We’ve seen a spike in the eCommerce business in 2020 because the bricks-and-mortar business collapsed under the worldwide pandemic COVID-19. Dropshipping, as an increasing eCommerce business model also see a surge from April 2020. But from Feb. 2021, the growth of dropshipping business slowdown, and till Nov. 2021, the high-season seems not that “high” as we supposed.
What leads to this? Will dropshipping die in 2022?
“Is dropshipping dead?” is a frequently asked question that is put up, again and again, every year. And it seems to go to end this time. But the answer is still a big NO.
· What is dropshipping?
· The future of dropshipping: dropshipping2.0 – wholesale dropshipping
· Who can benefit from wholesale dropshipping?
What is dropshipping and why do people do it?
Let’s start by understanding what starting a dropshipping business means. I will explain it really simple to you:
- You got an online store where you sell products, but you don’t have any of these products in your storage, or in your house.
- When someone places an order on your dropshipping store, then you place that same order directly with your dropshipping supplier. Don’t worry. There are a lot of apps out there that help you with automating this. For example, Oberlo, or these 15 Oberlo alternatives.
- Then your dropshipping supplier will handle the rest. Think about preparing the package and sending the order straight to your customer.
- Now your customer will receive the package straight from your dropshipping supplier, and you never touched the product in between!
To make dropshipping even more clear for you, take a look at our infographic below:
The most common question people have now is, won’t my customer know that the package didn’t come from me?
For example, aren’t there any advertisements or recipes from the supplier in the package?
You just need to make sure that your supplier accepts dropshipping and blind dropshipping.
Why wholesale dropshipping is the future of dropshipping?
Data speaks, the searches on Google shows people’s interest in a term, and it shows the trending of eCommerce activity.
The trending of wholesale is on the rise, and the amount of wholesale is far much larger than dropshipping.
Here are two graphs of the trending of dropshipping and wholesale over the past 5 years.
The interest of “dropshipping” over the past 5 years:
Comparison of interest in “dropshipping” and “wholesale” over the past 5 years:
The general trend of Dropshipping was increasing over the past 5 years, but over the past 12 months, it went a downtrend.
But for wholesale, it was at a much higher position over Dropshipping, and it got a sharp increase in Apr. 2021. and it still goes up. So the opportunity for wholesale is inestimable.
One of the reasons accounting for the thriving of wholesale in 2021 is that the pros of wholesale perfectly meet the current market under the impact of COVID-19 – longer delivery time and soaring shipping fees. While with the model of wholesale, traders can pre-stock to a local warehouse to avoid uncertain shipping times and take good control of the product, or even customize their own products to build a brand.
However, both dropshipping and wholesale business models have their obvious shortcomings. The cons of dropshipping are just listed in a former paragraph. The main cons of whole selling are not hard to figure:
· A lot of upfront investment
· Require cross-border trading knowledge
· Tons of time spent on finding a reliable supplier
· Usually need warehouse and staff to handle goods
· High risk of losing money if you meet a hold-up in the sale of commodities
Because of these cons of wholesale selling(especially for cross-border trading), the access threshold to start wholesale selling is quite higher than dropshipping. To combine the advantages and minimize the advantage of both wholesale and dropshipping, wholesale is a better choice for those traders who want convenient order management, fast shipping, and customized high-quality products.
Pros and cons of Wholesale Dropshipping
The advance of wholesale dropshipping is obvious, it combines both the advantages of wholesale and dropshipping. The pros of this model contain but are limited to the following points.
Pros of Wholesale Dropshipping:
· China is not the only choice to source products from but can also source from top countries worldwide.
· Rapid fulfillment time(in 24h) and shipping time(3-7days) shipped from the local warehouse.
· Branding your business with Print on Demand and custom packaging service.
· Keep the inventory under control.
· Take good control of product quality.
· Win happy customers coming back again and again.
· Lower product price than dropshipping 1.0.
But this model also has its shortcomings, mainly from the barriers for eCommerce newbies when you are just a start-up and have no winning products and the risk of holding inventory.
Cons of Wholesale Dropshipping:
· Need more start-up capital than Dropshipping 1.0.
· Not novice-friendly.
· More risks inventory pressure.
Who can benefit from Wholesale dropshipping?
For Dropshipping 1.0, the major part of the sellers are independent store runners, they use website building service providers like Shopify, Wix, WooCommerce, and the like, to build their own stores. They are the owner and runner of their store, so they have full control of the transaction rules, thus the buyers have no choice but to accept the long shipping time and maybe sometimes not so qualified products.
But for marketplace sellers, those open stores on eBay, Etsy, Amazon, Shopee, Lazada, and so on, they need to follow the rules made by the platform, usually include fast processing and shipping time, good quality products to win positive reviews from customers, or those sellers will be punished by the platform.
So when Dropshipping 1.0 can perfectly support marketplace sellers, Wholesale Dropshipping just hit the pain point of those marketplace sellers: supply good customized products with fast processing and delivery times.
At the same time, Wholesale Dropshipping provides a better solution for experienced independent store runners to win happy customers in high seasons or under the special quarantine circumstance.
Conclusion: Is Dropshipping Still Profitable in 2021?
So, is dropshipping still profitable in 2021?
I personally think dropshipping is still profitable in 2021, but you will need to put your time and effort into building a real business.
A lot of people start with a dropshipping store only because they want “Easy money”.
They probably never had that thought, “Wait, I’m building a real business”.
So if you want to succeed, then please put treat it as a real business, and don’t forget that failures are okay!
The future of dropshipping/eCommerce is undoubtedly going to be full of exciting changes and innovations for both suppliers and traders.
Whether you’re an entrepreneur, or you’re working at an eCommerce company yourself, it’s important to try to keep your finger on the pulse when it comes to changes in the dropshipping/eCommerce landscape.
Our best advice for you is never to stop hustling.