We’ve seen a spike in the eCommerce business in 2020 because the bricks-and-mortar business collapsed under the worldwide pandemic COVID-19. Dropshipping, as an increasing eCommerce business model also see a surge from April 2020. But from Feb. 2021, the growth of dropshipping business slowdown, and till Nov. 2021, the high season seems not as “high” as we supposed.
What leads to this? Will dropshipping die in 2022?
“Is dropshipping dead?” is a frequently asked question that is put up, again and again, every year. And it seems to go to an end this time. But the answer is still a big NO.
What is dropshipping?
Dropshipping is a business model that a seller doesn’t keep the products he sells in stock. Instead, the seller purchases the item from a third-party supplier and has it shipped directly to the customer. As a result, the seller doesn’t have to handle the product directly.
The pros of this model are that beginners do not need much start-up capital, and the risk is low, so it’s easy for beginners to start a business. But the cons are obvious, uncontrollable inventory, unstable quality, long shipping time, which may lead to unhappy customers, and your business is hard to scale up. It is also the core point of the sluggish growth of dropshipping business in 2021.
Then here comes the question again: is dropshipping dying? Definitely, the answer is no. Or to be precise, Dropshipping 1.0 is evolving to Dropshipping 2.0, just the same as the prediction which has been given in a post in 2020 “Is Dropshipping Dead in 2021? Is It Still Profitable?”, dropshipping never dies, it evolves, in other words, changes the way it works. Keep reading to find out how it works as Dropshipping 2.0.
The future of dropshipping: dropshipping2.0 – wholesale dropshipping
To cover the cons of the traditional dropshipping method, a better solution called Dropshipping 2.0 came out.
The core solution of Dropshipping 2.0 is pre-stock to local(domestic) warehouses to avoid long shipping time and uncertain quality, while suppliers process and send out the orders to the end customers from the local warehouse just as same as the Dropshipping 1.0. It is also known as Wholesale Dropshipping.
Why wholesale dropshipping is the future of dropshipping?
Data speaks, the searches on Google shows people’s interest in a term, and it shows the trend of eCommerce activity.
The trend of wholesale is on the rise, and the amount of wholesale is far much larger than dropshipping.
Here are two graphs of the trend of dropshipping and wholesale over the past 5 years.
The general trend of Dropshipping was increasing over the past 5 years, but over the past 12 months, it went a downtrend.
But for wholesale, it was at a much higher position over Dropshipping, and it got a sharp increase in Apr. 2021. and it still goes up. So the opportunity for wholesale is inestimable.
One of the reasons accounting for the thriving of wholesale in 2021 is that the pros of wholesale perfectly meet the current market under the impact of COVID-19 – longer delivery time and soaring shipping fees.
While with the model of wholesale, traders can pre-stock to a local warehouse to avoid uncertain shipping times and take good control of the product, or even customize their own products to build a brand.
However, both dropshipping and wholesale business models have their obvious shortcomings. The cons of dropshipping are just listed in a former paragraph. The main cons of whole selling are not hard to figure out:
- A lot of upfront investment
- Require cross-border trading knowledge
- Tons of time spent on finding a reliable supplier
- Usually need warehouse and staff to handle goods
- High risk of losing money if you meet a hold-up in the sale of commodities
Because of these cons of wholesale selling(especially for cross-border trading), the access threshold to start wholesale selling is quite higher than dropshipping. To combine the advantages and minimize the advantage of both wholesale and dropshipping, wholesale is a better choice for those traders who want convenient order management, fast shipping, and customized high-quality products.
Pros and cons of Wholesale Dropshipping
The advance of wholesale dropshipping is obvious, it combines both the advantages of wholesale and dropshipping. The pros of this model contain but are limited to the following points.
Pros of Wholesale Dropshipping:
- China is not the only choice to source products from but can also source from top countries worldwide.
- Rapid fulfillment time(in 24h) and shipping time(3-7days) shipped from the local warehouse.
- Branding your business with Print on Demand and custom packaging service.
- Keep the inventory under control.
- Take good control of product quality.
- Win happy customers coming back again and again.
- Lower product price than dropshipping 1.0.
But this model also has its shortcomings, mainly from the barriers for eCommerce newbies when you are just a start-up and have no winning products and the risk of holding inventory.
Cos of Wholesale Dropshipping:
- Need more start-up capital than Dropshipping 1.0.
- Not novice-friendly.
- More risks inventory pressure.
Who can benefit from Wholesale dropshipping?
For Dropshipping 1.0, the major part of the sellers are independent store runners, they use website building service providers like Shopify, Wix, WooCommerce, and the like, to build their own stores.
They are the owner and runner of their store, so they have full control of the transaction rules, thus the buyers have no choice but to accept the long shipping time and maybe sometimes not so qualified products.
But for marketplace sellers, those open stores on eBay, Etsy, Amazon, Shopee, Lazada, and so on, they need to follow the rules made by the platform, which usually include fast processing and shipping time, good quality products to win positive reviews from customers, or those sellers will be punished by the platform.
So when Dropshipping 1.0 can perfectly support marketplace sellers, Wholesale Dropshipping just hit the pain point of those marketplace sellers: supply good customized products with fast processing and delivery times.
At the same time, Wholesale Dropshipping provides a better solution for experienced independent store runners to win happy customers in high seasons or under the special quarantine circumstance.
The future is now – CJ Wholesale Dropshipping
Early in 2014, CJ started to provide dropshipping fulfillment services, and four years later launched the CJ Dropshipping platform. Over the years, CJ has set warehouses in China, the US, and Europe. Now CJ can be integrated with 13 platforms including Shopify, eBay, and Etsy…, and fulfill orders from these platforms.
Apart from these platforms, CJ allows users to place manual orders when they are not able to connect your store with CJ. This service we can consider Wholesale Dropshipping.
From a recent update, CJ Dropshipping is now transferred to CJ Wholesale Dropshipping.
On the product page, you’ll find apart from one piece dropship, CJ now well supports wholesale and pre-order inventory, which means you can conveniently buy at a cheaper wholesale price to your place or CJ warehouses.
Better things are, CJ provides more than other wholesale platforms like Alibaba, 1688.com, and dhgate.
Why CJ is a better choice over other wholesale websites/suppliers/providers?
- The best alternative for 1688/Alibaba/Dhgate
CJ provides the same service 1688/Alibaba/Dhgate provide, and even more services you may need like one piece dropship, product sourcing, quality inspection, photography service…
- Helps to resell stock
If you have stocked products you are not able to sell out, CJ can help you to resell the stock on the CJ marketplace. This service is free.
- Order combination fulfillment
With warehouses in China, the US, and Europe, CJ can process and combine your orders to save the shipping fees and win happy customers.
- Bottom prices
Because CJ only works with the direct manufacturers, so can provide the bottom prices.
- Numerous factories, no middleman
CJ only invite a direct factory to enroll, so no middleman or scams on CJ.
- Support both wholesale/dropshipping/pre-stock
CJ supports both wholesale/dropshipping/pre-stock, you can choose the best solution for your business.
The future of dropshipping/eCommerce is undoubtedly going to be full of exciting changes and innovations for both suppliers and traders.
Whether you’re an entrepreneur, or you’re working at an eCommerce company yourself, it’s important to try to keep your finger on the pulse when it comes to changes in the dropshipping/eCommerce landscape.
Our best advice for you is never to stop hustling.
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