Before making that all-important decision to launch your own dropshipping store, you may have asked yourself this question; is dropshipping saturated?
And rightly so!
You don't want to go to the effort and expense of starting up a dropshipping store through a platform like Shopify only to have it fail.
After all, dropshipping has been around since the pre-internet era but has skyrocketed into popularity in recent years with the increased access to the internet and the birth of ecommerce.
And with increased accessibility to Wifi, ease of entry into ecommerce in general, and the uptrend in working from home, it's easy to assume the competition is too fierce to make a dropshipping store worth your while.
But wait. It's best not to assume these truths are reason enough to avoid dropshipping altogether until we do a bit of detective work.
So let's put the dropshipping market under the microscope and see what evidence we can find as to whether the market for dropshipping is saturated or not.
What is market saturation?
Let's begin with a definition of market saturation.
Market saturation happens when most of the prospective customers in a current market already use a product or service… and indicates that the demand in the current market is satisfied or nearly satisfied…Source
So for dropshippers, this means their customers no longer want to buy a particular product they sell. Again, this is because customer need has been satisfied, and the market is saturated to the point where there's no more money to be made with that product.
To a great extent, the success of your business depends not only on your knowledge about dropshipping in general; it also very much depends on knowing the level of saturation for the products you sell.
This is because you may need to change or amp up your marketing strategy to stay competitive.
But the question “Is dropshipping saturated?” implies that it is dropshipping itself that is saturated. While that doesn't meet the definition of “market saturation,” many people ask this question, so it deserves a thoughtful answer.
Here's the thing. Dropshipping is a fulfillment method – a method of merchandising that has enjoyed a long history worldwide for several decades now.
If we assume that there is such a thing as dropshipping saturation, this would mean that the business model of dropshipping itself is dead.
And it's not!
Take, for example, these nine big ecommerce stores that started with or are still using dropshipping as their fulfillment method.
Yes, ecommerce platforms like Shopify have provided an easy entry point into ecommerce for many of us wanting to make our dropshipping dream come true. And, yes, this has created a crowded online dropshipping community.
But dropshipping has survived through decades of challenges, and there's little evidence to show it's going away. On the contrary, tens of thousands, perhaps hundreds of thousands of entrepreneurs, have created prosperous online stores in that space.
While a saturated market makes it more difficult to compete and profit, it also opens up opportunities.
It reminds me of the glass half-empty, glass half-full argument.
Believe it (half-full) or not (half-empty), even if a market is saturated, you can actually succeed in it!
Either you throw up your arms in defeat, believing there's no room for your company to grow, or you embrace ways to differentiate yourself from your competitors by concentrating on things like:
- Product improvement
- Lower or higher pricing
- Private labeling (you can find a list of private label suppliers here)
- Loyalty programs
… and that's just for starters.
And what about saturated products?
Is there even such a thing as a saturated product?
Some say yes. Others say it's a myth.
So let's take a good look at market saturation, keeping in mind that both kinds of saturation may exist – product and dropshipping – to understand better why so many entrepreneurs-to-be might be concerned about starting up a dropshipping business in a saturated marketplace.
Causes of market saturation
Let's start with an understanding of what causes a market to saturate by taking a look at the competition:
1. There's too much competition
If you believe that the ecommerce method of dropshipping is saturated and that too many dropshippers have crowded the marketplace to succeed, yes, that's true.
But consider this.
While it's true that the number of dropshipping stores has exploded in recent years, this isn't reason enough to give up the idea of dropshipping in 2023.
Yes, there is an estimated 12 to 24 million ecommerce stores, including dropshipping sites, worldwide which sound like a lot of “saturation” and competition.
However, only one million of those stores actually sell more than $1000 per year!
That means there's lots of room for savvy dropshipping pros like you to do a better job targeting their markets in the global ecommerce space and growing profits doing it.
Many of those millions of stores earning less than $1000 per year were likely launched into the digital stratosphere with a multitude of cheap products in the belief that dropshipping was a “get rich” scheme rather than a business requiring knowledge and effort like any other real business.
So if you're concerned about too much dropshipper competition, it isn't as bad as it first seems, especially when you consider that 2.14 billion people all over the world are expected to make an online purchase this year.
And those buyers are expected to spend 5.42 billion globally by 2022.
The trick is to do your research to find out what product those buyers need or want.
This brings us to the idea of a saturated product – a product that has reached its maximum audience, and demand for it falls.
Some say certain products like “pet beds” or the “posture corrector” are saturated because there are so many identical ads for these things, but from different dropshippers, all over the internet and social media.
But if those products are really so saturated, why do so many retailers continue to sell them?
Is it because they don't know what they're doing?
Or is it because they know there is still enough of a demand, regardless of the competition, for what they're selling?
I think it's the latter. Even amid competition, you can still make money!
Many people talk about saturation, which is a word I really hate personally because I think saturation is just a synonym for competition, but it’s a much more negative tone.Ahmed Hadi, Oberlo
Yes, you can beat the competition by first analyzing your competition and then upping your game by being price competitive, unique in your brand, gain credibility with user-generated reviews or videos, and offer your customers something your competition lacks, or sell globally (which we'll talk about more later in this article).
