Is Dropshipping Worth It in 2023?

By Rebekah Carter|Posted on 23 March 2023
Is Dropshipping Worth It in 2023?

Is dropshipping worth it in 2023? The dropshipping business model has become an extremely popular strategy for countless companies in the last couple of years. Emerging out of relative obscurity, dropshipping is now one of the most cost-effective, and efficient ways for business owners to bring products to customers, with minimal initial investment.

The question is, does it still have potential in 2023?

The reality is no business model is guaranteed to generate success. However, dropshipping does offer exceptional benefits over many other strategies. There’s very little startup cost to worry about, minimal waste to deal with, and vendors also get the benefit of being able to work with experts and partners to manage supply chains.

In 2020, the global market for dropshipping was valued at approximately $128 billion. Now, analysts predict it could grow at a CAGR of around 32%, to a projected value of $591.77 billion by 2027.

Let’s take a closer look at whether dropshipping still offers business owners an effective, lucrative, and reliable way to start making a profit online.

What Is Dropshipping? An Introduction

Dropshipping is a business model primarily used by ecommerce brands. As a strategy, it offers one of the lowest barriers to entry of any ecommerce model. With dropshipping, business owners partner with third-party manufacturers and logistics companies to bring their items to clients.

Rather than producing products in-house, storing them in a warehouse, then packaging and shipping them to customers, dropshipping retailers use partnerships for the majority of the production and logistics process. A dropshipping supplier produces the products, stores them, and sends them to customers whenever an order is placed.

Not only does dropshipping reduce the strain associated with managing products and inventory, it also ensures businesses don’t have to keep stock on-hand. Companies only pay for the products they want to sell when a purchase has already been made.

With dropshipping, companies can essentially sidestep most of the core challenges new business leaders face. There are no logistics or shipping tasks to worry about, and no expensive equipment to buy in order to produce new items.

Why Is Dropshipping so Popular?

Perhaps the biggest reason for dropshipping’s popularity is its simplicity. Dropshipping eliminates the headaches involved in sourcing materials, creating products from scratch, and shipping them to customers. As a result, around 23% of today’s online sales are now fulfilled via dropshipping.

Entrepreneurs launching a dropshipping brand don’t need a lot of prior knowledge on how to run a business to get started. They don’t have to worry about ensuring they package items correctly, or learn how to produce products at an agile speed. Companies can even expand their portfolios of potential products for sale as quickly as they like, with minimal risk.

What’s more, many dropshipping suppliers now work via platforms with apps that can connect directly to the ecommerce store a business owner uses. This allows companies to automate the majority of their strategy, sending orders directly to suppliers when they’re placed, then tracking the production process from start to finish in one place.

The Core Advantages of Dropshipping

Dropshipping can be a highly profitable and lucrative business model in the right circumstances. It offers companies a powerful way to start sourcing and selling products with minimal effort. Plus, the low start-up costs ensure business owners can take advantage of an extremely low barrier to entry and focus mainly on marketing & sales.

While there are numerous advantages associated with dropshipping, some of the primary benefits of the model include:

  • Minimal upfront investment: One of the biggest reasons business owners choose dropshipping over other business models, is it requires very little initial investment. There’s no brick-and-mortar store to worry about, no shipping and warehousing to pay for, and you don’t even need to purchase supplies to make products. What’s more you only purchase items when they’ve already been sold, so there’s very little risk to your cash flow.
  • Low barrier to entry: Anyone can get started with a dropshipping store, particularly now there are so many apps and tools available online to help you. There’s no need for any prior knowledge on how to run or manage a warehouse. You don’t have to deal with packing, shipping, and tracking orders. Plus, you can spend less time worrying about inventory and making sure you have the right number of items in storage.
  • Low overheads: Not only are the costs low when you first start a dropshipping store, but they generally remain low throughout the life of your business. You don’t have to pay for equipment or labor to produce products. There are no warehouses to rent or logistic to manage, and the costs are kept minimal by a lack of minimum order quantities. While you do need to pay to build your own ecommerce store, many other overheads are eliminated completely.
  • Variety: Thanks to the rise of dropshipping as a popular sales model, there are now many dropshipping suppliers out there, capable of offering a range of products. Some even operate in the print-on-demand landscape, offering companies a chance to add their own custom designs to various products. You can rotate and change your product list without having to worry about unsold inventory, and expand whenever you choose.
  • Scalability: Running a traditional business, if you receive higher numbers of orders one week, you’ll need to hire extra professionals to keep up with the work. However, with dropshipping, you can scale up or down however you like, without any additional complexity. While you may need to invest more in customer support as your store grows, you’ll have the freedom to scale when you need to.
  • Flexibility: As mentioned above, dropshipping gives you complete freedom to sell as many different items as you like, whenever you want. You can experiment with new portfolios without taking on any additional risk. Plus, you can choose to run your business from anywhere, with no requirement for any physical retail space.

