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5 Reasons Why Dropshipping Is Profitable

by Olga L. Marketing tips
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Jan 08, 2018 12 minute read
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 Boost Your Drop Shipping Profit In 2018

Find out how to secure jaw-dropping drop shipping profit, and learn how you can make the most out of this industry growth!

“Can I make any money from drop shipping?”

“This business model exists for almost a decade, is there any potential for growth left?”

“Everybody has already started a store, can I find a niche to benefit from?”

Have you ever seen these questions on thematic forums and in blogs’ comments? Do you have the same worries about the future of drop shipping business and your potential profits from it?

Fear not.

In this article, we’re going to talk about the directions you can go to secure yourself incredible drop shipping profit. Read it carefully to learn how exactly you can use the growth of this industry to make money with ease!

Why is dropshipping profitable business: developing markets are growing

Boost Your Drop Shipping Profit In 2018

Judging by numerous success stories of lucky entrepreneurs, it might seem that everybody already does drop shipping, and the market is overly saturated. A lot of people nowadays buy products at wholesale pricing and sell them all over the world, all wheels are invented, so do you still have any chances for success?

Still, on the global scale, the percentage of Internet retailers who primarily use drop shipping model to sell products online is not bigger than 33% which obviously means enough room for the industry growth.

As you can guess, these 33% are mostly represented by European companies and by entrepreneurs who operate on well-developed markets with high Internet penetration.

But is the world limited with these countries that learned about the existence of drop shipping several years ago?

Absolutely not.

There are dozens of countries on the globe that gradually learn about e-commerce and adopt newer technologies. Social media commerce, affiliate marketing, dropshipping little by little creep into people’s lives. If you do a little research and target these specific regions, you are highly likely to see a huge success of your drop shipping venture.

Why is that?

  • Internet penetration in developing countries is growing steadily

According to the data from Euromonitor International, while the percentage of emerging and developing countries’ population with Internet access was 34% in 2015, it’s going to reach the level of 45% in 2020 and hit the mark of 50% in 2025. That’s an impressive boost meaning that the number of your potential customers can rise dramatically. In fact, the results of a survey conducted by Credit Suisse across 9 emerging countries indicate that in case the citizens of these countries achieve the same rate of Internet usage as the people from developed regions, there could appear 1 billion additional Internet users. And this is an estimate for 9 countries only!

  • Purchasing power across developing regions is rising

As a drop shipping store owner, you need to be sure that you’re targeting people who are both willing and able to pay for their purchases. Luckily, the inhabitants of developing regions are gradually getting more and more affluent. In these countries, there slowly appears a segment of middle class buyers who are likely to shop online – and they surely can become a prospective target audience for you and your products to sell. Actually, an estimate from Credit Suisse Research Institute shows that the compound online retail sales across the emerging markets (India, Mexico, South Africa, Turkey, Russia, etc.) could amount to $3.5 trillion annually. Naturally, as more middle class representatives in emerging countries try make purchases online, the e-commerce industry in these regions grows rapidly.

  • It’s easy to meet the demand coming from the emerging countries

For a number of reasons, it’s not always possible for the emerging countries’ population to get some of the desired items, especially if these are the products of foreign origin. These reasons might include underdeveloped transport infrastructure, limited stocks, or overly high price for these items caused by huge distribution and storage costs.

This is why online stores working by the drop shipping business model are the perfect place for these people to make their purchases. Such stores provide the opportunity to source the items that can’t be found elsewhere in the country, and buy them for a moderate price – if you, as a store owner, treat your pricing strategy right, both you and your customers will be happy with the products’ affordability.

Why does dropshipping profit grow: B2B segment gets more accessible

Boost Your Drop Shipping Profit In 2018

Traditionally, newcomers to drop shipping business start with selling their items to end users as they find it easier to target and reach these people.

For the ones who have gained enough experience or just decided to try some alternatives, it might be an appealing idea to start working with B2B segment, which means offering your products to businesses.

As we can learn from Kingpin’s success story, a drop shipping store owner can do a great job collaborating with small businesses and selling products in bulk. You can follow the example and make a good use of this market segment because it is not fully taken yet: in 2014, the share of US B2B businesses that were selling online was only 22% – but quite remarkably, in the same year, the revenue of US B2B e-commerce went beyond $5 trillion.

Quite an exciting number, right? What’s more impressive, it’s just the beginning.

It is estimated that the global value of B2B e-commerce sales will hit $12 trillion by 2020, while the revenue will amount to $6.7 trillion.

Analysts expect that B2B e-commerce constitute 12.1% of all the B2B sales in the USA by 2020. It’s also believed that this market will outperform traditional B2C e-commerce market: according to Forrester, the B2B e-commerce market will be worth $1.1 trillion by 2019, while the number for the B2C market will be $480 billion.

Isn’t it a valid reason to consider making your way to the world of B2B drop shipping?

