Have you seen an ad or random post on your feed where a seller brags about a six-figure income on the dashboard and credits dropshipping? Perhaps that’s why you’re wondering if dropshipping is a profitable business.
I’m not going to discredit sellers who are earning thousands of dollars from dropshipping. I believe it has potential and possibly they earn that much—in fact, this lucrative industry is projected to reach $724.26 billion by 2027, with a compound annual growth rate of 30.6%. However, the amount you can make from this venture is subjective, and several factors contribute to its success or failure.
In this article, we will unpack everything you need to know about dropshipping in the Philippines, its pros and cons, and discuss whether it’s worth your time and effort.
Contents
- What is dropshipping?
- How does dropshipping work?
- Where can I find products to sell on dropshipping?
- What are the pros and cons of the dropshipping business?
- How do I make money from dropshipping?
- Is dropshipping profitable in the Philippines?
What is dropshipping?
Dropshipping is an e-commerce fulfillment method in which businesses skip stocking products. When an order arrives, they pass it to another company—usually the manufacturer or seller—who ships the product straight to the customer.
Dropshippers are the matchmakers between customer and product. This method helps entrepreneurs build brands, market products, and ship items without having to pile them up in a store or warehouse.
How does dropshipping work?
In dropshipping, the process involves the customer placing an order on the online store, which is automatically sent to a dropshipping supplier. The supplier prepares and ships the order directly to the customer, with the seller (that’s you) acting as a middleman between the customer and the supplier.
Image: Bluehost
In this business model, you have low overhead costs. It can be a starting point for those who have low capital and are willing to navigate the e-commerce industry. While the upfront costs are relatively low, it also comes with challenges like strong competition, low-profit margins, and a limited selection of honest and reliable suppliers to give you high-quality products.
Dropshipping provides flexibility in product offerings and can quickly adapt to new trends or niches. However, its profitability and success depend on niche competitiveness, customer demand, marketing strategies, and product quality.
Where can I find products to sell on dropshipping?
When selling items online, you can approach this in two ways: sell items you love or are passionate about or analyze and follow market trends.
Of course, if you choose the latter, you won’t do much of the legwork with such intensity, as you’d only copy or imitate what other drop shippers are doing. But the caveat is that you’d be dipping your toes into a market with strong competition.
I’m not saying you won’t exert effort and time, but checking out what others are selling gives you a clue as to whether the products are profitable.
To find products to sell on dropshipping, consider the following:
- Use tools like Niche Scraper, which allows you to identify top-selling products on platforms like AliExpress.
- Explore databases like Dropship, which provides access to millions of products and real-time revenue data from Shopify stores.
- Use Google reverse image search, Google keyword search, and Facebook graph search to find winning products for dropshipping. Platforms like EcomHunt, FindNiche, AliExpress, CJdropshipping, and Amazon can also be valuable sources for product ideas.
- Consider profitable niches such as fashion items, tech gadgets, pet supplies, office products, tools, home improvement items, phone accessories, car accessories, and travel equipment.
- Go to Shopee and Lazada is see which products are selling, like hotcakes. Here’s an example of top-selling baby toys on Shopee. You can filter them by clicking “Top Sales”
What are the pros and cons of the dropshipping business?
It’s quite tempting to go all in with dropshipping when you see the income of successful companies and individuals doing it. However, weighing the pros and cons is important to give you an objective view of what you’re getting yourself into.
| Pros | Cons |
| Low startup costs | High competition |
| Low inventory costs | No control over inventory |
| Lower order fulfillment costs | Low-profit margins |
| Wide range of products to offer | Legal issues |
| Scalable business model | Less control over customer experience |
| Flexible work schedule | Shipping complexities |
| Reliance on shipping partners |
Pros of dropshipping
- Low startup costs: Dropshipping involves low startup costs because you don’t have to purchase inventory upfront. It reduces the financial risks associated with traditional retail businesses, where you stock a pile of items that may not be sold immediately.
- Low inventory costs: You don’t need to hold or manage stocks, saving costs related to storage, warehouse space, and unsold products.
- Lower order fulfillment costs: It reduces order fulfillment expenses since you don’t handle packaging, shipping, or logistics. This can lead to significant savings compared to traditional retail models.
- Wide range of products to offer: It provides access to a vast inventory of products from multiple suppliers worldwide. This allows you to offer diverse products to cater to different customer preferences and needs.
- Scalable business model: It allows for easy expansion by adding new products or entering new markets without the constraints of managing physical inventory.
- Flexible work schedule: You can work from anywhere and manage your operations online. Sell at your own pace as long as you have a laptop or computer and internet access.
Cons of dropshipping
- High competition: Dropshipping faces intense competition due to low barriers to entry, leading to a saturated market where you may need help to stand out and attract customers.
