It’s now 2020 and plenty of online resellers are asking themselves: is dropshipping still worth it? It seems like every year there’s a wave of articles and posts claiming that dropshipping is dead. However, the underlying strengths of the dropshipping model make it unlikely that it will ever truly fail. If you ensure that your store is profitable, then you can keep going strong in 2020 and beyond!
Challenges that Online Resellers May Face in 2020
Although there are a variety of challenges that online resellers may face in 2020, dropshipping is still worth it! You can still turn a profit and run a viable business, all from the comfort of your own home.
Let’s take a moment to look over some of these challenges:
1) Is There Too Much Competition?
If you’re wondering about the ongoing profitability of dropshipping, then you’re probably asking yourself: is the market saturated? We all know that the low operation and startup costs for dropshipping – as well as the low overall risk – attract a lot of online resellers to this particular business model.
However, one way to outmatch this extensive competition is to choose the right niche. Why is it important to find the right niche? Well, most dropshipping stores can’t really compete with the retail giants like Amazon, Target, or WalMart. Rather than trying to do that, it’s best to specialize and find a niche!
So we’ve established that a specialized store is best, but how do you get a leg up against your competitors in your niche? Well, you can use the following tools:
This is a competitor analysis tool that will show other online stores’ most profitable keywords by showing who’s ranking for which keywords. As a result, you can find out what search terms have less competition and offer them on your site.
This is another tool you can use to analyze your competition by checking a website’s global rank. Obviously, the closer an online store is to number 1, the better! The tool determines this ranking using a variety of factors, including bounce rate, top keywords, backlinks, and time on site.
Social media is a big part of optimizing an e-commerce store, and the more shares you get, the better. This is where this tool comes in: it allows you to track the best performing content in terms of the number of shares. It’s important to remember that optimized content creation is critical for store success, so you can use this tool to track how well your competitors’ content is doing as well as generate new ideas for your own blog and site.
2) Are all the Good Niches Already Taken?
When discussing if dropshipping is still worth it in the year 2020, you may hear this constant refrain: all the good niches have already been taken! In other words, this is an extension of the argument that there is too much competition. But don’t believe it, there are still good niches out there!
According to a recent analysis by the US Department of Commerce, there was a 14.9% growth of the e-commerce market in the year 2019. Amazingly, this growth is even higher than the 13.6% in the year 2018. That’s the beauty of online retail: it’s steadily expanding. So what does that mean? There are new niches that are constantly opening up and developing if you know where to look!
There are plenty of tools you can use to find dropshipping niches. Plus, niches generally form around new trends. In other words, if you can identify a new trend, then you can tap into an emerging niche. To find new trends, you can always use the trusty Google Trends tool. There are also various publications and blogs to help, including Trend Watching, The Cool Hunter, PSFK, Shopping Signals, Trend Hunter, and Cool Material. Finally, you can also use Google Alerts on certain words – like brand or product names – to stay informed.
For example, take a look at this Google Trends graph for essential oils – as you can see, interest has grown dramatically and has held steady for several years!
3) Are There Any Good Suppliers Willing to Work With New Stores?
Absolutely! Dropshipping is not dead, and neither are good suppliers! There are plenty of tools you can use to find the right suppliers. Once you have a list of potential suppliers, you can then use this handy list of simple questions to identify the best one for you:
- Can they work with a dropshipping store (if they’re a wholesale supplier)?
- What are their order or membership fees?
- Are the service representatives always ready to help?
- Do they carry products in a specific niche or market sector?
- What is the return/refund policy?
- What is their warranty policy?
Use this list of questions to quickly and effectively find out all the information you need to make the best choice for your online store. Remember, there are plenty of suppliers out there, some of whom will undoubtedly cater to your specific needs and/or niche.
4) Does the Trade War with China Affect Dropshipping in 2020?
The short and sweet answer is: no, not generally. It may affect dropshipping stores that deal with highly expensive goods, like electronics, jewelry, or exercise equipment, but stores that specialize in smaller items will not be affected.
Why is that? Currently, the threshold for import is $800, which is way below what most online shoppers will purchase at a time. Again, this threshold may be reached for big-ticket items where it’s easy to rack up a big online order.
