The Profitability of a Dropshipping Business

In 2021, 9.1 million Australian households shopped online, spending over $50 billion in total, according to Australia Post. With e-commerce sales in Australia showing no signs of slowing down, more and more aspiring entrepreneurs are planning on setting up their own e-commerce businesses.

One of the business models that are available to online entrepreneurs in Australia is dropshipping.

What Is Dropshipping?

Dropshipping is a retail fulfilment method where a retailer doesn’t keep their inventory in stock. Instead, a third-party dropshipping supplier ships the order directly to the customer. This way, a retailer doesn’t have to handle their products directly.

With the emergence of new ways to make money online every day, you might be wondering whether dropshipping is still a profitable business model. We’re here to tell you—it definitely is.

Below, we outline the ways a dropshipping business in Australia can make you money.

Low Startup Cost

One of the biggest obstacles to starting a retail business is the cost of setting it up. Even if you’re selling online, you’ll still need space for your inventory. Of course, you also have to buy your inventory wholesale.

The costs are multiplied if you have a physical store. Apart from the cost of real estate and inventory, you also have to pay for staff, utilities as well as all the other pieces of equipment and furniture your store needs.

Dropshipping eliminates all these problems. The investment mostly comes from marketing and keeping your e-commerce website up, since you do not need to buy any products until a customer has made a purchase.

Scalability

With a traditional retail business model, scaling up your operations consumes a lot of resources. If the number of your orders multiplies, you will usually have to do as much work to meet the demand.

Dropshipping allows you to pass that burden to your suppliers. As a result, they can do most of the work and you can expand your business with less incremental work. This also means you won’t have to spend more on customer support and other services, protecting your bottom line.

Diversity

According to Australia Post’s Australian e-commerce industry report, the majority of e-commerce sales in 2021 went to variety stores. These stores had a 33.9% share of all online purchases from 7.6 million households.

This shows that if you plan on selling a variety of items, you already have plenty of customers. With dropshipping, your inventory can be endless and you can sell as many different products as you want.

Future-Proof

Global industry reports expect dropshipping to grow into a $557.9 billion industry by 2025. And with more and more people doing their shopping online every year, e-commerce businesses don’t have any reason to doubt their success.

With the right marketing efforts to keep your online store at the forefront of customers, as well as finding a reliable dropshipping partner in Australia, your dropshipping business can be a lucrative, future-proof enterprise.

Start Your Dropshipping Business

You don’t have to look far for a dropshipping partner. DropshipOnly is an Australian dropshipping supplier, offering a wide range of high-quality products, from electronics to home and beauty. With fast and secure shipping, we help e-commerce entrepreneurs kickstart their businesses.

Contact us today to learn more about our dropshipping service.