How the Pandemic Influenced the Dropshipping Market

Like most business models, dropshipping has been affected by the influence of the pandemic. There have been both positive and negative changes for companies to adhere to in recent years. For instance, during the pandemic, supply chains were disrupted, making it harder for some companies to access the products they needed and send them to customers quickly.

However, on the other hand, dropshipping solutions often provide companies with the opportunity to switch providers very quickly, making it easier to fill the gaps in their inventory. The pandemic has also helped the dropshipping market to grow in other ways, by increasing the number of people who are actively shopping for solutions online.

During the pandemic, 52% of consumers were increasingly turning to the web to access the products they needed. This provided dropshipping companies with a wider audience to appeal to. At the same time, many new entrepreneurs began entering the fold, creating their own stores on Shopify and Amazon to unlock the benefits of the ecommerce landscape.

While this has led to additional competition in the dropshipping economy, it has also prompted an increase in the number of suppliers, apps and tools available for dropshipping professionals.

Is Dropshipping Still Profitable in 2023?

So, where does the dropshipping market stand today?

Between 2022 and 2023, the dropshipping market saw a growth of around 23.7%, increasing in value to approximately $243.42 billion. This value is expected to almost double by 2026, indicating that there is still a very lucrative market out there for dropshipping companies.

The number of dropshipping stores opening around the world has reduced slightly, as people return to work post-pandemic, and stop looking for ways to make money from home. This could mean that business owners launching their own stores at this time have less competition to worry about.

However, as the market continues to grow, there are still numerous challenges to consider. 84% of dropshippers now say finding a good supplier is the biggest challenge they face when starting a new business. Increasing attention is being given to new trends in the production landscape, such as eco-friendly and sustainable processes. This places additional pressure on companies to think carefully about their production and growth strategy.

Overall, however, the dropshipping landscape still appears to be thriving. Not only is the value of the industry growing, but interest is consistently developing too. Around 58% of Amazon sales are now processed by third-party suppliers using dropshipping models.

What’s more, the number of searches for terms like “Dropshipping” and “Shopify Dropshipping” has increased in the last year.

How Much Money Can You Make With a Dropshipping Store?

While there’s significant potential out there for dropshipping companies, it’s worth noting that success isn’t necessarily guaranteed. Shopify indicates the average success rate for dropshipping companies is around 10-20%. This might seem low, but it’s worth noting the average success rate is for any business usually comes in at around 25%.

The amount you earn from dropshipping will depend heavily on your business process, and how much time you commit to growing your brand. However, according to some studies, dropshipping businesses can make an average of 20% to 30% profit on each sale.

You’ll need to take some time to think carefully about your suppliers, and how you can price your items to maintain a profit while still being competitive. It’s also worth noting that some niches can generate higher profits than others. For instance, in the fashion industry, you may be able to generate a profit range of up to 30-50%.

How Competitive Is Dropshipping?

One of the core challenges you’ll need to face when starting a dropshipping business is competition. While the rise of new dropshipping brands has decreased slightly since the peak of the pandemic, the dropshipping business model is extremely popular. With so many suppliers out there, ecommerce apps to help businesses get started, and a low barrier to entry, the competition is fierce.

If you’re worried about high levels of competition, it might be worth looking into less crowded niches before you start your ecommerce company. For instance, if you’re planning on getting started with your own print-on-demand fashion products, you can set your business apart from the crowd by partnering with a sustainable, eco-friendly supplier, capable of offering more customizations.

Building the right brand can also help you to make your business more profitable. In a crowded landscape, most customers purchase specifically from brands they feel they have an emotional connection with. Developing an identity based on core values like sustainability, excellent customer support, and quality will help you to differentiate your business.

How Long Does It Take to Succeed in a Dropshipping Business?

Another point worth noting when you’re developing your own dropshipping brand, is that success doesn’t happen overnight. Dropshipping does allow companies to build a profitable organization somewhat faster than they would if they were creating a traditional retail store.

