5 Reasons Why Dropshipping Is Profitable In 2020
Is dropshipping profitable in 2020? Well, find out how to secure jaw-dropping dropshipping profit! And learn how you can make the most out of this industry growth!
“Can I make any money from dropshipping?”
“This business model has existed for almost a decade, is there still any potential for growth?”
“Everybody has already started a store, can I find a niche to benefit from?”
Well, have you ever seen these questions on thematic forums and in blogs’ comments? Do you have the same worries about the future of dropshipping business and your potential profits from it?
In this article, we’re going to talk about the directions you can go to secure yourself incredible dropshipping 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
Judging by numerous success stories of lucky entrepreneurs, it might seem that everybody already does dropshipping, 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 have any chances for success?
Still, on the global scale, in 2017 the percentage of Internet retailers who primarily use dropshipping model to sell products online was not bigger than 33%, meanwhile, the retail ecommerce sales have almost tripled since that time. That obviously means enough room for the industry growth.
These 33% are mostly European companies and 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 dropshipping several years ago?
There are dozens of countries on the globe that gradually learn about ecommerce 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 dropshipping venture.
Why is that?
Internet penetration in developing countries is growing steadily
According to Statista, as of 2019, 49% of emerging and developing countries’ population has Internet access. Please note that in 2015 only 35% of people from developing countries could boast an access to the web. 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 dropshipping 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 to make purchases online, the ecommerce 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 items they need. 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 dropshipping 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
Traditionally, newcomers to dropshipping business start with selling their items to end users as they find it easier to target and reach these people.
However if you have gained enough experience or just decided to try some alternatives, there is a way out for you. It might be an appealing idea to start working with the B2B segment, which means offering your dropshipping products to businesses.
As we can learn from Kingpin’s success story, a dropshipping 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.
Actually, Statista says that the global B2B ecommerce market valuing more than US $12 trillion in 2019 is over 6 times that of the B2C market.
Isn’t it a valid reason to consider making your way to the world of B2B dropshipping?
Why is dropshipping profitable: business strategies for B2C segment are evolving
It’s completely fine to keep working with day-to-day needs of ordinary people and stick to the good old business-to-consumer dropshipping. It’s a time-tested business with nice proven profitability, after all.
Still, if you want to reach new heights, you can heavily benefit from rethinking several 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 they can find all these items 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.
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 dropshipping profit!
Why is dropshipping profitable: getting mobile-first opens up new opportunities
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 online store to meet the public demand; now, it’s essential to become mobile-first. If you want to achieve even more sales in your store, you need 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 occurred during this holiday season. According to OuterBox, almost 80% of smartphone users have made a purchase online through their smartphones within the 2nd quarter of 2019. What’s more, almost 40% of all eCommerce purchases during the 2018 holiday season were made on a smartphone. Analysts note that the numbers are much higher in comparison to the results from the previous years. Moreover, they 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 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 online store with the use of a responsive theme template is a must. This is the way you provide your customers with a comfortable shopping experience. So you can encourage them to come back later for more. And this is how you generate impulse purchases that contribute a lot to your overall dropshipping profits.
Why dropshipping is still profitable: automated management solutions get introduced
If you take a look at a typical range of day-to-day operations for dropshipping 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:
- Items search and import
- Prices setting
- Orders processing
- Orders tracking
- Store promotion
- Store performance tracking
- And more
In sum, using the right IT solutions, you can reduce the amount of time you’re spending on routine tasks. So you will be able to dedicate more of your attention to things that really matter. In that way, it will be possible to make your dropshipping business more profitable.
Well, be able to manage your time more efficiently. So you get unlimited opportunities to reach and surpass the goals you’ve set both for your business and personal life.