The ultimate guide to dropshipping: what is it and is it worth it?

Dropshipping is the business industry's hottest new trend. But what is it, is it worth it, and is it the right business for you? Here's how you find out...

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If the thought of a massive warehouse stocked up with items that aren't being ordered terrifies you, dropshipping is here to keep that nightmare from ever becoming reality. As a fast-growing ecommerce business model, dropshipping lets you ship items directly to customers once an order is placed, with the logistics handled by your chosen dropshipping supplier, rather than having to keep stock in your warehouse.

Dropshipping is therefore adding extra flexibility to ecommerce, lowering the barriers of entry for newcomers. However, the world of dropshipping can be daunting if it's your first time seriously thinking about getting into it.

We give you a helping hand with this thorough guide into dropshipping. From understanding the benefits to how the process work, to identifying the best dropshipping suppliers, you should feel more confident about becoming a dropshipper by the time you reach the bottom of this page.

What is dropshipping?

Dropshipping is a method of retail fulfilment for ecommerce businesses that is ever-growing in popularity, where a third-party manages the logistics of manufacturing, warehousing, and shipping.

This order fulfilment option allows the business to outsource the whole ecommerce process, from start to finish. For example, when a seller receives an order from a customer, they send it to another company who will then ship it to them. This allows people to start a business and sell products without the need to rent warehouse space or manage inventory. Many simply need a TikTok account to start dropshipping.

Pros
  • Low start up costs because you don't need to carry an inventory
  • You can easily scale your business up because you're not burdened by having to manage a warehouse
  • You can sell a wide variety of products and hop on trends instantly
  • You can run your dropshipping business from anywhere in the world
Cons
  • Low profit margins because you don't get the same discounts as traditional retailers who buy and store stock in bulk
  • Dropshipping is a very competitive market
  • You have no control over the quality of the products you sell because your supplier is in charge of that
  • Shipping times can be longer than with traditional retailing as the products are being shipped from the supplier's warehouse
  • It can be difficult to build a strong brand when you're dropshipping as you don't have control over the packaging or shipping materials

How does dropshipping work?

As mentioned above, dropshipping is almost a “done-for-you” product shipping service from you to your new potential customers. The process is quite simple and goes as follows:

  1. You create an online storefront with products you wish to sell
  2. When you receive an order, the supplier is contacted (by you or automation software)
  3. The supplier packs and ships the products directly to your customer.
  4. You profit the difference.
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Ecommerce platforms for dropshipping

Before committing to one of the dropshipping services above, it's important you first choose which ecommerce platform you'll use to build your dropshipping store. This way, you can ensure your platform is compatible with the dropshipping app you choose – for example, DSers would be the best choice if you're using Shopify. There are also plenty of other factors to add to the equation, such as budget constraints and how much experience you have with web-building products.

Based on our in-depth research and user testing, the three clear winners on the best ecommerce platforms for dropshipping podium are:

  1. Shopify – best for dropshipping beginners who want a simple and easy user experience, with expansive sales features
  2. WooCommerce – the best choice for users wanting a free and easy-to-install plugin that will get them operating as quickly as possible
  3. Wix – best for users that want an ecommerce platform offering high-level dropshipping product customisation and automatic inventory synchronisation

You can also use social media platforms, like TikTok or Instagram for dropshipping. This will give you access to an instant, ready-made audience to sell your products and is a powerful channel to sell through when used in conjunction with your website.

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Shopify

WooCommerce

Wix

 

Adobe Commerce

BigCommerce

OpenCart

Best for

Dropshipping beginners who want a simple and easy user experience, with expansive sales features

Best for

Users wanting a free and easy-to-install ecommerce platform that will get them operating as quickly as possible

Best for

Users that want an ecommerce platform offering high-level dropshipping product customisation and automatic inventory synchronisation

Best for

Advanced users who already have experience using an ecommerce platform to run a dropshipping business

Best for

Using multiple channels to promote the products in your dropshipping store

Best for

Dropshipping business owners with experience in website building, who want to get going with minimal outgoing and support costs

Price from

£19 per month

£1/month for 3 months

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$6.59 per month (£5.33)

Price from
Price from

Contact sales for a quote

Price from

$29 (around £23) per month

Price from

Free

Dropshipping apps and services

Dropshipping is used in a variety of ways and with a variety of different products. You can start a store for almost anything you can think of these days, from phone cases to partyware – there are suppliers for everything. Once you’ve decided on what you want to sell, you can start shopping around for dropshipping suppliers. We’ve collected a few here, with some recommended based on the specific website platform you’re using.