Since you don’t have to worry about producing your products yourself, and you can experiment with a range of different items with minimal risk, you might find that you start making money a lot faster than some other small brands. However, there’s still significant time and effort involved.

You’ll need to commit to researching the right dropshipping suppliers, to ensure you’re creating high-quality products your customers will love. It also takes time to start an ecommerce store, build an effective brand, and market your products to customers.

You should expect to spend a significant amount of time on your business in the early stages, to ensure you develop a strong identity. It may also take several months before you start to draw in customers who can give you a decent profit margin.

Companies like Shopify suggest it will usually take at least 12 months to turn a dropshipping store into an entity capable of delivering a full-time income.

How to Start a Dropshipping Business

The evidence seems to suggest that starting a dropshipping business is still worth it in 2023. However, you’ll still need to ensure you’re following the right strategy to make your company a success. The good news is that starting a dropshipping company is often much simpler than building a new traditional business from scratch.

Here are some of the core steps you’ll need to take.

Step 1: Conduct Extensive Market Research

First, you need to understand the market you’re getting into. As mentioned above, you’ll be able to make a profit faster, and improve your chances of earning money by choosing a specific niche for your dropshipping brand. Examine the current marketplace and ask yourself which areas are gaining the most attention, such as fashion, or toys and children’s products.

Once you’ve found a sector which appears to be profitable, narrow your niche even further, choosing a specific target market you want to address. For instance, 42% of customers now specifically search for eco-conscious brands when purchasing clothing. Building a highly sustainable store for individuals with a focus on green purchasing could help you to stand out.

Step 2: Find the Right Supplier

Once you’ve defined your niche, it’s time to look for a dropshipping supplier to create your goods and ship them to your target audience. There are a few crucial things to consider here. First is the niche of your supplier. Make sure they have the products and materials required to create the high-quality items you want. Most suppliers will be able to provide samples of products, so you can test the quality before shipping them to customers.

Next, consider the location of your supplier, and the fulfillment network they work with. The closer your supplier is to your target audience, the faster they’ll be able to deliver goods. Many suppliers work with global fulfillment companies to speed delivery.

It’s also worth considering the supplier’s reputation. Look for information on how they source their products, serve their customers, and offer amazing support. You might also want to consider working with a company with an integrated app available for your ecommerce store.

Step 3: Create Your Website and Build Your Brand

Once you have your niche and supplier, it’s time to start building your dropshipping store. There are numerous tools online that can help you with this. For instance, you can use Shopify to build a store using a professional template, and integrate it with your dropshipping supplier’s app.

Design your store to be user-friendly, and engaging. Make sure you highlight your core brand identity through everything from your web design choices, to the marketing copy you use. Once you have your store up and running, focus on grabbing the attention of your target audience with the right marketing campaigns.

You can use strategies like content marketing to improve your chances of ranking on the search engine results pages for specific keywords. You might consider social media marketing, or think about working with influencers to boost your promotional appeal.

Finishing Thoughts

Dropshipping is an excellent business model for ecommerce beginners, with a fantastic potential for profitability. Used correctly, this strategy can give you an opportunity to dive into the ecommerce world with very little upfront investment or expertise. However, you will be facing a lot of competition, so it’s important to make sure your business stands out.

Using the right supplier, such as an eco-friendly and sustainable dropshipping company like NovaTomato can help you to connect with your audience on a deeper level. NovaTomato also works with premium manufacturers, to ensure you can deliver higher quality items to your target audience, improving your brand reputation.


Still have questions about the profitability of dropshipping? Here are some answers to commonly asked queries in the dropshipping space.

How Profitable Is Dropshipping?

Dropshipping can be a highly profitable and lucrative business model. The exact profitability of your store will depend on the niche you choose, and the price margins you select. The good news is you’ll take on very little risk with a dropshipping store, as you only buy products when they’re sold.

Is Dropshipping Good for Beginners?

Dropshipping may be the perfect business model for beginners in the ecommerce space. It requires very little prior experience in running a company. You don’t need to deal with producing products yourself, managing logistics, or tracking inventory. Instead, you partner with another brand capable of handling most of the hard work for you.

Can You Drop Ship With No Money?

It is possible to dropship with virtually no money, if you use a free platform to build your website. However, most ecommerce website builders will charge a small fee for basic functionality. You may struggle to grow your business without investing at all.