Should Your eCommerce Business Be D2C or Use a Dropshipping Model?

Dropshipping is a hot commodity...for fads.

When dropshipping hopefuls find products on marketplaces like AliExpress, they typically fall into one of two categories: fad items and commodities.

For fad items, look no further than the famed fidget spinner.
Fidget spinners took off in 2017 as a fad among younger buyers. Many fortunes were made during this time for dropshippers who joined in early.

But within 8 months, the trend had slowed significantly.
As soon as the fad lost steam, so did the opportunity to make money.

In fact, that 8 month window of opportunity was much shorter in reality. After about 60 days of steep growth in demand, so many competitors jumped into the mix, it became a race to the bottom on price.

If you enjoy the constant hunt for the next trend and don’t mind starting from scratch every few months, this might not bother you in the least.

But if you want to build a sustainable, long-term business with high growth potential, fad products are not the optimal way to get there. Unless you have an informational advantage on emerging trends (if you do, let's talk...) or own some part of the supply chain, it’s incredibly difficult to remain competitive.

A second way dropshipping comes up short is with customer experience. As a dropshipper, you have little or no control over the customer experience: how the product is packaged, when it’s shipped, or even the integrity of the product itself.

Long-term businesses depend on their customers to be repeat buyers or at the very least, advocates of their brand. And when you’re nothing more than an order-taker, it’s difficult to fulfill any kind of brand promise that wins over customers for life. D2C eCommerce brands will pretty much have dropshippers beat in matters of customer service every single time. 

Dropshipping works for Amazon, so why not me?

If someone isn’t dropshipping fad products, they’re often making the mistake of trying to sell commoditized products. In this case, by commodities, I’m talking about products that can be found in virtually every retailer around the world.

Maybe you want to dropship a generic version of Windex. You think: “How many millions of people need to buy Windex every year? I can sell it for less! The market is huge!”

You reasoning doesn’t answer a simple question: Why would anyone buy generic glass cleaner from you?

You might be thinking, “yeah, but people buy glass cleaner online already on Amazon.” To which I say, “exactly.”

Amazon, with their two-day prime shipping and consistent customer experience, has all but locked up the market on selling household commodities online. They're a massive marketplace popular among dropshippers and small businesses (and pretty much everyone in between).

Your success or failure is dependent on your ability to differentiate.

So, should you dropship?

If it leads you to a fad product or trying to sell a commodity with little differentiation, my advice is to avoid it like the plague.

But we are not “anti-dropship.” We're just pro- sustainable growth systems.

I should disclose that we have and currently are dropshipping products ourselves. We like operating our own eCommerce businesses because it gives us an awesome sandbox to test new growth experiments on our venture like mad scientists before we roll something out to clients.

Here’s what our dropship strategy looks like on a high level: we use local suppliers, picked a long-term niche, and promote a unique product without a lot of competition and plenty of margin.

There’s a way to do dropshipping well and take advantage of the smooth logistics and low upfront investment. But only pursue the model when it doesn’t undermine your ability to keep customers happy long-term.

You owe it to yourself to think strategically and on a long-term timeline and make sure that your model isn’t dead in the water before you even start.

You’re going to be spending significant time and resources building the business of your dreams, whether it's a dropshipping model or a D2C eCommerce shop.