Additionally, don’t forget that there are suppliers in both China and the USA. While there are pros and cons for each, going with a North American supplier is generally better because:
- There is a common language.
- Customer service is usually better and more responsive.
- The shipping times are considerably shorter.
- Product quality is higher and more consistent.
- Return/refund/warranty policies in China are usually overly complex or totally lacking.
- You don’t have to worry about the threshold for import.
That’s not to say that going with a Chinese supplier is always the inferior option. For example, they can frequently be highly competitive on prices. However, in most cases, it’s the US supplier that will provide the best services.
5) Are There Increased Advertising Costs on Google and Facebook?
Using Google Ads or Facebook Ads can be critical for the success of your store, and each has its respective pros and cons. But this is a highly complex subject, so let’s break the question down as simply as possible: yes, the advertising costs have increased slightly. However, the return on investment (ROI) of these marketing campaigns is greater than the cost increase.
Let’s start with Google Ads first. It’s much more difficult to say if there’s been a general increase in cost-per-click (CPC) rates because it depends heavily on the industry. For example, the average rate for health and medical is $2.62 while the average rate for legal is $6.75. Amazingly, the lowest average CPC rate across all industries is e-commerce: it’s only $1.16!
So what does this mean? Well, the average ROI for Google Ads is $8 for every $1 spent. Plus, Google Ads is highly customizable, making it an invaluable tool in getting your name out there!
Now, as for Facebook Ads, let’s take a moment to look at the following figures:
- The average ad price has increased by 2%.
- On the other hand, ad impressions have increased by 34%.
- Most Facebook ads cost between $0.50 and $2.00
- Across all industries, the average CPC is $1.72.
As you can see, costs have increased slightly, but impressions far outgrew those costs and the CPC average remains low. Plus, as of early 2020, there are 7 million advertisers on the network with a potential reach of nearly 2 billion people!
6) Is “Dropsurfing” a More Viable Retail Model?
If you’ve been wondering about how profitable dropshipping still is, then you may have heard of dropsurfing in the world of e-commerce. Dropsurfing means dropshipping while checking and using multiple vendors to find the lowest product prices.
In other words, you’re “surfing” between vendors. That way you can maximize profits by always finding the best prices. Let’s take a moment to unpack everything.
Dropsurfing is a “buzzword” that’s been manufactured by marketing gurus. They’re using it to entice online resellers to shill out for expensive tutorials and courses that don’t contain any substantial information. In reality, dropsurfing is just one form of dropshipping that’s already being used – and it has its drawbacks!
The biggest one is that it results in higher opportunity costs. Basically, this means that you’ll be spending more time trying to monitor and compare these prices. You’ll always have to stay on top constantly shifting price points and do the time-consuming work of collating and analyzing all that information. Make no mistake, this is time-consuming work! So, rather than devoting so much effort to dropsurfing, you could just continue traditional dropshipping with a well-priced dropshipping supplier and spend your time and effort scaling up your online store.
The second major drawback is that it’s incredibly difficult to maintain consistency in the quality of all the products. Of course, you can always surf around between multiple suppliers, but you may not be getting the same quality across the board. Plus, many consumers are willing to pay a small premium for consistently high quality in their products.
In conclusion, don’t believe the hype about dropsurfing – it’s not worth it!
How to Make Your Store More Profitable
So how do you make certain that your dropshipping store is still worth it in 2020? You have to make it more profitable! So be sure you follow these tips to make that happen:
1. Increase Traffic to Your Online Store with SEO
Search engine optimization is the practice of using keywords to create content that will be selected by search engines. In other words, your website will rank higher when people search for certain keywords related to your online store.
First and foremost, you have to identify which keywords you’re trying to target. For that particular part of the job, the best tool is Google’s Keyword Planner. It will give you relevant information on both the keyword you inputted directly as well as related search terms to help you broaden your content. Plus, it will come into direct play when you’re trying to put together a Google Ads campaign as these tools integrate seamlessly.