Dare to be different. Dare to be bold. Just outdo the other guy by giving your customer what they love.
Not only will you captivate and hold your cherished customer's interest, you'll also prove to all those naysayers out there how awesome dropshipping can be!
2. Technological innovation
Markets are dynamic and always changing for many reasons, but technology has evolved to the max in the last hundred years. This means that if the product you're selling is outdated and lacking the most recent technological innovation, demand for your product will nose-dive.
Take the mobile phone as an example. From clunky and simple to sophisticated and smart.
While the demand for an earlier model of a mobile phone won't necessarily die off overnight, successful retailers, including dropshippers, know they need to constantly review and revise, if necessary, their product line to maintain a healthy bottom line.
Technological evolution can frustrate our efforts to sell profitable products that quickly become obsolete. Still, on the upside, it can also springboard your store to soar above the competition even in a saturated market.
For instance, Artificial Intelligence more and more will become part of our everyday existence, and your success as a dropshipper will very much depend on your efforts to embrace it to be front and center with your customer.
Artificial Intelligence innovations like chatbots and virtual assistants, personalized product searches, and product recommendations can propel you ahead of your competitors.
One more example is Jasper, an AI that helps you with writing amazing marketing copy!
But he can also help you with things like:
- Writing articles
- Product descriptions
- Landing pages
- Feature to benefit (turn your product features into benefits that compel action)
Note: Did you know that Jasper launched Jasper Art? This helps you create images with AI! Check out our in-depth review here.
Dropshippers already inhabit the technological world of ecommerce, so none of this should come as a surprise.
But the key takeaway is relevancy. Stay current, stay informed, and give your customer new and improved ways to shop, offer them solutions, and free up their time so that even in a saturated market, you'll outshine the competition.
3. Changing trends
Trends are another way a market can change quickly and send your business into a tailspin. What was cool yesterday could be dead in the water tomorrow. Literally overnight.
And I'm sure right now you can think of a few examples.
Unlike the more subtle change that happens with technology, trends like Pokemon swell up, make compulsive buyers of many, satisfy the “need,” and then fizzle out dramatically.
Remember those fidget spinners that spun into popularity in 2017? Retailers, both brick and mortar and ecommerce, rushed to copy them, flooded the market with them, and reaped the financial reward…for a while anyway.
Because they were inexpensive and accessible to so many, every cool kid could afford an entire collection of them. Demand was sky-high. And dropshippers did well.
Then, suddenly they were cool no more. Like Pokemon, they lived an exciting virtual life among the masses but sadly died at a young age. Demand maxed out, and spinners went the way of the Dodo bird.
This is not to say that dropshipping a trending product can't be profitable if your timing is right and if you have the right tools.
For example, with a free trial from the dropshipping app Sell the Trend, you can explore a huge variety of trending and winning products to sell on your store.
It's risky, though, because when trends die, your customer base withers, and your store, well, let's say you might need a fidget spinner or two of your own to lessen your stress.
But if you have a backup plan and you're aware of the pitfalls, trends can provide a viable although short-lived way to sell saturated products. Just be prepared for when the bottom drops out!
How to tell if a dropshipping product is saturated
Picking a winning product to dropship is every dropshipper's challenge and ultimately you'll meet that challenge by doing your research.
That may include finding out if it's more profitable to sell a saturated product or a niche product that doesn't have as large a market exposure?
Can you dropship saturated products? Many have had success with it, and some will even tell you how to do it.
Either way, you'll want to learn how to identify a saturated product while doing your research using four characteristics common to those products, which you can learn about in this excellent article.
Regardless of your choice, success in dropshipping will always depend on your ability to be creative in your marketing, unique in your branding, and diligent in analyzing your successes and failures.
While sourcing cheap items through AliExpress isn't always a bad idea, keep in mind that it is the choice many make because it is the easiest. For that reason, you'll have a lot more competition, requiring you to cut margins to stay afloat.
But if you choose unique or niche products, you'll automatically set yourself apart.
Discover ways to nicely brand and package your products, offer fast, efficient (and maybe free) shipping, and deliver excellent customer service.
You can be sure your product and your dropshipping method will still be viable in 2023 and beyond.
Reasons why dropshipping is still profitable
When people ask the question, “is dropshipping saturated?” I think what they really want to know is:
- Is dropshipping still a viable business?
- Is dropshipping still profitable?
The answer to these questions is a resounding; “Yes!”
And here's why:
1. Interest in ecommerce and dropshipping
Dropshipping is not dead and ecommerce is here to stay.
The current interest shown in ecommerce, and dropshipping in particular, remains steady and has trended slightly upwards in the past five years. As a result, it has not only become a viable source of income for the ecommerce giants like Amazon but also for the “little guy.”
And even though there are 24 million small online stores in the world, you can still make a good living at dropshipping if you set up your store correctly.
