone can start a dropshipping business with minimal upfront investment, it’s an attractive business model for entrepreneurs looking to sell products online. That makes it competitive—even more so if you’re selling in a popular dropshipping niche.
Stand out from the dropshipping competition by using techniques such as:
Choosing a less crowded niche
“Charging extra for the same product when you don’t add any value isn’t a viable business model for the long term, since the low barrier-to-entry means more competition and less differentiation,” says Caleb.
Building a brand
Cole Turner, who made millions through his dropshipping store, says: “The only way to be successful in dropshipping nowadays is to have a real identity as a brand, and have a real legitimate business, even if it’s not legit to start with. If you’re still shipping from AliExpress, you still have to be believable. People have to trust you.”
Prioritizing customer service
Dropshippers often fall into the trap of focusing solely on marketing and neglecting existing customers—despite the fact that existing customers are more likely to purchase products you’re selling.
“Dropshipping (is) still a massive part of a merchant’s journey,” says Brian Peters, partnerships lead at Shopify, “and there’s always an opportunity to do it better—more quality products, faster shipping, better search/UX.”
3. Like any business, dropshipping success takes time
Despite dropshipping being a low-risk business model, there’s still a large amount of time that needs to be invested before making your first sale. Dropshipping success requires:
- Starting an ecommerce store
- Sourcing new products
- Finding reliable suppliers
- Marketing your products
- Building a brand
Expect to spend dozens of hours per week to generate stable monthly revenue through your dropshipping business. The more time you invest, the higher your odds of earning substantial revenue.
The experiences of successful dropshippers show it typically takes at least a year of full-time work to recreate the average full-time income using dropshipping.
4. Finding a reliable dropshipping supplier is key
You can have the best marketing campaigns in the world. But if customers don’t like the products they’re receiving (or fail to receive them entirely), it’s likely your dropshipping business is doomed.
“Navigating supply chain complexities, such as shipping delays and quality control issues, requires proactive management and effective communication with suppliers,” says Adam Garfield, marketing director at HairBro. “Despite these challenges, dropshipping offers flexibility, low initial investment, and scalability, making it appealing for aspiring entrepreneurs.”
Websites like Alibaba and DSers have thousands of suppliers ready for dropshipping store owners to plug into. Thoroughly vet any dropshipping suppliers you choose to partner with.
While vetting dropshipping suppliers, pay close attention to the following:
Shipping estimates
Online shoppers want fast, free shipping. Consider whether you’re able to offer this service by researching estimates on shipping times and costs from different suppliers.
Reviews and ratings
To improve quality control, check reviews from other companies using the same dropshipping supplier. Is the product quality up to scratch? Does it arrive with any defects? Is their order fulfillment process fast enough to meet delivery promises to customers? Do they accept refunds on your behalf?
Customer support
The most successful dropshipping suppliers welcome feedback and provide speedy customer service. The most important dropshipping tip is: Own your supplier’s mistakes. Hold suppliers accountable for their errors, but when communicating with customers, always take responsibility for the error and find ways to make it up to them.
5. Dropshippers are responsible for customer support
The importance of prioritizing customer support should not be underestimated. As soon as a customer orders an item through your online storefront, details automatically feed through to your dropshipping supplier. It’s their responsibility to pick, pack, and ship the item to your customer. Inevitably, something could go wrong at any point in that process, and it’s up to you to minimize the impact of any negative customer experiences by owning your supplier’s mistakes.
Although the time you spend supporting customers can be minimized by partnering with reliable suppliers, it’ll still take up a lot of the time you spend running your store.
Best practices in customer support include:
- Communicating delays proactively, such as updated delivery times
- Maintaining strict quality control standards with your suppliers
- Asking for another chance if a customer’s order shows up wrong (e.g., offer a coupon code on their next order)
- Making support easily accessible by including an on-site chatbot and links to FAQs in your order confirmation emails
These customer support best practices can help you avoid situations in which customers publicly complain about your store on social media. That’s important to avoid, since social media complaints may deter up to 93% of online shoppers from purchasing one of your dropshipped products.
6. Dropshipping is legal
It’s totally legal to operate a successful dropshipping business. But there are some details you need to consider before setting up shop.
Business structure
Operating as either a sole proprietorship, LLC, or C corporation each has its own benefits. However, an LLC can provide greater protection as a dropshipper. With an LLC, you don’t risk being personally liable for any debt the business accumulates, like overspending on marketing.
Taxes
Dropshippers need to pay sales tax if the state you operate from collects it and an order is placed by someone living in your state. You may also need to pay income tax if you draw a salary from the business.
Contracts
Consult a lawyer to draft a dropshipping partner agreement and protect yourself in the event something goes wrong with suppliers.
Ecommerce policies
You’ll need privacy, shipping, and returns policies for potential customers to view when thinking about purchasing through your dropshipping store.
Business insurance
Risk increases as your dropshipping business grows. Consider investing in business insurance to protect yourself.
The future of dropshipping in 2024 and beyond
The dropshipping industry is growing at a remarkable rate, and its growth isn’t set to slow down anytime soon.
But with so many entrepreneurs turning toward this business model as a way to get rich quickly, you’ll need to put a lot of effort into your new dropshipping venture if it’s to stand out from the competition.
That’s especially true if your target market includes younger generations. “Millennial and Gen Z consumers are more aware of dropshipping than years past,” says Caleb, “and those younger purchasers understand that they can just buy those products for a cheaper price on sites like Temu and Alibaba.”
Dropshipping success lies in choosing the right products and suppliers, maintaining profit margins, and providing quality customer service. If you can prioritize those elements and be flexible along the way, then yes—building a future in dropshipping is worth it.
Is dropshipping worth it FAQ
Is dropshipping worth it for beginners?
Dropshipping is a great business opportunity for beginners, since you don’t have to deal with order fulfillment or inventory management. If you have a knack for marketing and time to dedicate to communicating with dropshipping suppliers and customers, dropshipping can be a lucrative business opportunity.
What is the downside of dropshipping?
The cons of dropshipping may include low profit margins, poor inventory management, and hassle with suppliers. You can mitigate that risk and avoid dissatisfied customers by sourcing high-quality products from affordable, reliable suppliers.
Is dropshipping still profitable in 2024?
Dropshipping can still be profitable, though your profit margin differs depending on the products you’re selling. Source prices from your suppliers and compare markups from other retailers when deciding on your profit margins for dropshipped products.
Is Amazon dropshipping still worth it?
Amazon dropshipping is slightly less profitable than selling online through your ecommerce store, since the marketplace takes a 15% cut of any sales. If profit is your main goal, consider diversifying your sales channels.