AliExpress for product range

AliExpress is the best all-rounder platform when it comes to dropshipping because of their extremely vast product range, good prices and overall ease of use.

DSers for Shopify users

DSers is a platform that integrates with Shopify and has a range of over 20,000 products. (Wondering whether Oberlo would be a better choice? Note that it was announced that Oberlo will be shutting down and will no longer be available on app stores from 2022).

Modalyst for Wix users

Modalyst is a great platform for Wix users. You can also run your dropshipping business on Amazon and Ebay, as long as you follow the specific rules on each platform on how to do it properly so as not to violate any of their community guidelines.

Do dropshippers make money?

There’s no doubt that dropshippers globally are making money. Whether or not the average Joe is one of them however, is a different matter.

Dropshipping can be incredibly lucrative and successful, but it is a highly competitive market and only the best seem to reap any real benefits. According to Shopify, top dropshippers from around the web estimate that only between 10% and 20% of dropshipping businesses actually succeed.

A lot of your success will depend on scale and time.

Scaling takes a keen eye to know what products will be profitable and potentially push them further with advertising, as well as making sure your supplier can actually deal with larger demands and orders in the case of a particularly popular product.

Time is involved to potentially build a brand around what you sell in order to build trust and familiarity, and to ensure that customers have loyalty to your store in particular instead of the thousands of other dropshipping stores out there.

A lot of people go into dropshipping thinking it will be a ‘get rich quick’ scheme, when that is definitely not the case, so they don’t put enough effort into these two crucial aspects. The industry is certainly not without its fair share of failures.

Zeky Ahmed of Zeky Enterprises, Inc. spent 2 years dropshipping before he closed down his e-commerce business and switched to affiliate marketing and selling digital information-based products.

“I tried dropshipping back in 2016 and spent a good two years trying to build that business. It didn't work out and ultimately I had to shut it down, losing a lot of money in the process, because I ended up running out of the cash I needed to keep running ads to my store.

I'd say dropshipping can definitely be worth it if you know what you're doing or have someone reliable who can show you the ropes…. I have friends that are currently making a lot of money doing it. But for most beginners, they SEVERELY underestimate how challenging it is. You need to have a big enough budget of at least a few thousand bucks to test your products, marketing and everything else until you finally get profitable.”

What kind of profit can you make?

The average dropshipper in the UK in 2022 made around £2000 a month, but there is no limit to how much you can earn. People like Irwin Dominguez from San Diego for example, is a fast growing and high-earning dropshipper who made $1,000,000 in profit within 8 months.

The niche you choose has an impact, as some are much more profitable than others. The most crowded and profitable niches are in the Gadgets, Devices, and Accessories Niche according to Alidropship, with 18.5% of all dropshippers catering to the high demand for new trending technology.

A higher price point too would decrease the amount you’d have to sell, and that would also have an impact in gaining more profit.

As an example of the type of profit you could make: if you sold 25 phone cases a month at £80 and deducted the supplier's wholesale price of £20, that would put you in the market of the average dropshipper’s profit range – a potential earning of £18,000 in a year.

You can make a rough estimate based on a 20% margin and 2% conversion rate but you need to factor into your profit calculation that your discount from wholesalers might be less than 20%, with other expenses and competitors undercutting you at this profit margin.

It’s important to show discernment when researching stats online before you compare yourself against anyone in the dropshipping industry however, or get too starstruck by the larger numbers.

Smaller dropshippers and people wanting to sell online courses will often embellish and promise huge numbers as their sales strategy with no viable evidence that they can provide this for you – while the larger dropshippers are actually generally more private about their exact earnings since they don’t feel the need to boast – so the figures are vast and hard to get a truly accurate read globally.

Shopify: Everything you need to start dropshipping from your own website

It makes sense to set up your ecommerce platform before committing to a dropshipping provider. This way, you can ensure the provider you choose integrates well with your online store.

