Expectations vs. Reality of a Dropshipping Business

Dropshipping is an emerging method of product fulfilment where a retailer doesn’t keep the product it sells in stock. Instead, the retailer’s third-party supplier ships the product directly to the       customer.

According to data from Grand View Research, the global dropshipping market is expected to register a compound annual growth rate of 28.8% from 2019 to 2025. In Australia, dropshipping is a profitable venture considering the 9.1 million Australian households that shopped online in 2021.

If you’re considering starting a dropshipping business in Australia, though, it’s best to manage your expectations. Like any business model, it has its pros and cons, each of which weighs more than the other depending on your type of business.

With that said, we discuss common expectations about dropshipping compared to the reality of this business below.

Expectation

Marketing is not a must in a dropshipping business.

Reality

Like any other type of business, dropshipping requires marketing efforts.

Many people think marketing is not required for dropshipping since the listed products are mainly average. This leads retailers to believe that it will not take much to convince customers to buy their products. However, this is a narrow expectation since you also have competitors.

Whether you offer a popular product or a niche one, selling it through dropshipping will require significant marketing to get noticed by customers.

Not only are you pushing the product to the top of relevant results, but you also want customers to recognise your brand. Marketing allows you to hit these two birds with one stone.

Apart from that, your marketing efforts result in significant and in-depth insights about your target customers, as well as the performance of your business and that of your competitors. With these insights, you can develop more effective engagement strategies to ensure customer loyalty.

Expectation

SEO-optimized product descriptions will lead to high sales.

Reality

Search engine optimization is crucial for your online marketing efforts, and one of the keys to success is a well-written product description. However, while it’s true that this will help customers find your products, it will only lead to higher sales if the product description answers customers’ queries.

When writing product descriptions, make sure you’re speaking the customers’ language so you can effectively communicate how your products will benefit them.

Expectation

Dropshipping is a dying business model.

Reality

Dropshipping isn’t showing any signs of slowing down anytime soon. As previously mentioned, the industry is expected to record 28.8% of compound annual growth rate until 2025. So if you’re thinking about starting a dropshipping business, now is the perfect time to move.

Expectation

You get your ROI quickly.

Reality

Dropshipping is the perfect business model if you want to venture into e-commerce but don’t have any experience. It’s simple to set up and manage and doesn’t require a significant upfront investment.

You can see a return on investment anywhere between 2 and 6 months. It also has an average profit margin of between 15% and 20%, depending on your niche and the cost of your products. And with proper management, some dropshippers even see a profit margin of up to 300%.

Start Your Dropshipping Venture

DropshipOnly is an Australian dropshipping product supplier, offering a wide range of high-quality products, from children’s toys to electronics. With fast and secure shipping, we help e-commerce entrepreneurs kickstart their business.

Contact us today to learn more about our dropshipping service.