The Most Common Misconceptions About Dropshipping in 2020
This article will outline the most common misconceptions that we get from our readers on our blog. It is worth mentioning at this point that dropshipping isn’t a get-rich-quick scheme, but a legitimate business model. Dropshipping is simply a different way of fulfilling orders – this notion will be explored later in this article.
Dropshipping is too saturated
Perhaps the most bizarre of all the claims is that Drop Shipping is dead and it’s over since well, it’s saturated. The truth is when I see comments like this it blows my mind because this comment literally makes no sense. Here’s what Market saturation literally is: It’s when a product has been “maximized in a market”, in other words when all of the people who would want that product have bought it already.
Here is what dropshipping is: Dropshipping is when a customer buys a product that you’ve listed in your store for a markup price. When they do, you go to the manufacturer and you purchase that one product for the wholesale price and then have them ship it out directly to the customer, while you keep the difference as profit and large retail stores have been Drop Shipping for years.
Dropshipping isn’t a product. It’s simply a way to fulfill products. Only products can be saturated. And so whenever you see someone equate the two, you can be sure that they don’t understand what they are talking about.
You might ask: Maybe dropshipping can’t be saturated, but are all of the AliExpress products instead saturated. The answer here is no. Although yes, indeed some are saturated and surprise surprise – It’s the products that pretty much everybody is trying to sell.
An example of a saturated product/niche would be cheap women’s apparel and accessories. I can’t stress enough how important it is to conduct effective shopify product research! Women’s watches is a terrible, saturated niche. And here’s the thing: These products are saturated on AliExpress and these saturated product niches, they are saturated regardless of how you fulfill your orders, which is why one of the biggest retailers for this Niche is Forever 21, who recently filed for bankruptcy. The reason this store chain failed wasn’t because of their method of fulfillment. It was because their Niche was too competitive and too saturated and so to survive in it, you needed to be extremely skilled and they were not skilled enough to compete in such a cut-throat market. It is worth mentioning that if you don’t want to repeat Forever 21’s fate, it is important that you use eCommerce tools, such as Oberlo or any other oberlo alternatives.
Saturation is a product problem, not a fulfillment problem. The solution? – Sell unsaturated products regardless of how you’re fulfilling your orders. That’s exactly why FreakyPete it had such huge success. They found a product that few people were selling and they put it in front of the people that would love to buy it. Choosing products like this is something that we focus on at SaleSource. If you don’t want to run into a scenario where you keep picking saturated products, it is important to ensure that you know how to drive traffic to your shopify store, to get the most leverage from the market.
Donald Trump’s war with China has killed Drop Shipping.
So if you haven’t heard the news – Donald Trump announced that ePacket the cheapest, fastest shipping option from China to the US, where packages could arrive in as little as 10 days halfway across the world, for just two dollars – an absolute steal. Not a lot of people know about this, but for over a hundred and ninety countries, the international postage rates are mostly negotiated and set by a worldwide organization – Universal Postal Union known as you UPU and historically the prices have generally been set by how poor a country is considered to be.
If they were rich like the United States then, they had to pay higher prices. But if they were poor then they could have lower shipping prices to stimulate economies. And so, because in the past China was poor, they were able to successfully negotiate with the UPU a very low postage rate. And of course, as you can imagine having a low-cost, fast shipping option from China made drop shipping from China much easier.
But then in 2018 something completely unprecedented happened. Noting that China’s Financial fortunes have drastically changed over the past little while, as part of the ongoing trade War – Donald Trump threatened to pull the USA out of the UPU, unless the rules change and they could declare their own shipping prices for China. Now, as you can imagine if the United States, arguably the biggest economy in the world were to pull out of the UPU, that would mean a hundred and ninety countries would suddenly have to negotiate their own shipping rates with the United States and that would be an absolute disaster.
Donald Trump gave an ultimatum: The UPU you had 12 months to implement this change or they’d be gone. Well, it’s over a year later and each packet is still here and the United States the still in the UPU. So, what happened? How can both of these two things be?
It’s because the Universal Postal Union scrambled, they held an emergency meeting in September 2019 and they struck a deal with the USA. The United States can now charge up to 70% of the postage rate, for example, if the price of the ePacket shipment was previously two dollars, they can now charge four dollars.
Not exactly the literal death of dropshipping is it? For a business that was already working on 20 to 25 percent profit margins and honestly when I saw the news I pretty much shrugged – even if ePacket disappears, there is absolutely no way that China Post is not going to come up with their own alternative, which is exactly what they did. There is now a new shipping option being rolled out: AliExpress standard shipping, and surprise surprise – it is a near clone of ePacket and as a further backup – more and more AliExpress suppliers are opening up their own fulfillment centers in the United States, which means that you can now drop ship products with four to seven-day shipping types for four to five dollars