We highly recommend Shopify owing to its excellent offering for dropshippers – especially those new to the game.

shopify dropshipping exampple

Our independent research reveals that Shopify offers some of the strongest sales features on the market, like easy multi-channel integration, fully customizable checkouts, and unlimited inventory allowance for those wanting to scale their stock without additional costs. You can start a free trial today!

Can you lose money?

If you haven’t prepared with as much knowledge as you can, especially in the beginning, then yes there is the potential to almost certainly lose money. As mentioned above, a common mistake most new dropshippers make is failing to choose a good niche.

Other ways you might lose money include needing to purchase your own products at least once to test quality, see how fast they are delivered, and that your supplier is reliable. You may need to verify your business with your online banking providers before any influxes of huge profits lead to your account being flagged for suspicious activity. These are two examples illustrating the multiple, most common setbacks that can occur rapidly for newer dropshippers.

Aaron Agius, Managing Director & Co-Founder of Louder Online shares:

“As far as numbers are concerned, I can't say dropshipping is the same it was 5 years ago. It's a highly competitive market with low-profit margins, low supply chain control, and legal liabilities. It's also harder to build a lasting brand through dropshipping than it was before. All things considered, dropshipping is still a viable business option IF you can meet the right conditions.”

While the uncertain dropshipping atmosphere rages on, there are some people who advise to avoid it altogether and still swear by older and more tried-and-true methods.

Rick Hoskins, founder of Filter King is one of them. He states:

Dropshipping is not a good long-term strategy. You’re leaving a tremendous amount of money on the table by not owning your own inventory and logistics processes. This could be the difference between a profitable business and a time consuming hobby.”

Can you succeed at dropshipping?

Yes, you can succeed at dropshipping.

With the right drive, mindset and tools at your disposal, you can potentially succeed with any new business.

However, you will need to consider if you are truly passionate about the time and effort it will take to build, and how much you desire to see your store in the estimated top 10-20% of all dropshipping businesses around the world. Currently, that’s the kind of drive it takes for real life-changing success.

You will be met with struggles. The biggest hurdle – as reported by 84% of ecommerce retailers – is finding and securing a good supplier to get their business going.

Once you’ve overcome that, you’ll need to actually launch your brand new online store, your chosen range of products, and ideally have the beginnings of an incredible brand (which will most likely involve a brand story and an action plan for marketing).

Austin Fain, the CEO of Perfect Steel Solutions emphasises:

If you already have an existing following or online presence, that is something that can put you ahead, or if not, at least have a plan to create content and grow your following.Then if you have the funds and the right know-how for an ad budget (up to £100 on average to start) that can go a long way.”

The great part about dropshipping is that it's a pretty sturdy business model during a recession. Because of the low upfront costs, you have enough to keep you afloat as soaring inflation and costs make life hard for other types of businesses.

What products are great for dropshipping?

If you want to increase your chances of succeeding at dropshipping, here are a few ideas for you to take on:

  • T-shirts
  • Sports clothes
  • Bamboo toothbrushers
  • Sunscreens
  • Razors
  • Reusable water bottles
  • Nappies
  • White noise machines
  • Food bowls for pets
  • Collars
  • Rugs
  • Bedding

How much work is all of this going to be?

Depending on the levels of success you want to reach, the level of work, time and expertise will be different.

If you’re looking for your dropshipping venture to be a small side hustle on your lunch breaks or after work most days, it can be a good source of extra income. However, doing it this way has a greater risk of failure due to all businesses needing strong commitment to them, especially in the beginning stages, leaving you with more lost costs than earnings.

“For anyone thinking of starting to dropship as a mode of making passive income, you have to realise this isn't passive at all.” Fain insists. “ You have to be on it all day, customising ads, finding winning products, maintaining your website, and contacting suppliers. While it might be a popular way to make money, it's not an efficient one.

If you want a breakout brand however, that reaches the high numbers everyone has seen around the web and that others only dream of, it is going to take a lot of work. It is not something you should begin lightly. While you don’t have to keep stock and that is a huge advantage, dropshipping still has all the other needs of any other business – and unless you have enough money to hire a team to help you, it will involve you being the driving force behind everything: content, promotion, brand strategy, budgeting, operations and more.

Bogdan Krstic, owner of RepairSprout speaks on the opportunity behind hard-working dropshippers:

“Personally, I don't see drop shipping going away any time soon. In fact, I only see it growing.

