How to Know if Dropshipping Is Right for Your Business

Dropshipping is a path to entrepreneurship with low barriers to entry. This business model has democratized retail so much that even teenagers can do it gainfully.

However, this venture isn’t for everyone. Find out what dropshipping is, who it’s for, how viable it is in 2025 and beyond, and strategies to blow your competition out of the water.

What Is Dropshipping? 

Dropshipping is a retail process where you don’t physically keep any of the products you sell in stock. When a customer orders something from your storefront, you buy the item from a third-party supplier, such as a manufacturer or wholesaler, who then ships it to your customer. 

This retail model means you can operate a store without needing to purchase and maintain inventory. You can also simultaneously work with numerous suppliers and sell a wider variety of products to generate more revenue.

Who Is Dropshipping For?

Dropshipping is for you if you:

• Can’t decide what to sell.
• Have minimal capital to start and operate.
• Lack space to keep extra inventory.
• Want to scale with ease, increasing or decreasing the number of items you sell.
• Prefer to sell on multiple platforms.

Although this business model allows you to focus on some aspects of operating a retail business, it has drawbacks. Its usual downsides include slim profit margins, high competition and limited branding opportunities.

Moreover, you may not have as much control over inventory management and fulfillment. Ordering deceivingly out-of-stock items and receiving products late can frustrate customers, damaging your brand’s reputation and discouraging repeat business. You may have to deal with dissatisfied buyers and resolve issues you didn’t cause.

Unreliable suppliers are everywhere. You may end up doing business with some of them until you find dependable ones.

Is Dropshipping Still in Growth Mode?

Dropshipping is still in growth mode, and it’s far from losing steam. Its global market size was worth $365.67 billion in 2024. Market researchers expect it to grow at a compound annual growth rate of 22% from 2025 to 2030.

Furthermore, e-commerce is on the rise. While most retail sales worldwide still happen offline, 21.4% of all transactions worldwide will take place online by 2029 — up from 17.3% in 2024. The slice of each online merchant may be shrinking as competition increases, but there’s enough money to go around for all dropshippers as long as the size of the pie continues to expand.

Photo by Icons8 Team on Unsplash

Tips for Succeeding as a Dropshipper

Like every other venture, dropshipping isn’t a slam dunk. Learn what profitable dropshippers do to make money so you can replicate their success with less trial and error.

1. Identify a Promising Niche

Targeting specific customers is an enduring trend. It gives you a sense of direction to define your brand identity clearly and cut through the noise more easily.

In contrast, casting a wide net makes it challenging to stand out from the crowd. Offering the same things as other retailers also makes it difficult to promote your products’ unique selling propositions.

Popular niches are highly saturated and competitive. Selecting a less crowded one is typically more promising than finding and satisfying an unmet need in a fiercely competitive space.

Low competition can help you nail a 15%-25% profit margin — a healthy range for small dropshipping operations — because there’s less pressure to price items low to lure buyers.

Many of the most successful dropshippers didn’t find a winning niche immediately. For example, Chan Tze Hing experienced failure after failure and succeeded only after selling bubble tea-themed plush toys to American, Canadian and Australian consumers, generating nearly $100,000 worth of sales in two months.

2. Choose Products Mindfully

Ethics should be as high on your agenda as profits. Ensure every item you intend to dropship is legal to avoid intellectual property issues and ruining your credibility on Shopify, Etsy and other renowned platforms.

3. Find Credible Suppliers

Behind every successful dropshipper are reliable suppliers.

Consider shipping costs and estimates when comparing prospects to find dependable manufacturers and wholesalers. This way, you can avoid charging high delivery fees and lengthy shipping times — the top pet peeves of 46%-52% of online shoppers.

Check suppliers’ ratings and reviews to gather anecdotal evidence of how credible they are as business partners.

4. Take Organic Marketing Seriously

Optimizing every component of your digital storefront makes your brand and products more searchable, visible and discoverable. Tried-and-true strategies include creating a professional store, enhancing photos with uniformity in mind, writing compelling item descriptions and including as detailed product information as possible.

Organic traffic and conversions take time, so consider investing in social media advertising and influencer marketing to help your storefront gain traction. Nonorganic marketing methods can inflate your costs, but they can yield substantial results when done thoughtfully.

5. Prioritize Customer Engagement

The beauty of being a dropshipper is you can pour considerable resources into customer service.

Take responsibility for your suppliers’ shortcomings because you represent your store’s front end. Finger-pointing accomplishes nothing. Upset shoppers seek solutions and not excuses, so trying to absolve yourself will only exacerbate the situation.

Excellent customer service helps frustrated customers feel heard — a critical first step toward alleviating their concerns.

Be accessible to everyone, but make an extra effort to nurture existing buyers. Retaining your current customers is less costly than acquiring new ones. Your customer base will grow faster when your existing customers place orders repeatedly and recommend your brand to other people they know.

Is Dropshipping for You?

Dropshipping offers a low-risk path to gain a foothold in retail. While this business model isn’t all roses, it lessens the obstacles you have to overcome to start your entrepreneurial journey and make your first profits.

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* This post is written in collaboration with our guest contributor, who has financially supported its publication.

Cover Photo by Microsoft Edge on Unsplash