Dropshipping Success Rate: How Successful are Dropshippers?

If you’re thinking of running your own dropshipping company researching the average dropshipping success rate for a new business can be a good idea. While your ability to earn a profit with dropshipping can vary depending on a number of factors, the market is growing at a phenomenal rate.

By 2030, the global dropshipping landscape is expected to reach a value of around $931.9 billion, representing a growth of 22.8% CAGR. With its low startup costs and barrier to entry, dropshipping has attracted a huge number of would-be entrepreneurs. However, making your dropshipping company a success isn’t as simple as it seems.

So, how successful can you really be with dropshipping?

What is the Average Dropshipping Success Rate?

Dropshipping eliminates a lot of challenges from the average business model. Most people assume you simply add products to an online store, and you’re guaranteed to make a profit. However, the reality is, with so much competition already in the market, it can be difficult to stand out.

While there aren’t a lot of clear statistics out there quantifying the success of dropshipping business owners, many experts believe between 10% and 20% of dropshipping businesses succeed.

While there are a lot of dropshipping success stories out there, the majority of profitable companies have spent significant time building their dropshipping store, connect with the right suppliers, and strengthening connections with customers across channels like blogs and social media.

Is Dropshipping Profitable?

So, is dropshipping profitable? The simple answer is yes, it can be. Dropshipping is a low-risk business model that ensures you can sell products to customers easily, without incurring high initial investment costs. There are plenty of dropshippers who make an average of $100,000 per year, even using dropshipping as a side hustle.

Of course, like any business model, dropshipping doesn’t guarantee success. Retailers still need to invest heavily in their ecommerce business, leveraging the right ecommerce store tools, marketplaces, and marketing strategies to generate growth.

Your ability to make a profit with a successful dropshipping business will depend on how much hard work you’re willing to put in. You’ll need to be committed to reaching your target audience, offering excellent customer service, and finding the right dropshipping products, among other things.

The Main Reasons why Dropshipping Businesses Fail

Perhaps the most common reason entrepreneurs fail to make a profit with dropshipping is they see the strategy as a get-rich-quick scheme. The dropshipping industry is full of would-be business leaders who believe they can make a profit rapidly without a lot of effort.

However, building a successful dropshipping store takes time and focus. You need to ensure you’re selling products your potential customers really want, interact with the right wholesalers, and develop a strong marketing strategy.

Some of the most common reasons dropshipping businesses fail include:

Choosing the wrong niche

When starting any business, whether it’s a dropshipping company or a traditional online store, choosing the right niche is essential. As interest in dropshipping continues to grow, there are a number of business owners out there experimenting with the same model.

This means some niches are likely to be more competitive than others. While there’s no one-size-fits-all strategy for choosing an effective niche, taking the time to research the market and select a potentially profitable sector is crucial. Sometimes, the more specific your target audience is, the more opportunities you’ll have for growth.

For instance, investing in sustainable clothing products made with eco-friendly materials will give you more of a competitive USP than the average clothing seller. It’s worth taking some time to examine your industry, and create profiles for your target audience.

Selling the wrong dropshipping products

The success of a dropshipping business depends on a number of things, from your approach to marketing, to your knowledge of your target audience. However, few things are more important than choosing the right product to sell.

Not only do you need to ensure you’re choosing items with high profit margins, but you also need to make sure the quality products you choose appeal to your audience. There are plenty of different items business leaders can choose to sell from dropshipping directories like AliExpress, from technology to home décor. However, not every option is guaranteed to be a success.

Choosing winning products means taking the time to get to know your target audience, the trends in the marketplace, and your competition. It’s also worth making sure the products you choose aren’t subject to any restrictions. Some countries will place limitations on the products you can legally sell online, so extensive research is necessary.

Working with the wrong suppliers

Once you’ve selected the right target audience and products for your dropshipping store, you need to ensure you’re working with the best dropshipping suppliers. A lot of today’s dropshippers choose suppliers from China, because the base cost of items in this region is often relatively low.

