If you’re an entrepreneur looking to make a living online, chances are you’ve probably heard about dropshipping.
Regardless of what you know or think about dropshipping, we’re going to get into all the specifics in this tutorial.
So if you’re interested in:
- Learning what dropshipping is
- If dropshipping still works in 2021
- The New Winning Dropshipping Formula
- And much more
You’ll absolutely love this updated guide.
Let’s jump in.
What is Dropshipping?
First, it’s important that we discuss and define what dropshipping actually is. This will help clear any misconceptions you may have about it.
Simply put, dropshipping is an online business model and form of eCommerce. It involves creating an online store and advertising products through social media platforms.
However, there’s one main difference between dropshipping and traditional eCommerce. Dropshippers don’t actually hold any inventory themselves.
Instead, dropshippers use a third-party supplier that holds the inventory and ships the product out to customers.
Here’s the step-by-step process to help you visualize dropshipping in 2021:
- Step 1: Create your online dropshipping store using Shopify
- Step 2: Add products to your dropshipping store using Aliexpress
- Step 3: Run advertisements on Facebook for your products
- Step 4: People visit your online store and purchase something
- Step 5: You notify your supplier about the order
- Step 6: The supplier ships the product directly to the customer
- Step 7: Customer receives the product
As you can see, the only difference between traditional eCommerce and dropshipping is that an external supplier ships products for the dropshipper.
In traditional eCommerce, the store owner needs to purchase inventory of their products before running advertisements. Afterward, they can then ship the products to customers themselves.
Now that you fully understand what dropshipping is, let’s discuss dropshipping’s strengths and why it’s harder in 2021.
Pro 1) Low Initial Capital
The main advantage of dropshipping is the low amount of capital needed to start a business. In fact, you can start a Shopify dropshipping store with less than $100.
However, we do recommend starting with at least $2000.
The reason why it’s so cheap to open a dropshipping store is because dropshippers don’t need to invest any initial capital into inventory.
Usually, eCommerce stores need to invest thousands of dollars into their first haul of inventory. Furthermore, they need to find somewhere to store it, usually by renting a warehouse.
This is where dropshipping finds its strength.
The third-party supplier is already holding inventory of the products you’re selling. So, when a customer buys the product from your store, you then pay the supplier for the product and they ship it directly to the customer.
Here are the expenses when first opening a dropshipping store:
- Shopify Subscription – $30/month
- Domain Name – $12/year
- Shopify Apps – $20/month
- Google Workspace – $5/month
- Advertisements – Varies
As you can see, it doesn’t cost a lot of money to start a dropshipping store. Most of the initial cost will be in the advertisements.
Pro 2) Location Independent
Another benefit of dropshipping is that it’s completely location-independent. This means that you can start a dropshipping business from anywhere in the world. All you need is a laptop and an internet connection.
Since you don’t have to invest heaps of money into inventory and storage, you can work from literally anywhere. This is extremely valuable for people who travel around or move often.
For example, it’s popular for dropshippers to become digital nomads in Southeast Asian countries like Thailand and Indonesia.
They do this to experience a new culture at affordable prices, while not having to worry about being somewhere for their online business.
Pro 3) Ability To Test Multiple Products
The next advantage of dropshipping is the ability to test a lot of products. Being able to test many products is extremely important.
Check out our best dropshipping products in 2021 article if you’re looking for potential products to sell.
Think about it like this.
In traditional eCommerce, you initially invest a portion of money into inventory. However, if the product isn’t selling well, you are stuck with the product.
However, you don’t have to worry about being stuck holding unsellable inventory in dropshipping. If a product isn’t selling well in a dropshipping store, you can simply find another product and run advertisements for it.
The ability to try and test different products is what makes dropshipping so unique.
Pro 3) Low Risk
The last benefit of dropshipping that ties everything together is that it is low risk. By starting a dropshipping business, the only thing you’re risking is a couple of hundred dollars and a few hours of your time.
Moreover, the potential gains heavily outweigh the initial risks. Just by investing some money and time into starting a dropshipping business, you could potentially set yourself up for a substantial income source.
All in all, dropshipping is classified as a low-risk business venture.
Does Dropshipping Still Work in 2021?
Con 1) Competitive
Since dropshipping has such a low barrier to entry, it’s become extremely competitive. There will be other dropshippers selling the same products as you and running similar advertisements.
For this reason, it’s important to stay on top of your marketing and making sure your advertisements and website are as unique as possible.
Furthermore, an increased level of competition means that advertisement costs are going to be higher. More advertisers mean more people bidding on the same audience. This means that your ad cost may be higher than usual depending on what niche you’re in.
Con 2) Facebook Restrictions
Another con for opening up a dropshipping store is Facebook restrictions. From 2017 to early 2020, most dropshippers didn’t have any issues advertising on Facebook.
However, starting in mid-2020, Facebook started cracking down on advertisers. Since many dropshippers started using Facebook ads without doing any due diligence on their products, a lot of consumers complained about product quality and shipping times.
Furthermore, sometimes people didn’t even receive their products.
For this reason, Facebook made advertising on their platform much more restrictive. However, if you are running a legitimate eCommerce dropshipping business, you shouldn’t face many issues when using the platform.
Con 3) Product Quality
Another issue that arises with dropshipping is product quality. Since dropshippers don’t hold any inventory, they often don’t go out of their way to receive product samples. Then, they are surprised when customers complain about product quality.