While the market is indeed ‘saturated’, most of the competitors one will face throughout their journey will not be there in a few months because all of them have entered the market to ‘get rich quick’.

I have tried dropshipping in the past and yes, it is (and always will be) a viable model, not a ‘biz opp’ or an ‘MMO scheme’. Instead, it's a way people can get into the eCom business without a ton of money and experience.”

How long might it take to start making money?

According to Shopify, it will realistically take about a year on average to build a business that generates an average full-time income, but for some people it can take as little as a few weeks. This all mostly depends on how much they knew of the industry and the size of any audience they had beforehand.

But no matter what, ensure that you give yourself a grace period before celebrating too hard and spending all your profits – because as with most businesses, there will always be some people who may want to return items for whatever reason, and these requests will often have to be resolved, coming back out of your profits.

Beware of relying too much on your profits if they do well in the future too, because online sales are largely inconsistent and hard to rely on as a sole source of income.

Dropshipping alternatives

Whether it's because you think the dropshipping market is saturated or you think it'd be too logistically complicated for you to ace, here are a few dropshipping alternatives to try:

  • Print on Demand (POD): this is a fulfilment model that lets sellers design graphics for products. Once you receive an order, all you have to do is tell the manufacturer what to print on the product (t-shirts, mugs, tote bags, you get the idea) to then ship it to the customer.  This is easier to set up than traditional dropshipping and there's few upkeep costs, mostly because the products you print on can be pretty cheap.
  • White labelling: this models allows you to sell products markers with your company's brand. This can be done by putting your company's logo on the product and packaging. White label products are generic products manufactured by a supplier that are rebranded for multiple brands. In this case, the competition will be less of a worry since no one will sell the exact same product.
  • Drop servicing: this is an online business model that involves selling a service to a client and then hiring someone else to do it for cheaper so that you can make a profit. This can be anything from designing logos to doing an SEO analysis of someone's ecommerce store.

Conclusion: is dropshipping worth it?

There are many positives to starting a career in dropshipping – as well as a few negatives. The most prevalent positive being that there is really no upper limit to the potential new profit you can make, and the most prevalent negative being that it takes more work and effort than most people imagine especially when first starting out.

Throughout this article we discussed how dropshipping works, the best platforms for dropshipping, the type of money you could stand to lose or gain, and whether or not all of it is worth it.

Overall, by having a strong awareness of what you’re about to get into, understanding the strengths and weaknesses of the business model, and knowing that it is not a ‘get rich quick’ scheme and there will be real work involved, you could achieve a very viable dropshipping business.

Frequently Asked Questions
  • What do I need to know before starting dropshipping?
    Dropshipping can be incredibly lucrative and successful, however, it is a highly competitive market and only the best seem to reap any real benefits.
  • Is there a downside to dropshipping?
    If you haven’t prepared with as much knowledge as you can, especially in the beginning, then there is the potential to almost certainly lose money.
  • Is it profitable to do dropshipping?
    The average dropshipper in the UK in 2022 makes around £2000 a month, but there is no limit to how much you can earn.
  • Is dropshipping legal in the UK?
    Yes! In the UK, dropshipping is treated like any other kind of e-commerce store. As long you're abiding by all applicable sales and consumer protection laws, you're good to go.
  • How do I become a dropshipper?
    There's a couple of steps you need to follow but in a nutshell you'll need to: choose a niche, perform competitor research, find a good supplier, build your online store, and market your dropshipping business.
  • What is an example of dropshipping?
    Gymshark is a brand that dropships. Instead of keeping mountains of products stored in a warehouse, items are directly shipped to customers by a supplier when an order is made.

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Written by:
Stephanie Lennox is the resident funding & finance expert at Startups: A successful startup founder in her own right, 2x bestselling author and business strategist, she covers everything from business grants and loans to venture capital and angel investing. With over 14 years of hands-on experience in the startup industry, Stephanie is passionate about how business owners can not only survive but thrive in the face of turbulent financial times and economic crises. With a background in media, publishing, finance and sales psychology, and an education at Oxford University, Stephanie has been featured on all things 'entrepreneur' in such prominent media outlets as The Bookseller, The Guardian, TimeOut, The Southbank Centre and ITV News, as well as several other national publications.
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