With worldwide global ecommerce revenues expected to rise to 5.4 trillion USD by 2022, and with the number of ecommerce customers on the rise, there is plenty of opportunities for dropshippers to make a successful dropshipping store a reality.
2. Emerging markets with purchase power
Emerging markets worldwide are a huge opportunity for dropshippers because it's an untapped market in an ever-expanding ecommerce universe.
While ecommerce has barely scratched the surface of the global markets, it's estimated that emerging markets worldwide represent $22 trillion GDP, one and half times China's GDP alone.
It's also been shown that as global incomes rise, markets for ecommerce follow suit.
That's where you come in.
It doesn't matter where you live. You can dropship your products absolutely anywhere in the world.
Incredibly, in 2020 alone, Shopify merchants were responsible for creating over $20 billion USD in cross-border sales!
So regardless of where you live, if you can find a way to cater to these markets by offering products and services unique to them, like paying cash on delivery, or accept payment in local currencies, for instance, you will not only drive your business forward, you can help emerging markets thrive well into the future.
3. Increasing internet use and ecommerce users
More and more, the internet is becoming a bigger part of our everyday lives. Yet, even as the pandemic subsides and our need for internet access is less, we are conditioned to the convenience of online shopping.
And internet usage is predicted to only increase over time. So the more users, the better it is for dropshippers.
And what if I told you that 93.5% of those global internet users have shopped for products online?
Are you somewhat convinced that it's possible you could capture just a fraction of that market and still make a profit?
Also, with ever-increasing internet speed, online shopping has become a daily pastime, not just a necessity. If you're like the average user, you're spending about 155 minutes per day on the internet, and it's not just because you have to. You want to!
In those 155 minutes, you can cover a lot of ground if you want to compare products, read reviews, compare prices, or “share” a product of interest with your friends.
Social media is our new mode of relating to one another and is why so many dropshippers successfully advertise on platforms like Facebook, Instagram, and others.
You can see how big this is, right?
If you take 155 minutes times the number of internet users, you know your potential to reach a sizeable market and a very profitable one.
4. The evolution of m-commerce
Mobile phone use (and tablets) is on the rise.
You know this from your own experience. How many people in your circle DON'T have a cell phone or tablet?
There's an excellent chance everyone you know has at least one and/or the other, including children. For example, it was reported in 2019 that just over half of all children in the US have a cell phone by the age of 11!
Why should you care?
Well, if you believe the adage “children are our future,” these kids with cell phones are the next tech-savvy generation that will make m-commerce not just a new statistic but a matter of fact.
Your market awaits!
But we don't need to wait for the future.
How can your dropshipping store benefit from the early beginnings of the mobile tidal wave?
Again, the statistics speak. Worldwide m-commerce sales are expected to reach $3.56 trillion in 2021 – a whopping 22.3 percent increase over the previous year.
And your market is all too willing to open their mobile wallets, as long as you sell them what they want and make it easy, safe, and fast.
Mobile payments meet all those criteria.
With only one click needed for your customer to make a purchase, mobile payments are quickly over-taking credit cards as the preferred payment method.
And if you advertise on a social platform like Facebook, inserting a “Buy Now” button on your ad means your customers don't even need to visit your website to make a purchase.
The mobile economy is booming and sure to bring economic opportunity to dropshippers, even in a saturated market.
Is dropshipping too saturated?
I think the answer depends, not on dropshipping or even dropshipping products so much.
I think it depends on you!
Are you the glass half-full?
Or the glass half-empty?
Do you run with the crowd, backing away from competition or copying it and unwilling to take on new challenges to keep your store current and relevant.
If you're the latter, chances are you won't make it as a successful dropshipper, or as any business owner for that matter, saturated market or not.
In the words of Jack Ma from Alibaba, “Copy, and you die.”
The facts are clear. Look around you, read the statistics, check out the competition, and you'll discover that ecommerce is here to stay – and dropshipping with it.
Consumer spending continues to shift toward online shopping versus shopping in brick-and-mortar stores…Source: thebalance.com
Cynical naysayers (including the dropshipping gurus) will declare that the only money to be made in dropshipping is selling courses to dropshippers.
And even if you believe there are too many dropshippers in the world, survival of the fittest will naturally filter out those who discover that dropshipping is not just a ‘get rich quick' gig.
Those folks will eventually lose interest once they understand the challenges of running a real business.
Only the best dropshippers will inherit the ecommerce fortune!
And if you're one of those willing to take on the challenge of becoming a skilled, tried, and true professional dropshipper (because you learned how on this website!), you will help make the dropshipping business model a totally viable business well into the future.
Strike the right balance between product value and price, be customer-focused, adapt as needed to changing market conditions, and dropshipping is totally profitable.
If too many of the same products flood the market, then you'll be ready because you'll have the know-how to adapt your business to meet the demands of a changing market.
Dropshipping is here to stay.
But you're the one that matters. What do you think? Let me know in the comments below!
Cheers to your dropshipping success!