So, it is extremely important as a dropshipper to purchase some of the products you are selling yourself to inspect their quality and condition.
Furthermore, you will be able to see how long the product takes to ship.
By ordering some samples yourself, you will save yourself a ton of potential issues later on.
Dropshipping Outlook: Is It Worth Trying Still?
Now, it’s time to get onto the golden question.
Is dropshipping still worth trying in 2021?
And my answer is 100% yes.
Although dropshipping is much harder than it was a few years ago, it’s still completely possible to start a sustainable and profitable dropshipping store.
Dropshippers need to be much more adaptable in 2021 because of different changes in the marketing landscape.
For example, the Apple iOS 14 update impacted Facebook marketing in a big way.
This being said, let’s talk about how to approach dropshipping in 2021.
How to Approach Dropshipping in 2021
Old Winning Formula
In the past, dropshippers focused on quantity over quality. Since advertisements were much cheaper back then, dropshippers would test as many products as possible in order to find a winning product.
The advertisements, product pages, and store websites would all look sloppy and unprofessional.
This formula worked in the past, but nowadays, is a recipe for disaster.
So, let’s take a look at the new winning formula needed to create a successful dropshipping store.
Dropshipping in 2021 – The New Winning Formula
Step 1) Selling Only One Product
Instead of creating massive general stores and testing dozens of products, dropshippers are choosing to create one product stores. A one-product store focuses on selling one or just a few products.
The advertisements, website, and product page are solely focused on the single product.
The advantage of creating a one-product store is the ability to focus on quality over quantity. Dropshippers can spend more time refining each step of the marketing funnel from the advertisement itself to the product page and checkout screen.
Furthermore, the seller looks like the authority seller of the product.
Also, we highly recommend using video ads when testing all your new products. Video ads have been performing better for us since they’re more engaging, offer more information, and have more potential to go viral.
Step 2) Selling a Unique or Problem Solving Product
If you’re only selling one product or a few products, you need to make sure the products are unique and/or real-world problem solvers.
The products should focus on solving common problems people face.
For example, we sold a mosquito catcher and posture brace on two separate one-product stores.
These products had the ability to actually help people in need.
Step 3) Starting With a Realistic Budget
Having a realistic starting budget is another key point to creating a successful dropshipping store in 2021.
I recommend starting with at least $2000 completely dedicated to your dropshipping store. This will give you enough ad dollars to test several different products.
Around $100-300 should be enough when testing each product.
Furthermore, I recommend reinvesting all profits back into the business. When you’re first starting out, it may be tempting to take some profits out.
However, this will only hurt your business in the long run and is not worth the short-term gain.
Step 4) Having Realistic Expectations About Dropshipping
Furthermore, it’s important to have realistic expectations about dropshipping and what it is.
You should expect to lose money in the beginning as you are testing different products and advertisements.
It’s vital to treat dropshipping as a real business and not a get-rich-quick scheme. There will be many hardships on the way to creating a sustainable business.
And the sooner you start treating it as a legitimate business, the quicker you’ll start making progress.
Step 5) Testing all the Advertising Platforms
Marketing is what dropshipping is truly about. For this reason, it’s important that you are testing advertisements on all the major platforms.
In 2021, the main advertising platforms are:
- Tik Tok
These are the big 5 platforms that I recommend all dropshippers use. You never know which platform will work best for your product.
Furthermore, you can test:
- Google Ads
Step 6) Realizing & Satisfying Customer Expectations
Another key dropshipping success trait is understanding customer expectations.
In 2021, customers are used to receiving their products quickly. Although it’s hard to compete with Amazon’s two-day shipping, you can work to make your shipping as fast as possible.
So, I highly recommend reinvesting all of your profits into creating a better logistics process. I recommend using a 3PL, or third-party logistics, that can help you store and ship your products quickly.
Furthermore, customers expect a lenient refund and return policy. They expect to be able to refund their purchase without any hassle. So, make sure you’re doing everything you can to provide a convenient returns process.
Step 7) Having the Correct Mindset
Let’s face it.
Most people who try dropshipping end up failing. However, the few that succeed have one thing about their mindset that separates them from the failures.
It’s the fact that they actually enjoy the process of growing an eCommerce business. They also learn and adapt as they are growing their business.
Most dropshippers who fail see dropshipping as a get-rich-quick scheme. They start their stores with hopes of making a lot of money quickly and easily. Then, they get frustrated and quit as soon as any problems arise.
I’ve seen this happen time and time again. The dropshippers that actually succeed treat dropshipping as a legitimate business and are passionate about eCommerce.
They enjoy solving problems and creating well-made content.
Step 8) Taking Advantage of Outsourcing
Trying to sustain a 5 or 6 figure dropshipping store all by yourself is impossible. There are just too many essential tasks that require hours upon hours each day.
For this reason, it’s important to hire employees to complete the tasks such as:
- Order fulfillment
- Customer service emails
- Product description writing
- Product importing
I highly recommend finding some freelancers on Upwork and hiring order fulfillment and customer service agents. These roles should be the first ones to outsource as soon as your budget allows it.
Now It’s Your Turn
Now it’s your turn to put this new information into action. If you’re just starting your dropshipping business or trying to grow your existing one, the only limitation is your own work ethic.
For this reason, it’s important to get started right away and trying to problem solve all the issues you’re currently facing.
Let us know in the comments section below if you have any questions about dropshipping in 2021.