Next, you have to create content that is optimized. For a detailed explanation on how to do this, check out this blog post on SEO for Shopify stores to improve rankings. It’s important to note that these SEO strategies can be used for any online store, not just on an e-commerce platform like Shopify. However, if you’re looking for a simplified summary, just make sure you:
- Add targeted keywords in your product names.
- Have a Meta Title and Meta Description for every page using the targeted keywords.
- Create a sitemap and submit it to Google.
- Include informative and rich product descriptions with your keywords.
- Use alt tags for all product images.
- Create content on your site to rank for more keywords and increase traffic. This can be a blog or selling guides for instance.
- Get backlinks to your site from other, high-quality sites.
These are the basics of SEO, although there is a lot to the practice and its successful implementation.
2. Use Google Ads and Related Tools
- Google Ads – Launching ads on Google will help you gain more exposure and get more traffic to your website. Google Ads has a comprehensive dashboard where you can compare and contrast multiple campaigns. You also have the ability to collate all the necessary and relevant data, including clicks, conversions, cost, and impressions! Using this digital analytics tool will help you determine which ads have the best ROI.
- Clever Ecommerce – This Shopify app optimizes and simplifies your Google Ads campaign. You can launch various products onto Google ads with just a few clicks, but you can also develop remarketing campaigns to best reach your target audience.
- SEMrush – Use this tool to analyze a comprehensive scope of pre-click data in your pay-per-click (PPC) campaigns. You can also determine your average CPC and use it in conjunction with Keyword Planner to identify the right keywords on a granular level. Plus, it will help you identify the most popular ads in your niche as well as your competitors’ search and display ads.
3. Use Facebook Ads to Target Your Audience
Like all social media, Facebook gains its value from the users’ data. Remember, the more you know about your site visitors, the better. That being said, Facebook has a goldmine of this information that you can use to reach highly specific demographic groups. Plus, you can easily and effectively customize Facebook Ad campaigns to make sure that your audience outreach is targeted.
Let’s take a look at the platform:
As you can see, you can choose a budget right when you get started! This will allow you to stay within the confines of however much you’re willing to spend. Plus, you can choose from multiple media formats and various placements, including Facebook, Instagram, Audience Network or Messenger – let’s not forget that Facebook owns these other social media platforms. In fact, Instagram was a huge get for the company and being able to send Facebook Ads to this potential audience can make a huge difference.
Additionally, follow these tips when designing your Facebook Ads campaign:
- Be sure to use video. This is consistently the most effective format for ads since many consumers will be more highly engaged with a video, not to mention you can include more information in a video versus a picture or even a slideshow.
- Build a contact list. Be sure you always collect visitors’ contact info – even if they don’t buy anything – and you can use the Facebook Custom Audiences function to send targeted ads to your contact list.
- Use Facebook Pixel. This is the equivalent to Google Analytics. It will allow you to accurately track and collate all the relevant data.
4. Build A User-Friendly Website
Never underestimate the power of a well-designed website! You want to make sure that your visitors have a good user experience (also referred to as U/X), but how do you make that happen? Let’s take a look at some basic tips for building a good e-commerce store:
- Make sure your products are easy to find.
- Include a checkout process that is easy, secure, and convenient.
- Use design that is clear and engaging – avoid any clutter or clashing colors.
- Make all your shipping rates easy to see and clear.
- Write informative product descriptions.
- Include outbound links to all your social media accounts.
- Incorporate storytelling – consumers want to know who you are!
- Include user reviews or customer testimonials to build trust.
Is Dropshipping Dead in 2020?
Absolutely not! Dropshipping is still worth it and – from the looks of things – it will be for quite a while. You just have to make sure that you choose the right niche, pick a good dropshipping supplier, optimize your website, and provide an excellent experience for your customers.
Remember that the right supplier is crucial to the success of your online store, so you’ll need a company that is reliable, effective, and efficient. You also want to offer an inventory with high-quality products at competitive prices.
If you’re trying to find a supplier that ticks all these boxes, look no further than Greendropship! We offer over 20,000 natural and organic products that are all made in the USA. We have also developed highly innovative methods for packing and shipping various items, including perishable goods. Contact us today to speak to a sales representative who can answer any and all questions you may have.