Is dropshipping dead? Or is it still profitable? Most people want to know if dropshipping is still as it used to be before they invest a single dime, which is totally rational.
You see… Dropshipping is a business model that can make you millions of dollars. However, a lot of gurus make it sound easy so they can pitch something along the way. But believe me, if you underestimate the process and go in thinking it’s easy, you will never make a dime dropshipping.
So in this article, I will share with you why some people say dropshipping is dead, and tell you if it’s actually dead or not. I will also share with you some events that are massively affecting how dropshipping is done. Make sure to read until the end, and check the other resources we have included here if you’d like to take the shortcut and make your life a lot easier.
Is Dropshipping Dead?
The short answer is: If you look at the old way of doing dropshipping, that’s so dead. But if you do things differently and adjust to the new way, you can still build a very profitable brand and scale it to the moon.
Let’s take a moment and break the ice regarding the old way and the new way.
The old way is creating a basic store and filling it with products with shitty images from aliexpress, then stealing a few product descriptions and video ads from your competitors, and expecting to make a million. That could have been successful in 2015, but it’s no longer successful.
The new way is a tough pill to swallow if you’re lazy, not tech-handy, or if you don’t have enough money to cover the laziness and the lack of technical skills, as you’ll need to do more than what you needed to do back in 2015. The standards for starting a dropshipping business have changed.
What I mean by more is branding, from the way your logo looks, the design of your store, the quality of your product images, and the look and feel of your product package. That’s not the entire thing… You will still need original awesome videos of your products, not videos that are stolen from your competitor or Youtube, alongside a solid product description, and sometimes you’ll still need more.
I have included a link below to help you understand what kind of costs you will need to cover if you’d like to start a stunning and successful dropshipping business. Make sure you check that out.
So if you can handle the pressure and costs of starting a dropshipping business that adapts to the new norms, you are successful by now.
How Does The Trade War Affect Dropshipping?
After Donald Trump became the president of the states, he started a trade war with China. Some of the reasons are obvious, but we’re not here to discuss them. We’ll stick to how this trade war affects dropshipping.
So Trump started putting tariffs on products imported from China, and China is also doing more of the same to show it has a pair. As a consequence, some products became a little cheaper, so companies had to raise the prices to keep being profitable, and stay in the game.
A year after starting the trade war, Trump opened a new front in his battle against China by threatening to leave the 144 years old UPU pact unless the terms were negotiated and modified, which happened eventually. So the US is still a part of the UPU, but the prices for shipping surged slightly, and that affected the beloved ePacket shipping price.
After that, Trump signed an executive order telling American companies that do manufacturing in China to find alternatives. So things may get ugly. Apple actually started doing that and moved some of the manufacturing to Vietnam.
The bottom line here is not to scare you into thinking this will kill dropshipping. No. Dropshipping will never die. It’s just that if Trump wins the 2020 elections, you may have to find a supplier in the US that can source what you sell, while you stick to your Chinese supplier for the rest of the world if that’s convenient to you.
How Does COVID-19 Pandemic And the 2020 Recession Affect Dropshipping?
A lot of people hate 2020. It was full of surprises that we did not like. COVID-19 pandemic and the recession it caused are affecting everyone around the globe. So, is dropshipping dead because of these nasty surprises?
I can surely promise you dropshipping isn’t dead. However, the COVID-19 thing did change supply and demand in almost all industries. Look at how the oil prices went negative due to the low demand, and supply increase…
So when it comes to dropshipping, some product categories were no longer in demand, while some others were just crushing it.
A great example of both cases is the fitness industry. Fitness bags’ sales went down, while home workout products made 5 times what they used to make in sales.
Other products that were in huge demands are kitchen related products, entertainment-related products, and baby toys.
When we talk about the COVID-19 driven recession, a lot of people are losing their jobs all over the world. As of the time I’m writing this, 14.7 million Americans lost their jobs, and 10 million are expected to lose their jobs within the next few months, which is bad.
If nobody seems to come up with a cure or a vaccine to the coronavirus pandemic within the end of 2021, a lot more people are going to be affected, and I think we will be heading into a depression that looks a bit like the great depression.