Why is dropshipping profitable: business strategies for B2C segment are evolving

Boost Your Drop Shipping Profit In 2018

It’s completely fine to keep working with day-to-day needs of ordinary people and stick to the good old business-to-consumer drop shipping. It’s a time-tested business with nice proven profitability, after all.

Still, if you want to excel yourself and reach new heights, you can heavily benefit from rethinking several important aspects of your business approach:

  • Your product strategy

Generic and easy-to-source items might be a good solution if you are targeting the emerging markets we have discussed above, but what about other types of customer segments? Are you sure you’re offering them what they actually want?

Take some time to research your target audience and look carefully at your product offer once again. Are you selling the same annoying basic goods as everyone does? Is it obvious for your store visitors that all these items could be quickly found on AliExpress for a lower price? Use additional sources to find the best items for your store, and don’t forget to evaluate AliExpress items in detail before you import them on your website.

  • Your branding

Product range is not the only thing that matters to your store visitors. Do you remember the primary reason why customers might prefer your store to AliExpress? It’s all because of the atmosphere and the sense of belonging you create there. Dedicate a couple of days to creating clear and informative product pages, and enjoy the growth of your conversion rate – as well as the boost of your drop shipping profit!

Why is dropshipping profitable: getting mobile-first opens up new opportunities

Boost Your Drop Shipping Profit In 2018

It’s not a secret that the growth of mobile technology reshapes the online shopping industry in general.

Previously, it was more than enough to simply have a mobile-friendly webstore to meet the public demand; now, it’s essential to become mobile-first. If you want to achieve even more sales in your store, it’s absolutely necessary to keep your website relevant to contemporary technological requirements, and here is why.

  • Mobile shopping rises rapidly on the developed markets

The increase in the use of mobile devices for online shopping was recorded during this holiday season. It is reported that online purchases made with the help of smartphones account for 40.3% of the total e-commerce traffic in the US, and represent 22.3% of global revenue on the market. Analysts note that the numbers are much higher in comparison to the results from the last year, and add that the traffic from desktop gets significantly lower. According to earlier estimates, mobile sales represent up to 35% of the total volume of e-commerce sales at the end of 2017.

  • Developing countries’ population predominantly uses mobile devices

Quite often, for this category of online shoppers, mobile devices are the only way to go online. It is reported that consumers from the emerging countries are much more likely to use their smartphones to shop online in comparison to people from the developed countries. The reason is simple: for them, these devices are the only affordable tools to get Internet access. For example, the share of purchases made from smartphones in Brazil was 40% in 2014, and in 2015, mobile devices were used to make over 70% of online purchases in Indonesia.

In other words, whatever type of customer segment you’re targeting, building a mobile-first webstore with the use of a  responsive theme template is a must. This is the way you provide your customers with a comfortable shopping experience encouraging them to come back later for more, and this is how you generate impulse purchases that contribute a lot to your overall drop shipping profits.

Why dropshipping is still profitable: automated management solutions get introduced

Boost Your Drop Shipping Profit In 2018

If you take a look at a typical range of day-to-day operations for drop shipping store owners, you’ll quickly notice that the majority of these tasks can be automated.

A wide range of issues that can be managed automatically includes:

In other words, with the use of the right pieces of technology, you can reduce the amount of time you’re spending on routine repetitive tasks, and dedicate more of your attention to things that really matter and will help you make money from dropshipping.

Being able to manage your time more efficiently, you get unlimited opportunities to reach and surpass the goals you’ve set both for your business and personal life.

Isn’t a healthy drop shipping profit the exact thing you’ve always wanted from your own business? It’s time to take the action now!

 

By Olga L.
Olga is a content creator at AliDropship, and she aims to explain the most complicated drop shipping concepts in the simplest terms possible.
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4 Comments
Mark January 9, 2018 0:54:57

” Dedicate a couple of days to creating clear and informative product pages,” … A COUPLE of days!!?? LOL. Try WEEKS!

Ryan January 12, 2018 2:40:54

What is dropshipping?
What is the real examples of dropshipping webstore?
How to do it?
How much will it cost?

Edgar January 16, 2018 15:17:10

Products and niche choices. We really more hint on the topics. f you can always give a periodical review report on the most buys, treading and the products that are new but likely to attract attention. That’s where we all loose from and start hating the business

David A Sweney January 17, 2018 8:05:26

This is a great 10,000 feet view of the overall market and the many opportunities that are out there for us all as drop shippers. It also is a positive affirmation that this market has a bright future as more and more people move to making their purchases online…

Another trend that is affecting things greatly is AI…That technology is getting ever more sophisticated and easier to incorporate into people’s daily regimen. Tapping into that for growing your immediate access to prospects and customers applies across the trends you mention, I think…

Interesting and useful, thanks for your work putting this together! It is indeed shaping up to be a great year. I for one am looking forward to growing my online business even faster in 2018!

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