- No control over inventory: Lack of control over inventory in dropshipping means relying on suppliers for stock availability. This can result in stockouts, delays, or quality concerns affecting customer satisfaction.
- Low-profit margins: This often involves low profits as you rely on third-party suppliers. This can make you vulnerable to sudden price changes that can eat your profits if you’re trying to sell items at low prices.
- Legal issues: Legal considerations in dropshipping include ensuring compliance with local and international laws, verifying supplier legitimacy, adhering to tax regulations in the Philippines and overseas and consumer protection laws, and handling shipping and return policies appropriately to avoid legal complications.
- Less control over customer experience: You relinquish control of customer experience since you rely on suppliers for order fulfillment. It can lead to challenges in ensuring consistent quality, timely delivery, and personalized service.
- Shipping complexities: Managing multiple suppliers in dropshipping can lead to complex shipping processes, especially when different wholesalers fulfill orders. This complexity can impact shipping costs, delivery times, and customer satisfaction.
- Reliance on shipping partners: Dropshippers depend on shipping partners for timely and reliable delivery services. You don’t have control over the estimated time of delivery. Thus, it may be difficult for you to manage customer inquiries if the items are delayed or even lost in transit.
How do I make money from dropshipping?
Now that you know the pros and cons of dropshipping, you have enough reasons to justify its viability for you and your financial goals. So, how do you make money from dropshipping?
The best way is to use Shopify and its third-party plugins to find the best suppliers and products. Here’s an overview of your next action plan.
- Choose a niche: Select a niche that you are passionate about, and that has market demand. Perform market research to validate your niche.
- Find a reputable dropshipping supplier: Use apps like DSers, AliExpress, and Oberlo to find suppliers who can provide products for your niche. Ensure they are reliable and offer quality products.
- Set up your Shopify store: Sign up for a Shopify account and choose a plan that fits your budget. Customize your store using Shopify’s themes and add necessary pages like “About Us” and “Contact.” Shopify offers $1.00 monthly for three months to help you get started. That’s like about ₱55 per month!
- Import products: Use DSers or similar apps to import products from your chosen supplier into your Shopify store. Customize product titles, descriptions, and images to make them appealing and informative.
- Price your products: Use Shopify’s profit margin calculator to determine their profitability. Price your products competitively while ensuring a good profit margin.
- Market your store: Implement marketing strategies to attract customers to your store. This could include SEO, social media marketing, email marketing, and paid advertising.
- Customer service: Provide excellent customer service to encourage repeat business and referrals. This includes handling inquiries promptly and managing returns and exchanges efficiently.
- Analyze and improve: Regularly analyze your store’s performance and make improvements. This could involve adding new products, optimizing marketing campaigns, or tweaking your website’s design.
These are the crucial steps to thriving in a dropshipping business. I signed up for a Shopify account and tried to link third-party product-sourcing suppliers like DSers to find profitable products. Given that I’m digitally savvy, it’s harder than I thought. It’s possible, but if you’re really into it, you need to set aside time to learn how to use these features.
Setting up your Shopify store and using the third-party plugins can be cumbersome to those unfamiliar with these tools.
But hear me out. If you’re patient enough to learn the nitty-gritty processes, like adding profit margins and adjusting prices that include shipping costs, then you’ll likely get along with Shopify—if you give yourself time.
Now, you’re curious about which product categories remain saleable—timeless and always on demand. According to Foundr, these are pet products, baby products, home and decor, comfort and leisure, car care, and plants and gardening.
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I set up a baby-product-focused dropshipping store on Shopify and found several suppliers on DSers. However, you need to spend time filtering out the high-quality items.
The steps I mentioned above require time, effort, and money, as relying on paid ads in the first few months of the business requires a lot of money.
Is dropshipping profitable in the Philippines?
Dropshipping can be profitable in the Philippines for entrepreneurs willing to invest time in market research, find the right products, partner with reliable suppliers in China, and implement effective marketing strategies.
This is not a get-rich-quick business model, as you’ve probably seen some drop shippers bragging their profits on Reels, earning thousands of dollars in a few months (and not even in Pesos, right?)
To get sales immediately after launching the site, you must promote your website and products on other social media channels like TikTok, Facebook, and Instagram — using paid advertising.
TikTok is particularly popular in the Philippines, with 41.4 million users. This large user base presents a huge market for dropshippers to target.
However, like any business, it comes with challenges like lowering overhead costs (subscription plans for Shopify and product sourcing apps) and limited control over the quality of products shipped to customers. To succeed, it also requires dedication, adaptability, and a focus on customer satisfaction.
Should you pursue dropshipping? As a side hustle, it’s doable, but you must do your homework before paying for the premium subscriptions mentioned above.
What do you think of dropshipping? Is it worth a try?
Share your thoughts in the comments below.