However, not everyone is going to lose their jobs. In fact, over 50% of the US population will get to keep their jobs and receive their paychecks. And there are absolutely a few things they will need. Just find out what that is, and put it in front of their eyes.
For those that have already lost their jobs, some of them are coming for dropshipping, affiliate marketing, and all the kinds of online business models that “look” easy and have a huge potential. Ol’ timers will absolutely spend some of their stimulus checks on running Facebook Ads. Believe me!
So, if you’d like to separate yourself from startup dropshippers, you will need to find something that will be very handy for people in lockdown, and build a brand around it. This way, you’ll still be able to secure your bag during the pandemic driven recession.
How To Handle The Increasing Advertising Costs?
It’s no secret that advertising costs are on the rise. Every year ads go more expensive than the previous year. But that should not be a problem if you’re a resourceful fella.
You see, if the content of your ads is engaging, original, and what you’re selling is on-demand, you won’t even notice the increase in your ad spend.
So unless you’re stealing your competitors’ videos and taking anything you can find from youtube to make a video ad that sucks, you won’t need to worry about your ads getting more expensive.
Another thing that’ll help you reduce your ad spend is branding. If your brand’s message is something that makes people excited about you or your product, or if your brand stands for values and principles your ideal prospect stands for, and you make that clear in your ads by using the right words and tonality, you’re going to come out on top of the competition.
Another thing to work on as you’re building your brand is not to focus only on getting sales for the lowest cost. Try to grow your audience on social media and email list by offering free gifts. Free gifts are very powerful. But don’t make that stupid mistake of giving a promise and underdelivering. You should overdeliver whenever you have the chance to.
A quick example: A lot of people start their brands with a Free Plus Shipping offer which is followed by an upsell. That can actually be awesome if you’re prepared to overdeliver regardless of being profitable from the first interaction with your customer.
However, if you try to manipulate people and question their mental abilities by having high shipping rates for the so-called “Free, Just Pay Shipping” offers, or having too many upsells, downsells, buttfucksells, don’t be surprised if you don’t get returning customers and word of mouth sales, because people already know you took advantage from them at the very first sight, and that’s what you’ll keep on doing.
Will The Classic AliExpress Dropshipping Work?
From my experience with AliExpress suppliers, I can tell you that you can be better off without them.
If you’re looking for a supplier from AliExpress that can help you scale, you’re going to struggle a lot, my friend. You’ll be doing cold outreach to anyone that has the product you sell, and then you’re going to start negotiating the price.
Most of the suppliers might not be okay with the price you want, so you’ll end up with one or 2 suppliers that can provide the product you want for the price.
After that, you would want to discuss product modifications and packaging, and you’ll be very lucky if you can find that supplier that can help you customize your product.
There are also other problems that you may go through due to working with an unreliable supplier. You want your product to deliver in less than 10 days, and most of these suppliers won’t be able to handle that pressure.
Another nasty thing you’ll find out after working with too many suppliers is the very low quality they provide. You see… When you want a sample to see how the product looks and feels, they will send you a high-quality product. But once you’re scaling, they won’t be able to handle the high volume of sales, and to save them some time, they’ll cut down on the quality checks. And that will come back at you in the form of disputed payments that will likely result in payment processors holding your money for a certain amount of time.
So if you don’t already have a very reliable supplier that is a go-getter, don’t go with AliExpress. Instead, there are a lot of companies that can exceed your expectations and help you with anything you need, you just need to ask. Below is a link to the top 3 companies to help you source and ship products efficiently.
The Bottom Line
If you don’t deliver value as an online business, you’ll don’t have a place in the online world. Facebook Ads will be pushing you around like a rented mule, they’ll be closing your ad and business accounts, people will be reporting you to the BBB, and you may end up losing money instead of earning profits.
I know people that went USD 300k negative because of doing dropshipping the wrong way. Some sold branded and copyrighted products. Some stole the wrong video from Youtube and modified it thinking things can never go wrong.
So unless you’re going to do things properly and overdeliver, don’t even try. You will fail. On the other hand, if you’re prepared to go the extra mile and create something genuine that you’re proud of, there’s a very huge chance you will make it.