However, it can be difficult to find quality products in this market, as the standards set for manufacturers may not be as high as they are elsewhere in the world. It’s also worth noting that working with a supplier from a distant country can impact the customer service you can offer customers.

Some products can take more than a month to arrive at a customer’s door, which leads to damage to your reputation and potential growth. You may even find that slow shipping times and limited quality means you can’t charge the best price for your products, harming your profit margins. Always do your research into suppliers, and order sample products where possible.

Poor branding

With dropshipping, business leaders sell products created by other companies, rather than producing items themselves. However, that doesn’t mean you can afford to overlook the importance of a good brand. Ultimately, it’s the image you build for your online business that determines your conversion rate. If you’re not connecting with customers emotionally, you won’t get sales.

This means, when you invest in a dropshipping model, you need to commit significant time and effort to demonstrating your USP and interacting with your audience. You’ll need to ensure you’re branding your store effectively with the right logo and imagery, as well as connecting with your audience using the right marketing methods.

Building your credibility and reputation as an authoritative store, showcasing your products’ benefits in your product page descriptions, and working with the right influencers will be crucial. Otherwise, you could spend a lot of money, only to end up with no customers.

Choosing the wrong platforms for sales

As a highly versatile business model, dropshipping allows businesses to sell various different types of products across various channels. Depending on the dropshipping tools you invest in, you can choose to sell through your own ecommerce platform, such as a Shopify store. Or you could look into selling on marketplaces that already have a lot of potential customers to connect with.

Many companies choose to sell both on their own platform, as well as on channels like Ebay and Amazon. While there’s no guarantee any particular platform will be more effective than another, you will need to ensure you’re investing in the right strategies for every platform you choose.

On your own store, this means investing in a convenient and straightforward purchasing process, with a simple checkout page. On channels like Amazon, you’ll need to think about how you can optimize your listings using Amazon’s own SEO methodologies.

Not investing in the right marketing efforts

Speaking of SEO, a lot of businesses who fail to make significant profits with dropshipping struggle because they don’t draw enough attention to their products. Even if you have the best dropshipping providers and an excellent store for your online business, you won’t earn sales unless you’re investing the right effort into online growth.

Take the time to optimize your store or website with the right product descriptions, page content, and content marketing strategies. Designing your own blog can be an excellent way to boost your search engine optimization strategies and bring more traffic to your online store.

Additionally, it’s worth experimenting with a variety of marketing methods. For instance, you might use Facebook ads targeted at a specific audience to drive sales. You can experiment with influencer marketing and affiliate marketing to boost reach and increase credibility. You might even focus on building a strong presence on social platforms like TikTok and Instagram.

Poor customer service

Customers prioritize customer experience more than anything else when deciding which products to buy, and which companies to work with. Around 86% of customers say they’re willing to pay more for a guaranteed outstanding experience. This makes enhancing customer support and service essential to increasing your profits as a dropshipping company.

Part of the support you can offer as a dropshipping company will depend on the supplier you choose. Some solutions allow you to provide customers with a tracking number so they can monitor their order progress. Others help with refunds and returns.

However, it’s also worth thinking about what you can do personally to improve customer support, such as responding to customer concerns on social media platforms, creating your own FAQ page, and offering step-by-step guidance on how to use products.

Can You Be Successful with Dropshipping?

Dropshipping can be a highly profitable, low-risk business model. However, it’s not without its challenges. With countless ecommerce platforms now offering apps and add-ons for dropshipping solutions, a lot of would-be entrepreneurs believe they can make a significant profit without implementing much effort.

While tools like Shopify dropshipping tools can help to make your business a lot easier to run, it’s still up to you to ensure you’re investing in growth. Failing to choose the right products, select reputable suppliers and connect with your customers consistently can harm your profitability.

Like any business model, dropshipping requires careful strategy and commitment if you want to earn a significant income. However, if you’re willing to put in the work, avoid scam sellers, and invest in the right marketing strategy, you can create a successful, profitable business.