Dropshipping was a popular business model during the pandemic and still is today, but is it worth your time and effort in 2023 or should you focus on growing your business another way?

If you’re after sustainability, follow our guide below. We’ll cover how you can use dropshipping today and what you can do to grow your business so it scales and thrives for years.

What is dropshipping and how did it become popularized?

Dropshipping is an e-commerce business model in which the seller doesn’t hold inventory and instead relies on third-party vendors to deliver products to customers. It has become an appealing option for new entrepreneurs due to its:

• low overhead costs
• lack of need for a physical location
• ability to start selling a range of products with relative ease

The increase in popularity of dropshipping businesses was seen especially during the pandemic when businesses had to pivot in order to survive the economic downturn.

As it allowed dropshippers to quickly adapt their business models with minimal additional investments, dropshipping has provided an access point into e-commerce that would otherwise have been cost-prohibitive or too slow.

What are the pros and cons of dropshipping as a business model?

Dropshipping can be a profitable business model when done correctly, allowing entrepreneurs to run an e-commerce store with minimal overhead and start-up costs. However, it does come with certain challenges.

Dropshipping Pros

Here are the top 10 pros for opening a dropshipping store:

1. Hands-off or low-maintenance dropshipping process
2. Minimal start-up costs
3. No need for a physical location
4. Ability to quickly pivot and adapt business models
5. Can source products from multiple vendors easily
6. Ability to scale with minimal additional investments
7. No shipping fees due to third-party suppliers handling orders
8. Minimum risk since there is no inventory holding cost
9. Possibility of higher profit margins on niche/exclusive items
10. Provides access into e-commerce that may otherwise be too expensive or slow

Dropshipping Cons

The pros of dropshipping make it an enticing business model to test, but the cons could deter you.

1. Difficult to control product quality and customer support
2. Dependence on dropshipping suppliers for fulfillment can be troublesome
3. Shipping times are often unpredictable
4. Inventory is constantly changing, making it tricky to keep track of product selection
5. Susceptible to increased competition due to low barriers to entry
6. Reliance on accurate information from suppliers who may be unreliable or slow in providing updates
7. Risk of chargebacks if vendors do not follow the policies set by payment processors
8. Returns can be complicated as customers will have to return products directly to the manufacturer or supplier instead of your store
9. Difficulty in branding and creating a distinct identity in an already crowded marketplace
10. High fees associated with certain dropshipping platforms

Is dropshipping still a viable option in 2023?

Dropshipping has quickly become a popular e-commerce model, especially during the pandemic when more people turned to online shopping for their needs. But is this still a viable option for entrepreneurs in 2023?

Although there is no fixed answer, the dropshipping business model still does have a place for business owners in 2023.

Testing New Products

Dropshipping products doesn’t have to be your one and only business model. You can use it to test new products before taking the dive. This way, you get valuable customer feedback before spending on inventory, management, and everything else that comes with selling new products.

New products are easy to find without contacting specific manufacturers. AliExpress and Spocket are great examples. Order fulfillment might be a little messy depending on shipping costs, shipping times, and if you find a reliable supplier or not. But that’s nothing a quick disclaimer can’t cover so the experience remains slightly separated from your brand.

Selling Trending Products

When you want to sell what’s hot right now, dropshipping is the perfect solution.

You already know there’s a market for the product, but what you don’t know is how long that market will be open—meaning, how long consumers will be interested. Dropshipping takes away the burden of overstock. Plus, you can close up shop or move on to the next product in literal seconds.

Keep in mind that dropshipping high-quality products or high-ticket items don’t necessarily mean higher profit margins nor success. If you’ve performed some market research via Google Trends (for example) that an expensive item is hot right now, you will need a strong payment ecosystem and customer experience to match the quality of that product. In the end, you may not be earning as much as you’d hoped. So please do some research before selling hot items.

Begin a Business with Dropshipping

Dropshipping is great to start your business. There’s always the opportunity to move on to other business models. But when you’re just starting out, you don’t always have the resources or the time to build a stand-alone business.

Getting some momentum from dropshipping first will help you get a leg-up on becoming running your own business.

What other e-commerce business models are there?

E-commerce business models have evolved since the pandemic, and there are more alternatives to dropshipping than ever before.

Affiliate Marketing

Affiliate marketing is a great example: instead of owning a product or shipping it out, an affiliate merely links customers to the product they’re looking for and gets a commission when they buy it.

You can also use affiliate marketing along side your store. Using social media influencers to promote your products to your target audience is a great way to get noticed, especially if affiliates work off commission (meaning it’s a low-risk marketing option).

FBA

Fulfillment by Amazon (FBA) is another one – merchants send their products directly to Amazon which takes care of all aspects of delivery along with customer service.

Private Label

For those who don’t want to deal with any hassle at all, private labeling is also an option; this model involves partnering with factories to manufacture products as per exact specifications, then branding them and selling them with your own logo.

Marketplace Selling

Selling products on all-in-one marketplaces like eBay and Etsy are also a great alternative to running your own dropshipping website. Many of these marketplaces are free to use and have millions of active buyers looking for products. You can easily create a shop, upload your product listings, and start selling.

Print on Demand

Print on Demand (POD) is an e-commerce business model that allows for the production and sale of customized products without requiring a large initial investment. In POD, merchants partner with a print provider and design their own products, which are then produced as orders come in. This way, merchants can manage their inventory and keep costs down.

What is the best way to open an online store in 2023?

Opening an online business in 2023 is a great idea if you’re looking to make an income or start a business.

Dropshipping is a great way to start a business, but if you want to continue one then you should convert to a more sustainable business model, like private label.

The best way to become an online retailer is with dropshipping if you don’t want inventory or have the capital to operate every aspect of a full-fledged business. While you’re getting started, you can test out the other inventory-free options like print-on-demand, FBA, and affiliate marketing.

But once you’ve matured your business, you should absolutely transition to either private label or holding your own inventory. This will lower the risk profile of your business and save you from things like chargebacks—which can destroy your business overnight.

eCommerce platforms like Shopify or WooCommerce are great ways to get started for beginners. Opening a Shopify store, in particular, is incredibly easy as the platform offers many automation tools like inventory management, email marketing strategies, and a clean checkout. Shopify isn’t the only player, though. There are other bigger platforms like BigCommerce and BigCartel that offer even more.

And don’t forget SEO! Search engine optimization is something that every site needs, and it can make profitable dropshipping that much more obtainable.

Ready to open your dropshipping store? Don’t forget this final step!

Dropshipping is a great way to start an online store in 2023, but as you grow your business and become more comfortable with the process of selling products, it’s important to consider transitioning into other e-commerce models.

Each model has its own advantages and disadvantages, so be sure to research them carefully before making any decisions. No matter which route you choose, you’ll need a payment processor. We know Stripe and WooCommerce are easy, attractive solutions but they could kill your business in seconds.

If you really want to make money online, you need a payment ecosystem that 100% supports dropshipping.

Get in touch with us about opening a dropshipping merchant account that hooks you up with a payment processor that truly supports your business model.